Robust SBA PPP Fundings Boost Record Net Income

American Business Bank (OTCQX: AMBZ) today reported record net income of $6.7 million or $0.83 per fully diluted share for the second quarter of 2020 compared to $5.3 million or $0.66 per fully diluted share for the second quarter of 2019. The increase was primarily due to significant PPP loan originations during the quarter which increased net interest income but reduced net interest margin.

“Although much uncertainty exists from the pandemic, we are confident for the future based upon the resilience and financial strength of our outstanding customer base. Additionally our significant participation in the PPP program makes us hopeful our clients received the economic boost to move forward in a positive manner, making the proper adjustment to not only survive but to flourish. The program provided unprecedented liquidity in April to our customers who did not know what the new normal would look like. Most of our customers did not shut down but adapted to remote work like the Bank. We have taken an aggressive stance in downgrading credits, but a vast amount of our customers are proactive and are good managers of their businesses and are taking the necessary steps to survive. This is reflected in the continued strong credit metrics of the Bank and is a result of our prudent lending approach in our evaluation of businesses.”

“Furthermore, the Bank is providing the same responsiveness and service we demonstrated in the PPP origination process by assisting clients with a professional accounting firm to ensure our customers meet the SBA requirements to maximize loan forgiveness. At PPP loan payoff, the Bank stands to earn a noteworthy amount of fees to offset the effects of the lower interest rate environment we find ourselves in. Another reason I’m optimistic is the strong pipeline of new business for the Bank as our PPP performance has attracted prospects at a time when our high touch service is appreciated more than ever,” said Leon Blankstein, ABB’s President, CEO and Director.

For the quarter ending June 30, 2020, net income was $6.7 million or $0.83 per fully diluted share, compared to net income of $4.8 million or $0.60 per fully diluted share for the first quarter of 2020. Net interest income for the second quarter was $21.7 million, or 9% higher than the first quarter of 2020 as PPP loan interest of $3 million was partially offset by lower rates on earning assets, while the cost of deposits declined 13 basis points to 0.08%. The increase in net income was also attributable to a $1.7 million increase in Bank/Corporate Owned Life Insurance income offset by a $1.2 million increase in salaries and employee benefits. Furthermore, as outstanding loans excluding PPP declined in the second quarter the provision for loan loss was $680,000 compared to $1.4 million recorded in the first quarter. The allowance for loan losses as a percentage of loans, excluding PPP loans, increased from 1.42% at March 31, 2020 to 1.54% at June 30, 2020.

Net income was $11.6 million or $1.43 per fully diluted share for the six months ended June 30, 2020, compared to $10.7 million or $1.32 per fully diluted share for the six months ended June 30, 2019. The increase was primarily due to significant loan growth between periods, partially offset by lower interest margin resulting in increased net interest income. The provision for loan losses increased $1.1 million primarily as a result of loan growth between periods, as well as a higher level of allowance in response to uncertainty caused by the COVID-19 pandemic.

PPP loans represent 45% of total loans as of March 31, 2020 with the participation of 46% of our customer base. These efforts helped to protect approximately 50,000 jobs in the business community served by the Bank. This influx of cash to the Bank’s existing commercial customers has helped to alleviate any deterioration in their operations for the time being. The following table shows the details of the PPP loans originated during the second quarter of 2020:

Loan Size by Tier	Count	Funded (Dollars in '000)	Average loan size (Dollars in '000)
Less than $350,000	518	$75,438	$146
$350,000 to less than $2 million	465	388,116	835
$2 million and greater	73	229,066	3,138
	1056	$692,620	$656
	Weighted average processing fee %		2.57%

Net Interest Margin

The Bank’s net interest margin for the second quarter of 2020 was 2.88% compared to 3.61% in the second quarter of 2019, and 3.47% in the first quarter of 2020. Excluding the impact of PPP loans, net interest margin for the second quarter of 2020 was 3.02%. The decrease was primarily due to a reduction in market interest rates while the mix of non-interest bearing deposits to total deposits remains at 50% or more. The loan to deposit ratio increased to 70% for the second quarter of 2020 compared to 68% for the first quarter of 2020 and 66% for the second quarter of 2019. Despite the contraction in the Bank’s net interest margin, there continues to be a shift to higher earning assets. As of June 30, 2020, approximately 44% of the Bank’s variable-rate loans are indexed to prime and 69% of these loans are at or above their floor.

