American Business Bank Reports Record Quarterly Earnings of $17.2 Million

AMERICAN BUSINESS BANK (OTCQX: AMBZ) today reported net income of $17.2 million or $1.89 per fully diluted share for the quarter ended September 30, 2026 compared to $16.2 million or $1.77 per fully diluted share for the quarter ended June 30, 2026, and $14.3 million or $1.56 per fully diluted share for the quarter ended September 30, 2025, representing an increase of 6% and 20%, respectively.

“We are pleased to report surpassing $4 Billion in total deposits. As one of the five founders of the Bank in 1998, it was hard to imagine such an accomplishment. We have achieved this by building relationships one at a time, not just through listing client rosters. This success could not have been realized without our excellent clients and great ABB team, which I thank profusely. The quarter also showed record earnings, increased net interest income, continued earnings per share growth, and a return on equity again exceeding 15%. We accomplish this by providing best in class service and treating each business client as a partner,” said Leon Blankstein, Chief Executive Officer, President, and Director.

“Another first this quarter was rewarding shareholders with a special cash dividend of $1.00 per share in addition to the regular quarterly cash dividend. During the quarter the company announced its third repurchase program as we believe the stock provides attractive long-term returns. We expect to finish the year strongly as the pipeline of new customer relationships remains solid. Deposit growth has originated from both new and existing customers which continues to bode well for the growth of the franchise. The Bank is well positioned to navigate continued macroeconomic uncertainty as our clients remain cautious and selective in pursuing expansion opportunities. As a result, we expect net loan growth to be lower this year than last year. While asset quality metrics remain favorable, management continues to closely monitor potential credit deterioration and trends. Strong capital, liquidity, and reserve levels position the Bank to support clients and maintain financial strength. I would like to thank the entire ABB team for their ongoing commitment and our shareholders for their continued confidence and support.”

For the quarter ended September 30, 2026, net interest income was $44.8 million, a 12.5% 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 September 30, 2026 and June 30, 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 opportunistically sell investment securities with longer duration and below market yields. The following table presents net income excluding the after-tax losses on sales of investment securities to arrive at core net income:

For the nine months ended September 30, 2026, net income was higher compared to the nine months ended September 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 third quarter of 2026 increased to 3.99% from 3.92% for the prior quarter primarily due to an increase in the balance of interest earning deposits with other financial institutions, higher loan rates, a special FHLB dividend ($178 thousand) and net interest and fees from the payoff of non-accrual loans. The core net interest margin for the quarter was 3.95%, an increase from 3.66% 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, a higher loan to deposit ratio and a positive mix change in deposits. As of September 30, 2026, 53% of the loan portfolio was fixed rate with a weighted average remaining life of 57 months. In the next 12 months, $120 million of fixed rate loans currently yielding 4.7% will mature, and $72 million of hybrid loans currently yielding 4.3% will reprice. Approximately 47% of variable rate loans are indexed to prime of which $630 million are adjustable within 90 days of a change in the prime rate.

Net Interest Income

For the quarter ended September 30, 2026, net interest income increased by $2.6 million, or 6%, compared to the quarter ended June 30, 2026 primarily due to an increase in interest earning deposits with other financial institutions as a result of deposit growth and an increase in loans at higher interest rates and an additional day in the quarter. Net yield on interest earning assets increased to 4.81% compared to 4.74% in the prior quarter. Compared to the quarter ended September 30, 2025, net interest income increased by $5.0 million, or 12%, in the quarter ended September 30, 2026. The increase in net interest income is 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 September 30, 2026, June 30, 2026 and September 30, 2025, the cost of deposits was 0.98%, 0.97% and 1.14%, respectively. The loan-to-deposit ratio was 78%, 79% and 73% as of September 30, 2026, June 30, 2026 and September 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 decrease in non-interest income compared to the prior quarter and the prior year quarter is primarily due to the sale of lower yielding investment securities offset by insurance benefit proceeds on BOLI of $681 thousand.

For the nine months ended September 30, 2026, non-interest income decreased compared to the same period a year ago, primarily due to an increase in CDARS placement fees, the one-time BOLI benefit and deposit fees offset by the sale of lower yielding investment securities.

Non-Interest Expense

For the quarter ended September 30, 2026, total non-interest expense decreased $0.7 million compared to the prior quarter. The decrease from the prior quarter was primarily attributable to a decrease in employee salaries and benefits, including a $432 thousand reduction in deferred compensation plan (DCP) expenses, along with lower legal expenses and employment agency fees. Total non-interest expense increased $0.8 million for the quarter ended September 30, 2026 compared to the prior year quarter mainly due to the increase in professional services. The efficiency ratio was 43% for the third quarter of 2026, 47% for the second quarter of 2026 and 47% for the third quarter of 2025.

