1998estd

TECHNOLOGY changesFUNDAMENTALS don’t

Robert F. Schack chairman

Wes E. Schaefer vice chairman

Robin C. Patersonexecutive vice president

Leon I. Blanksteinpresident & ceo

Entrepreneurs are the backbone of the American economy. They provide over half of all new job creation, they provide the vast majority of all innovation and are central to the American way of life.

Entrepreneurs are also survivors. They have shown that despite the booms, busts, over-regulation and technological changes that they do, indeed, adapt and survive.

As entrepreneurs, ourselves, American Business Bank has not only survived, but prospered in the past decade. We have done so for one simple reason - having true relationships with each and every one of our clients.

The year 2014 was yet another successful one for our bank. A few of our accomplishments are worthy of note:

• The addition of nearly 90 new relationships

• Deposit growth of more than 10%

• Loan growth of nearly 14%

• Core earnings growth of more than 17%

• Return on equity of 10%

• Being named one of the 50 most profitable banks in the U.S. by American Banker Magazine

• Once again being named a Super Premier Performing Bank by the Findley Companies

While we are rightfully proud of these results, they merely reflect the quality and determination of our clients to succeed. It’s our responsibility to listen to them, to contribute our thoughts and to support them in their success. That’s what relationship banking is all about.

from the

MANAGEMENT

1420

“the process of industrial mutation

that incessantly revolutionizes the

economic structure from within,

incessantly destroying the old one,

incessantly creating a new one.”

creative destruction

Creative destruction has been a major component of capitalism for all time. What’s changing, however, is the pace of this creative destruction brought about by technology. Whole industries are being overturned with technological advancements. UBER is a perfect example. The whole regulated taxi industry, with its virtual monopoly on the urban transportation business, is being replaced with non-regulated, easy-entry transportation alternative. It’s happened very quickly. People love it. And it’s here to stay.

The creative destruction, exemplified by UBER, is beginning to be seen in the banking business as well.

Will the banking industry be UBER’ed?

74%

Most consumers can imagine they’ll bank 100% digitally in the future

Consumers who agree with the statement, “I can envision a day when I’ll do all my banking virtually.”

most major payment innovations have occurred in the last 15 years

credit cards

NFC

online banking

debit cards

paypal launched

mobile banking mobile e-wallets

ATMs

NFC

p2p mobile payments

mobile check deposits

coin cards

4,000

6,000

8,000

10,000

12,000

14,000

16,000

1975 1980 1985 1990 1995 2000 2005 2010 2015

branch

1-2 timesper month

20-30 timesper month

mobile

7-10 timesper month

desktop

5-10 timesper month

call center

3-5 timesper month

atm

Changes in Number ofFDIC-Insured Commercial Banks

projected in 2016

monthly banking channel

interactions

Historically, banks have existed to meet three broad financial needs: To facilitate payments, to provide loans and to give advice. Today, there seems to be an app for everything. We have the ability to use our smart phones to perform all the depository banking functions that we used to have to stand in line to do. Parallel payment systems, like PayPal, facilitate funds transfers without the use of any bank. Even digital currencies are beginning to appear — Bitcoin and Boston Bean come to mind. The lending side has also been breached by crowd sourcing and peer to peer lending, with the likes of Lending Club and Prosper appearing in the market.

Banks, today, are scrambling to get ahead of this trend by embracing the technology in order to remain relevant. Banking in the future will certainly be faster, more convenient and more democratized than it has been in the past. It will also continue to become more and more of a commodity.

WHAT ARE WE GIVING UP?

So,

The answer is the third leg of the traditional banking stool — the advisory, relationship roles of the bank and the customer.

All of the technological advancements in the new era, just described, are transactional in nature. Big banks, in particular, have surrendered the advisory relationship role they traditionally played in favor of speed, accuracy and price.

We believe that the business banking client of the future will demand all of the new technology, as a given. We also believe, however, that as we become more connected electronically, we will need to connect more strongly on a personal level. American Business Bank’s relationships are designed to do just that — to help solve problems and take advantage of opportunities.

no app there’s

At American Business bank, we

realize relationships can not be

created with a touch of a button.