Net Interest Income

Net interest income increased for the second quarter of 2020 compared to the second quarter of 2019 by $2.7 million, or 14%, and compared to the first quarter of 2020 by $1.7 million, or 9%. These increases were due to an increase in average outstanding loans offset by lower yields on all interest earning assets for the periods compared. Included in interest income for the second quarter of 2020 is the accretion of net deferred processing fees of $1.5 million for PPP loans. The Bank’s core funding continues to be a strength with the cost of deposits at 0.08% for the second quarter of 2020 compared to 0.24% for same period a year ago.

On a year-to-date basis, net interest income was $41.8 million for the six months ended June 30, 2020, compared to $37.9 million for the same period a year ago. The increase was primarily due to significant loan growth between periods, partially offset by a lower net interest margin.

Non Interest Income

Non-interest income in the second quarter of 2020 was $1.8 million, representing an increase of $454,000, or 34% from the quarter a year ago, and an increase of $1.4 million compared to the first quarter of 2020. The increase from the second quarter of 2019 was attributable to an increase in Bank/Corporate owned life insurance income of $753,000, which is driven by the increase in the value of the policies that are invested in mutual funds. This increase was partially offset by a $161,000 decline in gains on sale of SBA loans as the Bank started to portfolio more SBA loans to add to its interest earning asset base since 2019. Compared to the first quarter of 2020, non-interest income also increased primarily due to a $1.7 million increase in Bank/Corporate owned life insurance income, offset by an $184,000 net loss on the sale of SBA investment securities realized in the recent quarter. On a year-to-date basis, Deposit and International Fees increased $224,000 from the period a year ago due to growth in commercial business customers. For the second quarter of 2020, International Fees declined due to the impact of the pandemic.

Non Interest Expense

Non-interest expense increased $1.6 million for the quarter ended June 30, 2020 compared to the same quarter a year ago. The increase was predominantly due to an $810,000 increase in salaries expense, a $431,000 increase in professional services expense and a $533,000 increase in other non-interest expense. The increase in salaries expense is primarily due to higher deferred compensation plan (DCP) cost as a result of better market performances on other mutual fund measurement balances, and higher full time equivalent employees at June 30, 2020 over the prior year. In other non-interest expense, the provision for off-balance-sheet commitments increased $687,000 due to reduced utilization percentages. The efficiency ratio declined to 59% for the second quarter of 2020 compared to 60% for the second quarter of 2019.

Compared to the first quarter of 2020, non-interest expense increased $1.9 million primarily due to a $1.2 million increase in salaries and employee benefits expense and a $635,000 increase in other non-interest expense. The increase in salaries expense is mainly due to the following:

• Higher DCP cost as a result of better market performances on other mutual fund measurement balances, resulting in an $894,000 DCP expense recorded in the recent quarter compared to an $837,000 DCP benefit recorded in the prior quarter;
• Higher overtime and bonus expenses associated with PPP originations net of related deferred costs for PPP origination activities.

In other non-interest expense, the provision for off-balance sheet commitments increased $706,000 due to reduced utilization percentages, and deposit insurance assessments increased $117,000 as the Bank received a Small Bank Assessment Credit of the same amount from the FDIC during the first quarter of 2020 to offset regular deposit insurance assessments. The Bank did not receive such credit in the recent quarter. The efficiency ratio was 59% for the second and first quarters of 2020.

On a year-to-date basis, non-interest expense for the six months ended June 30, 2020 increased $654,000 or 3% compared to the same period a year ago, predominantly due to higher professional services expense. The efficiency ratio was 59% and 62% for the six months ended June 30, 2020 and 2019, respectively.

Full time equivalent employees at June 30, 2020 were 195 compared to 191 a year ago, and the same as March 31, 2020. The Bank has 30 relationship managers in seven offices.

