American Business Bank Reports Record Quarterly Earnings of $16.2 Million

AMERICAN BUSINESS BANK (OTCQX: AMBZ) today reported net income of $16.2 million or $1.77 per fully diluted share for the quarter ended June 30, 2026 compared to $15.9 million or $1.73 per fully diluted share for the quarter ended March 31, 2026, and $13.2 million or $1.42 per fully diluted share for the quarter ended June 30, 2025, representing an increase of 2% and 25%, respectively.

“We are pleased to report record earnings, continued earnings per share growth, and a return on equity exceeding 15% for the quarter. I would like to thank our employees for their ongoing commitment and our shareholders for their continued confidence and support,” said Leon Blankstein, Chief Executive Officer, President, and Director.

“Second quarter results benefited from both loan growth and continued repricing, all at higher rates than the legacy portfolio. Reported loan growth during the quarter was impacted by anticipated payoffs and despite reporting limited deposit growth, our pipeline of new customer relationships remains solid. Deposits were still below year-end levels, as new relationships have yet to fully fund, creating opportunities for growth. Clients appear more optimistic than they were at the end of last year and we anticipate loan and deposit growth in the second half of the year, but overall net loan growth to be lower this year than last year.”

For the quarter ended June 30, 2026, net interest income was $42.2 million, a 15% increase compared to the prior year quarter. The higher balance of average loans, and a decrease in the cost of deposits, all contributed to the increase in net interest income compared to the prior year quarter.

The allowance for credit losses as a percentage of loans was 1.11% at June 30, 2026 and March 31, 2026. A provision of $0.4 million was recorded for the quarter to increase the allowance for credit losses primarily due to growth in the loan portfolio.

We continue to sell certain investments with longer duration and below market yields opportunistically. The following table presents net income excluding the after-tax losses on sales of investment securities to arrive at core net income:

For the six months ended June 30, 2026, net income was higher compared to the six months ended June 30, 2025 due to higher average balance of loans, increase in loan yields and a decrease in the cost of deposits.

Net Interest Margin

The net interest margin for the second quarter of 2026 decreased to 3.92% from 3.93% for the prior quarter primarily due to the non-recurring, special FHLB dividend paid in the prior quarter. Without the non-recurring events in the prior quarter the net interest margin would have been 3.89% and thus would have shown an increase of 3bps to this quarter’s net interest margin. The net interest margin for the second quarter increased to 3.92% from 3.58% for the prior year quarter. The increase compared to the prior year quarter is primarily due to an increase in the balance of average loans and a positive mix change in deposits. The loan yield for the month of June was 5.74%. As of June 30, 2026, 54% of the loan portfolio was fixed rate with a weighted average remaining life of 58 months. In the next 12 months, $129 million of fixed rate loans currently yielding 4.7% will mature, and $76 million of hybrid loans currently yielding 4.6% will reprice. Approximately 44% of variable rate loans are indexed to prime of which $584 million are adjustable within 90 days of a change in the prime rate.

Net Interest Income

For the quarter ended June 30, 2026, net interest income increased by $474 thousand, or 1%, compared to the quarter ended March 31, 2026 primarily due to growth in loans at higher interest rates and one more day offset by the non-recurring, special FHLB dividend received in the prior quarter. Net yield on interest earning assets remained at 4.74% compared to the prior quarter. Compared to the quarter ended June 30, 2025, net interest income increased by $5.4 million, or 15%, in the quarter ended June 30, 2026. The increase in net interest income is primarily due to an increase in the average balance of loans with higher interest rates and a decrease in the cost of deposits. For the quarter ended June 30, 2026 and March 31, 2026, the cost of deposits was 0.97%. The loan-to-deposit ratio was 79% as of June 30, 2026 and March 31, 2026, and 75% as of June 30, 2025, respectively.

Provision for Credit Losses

The following table presents details of the provision for credit losses for the periods indicated:

Non-Interest Income

The increase in non-interest income compared to the prior quarter and the prior year quarter are primarily due to an increase in the valuation of COLI policies.

For the six months ended June 30, 2026, non-interest income increased compared to the same period a year ago, primarily due to an increase in CDARS placement fees and deposit fees offset by the sale of select lower yielding investment securities.

Non-Interest Expense

For the quarter ended June 30, 2026, total non-interest expense increased $0.8 million and $1.6 million compared to the prior quarter and the prior year quarter, respectively. The increases over the prior quarter and prior year quarter are primarily due to increases in legal expenses and employment agency fees. The efficiency ratio was 47% for the second and first quarter of 2026 and 50% for the second quarter of 2025.

For the six months ended June 30, 2026, non-interest expense increased by $3.2 million or 8% compared to the same period a year ago, mainly due to increases in salaries and employee benefits.

There were 250 full time equivalent employees at June 30, 2026 compared to 252 at March 31, 2026 and 253 at June 30, 2025. The Bank currently has 42 relationship managers in ten offices compared to 43 relationship managers at March 31, 2026 and 45 at June 30, 2025.