For the nine months ended September 30, 2026, non-interest expense increased by $4.0 million or 7% compared to the same period a year ago, mainly due to increases in salaries and employee benefits and professional services which would include additional technology expenses in 2026.

There were 244 full-time equivalent employees at September 30, 2026 compared to 250 at June 30, 2026 and 256 at September 30, 2025. The Bank currently has 41 relationship managers in ten offices compared to 42 relationship managers at June 30, 2026 and 45 at September 30, 2025.

Income Taxes

The effective income tax rate was 27.3% for the quarter ended September 30, 2026, 26.8% for the quarter ended June 30, 2026, and 28.4% for the quarter ended September 30, 2025. The effective tax rate decreased from the prior year quarter primarily due to discrete tax benefits associated with the one time insurance benefit proceeds. The effective income tax rate for the year to date period is 26.6%.

Balance Sheet

For the quarter ended September 30, 2026, total loans increased $27 million, or 1% compared to the prior quarter. The majority of this quarter’s increase in loan balances was in owner-occupied commercial real estate loans, primarily due to loans to existing customers. The utilization rate for the Bank’s commercial lines of credit was 29% at September 30, 2026, June 30, 2026, and September 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 September 30, 2026 were $0.9 billion including $483 million (48%) 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 5.6 years as of September 30, 2026, 5.4 years as of June 30, 2026, and 5.8 years as of September 30, 2025. Accumulated other comprehensive loss (AOCI) increased to $59.3 million as of September 30, 2026, from $50.9 million as of June 30, 2026 and from $57.9 million as of September 30, 2025 as market rates relevant to securities pricing increased. The duration of the held-to-maturity portfolio, which consists primarily of municipal securities, is 8.4 years. As of September 30, 2026, the unrealized after-tax loss on HTM securities was $77 million.

Deposits increased $113 million or 3% to $4.1 billion in the quarter ended September 30, 2026. The increase in the quarter was a result of increases of $44 million in non-interest bearing demand deposits and $122 million in money market and savings deposits offset by a decrease of $36.6 million in customer certificates of deposit. For the nine months ended September 30, 2026, new deposit relationships have totaled approximately $91 million from 111 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 September 30, 2026 and June 30, 2026, and 47% September 30, 2025.

During the third quarter of 2026, total assets increased $112 million, total investment securities decreased by $48 million, total loans increased by $27 million, and total deposits increased by $113 million. As of September 30, 2026, the Bank has $1.5 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 during the third quarter of 2026.

Capital Management

For the quarter ended September 30, 2026, total shareholders’ equity decreased by $3 million to $434 million primarily driven by the increase in Accumulated Other Comprehensive Loss related to investment securities due to the increase in market rates in the quarter. During the quarter, the Bank declared and paid a regular quarterly cash dividend of $0.30 per share, totaling $2.7 million, and a special cash dividend of $1.00 per share, totaling $8.9 million.

The following table presents a summary of quarterly cash dividends for 2026:

For the quarter ended September 30, 2026, the Bank repurchased 15,000 shares of common stock at a weighted average price of $72.50, totaling $1.1 million. In August 2026, the Bank completed its second stock repurchase program. In September 2026, the Bank’s Board of Directors authorized a third stock repurchase program for 288,555 shares, or approximately 3.25% of the Bank’s outstanding shares of common stock, which expires in October 2027. The third repurchase program has received all necessary regulatory approvals and no shares have been repurchased under this program.

The following table presents a summary of quarterly stock repurchases for 2026:

Asset Quality

The following table presents an overview of asset quality:

During the third quarter of 2026, non-performing assets increased by $2 million due to the addition of two relationships offset by the pay-off of three relationships. Non-performing loans of $2 million that was added in the quarter was fully paid off in October 2026. There is no single industry predominate in the NPA portfolio. As of September 30, 2026, NPAs have a $667 thousand allowance on individually evaluated loans related to five non-performing C&I loans.

“The increase in criticized and classified loans in the quarter is primarily due to an $11 million non-owner occupied property with adequate collateral. In October 2026, the Bank received a demand on this credit and demands to fully pay off an additional $3.5 million of NPAs. Additionally, NPAs of $2 million that were added in the quarter were fully paid off in October 2026,” 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 68% of total loans while non-owner occupied represent 24% 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 $35.1 million during the third quarter of 2026 as a result of growth in the loan portfolio. There were no charge-offs and recoveries of $9 thousand in the third quarter of 2026. Four relationships totaling $15.7 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.