Balance Sheet

Total assets increased $893 million, or 37% from year-end December 31, 2019 to $3.3 billion, with 76% of the increase attributable to PPP originations during the recent quarter. Total loans, excluding PPP loans, decreased $32 million, or 2%, to $1.46 billion from year-end as the Bank primarily focused its resources to participate in the PPP program and C&I line utilization declined. As of June 30, 2020 and March 31, 2020, the utilization rates for the Bank’s commercial lines of credit were 27% and 35%, respectively.

During the first six months of 2020, total deposits grew by $860 million with a majority of the increase attributable to the proceeds of PPP loans. In addition, existing customers became more liquid as the economy slowed and receivables were converted to cash as well as new relationships to the Bank contributed to the significant growth in deposits during the first half of 2020. At June 30, 2020, the tangible common equity ratio was 6.89%; excluding PPP loans, the tangible common equity ratio was 8.67%.

Asset Quality

During the second quarter of 2020, non-performing assets declined from $4.5 million on March 31, 2020 to $2.8 million on June 30, 2020, representing 0.11% of total assets (excluding PPP loans). The Bank continues to have no Other Real Estate Owned (OREO). At June 30, 2020, the Bank’s level of past due, criticized and classified loans represented 0.26%, 6.55% and 1.22% of total loans (excluding PPP loans), respectively. As of June 30, 2020 the Bank has one $2.6 million commercial loan on non-accrual status with a specific allowance. There are four other relationships that are impaired totaling $1.6 million with a specific allowance. At the end of the quarter, the allowance for loan losses stood at $22.4 million, or 1.54% of total loans (excluding PPP loans); compared to 1.4% at December 31, 2019. All PPP loans are 100% guaranteed by the SBA and as such, no allowance for loan losses is allocated to these loans. The Bank is required to adopt CECL, or Current Expected Credit Loss, on January 1, 2023. For the first six months of 2020, the Bank recorded a total of $538,000 in net charge-offs on two commercial loans, representing annualized net charge offs of 0.06%.

In response to the COVID-19 pandemic, the Bank established a loan payment deferment program to assist its customers who are experiencing short-term, temporary financial or operational problems. During the second quarter of 2020, loan payment deferrals were granted on 38 loans with a total principal balance of $94 million, or 4% of total loans; 68% of the deferrals granted were in the owner occupied and 24% were in non-owner occupied commercial real estate loans. Those loans were originally underwritten with a 53% average loan to value ratio. All payment deferrals granted to-date meet applicable requirements to continue accruing interest.

At June 30, 2020, loans to customers in the hotel, restaurant, entertainment, and recreation industries represented 5% of the loan portfolio. Retail and hospitality related loans, collateralized by commercial real estate, comprised 7% of the loan portfolio that was originally underwritten with a 55% average loan to value ratio. The Bank has no exposure to the oil and gas industry.

ABOUT AMERICAN BUSINESS BANK

American Business Bank, headquartered in downtown Los Angeles, offers a wide range of financial services to the business marketplace. Clients include wholesalers, manufacturers, service businesses, professionals and non-profits. American Business Bank has six Loan Production Offices in strategic locations including: North Orange County in Anaheim, Orange County in Irvine, South Bay in Torrance, San Fernando Valley in Woodland Hills, Riverside County in Corona and Inland Empire in Ontario.

FORWARD LOOKING STATEMENTS

This communication contains certain forward-looking information about American Business Bank that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Such statements include future financial and operating results, expectations, intentions and other statements that are not historical facts. Such statements are based on information available at the time of this communication and are based on current beliefs and expectations of the Bank’s management and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control. The COVID-19 pandemic is adversely affecting the national economy; the ultimate length and severity of its impact on the Bank’s customers are uncertain. Actual results may differ materially from those set forth in the forward-looking statements due to a variety of factors, including various risk factors. We are under no obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