Income Taxes

The effective income tax rate was 26.8% for the quarter ended June 30, 2026, 25.6% for the quarter ended March 31, 2026, and 27.3% for the quarter ended June 30, 2025. The reduction compared to prior year quarter is a result of an increase in excess tax benefit on current year restricted stock vesting. Without this excess tax benefit, the effective income tax rate for the quarter and year to date periods would have been 27.7%.

Balance Sheet

For the quarter ended June 30, 2026, total loans increased $28 million, or 1% compared to the prior quarter. The majority of this quarter’s increase in loan balances was in Commercial and Industrial (C&I) loans, primarily due to new relationships. Commercial real estate loans declined due to elevated maturities and prepayments. At June 30, 2026, the utilization rate for the Bank’s commercial lines of credit was 29%, a 1% decrease compared to March 31, 2026 and June 30, 2025.

The following table is the composition of Commercial Real Estate (CRE) loans as of:

The following table is the composition of the owner-occupied and non-owner-occupied CRE loans by collateral type as of:

Total investment securities at June 30, 2026 were $1 billion including $510 million (49%) in held-to-maturity (HTM) securities based on book value. The Bank has no non-agency mortgage-backed securities in its portfolio. The duration of the available-for-sale (AFS) securities portfolio was 5.4 years as of June 30, 2026, 5.6 years as of March 31, 2026 and 6.1 years as of June 30, 2025. Accumulated other comprehensive loss (AOCI) improved to $50.9 million as of June 30, 2026 from $54.1 million as of March 31, 2026 and from $70.7 million as of June 30, 2025 as market rates relevant to securities pricing decreased. The duration of the held-to-maturity portfolio, which consists primarily of municipal securities, is 7.7 years. As of June 30, 2026, the unrealized after tax loss on HTM securities was $60 million.

Deposits increased by $34 million or 1% to $3.9 billion in the quarter ended June 30, 2026. The increase in the quarter was a result of increases of $35 million in non-interest bearing demand deposits and $41 million in money market and savings deposits offset by a decrease of $23 million in customer certificates of deposit. For the second quarter, new deposit relationships have totaled approximately $6 million from 27 new clients. The Bank has never had brokered or internet-solicited deposits. The ratio of non-interest bearing deposits to total deposits was 46% at June 30, 2026, March 31, 2026, and June 30, 2025.

During the second quarter of 2026, total assets increased $46 million, total investment securities decreased by $19 million, total loans increased by $28 million, and total deposits increased by $34 million. As of June 30, 2026, the Bank has $1.6 billion in total borrowing capacity from the discount window of the Federal Reserve Board and loans pledged at the Federal Home Loan Bank of San Francisco. There were no borrowings outstanding at the end of the second quarter of 2026.

Capital Management

For the quarter ended June 30, 2026, total shareholders’ equity increased by $15 million to $437 million. During the quarter, the Bank declared and paid a cash dividend of $0.30 per share, totaling $2.7 million, and repurchased 31,500 shares of common stock at a weighted average price of $72.05, totaling $2.3 million.

The Bank’s Board of Directors has an authorized stock repurchase program for 205,453 shares, or approximately 2.3% of the Bank’s outstanding shares of common stock, which expires in August 2026. The Bank has already repurchased 53% of this authorization leaving 97,389 shares to be repurchased in the current authorization.

Asset Quality

The following table presents an overview of asset quality:

During the second quarter of 2026, non-performing assets decreased by $0.1 million due to loan payments and the addition of two relationships consisting of a home equity line of credit and a credit card. As of June 30, 2026, NPAs have a $688 thousand allowance on individually evaluated loans related to five non-performing C&I loans.

“Although no single industry is predominate in the NPA portfolio, the increase in past dues and classified loans relate to the same customer who has provided additional real estate collateral such that all commitments are fully secured by commercial real estate,” commented Jeffrey Munson, Executive Vice President and Chief Credit Officer (CCO).

The loan portfolio has approximately 9% in office collateral of which the majority is owner-occupied, and substantially all are three stories or under and located in suburban markets.

Our commercial real estate lending is primarily owner-occupied which is not dependent on rent rolls, but reliant on the cash flows of the operating business that occupies the property. C&I and owner-occupied commercial real estate portfolios comprise 66% of total loans while non-owner occupied represent 35% of total loans.

The following table represents the allowance for credit losses for loans as of and for the dates and periods indicated:

The allowance for credit losses for loans increased to $34.8 million during the second quarter of 2026 as a result of growth in the loan portfolio and a higher allowance on individually evaluated loans. There were $58 thousand of charge-offs of three unsecured loans and recoveries of $3 thousand in the second quarter of 2026. Three relationships totaling $4.8 million were restructured in the past twelve months involving borrowers experiencing financial difficulty.

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 nine 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, Southern Inland Empire in Corona, Inland Empire in Ontario, Riverside County in Downtown Riverside, LA Coastal in Long Beach and North County in San Diego.

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. 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.