American Business Bank Reports Record Quarterly Earnings of $14.8 Million

“For the first time since the Bank’s inception, outstanding loans exceeded $3 billion! As a co-founder, I am humbled to have reached this pinnacle as part of the ABB team. We have originated roughly $8 billion of loans in our 27 years of operation and have contributed positively to many lives in helping entrepreneurs thrive in their businesses.

“Loan growth during the year and last quarter combined with higher average non-interest bearing deposits continues to drive net interest margin expansion and earnings growth over the prior periods. Profitability metrics for the quarter were a Return on Average Equity of 15% and a Return on Average Assets of 1.33%. In addition, business momentum and the loan pipeline remains robust as prospects and existing customers are strong and continue to grow.”

“We are pleased with the core deposit growth for the year. The deposit pipeline of new customer relationships remains solid and should drive further core deposit growth over the course of 2026. The key to our success continues to be attracting new business clients by differentiating ourselves with professional bankers who deliver business acumen coupled with high touch service.”

“We have also prepared for the future of American Business Bank by promoting two of our own outstanding relationship managers to be executives to help lead corporate banking and develop relationship managers,” commented Leon Blankstein, Chief Executive Officer (CEO), President and Director.

For the quarter ended December 31, 2025, net interest income was $41.8 million, a 22% increase compared to the prior year quarter. The higher balance of average loans, an increase in loan yields, 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 1.10% at December 31, 2025 and September 30, 2025. A provision of $1.4 million was recorded for the quarter to increase the allowance for credit losses due to growth in the loan portfolio.

For the year ended December 31, 2025, the Bank reported net income of $54 million or $5.86 per fully diluted share compared to $43 million or $4.64 per fully diluted share for the year ended December 31, 2024, representing an increase of 25% in net income. Net income was higher in 2025 due to higher average balance of loans and higher loan rates from new production and repricing of existing loans.

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

Net Interest Margin

The net interest margin for the fourth quarter of 2025 increased to 3.78% from 3.66% for the prior quarter and 3.32% for the prior year quarter. The increase compared to the prior quarter is primarily due to an increase in average loans with higher interest rates and a reduction of interest expense on deposits. The increase in the average balances of non-interest bearing deposits also contributed to margin expansion. The loan yield for the month of December was 5.65%. As of December 31, 2025, 56% of the loan portfolio was fixed rate with a weighted average remaining life of 62 months. During 2026, $129 million of fixed rate loans currently yielding 4.5% will mature. Approximately 46% of variable rate loans are indexed to prime of which $552 million are adjustable within 90 days of a change in the prime rate. The Bank has experienced net interest margin expansion for the past six consecutive quarters.

Net Interest Income

For the quarter ended December 31, 2025, net interest income increased by $2 million, or 5%, compared to the quarter ended September 30, 2025 primarily due to growth in loans with higher interest rates and a decrease in the cost of deposits. For the quarter ended December 31, 2025, net interest income increased by $7.7 million, or 22%, compared to the quarter ended December 31, 2024. The increase in net interest income was attributable to an increase in the average balance of loans. Interest income was further enhanced in the fourth quarter by recovery of interest on a non-accrual loan and accelerated loan fees on payoffs that enhanced the loan yield. Without the one time events in the quarter, the loan yield would have been 5.66%, a reduction over the prior quarter as a result of the prime rate reduction on the loan portfolio. For the quarter ended December 31, 2025, the cost of deposits was 1.02% representing a decrease of 12 bps compared to the quarter ended September 30, 2025. This decrease is mainly due to a decline in interest rates on money market and savings deposit accounts coupled with a reduction in the balance of certificates of deposit. The loan-to-deposit ratio was 77% as of December 31, 2025, 73% as of September 30, 2025, and 75% as of December 31, 2024, 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, the prior year quarter and the prior year is primarily due to realized losses on the sale of investment securities with longer durations and below market yields.

Non-Interest Expense

For the quarter ended December 31, 2025, total non-interest expense decreased $0.3 million and increased $1.3 million compared to the prior quarter and the prior year quarter, respectively. The decrease from the prior quarter is mainly due to a decrease in salaries and employee benefits. The decrease over the prior quarter was primarily due to an over accrual of estimated bonus payments in the prior quarter. The increase over the prior year quarter was primarily due to an increase in new employees coupled with higher salaries and bonuses commensurate with increased profitability. The efficiency ratio decreased to 44% for the fourth quarter compared to 47% for the third quarter and 48% for the fourth quarter of 2024.