American Business Bank
Figures in $000, except share and per share amounts
BALANCE SHEETS (unaudited)
								June				March				December				June
									2020				2020				2019				2019
Assets:
	Cash and Due from Banks							$	68,072			$	36,539			$	31,673			$	66,605
	Interest Earning Deposits in Other Financial Institutions								232,770				149,654				45,202				10,313
	Investment Securities:
		US Agencies							240,012				265,758				284,032				376,573
		Mortgage Backed Securities							313,119				286,122				292,126				194,735
		State and Municipals							133,128				75,240				78,520				72,117
		US Treasuries							10,081				10,116				10,009				9,991
		Corporate Bonds							19,502				20,068				19,805				7,919
			Securities Available-for-Sale, at Fair Value						715,842				657,304				684,492				661,335
		State and Municipals Securities Held-to-Maturity, at Amortized Cost							86,289				86,499				86,707				87,121
		Federal Home Loan Bank Stock, at Cost							10,864				10,356				10,356				10,356
			Total Investment Securities						812,995				754,159				781,555				758,812
	Loans Receivable:
		Commercial Real Estate							1,007,655				1,009,731				982,070				893,866
		Commercial and Industrial							370,786				454,838				423,868				365,834
		SBA Payroll Protection Program							675,666				-				-				-
		Residential Real Estate							71,112				76,083				76,481				61,116
		Installment and Other							6,039				5,337				4,959				4,026
			Total Loans Receivable						2,131,258				1,545,989				1,487,378				1,324,842
				Allowance for Loan Losses					(22,399	)			(21,888	)			(20,824	)			(18,548	)
			Loans Receivable, Net						2,108,859				1,524,101				1,466,554				1,306,294
	Furniture, Equipment and Leasehold Improvements, Net								8,520				8,833				9,023				6,453
	Bank/Corporate Owned Life Insurance								26,651				25,698				26,448				25,975
	Other Assets								37,396				38,650				41,456				47,030
		Total Assets						$	3,295,263			$	2,537,634			$	2,401,911			$	2,221,482
Liabilities:
	Non-Interest Bearing Demand Deposits							$	1,684,662			$	1,164,965			$	1,083,705			$	988,259
	Interest Bearing Transaction Accounts								204,133				214,967				215,730				202,465
	Money Market and Savings Deposits								1,100,191				872,908				827,713				749,979
	Certificates of Deposit								35,713				36,044				37,712				59,524
			Total Deposits						3,024,699				2,288,884				2,164,860				2,000,227
	Federal Home Loan Bank Advances / Other Borrowings								-				-				-				-
	Other Liabilities								43,206				33,526				30,386				29,190
		Total Liabilities						$	3,067,905			$	2,322,410			$	2,195,246			$	2,029,417
Shareholders' Equity:
	Common Stock							$	165,032			$	164,456			$	163,872			$	162,589
	Retained Earnings								58,359				51,624				46,784				35,378
	Accumulated Other Comprehensive Income / (Loss)								3,967				(856	)			(3,991	)			(5,902	)
		Total Shareholders' Equity						$	227,358			$	215,224			$	206,665			$	192,065
		Total Liabilities and Shareholders' Equity						$	3,295,263			$	2,537,634			$	2,401,911			$	2,221,482
	Standby Letters of Credit							$	37,259			$	38,614			$	39,513			$	40,346
Per Share Information:
	Common Shares Outstanding								7,904,105				7,870,120				7,850,171				7,794,212
	Book Value Per Share							$	28.76			$	27.35			$	26.33			$	24.64
	Tangible Book Value Per Share							$	28.76			$	27.35			$	26.33			$	24.64