Rather, it is something tangible

that produces tangible results.

no app for this

deposit growth ($millions)

1400

1050

700

350

0201420132010 2011 2012

Our ability to listen strengthens relationships which in turn, grows deposits. Deposits increased more than 10% during the year, reflecting the bank’s continuing growth in our client base.

some people hear, we listenOne of the keys to our success over time is that we actually listen to our clients with the intent to understand. We ask questions. We provide feedback. We act. One size does not fit all.

we don’t leave relationships to chanceReal relationships take work. To us, it means that, as a bank, we must invest time with individuals, to develop understanding and to foster mutual trust. If we’re doing our jobs right, our clients will know how we think, every bit as much as our knowing how they think.

1

2

3we put the pieces together - togetherAt inception, we built American Business Bank the way that you would have designed it to meet your banking needs. This means, talented, interested bankers, who are not afraid to consult with their clients, are empowered to act on their behalf and are involved enough to respond to our ever-changing environment. That was our promise at the beginning, and it remains our promise today.

ASSET GROWTH($ millions)Asset growth of 14% reflects an increase in our loan portfolio and a continued shift toward more liquidity in our investment portfolio, as we anticipate higher interest rates.

NET LOANS OUTSTANDING($ millions)Loans increased nearly 14% during 2014. This is a result of continued market share growth, along with a marginal improvement in our economy.

1600

1200

800

400

0201420132010 2011 2012

700

525

350

175

0201420132010 2011 2012

NET PROFIT($ thousands)American Business Bank increased our core earnings, this year by over 17%. Total profits were down from the prior year, due to management’s decision to harvest unrealized bond gains into income in 2013.

core earnings total earnings

Financials

14000

10500

7000

3500

0201420132010 2011 2012

ADJUSTED BOOK VALUE PER SHARE

($ dollars)American Business Bank has nearly doubled its book value over the past five years through retention of earnings, negligible credit losses

and prudent investment management.

$140

$105

$70

$35

$0201420132010 2011 2012

15

11.25

7.5

3.75

0201420132010 2011 2012

CAPITAL AND RESERVES

($ millions)We continue to grow our capital through retention of earnings and by adding to our reserves, at a time when other banks are

reducing them.

ASSETS PER EMPLOYEE

($ millions)American Business Bank’s business model is efficient. Our assets per employee remain among the best in the industry, approximately double the industry average.

170

128

85

43

0201420132010 2011 2012

MARKET CAPITALIZATION

($ millions)While we don’t try to drive stock price, American Business Bank’s market value has

steadily grown since inception.

20.0

15.0

10.0

5.0

0201420132010 2011 2012

We are a legacy bank. We believe in

continuity. All five of our founding

executives are still involved with the bank,

six of our original seven board members

still serve and sixteen of our seventeen

starting employees are still with us. Our

relationship managers have an average of 27

years experience in banking, which is one

of our most valuable assets.

Why does all this matter? It means that we

get it. We’ve seen a lot and we’re not afraid

to share our experience with our clients. It’s

all part of the relationships that we offer at

American Business Bank.

since

INCEPTION

9819

25 years experience

154years of bank experience

Wes E. Schaefer vice chairman

Leon I. Blanksteinpresident & ceo

Robert F. Schack chairman

Robin C. Patersonexecutive vice president

10%

14%

17%

10%

deposit growth of more than

loan growth of nearly

core earnings of more than

return on equity of

BALANCE SHEET AND INCOME STATEMENT

DEC 2014 DEC 2013ASSETSOvernight Interest Bearing Funds $ 19,278 $ 46,028Investment Securities 790,643 644,898Loans and Leases (net) 645,861 568,433Cash, Checks in Process of Collection, Due from Banks 25,145 42,300Premises, Equipment and other Assets 54,611 50,793 Total Assets $ 1,535,538 $ 1,352,452

LIABILITY AND SHAREHOLDERS’ EQUITYDemand Deposits $ 695,461 $ 576,792Money Market and NOW Deposits 589,796 586,497Savings and Time Deposits 79,187 75,922

Total Deposits $ 1,364,444 $ 1,239,211

FHLB Advances $ 41,000 $ 5,000Other Liabilities 11,203 12,753Shareholders’ Equity 118,891 95,489

Total Liabilities and Shareholders’ Equity $ 1,535,538 $ 1,352,453

TWELVE MONTHS ENDED DEC 2014 DEC 2013 Interest Income

Loans and Leases $ 27,682 $ 25,141Investment Securities 14,742 16,224

Total Interest Income $ 42,424 $ 41,365

Interest ExpenseMoney Market and NOW Accounts $ 1,183 $ 1,340Savings and Time Deposits 282 359FHLB Advances 67 132