There were 255 full time equivalent employees at December 31, 2025 compared to 247 a year ago and 256 at September 30, 2025. The Bank had 42 relationship managers in nine offices at December 31, 2025 compared to 45 at September 30, 2025 and 47 at December 31, 2024. This reduction is mainly due to the movement of two relationship managers into the executive group.

For the year ended December 31, 2025, non-interest expense increased $7.4 million or 10% compared to the same period a year ago, primarily due to increases in salaries and employee benefits commensurate with the increase in full time equivalent employees.

Income Taxes

The effective income tax rate was 27.4% for the quarter ended December 31, 2025, 28.4% for the quarter ended September 30, 2025, and 28.3% for the quarter ended December 31, 2024. For calendar 2025, the effective income tax rate was 28%.

Balance Sheet

For the quarter ended December 31, 2025, total loans increased $126 million, or 4% compared to the prior quarter. The majority of this quarter’s increase in loan balances was in owner-occupied commercial real estate loans secured by industrial collateral. The increase in Commercial and Industrial (C&I) loans is mainly due to an increase in line utilization. At December 31, 2025, the utilization rate for the Bank’s commercial lines of credit increased to 31%, a 3% increase compared to September 30, 2025 and a 2% increase compared to December 31, 2024.

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:

Total investment securities at December 31, 2025 were $1 billion including $528 million (53%) 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 December 31, 2025, 5.8 years as of September 30, 2025 and 5.9 years as of December 31, 2024. Accumulated other comprehensive loss (AOCI) decreased to $52.9 million as of December 31, 2025 from $57.9 million as of September 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 7.9 years. As of December 31, 2025, the unrealized after tax loss on HTM securities was $60 million.

Deposits declined by $43 million or 1% to $4.0 billion in the quarter ended December 31, 2025. A portion of the quarterly decrease was related to federal and state tax payments that were delayed until October 15, 2025 as a result of the January fires in Los Angeles County. Customer certificates of deposit declined by $34 million in the quarter. For the year, new deposit relationships have totaled approximately $169 million from 176 new clients. The Bank has never had brokered or internet-solicited deposits. The ratio of non-interest bearing deposits to total deposits was 45%, 47% and 45% at December 31, 2025, September 30, 2025 and December 31, 2024, respectively.

During the fourth quarter of 2025, total assets decreased $50 million, or 1%, total loans increased by $126 million, or 4%, and total deposits decreased by $43 million, or 1%. As of December 31, 2025, 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 all four quarters of 2025.

Capital Management

As of December 31, 2025, total shareholders’ equity increased to $411 million. During the quarter, the Bank declared and paid a cash dividend of $0.25 per share and repurchased 46,564 shares of common stock.

The following table presents a summary of quarterly cash dividends for 2025:

The Bank announced its first stock repurchase program in January 2025 for 227,541 shares which was completed in August 2025. The Bank’s Board of Directors has authorized a second 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. As of December 31, 2025, there are 143,889 shares remaining to be repurchased in the current authorization.

For the year, the Bank repurchased 289,105 shares at a cost of $13.6 million.

The following table presents a summary of quarterly stock repurchases for 2025:

 Asset Quality

The following table presents an overview of asset quality:

During the fourth quarter of 2025, non-performing assets increased by $0.2 million. The Bank believes that it is well positioned with collateral and SBA enhancements, therefore no loss is expected on the credits. As of December 31, 2025, NPAs have a $505 thousand allowance on individually evaluated loans related to six non-performing C&I loans.

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 61% of total loans while non-owner occupied represent 25% of total loans.

As of December 31, 2025, the loan portfolio has one piece of collateral on a commercial property that had been destroyed by the January fires in Los Angeles County; the loan was subsequently paid in full in January 2026.

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 $33.5 million during the fourth quarter of 2025 primarily as a result of growth in the loan portfolio. There were charge-offs of $5 thousand and recoveries of $160 in the fourth quarter of 2025. Three loans totaling $5 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.