American Business Bank
Figures in $000, except share and per share amounts
INCOME STATEMENTS (unaudited)
								For the three months ended:
								June				March				June
									2020				2020				2019
Interest Income:
	Interest and Fees on Loans							$	19,169			$	17,295			$	15,845
	Interest on Investment Securities								3,084				3,913				4,145
	Interest on Interest Earning Deposits
	in Other Financial Institutions								93				54				263
		Total Interest Income							22,346				21,262				20,253
Interest Expense:
	Interest on Interest Bearing Transaction Accounts								37				105				107
	Interest on Money Market and Savings Deposits								538				968				956
	Interest on Certificates of Deposits								28				41				116
	Interest on Federal Home Loan Bank Advances
		and Other Borrowings							-				131				14
		Total Interest Expense							603				1,245				1,193
Net Interest Income									21,743				20,017				19,060
	Provision for Loan Losses								680				1,434				928
Net Interest Income after Provision for Loan Losses									21,063				18,583				18,132
Non-Interest Income:
	Deposit Fees								640				615				543
	International Fees								244				282				254
	Gain (Loss) on Sale of Investment Securities, Net								(184	)			47				(145	)
	Gain on Sale of SBA Loans, Net								-				19				161
	Bank/Corporate Owned Life Insurance Income (Expense)								953				(750	)			200
	Other								143				198				329
		Total Non-Interest Income							1,796				411				1,342
Non-Interest Expense:
	Salaries and Employee Benefits								9,384				8,219				8,574
	Occupancy and Equipment								953				920				1,047
	Professional Services								1,627				1,482				1,196
	Promotion Expenses								267				366				322
	Other								1,693				1,058				1,160
		Total Non-Interest Expense							13,924				12,045				12,299
Earnings before income taxes									8,935				6,949				7,175
	Income Tax Expense								2,200				2,110				1,906
NET INCOME								$	6,735			$	4,839			$	5,269
Add back:
	After-Tax Gain (Loss) on Sale of Investment Securities, Net							$	139			$	(33	)		$	107
	After-Tax DCP ABB Stock Expense (Benefit)							$	-			$	-			$	52
Core Net Income								$	6,874			$	4,806			$	5,428
Per Share Information:
	Earnings Per Share - Basic							$	0.84			$	0.60			$	0.66
	Earnings Per Share - Diluted							$	0.83			$	0.60			$	0.65
	Core Earnings Per Share - Diluted							$	0.85			$	0.59			$	0.67
	Weighted Average Shares - Basic								8,046,122				8,036,255				7,947,731
	Weighted Average Shares - Diluted								8,097,354				8,122,355				8,079,466

American Business Bank
Figures in $000, except share and per share amounts
INCOME STATEMENTS (unaudited)
								For the six months ended:
								June				June
									2020				2019
Interest Income:
	Interest and Fees on Loans							$	36,464			$	30,922
	Interest on Investment Securities								6,997				8,419
	Interest on Interest Earning Deposits
	in Other Financial Institutions								147				766
		Total Interest Income							43,608				40,107
Interest Expense:
	Interest on Interest Bearing Transaction Accounts								141				210
	Interest on Money Market and Savings Deposits								1,505				1,763
	Interest on Certificates of Deposits								69				221
	Interest on Federal Home Loan Bank Advances
		and Other Borrowings							131				14
		Total Interest Expense							1,846				2,208
Net Interest Income									41,762				37,899
	Provision for Loan Losses								2,114				1,018
Net Interest Income after Provision for Loan Losses									39,648				36,881
Non-Interest Income:
	Deposit Fees								1,255				1,045
	International Fees								527				513
	Gain (Loss) on Sale of Investment Securities, Net								(137	)			(145	)
	Gain on Sale of SBA Loans, Net								19				239
	Bank/Corporate Owned Life Insurance Income (Expense)								203				647
	Other								341				514
	Total Non-Interest Income								2,208				2,813
Non-Interest Expense:
	Salaries and Employee Benefits								17,603				18,017
	Occupancy and Equipment								1,873				2,068
	Professional Services								3,109				2,394
	Promotion Expenses								633				586
	Other								2,754				2,253
	Total Non-Interest Expense								25,972				25,318
Earnings before income taxes									15,884				14,376
	Income Tax Expense								4,310				3,706
NET INCOME								$	11,574			$	10,670
Add back:
	After-Tax Net Gains (Losses) on Sale of Investment Securities							$	100			$	108
	After-Tax DCP ABB Stock Expense (Benefit)							$	-			$	451
Core Net Income								$	11,674			$	11,229
Per Share Information:
	Earnings Per Share - Basic							$	1.44			$	1.35
	Earnings Per Share - Diluted							$	1.43			$	1.32
	Core Earnings Per Share - Diluted							$	1.44			$	1.39
	Weighted Average Shares - Basic								8,041,189				7,923,375
	Weighted Average Shares - Diluted								8,109,855				8,068,298