Total Interest Expense $ 1,532 $ 1,831Net Interest Income $ 40,892 $ 39,534

Provisions for Loan Losses 898 1,675Net Interest Income After Provision for Loan Losses $ 39,994 $ 37,859

Non Interest Income $ 3,354 $ 7,580

Non Interest Expense $ 26,790 $ 25,291

Operating Income Before Taxes $ 16,558 $ 20,148Income Tax Expense 5,098 6,655Net Income $ 11,460 $ 13,493Net Income Per Share – Basic $ 1.93 $ 2.30Net Income Per Share – Diluted $ 1.86 $ 2.22

Weighted Average Shares – Basic 5,941,876 5,869,399Weighted Average Shares – Diluted 6,145,947 6,068,401

Board of Directors

From top left: Don Johnson, Vice Chairman and Co-Founder of American Business Bank

Robert I. Usdan, Principal of The Endicott GroupJon Schlobohm, Former Chairman National Corset Supply

Edith Matthai, Managing Partner Robie & MatthaiTrent Merrill, CEO, Triple R, LLC

D. Van Skilling, Chairman of the Board, Onvia, Inc.

FoundersAcorn Group

Ed Actkinson

Arthur J. Alper

Paul H. Apel

Anthony P. Arons

James A. Asher

John A. Asher

Robert L. Asher

Peter Barsocchini

Ben Bernie

Peter H. Betti

Leon & Mary Blankstein

Jay W. Bligh

Mr. & Mrs. Michael J. Bonesteel

William Brodersen

John Cirelle

Barry Cohn

Joseph Conzonire

Ben F. Smith, Inc.

Gerald P. Cotter, President

Frank Cutrone, Jr.

Debbie L. Dair

Frank DelRe

David Dennis

Aurella DeZonia

Roger & Diane Duhl

Jack Edelstein

Leonard A. Faas, Jr.

Herb Fields

Ed Fountain

Arnold L. Gilberg, M.D., Ph.D.

Harold Greene & Charlene Greene

Uri Halabe

John Hancock

Edward Handler

Mark S. Hierbaum

Dan Holtzman

Thomas H. Hurlburt

Donald P. & Lana R. Johnson

Karl Johnson & Barbara Smith

Morley Justman

Russell Justman

Charles King

R. DeWitt Kirwan

Richard Koral

Beverly & Andy Liggett

Martin & Sandy Luboviski

Larry D. Lyon

Joel Matta, M.D., Ph.D.

Donald V. McCann

George B. McGregor, III

Trent D. Merrill

Ken Miller

Thomas E. Miller

Gene Montesano

Stan & Aileen Morse

Robert Murphy

Marc Myers

Raymond V. O’Brien, III

John & Laura O’Connor

Norma Owen

Robin C. Paterson

Barry L. Perlman

Darrel Reifschneider

Rob Reifschneider

Richard A. Riddle

Brian Roberts

Marty & René Romell

Al & Elaine Ruhl Trust

William A. Saunders

Robert & Gail Schack

Kathy Schaefer

Wes Schaefer

Jon Schlobohm

Roy Schlobohm

Richard C. Seff

Sandy M. Singer

D. Van Skilling

Richard St. John

Donald P. Tobin

Robert G. Twist

Ervin (Erv) Unvert

Jim Valestrino

Ralph Van De Moere

Chuck Von Der Ahe

T/C Von Der Ahe

Revocable Trust

Carl Von Wolffradt

Marshall Wax

Max Weissberg

Fred & Sue Westberg

Myra & Louis Wiener

A. Charles Wilson

Timothy Wilson

Kenneth Wolt

Terrence L. Young

William L. Young, Jr.

headquarterslos angeles

523 W. 6th Street, Suite 900Los Angeles, California 90014

213.430.4000

regional officesorange county

18101 Von Karman Ave., Suite 450 Irvine, California 92612

949.261.1122

south bay970 West 190th Street, Suite 301

Torrance, California 90502

310.808.1200

san fernando valley 21800 Oxnard Street, Suite 350Woodland Hills, California 91367

818.884.0000

inland empire3633 Inland Empire Blvd., Suite 720

Ontario, California 91764

909.919.2040

www.americanbusinessbank.com