AMBZ American Business Bank (QX)

AMERICAN BUSINESS BANK (Bank) (OTCBB: AMBZ) today reported net income of $2,695,000 for the first quarter of 2014. Earnings per share (basic) in the first quarter of 2014 were $0.54 versus $0.81 in the first quarter of 2013. During the first quarter of 2013, the Bank was able to harvest gains from its securities portfolio to add to capital. After adjusting results for securities gains on an after-tax basis, “core” earnings per share increased 24% to $0.54 in the first quarter of 2014 versus $0.44 in the first quarter of 2013.

“In 2013 we took advantage of having a number of securities where the market price made it advantageous for us to sell them at a profit and increase our capital accounts. This year, we are back to basics, generating the bulk of our income through the spread business. With that in mind, we think that we have gotten off to a great start in 2014,” said Wes Schaefer, Vice Chairman and CFO.

“Core earnings are what count. Opportunities will arise to take one-time gains in our bond portfolio from time to time and we may choose to take advantage of those situations. However, the strength of our Bank is based upon earnings derived from providing our clients with superior service every day. This is a very traditional model and one that won’t change at American Business Bank,” said Robert Schack, Chairman.

Total assets increased 6% or $79 million to $1.387 billion at March 31, 2014 as compared to $1.308 billion at March 31, 2013. The loan portfolio (net) increased 14% or $72 million to $588 million at March 31, 2014 as compared to $516 million at March 31, 2013. Deposits increased 11.6% or $130 million to $1.243 billion at March 31, 2014 as compared to $1.113 billion at March of 2013. Borrowings from the Federal Home Loan Bank were reduced from $70 million at the end of the first quarter in 2013 to $34 million at the end of the first quarter in 2014.

During the first quarter of 2014, Net Interest Income increased $509,000 or 5% to $10,068,000 from $9,559,000 during the first quarter in 2013.

Non-Interest income during the first quarter of 2014 decreased $2,188,000 to $522,000 from $2,710,000 during the first quarter of 2013. This change was centered in investment gains as mentioned above.

Non-Interest expense during the first quarter of 2014 increased $408,000 or 6.7% to $6,473,000 from $6,065,000 during the first quarter in 2013.

Asset quality at the end of the first quarter of 2014 remains excellent, with $279,000 of non-performing loans, or 0.05% of total loans; and, no OREO. At the end of March 2014, the allowance for loan losses stood at $11,661,000 or 1.94% of loans.

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. The Bank has opened four Loan Production Offices in strategic areas including our Orange County Office in Irvine, our South Bay Office in Torrance, our San Fernando Valley Office in the Warner Center and our Inland Empire Office in Ontario.

American Business Bank Figures in $000, except per share amounts       CONSOLIDATED BALANCE SHEET (unaudited)    

As of:

      March March Change   2014       2013   %

Assets:

Cash & Equivalents $ 62,170 $ 44,290 40.4 % Fed Funds Sold 3,000 1,000 200.0 % Interest Bearing Balances 28 28 0.0 %

Investment Securities:

US Agencies 379,423 376,582 0.8 % Mortgage Backed Securities 149,878 170,832 -12.3 % State & Municipals 162,264 157,425 3.1 % Other     2,988       2,995   -0.2 % Total Investment Securities 694,553 707,834 -1.9 %

Gross Loans:

Commercial Real Estate 362,397 292,808 23.8 % Commercial & Industrial 191,905 191,709 0.1 % Other Real Estate 39,783 36,864 7.9 %

Other

    5,642       5,220   8.1 % Total Gross Loans 599,727 526,601 13.9 % Allowance for Loan & Lease Losses     (11,661 )     (10,211 ) 14.2 % Net Loans 588,066 516,390 13.9 % Premises & Equipment 955 640 49.2 % Other Assets     38,274       37,929   0.9 %

Total Assets

  $ 1,387,046     $ 1,308,111   6.0 %  

Liabilities:

Demand Deposits $ 577,242 $ 515,501 12.0 % Money Market 595,105 517,871 14.9 % Time Deposits and Savings     71,034       80,345   -11.6 % Total Deposits 1,243,381 1,113,717 11.6 % FHLB Advances / Other Borrowings 34,500 70,500 -51.1 % Other Liabilities     5,740       19,330   -70.3 % Total Liabilities   $ 1,283,621     $ 1,203,547   6.7 %  