American Business Bank
Figures in $000
QUARTERLY AVERAGE BALANCE SHEETS AND YIELD ANALYSIS (unaudited)
								For the three months ended:
								June 2020							March 2020
								Average		Interest		Average			Average		Interest		Average
								Balance		Inc/Exp		Yield/Rate			Balance		Inc/Exp		Yield/Rate
Interest Earning Assets:
	Interest Earning Deposits in Other Financial Institutions							$	264,722	$	93	0.14	%		$	27,556	$	54	0.80	%
	Investment Securities:
	US Agencies								260,033		270	0.41	%			277,854		677	0.98	%
	Mortgage Backed Securities								271,173		1,434	2.12	%			287,295		1,742	2.43	%
	State and Municipals								178,378		1,196	2.68	%			166,727		1,121	2.69	%
	US Treasuries								10,018		37	1.48	%			10,025		37	1.48	%
	Corporate Bonds								19,908		147	2.95	%			19,947		150	3.00	%
	Securities Available-for-Sale and Held-to-Maturity								739,510		3,084	1.67	%			761,848		3,727	1.96	%
	Federal Home Loan Bank Stock								10,753		-	0.00	%			10,356		186	7.16	%
	Total Investment Securities								750,263		3,084	1.64	%			772,204		3,913	2.03	%
	Loans Receivable:
	Commercial Real Estate								1,003,318		11,031	4.42	%			1,005,413		11,345	4.54	%
	Commercial and Industrial								402,179		4,380	4.38	%			436,183		5,024	4.63	%
	SBA Payroll Protection Program								539,535		2,994	2.23	%			-		-	0.00	%
	Residential Real Estate								70,984		705	4.00	%			76,302		886	4.67	%
	Installment and Other								5,037		59	4.75	%			5,649		40	2.88	%
	Total Loans Receivable								2,021,053		19,169	3.81	%			1,523,547		17,295	4.57	%
	Total Interest Earning Assets							$	3,036,038	$	22,346	2.91	%		$	2,323,307	$	21,262	3.62	%
Liabilities:
	Non-Interest Bearing Demand Deposits								1,624,250		-	0.00	%			1,104,594		-	0.00	%
	Interest Bearing Transaction Accounts								201,439		37	0.07	%			202,250		105	0.21	%
	Money Market and Savings Deposits								1,027,292		538	0.21	%			807,134		968	0.48	%
	Certificates of Deposit								35,614		28	0.31	%			36,427		41	0.46	%
	Total Deposits								2,888,595		603	0.08	%			2,150,405		1,114	0.21	%
	Federal Home Loan Bank Advances / Other Borrowings								-		-	0.00	%			31,714		131	1.66	%
	Total Interest Bearing Deposits and Borrowings								1,264,345		603	0.19	%			1,077,525		1,245	0.46	%
	Total Deposits and Borrowings							$	2,888,595	$	603	0.08	%		$	2,182,119	$	1,245	0.23	%
	Net Interest Income									$	21,743						$	20,017
	Net Interest Rate Spread											2.83	%						3.39	%
	Net Interest Margin											2.88	%						3.47	%
	Net Interest Margin, excluding SBA PPP											3.02	%						3.47	%

