American Business Bank : 2021 Audited Financial Statements

Financial Statements and Report of Independent Auditor

December 31, 2021 and 2020

American Business Bank
Contents
Page
Independent Auditor's Report	3
Financial Statements
Balance Sheets	5
Statements of Income	6
Statements of Comprehensive Income	7
Statements of Changes in Shareholders' Equity	8
Statements of Cash Flows	9
Notes to Financial Statements	11

Independent Auditor's Report

Board of Directors

American Business Bank

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of American Business Bank (the Bank), which comprise the balance sheets as of December 31, 2021 and 2020, the related statements of income, comprehensive income, changes in shareholders' equity and cash flows for the years then ended, and the related notes to the financial statements (collectively, the financial statements).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Bank as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with auditing standards generally accepted in the United States of America (GAAS), the Bank's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated April 18, 2022, expressed an unmodified opinion on the effectiveness of the Bank's internal control over financial reporting.

Basis for Opinion

We conducted our audits in accordance with GAAS. Our responsibilities under those standards are further described in the "Auditor's Responsibilities for the Audit of the Financial Statements" section of our report. We are required to be independent of the Bank and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Bank's ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable).

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

•  Exercise professional judgment and maintain professional skepticism throughout the audit.

•  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

•  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.

•  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

•  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Bank's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

Los Angeles, California

April 18, 2022

American Business Bank BALANCE SHEETS As of December 31,

ASSETS

2021

2020

Cash and due from banks

Interest earning deposits in other financial institutions

Cash and cash equivalents

Securities available-for-sale, at fair value Securities held-to-maturity, at amortized cost Federal Home Loan Bank stock, at cost

Loans receivable

Allowance for loan losses

Loans receivable, net

Furniture, equipment and leasehold improvements, net Bank/corporate owned life insurance

Deferred income tax assets, net

Accrued interest receivable and other assets

Total assets

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits

Non-interest bearing demand deposits Interest bearing transaction accounts Money market and savings deposits Certificates of deposit

Total deposits

Accrued interest payable and other liabilities

Total liabilities

Commitments and contingencies

Shareholders' equity

Common stock, no par value; authorized, 15,000,000 shares; issued and outstanding, 8,832,797 and 7,942,368 shares at December 31, 2021 and 2020, respectively Accumulated other comprehensive income (loss) Retained earnings

Total shareholders' equity

Total liabilities and shareholders' equity

$

33,246,291

195,623,950

228,870,241

1,238,486,678

298,651,185

11,778,500

2,077,782,190

(25,061,555)

2,052,720,635

6,579,915

28,850,883

17,375,796

28,961,893

2,060,909,994

2,037,979,413

$

3,912,275,726 $ 3,454,261,682

$

1,934,443,799 $ 1,686,091,290

287,223,678

1,337,034,949

39,444,948

3,598,147,374

35,574,321

3,633,721,695

3,172,409,980

3,206,423,498

202,199,318 166,263,030

(5,165,847) 6,017,874

81,520,560 75,557,280

278,554,031 247,838,184

$

3,912,275,726

$

The accompanying notes are an integral part of these statements.

5

$

44,334,313

201,718,804

246,053,116

939,265,355

143,228,954

10,864,200

(22,930,581)

7,857,492

27,738,073

10,615,572

30,659,507

258,949,770

1,191,590,938

35,777,982

34,013,518

3,454,261,682