Shareholders' Equity:

Common Stock & Retained Earnings $ 110,364 $ 94,696 16.5 % Accumulated Other Comprehensive Income / (Loss)     (6,939 )     9,868   -170.3 % Total Shareholders' Equity   $ 103,425     $ 104,564   -1.1 % Total Liabilities & Shareholders' Equity   $ 1,387,046     $ 1,308,111   6.0 %  

Capital Adequacy:

Tangible Common Equity / Tangible Assets 7.46 % 7.99 % -- Tier 1 Leverage Ratio 7.96 % 7.54 % -- Tier 1 Capital Ratio / Risk Weighted Assets 15.95 % 15.96 % -- Total Risk-Based Ratio 17.20 % 17.22 % --  

Per Share Information:

Common Shares Outstanding 4,945,774 4,876,664 -- Book Value Per Share $ 20.91 $ 21.44 -2.5 % Tangible Book Value Per Share $ 20.91 $ 21.44 -2.5 %   American Business Bank Figures in $000, except per share amounts       CONSOLIDATED INCOME STATEMENT (unaudited)     For the 3-month period ended:   March March Change   2014       2013   %

Interest Income:

Loans & Leases $ 6,551 $ 5,870 11.6 % Investment Securities     3,921       4,215   -7.0 % Total Interest Income 10,472 10,085 3.8 %    

Interest Expense:

Money Market, NOW Accounts & Savings 321 368 -12.8 % Time Deposits 71 104 -31.7 % Repurchase Agreements / Other Borrowings     12       54   -77.8 % Total Interest Expense 404 526 -23.2 %     Net Interest Income 10,068 9,559 5.3 % Provision for Loan Losses     (300 )     (300 ) 0.0 % Net Interest Income After Provision for Loan Losses 9,768 9,259 5.5 %    

Non-Interest Income:

Deposit Fees 325 270 20.4 % Realized Securities Gains 7 2,689 -99.7 % Other     190       (249 ) -176.3 % Total Non-Interest Income 522 2,710 -80.7 %    

Non-Interest Expense:

Compensation & Benefits 3,909 3,691 5.9 % Occupancy & Equipment 516 510 1.2 % Other     2,048       1,864   9.9 % Total Non-Interest Expense 6,473 6,065 6.7 %     Pre-Tax Income 3,817 5,904 -35.3 % Provision for Income Tax     (1,122 )     (1,970 ) -43.0 %     Net Income   $ 2,695     $ 3,934   -31.5 %   Less: After-Tax Realized Securities Gains $ 5 $ 1,792   Core Net Income   $ 2,690     $ 2,142     25.6 %  

Per Share Information:

Average Shares Outstanding (for the quarter) 4,945,774 4,876,664 -- Earnings Per Share - Basic $ 0.54 $ 0.81 -32.5 %  

Earnings Per Share "CORE" - Basic

$ 0.54 $ 0.44 23.8 %   American Business Bank Figures in $000, except per share amounts           March March Change   2014       2013   %  

Performance Ratios

Return on Average Assets (ROAA) 0.79 % 1.23 % -- Return on Average Equity (ROAE) 10.76 % 15.06 % --  

Return on Average Assets "CORE" (ROAA)

0.79 % 0.67 % --

Return on Average Equity "CORE" (ROAE)

10.74 % 8.20 % --    

Asset Quality Overview

Non-Performing Loans $ - $ 322 NA Loans 90+Days Past Due     279       933     -70.1 % Total Non-Performing Loans $ 279 $ 1,255 -77.8 %   Restructured Loans (TDR's) $ 2,563 $ 6,472 -60.4 %   Other Real Estate Owned 0 0 --   ALLL / Gross Loans 1.94 % 1.94 % -- ALLL / Non-Performing Loans * 4179.57 % 813.63 % -- Non-Performing Loans / Total Loans * 0.05 % 0.24 % -- Non-Performing Assets / Total Assets * 0.02 % 0.10 % -- Net Charge-Offs $ (209 ) $ 626 -- Net Charge-Offs / Average Gross Loans -0.04 % 0.12 % --  

* Excludes Restructured Loans

AMERICAN BUSINESS BANKWes E. SchaeferVice Chairman and Chief Financial Officer213-430-4000