American Business Bank
Figures in $000
QUARTERLY AVERAGE BALANCE SHEETS AND YIELD ANALYSIS (unaudited)
								For the three months ended:
								June 2020							June 2019
								Average		Interest		Average			Average		Interest		Average
								Balance		Inc/Exp		Yield/Rate			Balance		Inc/Exp		Yield/Rate
Interest Earning Assets:
	Interest Earning Deposits in Other Financial Institutions							$	264,722	$	93	0.14	%		$	43,368	$	263	2.46	%
	Investment Securities:
	US Agencies								260,033		270	0.41	%			402,437		1,449	1.44	%
	Mortgage Backed Securities								271,173		1,434	2.12	%			191,710		1,362	2.84	%
	State and Municipals								178,378		1,196	2.68	%			163,565		1,096	2.68	%
	US Treasuries								10,018		37	1.48	%			10,046		37	1.49	%
	Corporate Bonds								19,908		147	2.95	%			2,720		24	3.46	%
	Securities Available-for-Sale and Held-to-Maturity								739,510		3,084	1.67	%			770,478		3,968	2.06	%
	Federal Home Loan Bank Stock								10,753		-	0.00	%			10,356		177	6.84	%
	Total Investment Securities								750,263		3,084	1.64	%			780,834		4,145	2.12	%
	Loans Receivable:
	Commercial Real Estate								1,003,318		11,031	4.42	%			870,023		10,289	4.74	%
	Commercial and Industrial								402,179		4,380	4.38	%			359,009		4,712	5.26	%
	SBA Payroll Protection Program								539,535		2,994	2.23	%			-		-	0.00	%
	Residential Real Estate								70,984		705	4.00	%			60,345		808	5.37	%
	Installment and Other								5,037		59	4.75	%			4,996		36	2.88	%
	Total Loans Receivable								2,021,053		19,169	3.81	%			1,294,373		15,845	4.91	%
	Total Interest Earning Assets							$	3,036,038	$	22,346	2.91	%		$	2,118,575	$	20,253	3.78	%
Liabilities:
	Non-Interest Bearing Demand Deposits								1,624,250		-	0.00	%			1,006,872		-	0.00	%
	Interest Bearing Transaction Accounts								201,439		37	0.07	%			198,638		107	0.22	%
	Money Market and Savings Deposits								1,027,292		538	0.21	%			723,827		956	0.53	%
	Certificates of Deposit								35,614		28	0.31	%			69,674		116	0.67	%
	Total Deposits								2,888,595		603	0.08	%			1,999,011		1,179	0.24	%
	Federal Home Loan Bank Advances / Other Borrowings								-		-	0.00	%			2,049		14	2.66	%
	Total Interest Bearing Deposits and Borrowings								1,264,345		603	0.19	%			994,188		1,193	0.48	%
	Total Deposits and Borrowings							$	2,888,595	$	603	0.08	%		$	2,001,060	$	1,193	0.24	%
	Net Interest Income									$	21,743						$	19,060
	Net Interest Rate Spread											2.83	%						3.54	%
	Net Interest Margin											2.88	%						3.61	%
	Net Interest Margin, excluding SBA PPP											3.02	%						3.61	%

American Business Bank
Figures in $000
YEAR-TO-DATE AVERAGE BALANCE SHEETS AND YIELD ANALYSIS (unaudited)
								For the six months ended:
								June 2020							June 2019
								Average		Interest		Average			Average		Interest		Average
								Balance		Inc/Exp		Yield/Rate			Balance		Inc/Exp		Yield/Rate
Interest Earning Assets:
	Interest Earning Deposits with Other Financial Institutions							$	146,139	$	147	0.20	%		$	62,591	$	766	2.48	%
	Investment Securities:
	US Agencies								268,943		946	0.70	%			418,032		3,206	1.53	%
	Mortgage Backed Securities								279,234		3,177	2.28	%			170,005		2,481	2.92	%
	State and Municipals								172,553		2,317	2.69	%			167,964		2,257	2.69	%
	US Treasuries								10,022		74	1.48	%			10,049		74	1.48	%
	Corporate Bonds								19,928		297	2.98	%			2,362		42	3.53	%
	Securities Available-for-Sale and Held-to-Maturity								750,680		6,811	1.81	%			768,412		8,060	2.10	%
	Federal Home Loan Bank Stock								10,554		186	3.52	%			10,356		359	6.94	%
	Total Investment Securities								761,234		6,997	1.84	%			778,768		8,419	2.16	%
	Loans Receivable:
	Commercial Real Estate								1,004,366		22,374	4.48	%			850,748		19,944	4.73	%
	Commercial and Industrial								419,181		9,404	4.51	%			356,349		9,311	5.27	%
	SBA Payroll Protection Program								269,767		2,994	2.23	%			-		-	0.00	%
	Residential Real Estate								73,643		1,592	4.35	%			60,138		1,596	5.35	%
	Installment and Other								5,343		100	3.76	%			4,841		71	2.95	%
	Total Loans Receivable								1,772,300		36,464	4.14	%			1,272,076		30,922	4.90	%
	Total Interest Earning Assets							$	2,679,673	$	43,608	3.22	%		$	2,113,435	$	40,107	3.77	%
Liabilities:
	Non-Interest Bearing Demand Deposits								1,364,422		-	0.00	%			1,001,486		-	0.00	%
	Interest Bearing Transaction Accounts								201,845		141	0.14	%			198,723		210	0.21	%
	Money Market and Savings Deposits								917,213		1,505	0.33	%			729,957		1,763	0.49	%
	Certificates of Deposit								36,020		69	0.39	%			67,152		221	0.66	%
	Total Deposits								2,519,500		1,715	0.14	%			1,997,318		2,194	0.22	%
	Federal Home Loan Bank Advances / Other Borrowings								15,857		131	1.66	%			1,030		14	2.66	%
	Total Interest Bearing Deposits and Borrowings								1,170,935		1,846	0.32	%			996,862		2,208	0.45	%
	Total Deposits and Borrowings							$	2,535,357	$	1,846	0.15	%		$	1,998,348	$	2,208	0.22	%
	Net Interest Income									$	41,762						$	37,899
	Net Interest Rate Spread											3.07	%						3.55	%
	Net Interest Margin											3.13	%						3.62	%
	Net Interest Margin, excluding SBA PPP											3.23	%						3.62	%

American Business Bank
Figures in $000
SUPPLEMENTAL DATA (unaudited)
								June				March				December				June
									2020				2020				2019				2019
Performance Ratios:
	Quarterly:
	Return on Average Assets (ROAA)								0.86	%			0.80	%			0.99	%			0.95	%
	Core Return on Average Assets (ROAA)								0.87	%			0.79	%			0.99	%			0.98	%
	Return on Average Equity (ROAE)								12.14	%			9.15	%			11.74	%			11.74	%
	Core Return on Average Equity (ROAE)								12.39	%			9.09	%			11.74	%			12.09	%
	Efficiency Ratio								58.70	%			59.10	%			58.77	%			59.86	%
	Core Efficiency Ratio								58.70	%			59.10	%			58.77	%			59.51	%
	Year-to-Date
	Return on Average Assets (ROAA)								0.83	%			0.80	%			0.97	%			0.97	%
	Core Return on Average Assets (ROAA)								0.84	%			0.79	%			1.00	%			1.02	%
	Return on Average Equity (ROAE)								10.68	%			9.15	%			11.80	%			12.29	%
	Core Return on Average Equity (ROAE)								10.77	%			9.09	%			12.15	%			12.93	%
	Efficiency Ratio								58.88	%			59.10	%			60.29	%			61.97	%
	Core Efficiency Ratio								58.88	%			59.10	%			59.57	%			60.48	%
Capital Adequacy:
	Total Risk Based Capital Ratio								14.64	%			13.71	%			13.82	%			14.37	%
	Common Equity Tier 1 Capital Ratio								13.38	%			12.46	%			12.57	%			13.12	%
	Tier 1 Risk Based Capital Ratio								13.38	%			12.46	%			12.57	%			13.12	%
	Tier 1 Leverage Ratio								7.10	%			8.91	%			8.66	%			8.94	%
	Tangible Common Equity / Tangible Assets								6.89	%			8.48	%			8.60	%			8.65	%
Asset Quality Overview
	Non-Performing Loans							$	2,601			$	4,225			$	1,855			$	1,047
	Loans 90+ Days Past Due and Still Accruing								-				-				-				-
		Total Non-Performing Loans							2,601				4,225				1,855				1,047
	Restructured Loans								223				225				227				231
	Other Real Estate Owned								-				-				-				-
	ALLL / Loans Receivable								1.05	%			1.42	%			1.40	%			1.40	%
	Non-Performing Loans / Total Loans Receivable *								0.13	%			0.29	%			0.14	%			0.10	%
	Non-Performing Loans / Total Loans Receivable *, excluding PPP **								0.19	%			0.29	%			0.14	%			0.10	%
	Non-Performing Assets / Total Assets *								0.09	%			0.18	%			0.09	%			0.06	%
	Non-Performing Assets / Total Assets *, excluding PPP **								0.11	%			0.18	%			0.09	%			0.06	%
	Net Charge-Offs (Recoveries) quarterly							$	168			$	370			$	(8	)		$	(12	)
	Net Charge-Offs (Recoveries) year-to-date							$	538			$	370			$	(41	)		$	(27	)
	Net Charge-Offs (Recoveries) year-to-date / Average								0.03	%			0.02	%			0.00	%			0.00	%
		Loans Receivable
	*	Includes non-accrual loans, accruing loans past due 90+ days and Troubled Debt Restructurings (TDRs).
	**	SBA Paycheck Protection Program (PPP)

 

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