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2014from theM A N A G EM EN TRobert F. SchackchairmanEntrepreneurs are the backbone of the American economy. Theyprovide over half of all new job creation, they provide the vast majorityof all innovation and are central to the American way of life.Entrepreneurs are also survivors. They have shown that despitethe booms, busts, over-regulation and technological changes thatthey do, indeed, adapt and survive.Leon I. Blanksteinpresident & ceoAs entrepreneurs, ourselves, American Business Bank has not onlysurvived, but prospered in the past decade. We have done so forone simple reason - having true relationships with each and everyone of our clients.The year 2014 was yet another successful one for our bank. A fewof our accomplishments are worthy of note:Wes E. Schaefervice chairmanRobin C. Paterson 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 theU.S. by American Banker Magazine Once again being named a Super Premier PerformingBank by the Findley Companiesexecutive vice presidentWhile we are rightfully proud of these results, they merely reflectthe quality and determination of our clients to succeed. It’s ourresponsibility to listen to them, to contribute our thoughts and tosupport them in their success. That’s what relationship banking isall about.

creativedestruction“the process of industrial mutationthat incessantly revolutionizes theeconomic structure from within,incessantly destroying the old one,incessantly creating a new one.”Creative destruction has been a major component of capitalismfor all time. What’s changing, however, is the pace of this creativedestruction brought about by technology. Whole industries arebeing overturned with technological advancements. UBER isa perfect example. The whole regulated taxi industry, with itsvirtual monopoly on the urban transportation business, is beingreplaced 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 beseen in the banking business as well.Will the banking industry beUBER’ed?

monthly bankingchannelinteractionsmost major payment innovationshave occurred in the last 15 yearscoin cardsmobile check depositsprojected in2016p2p mobile paymentsmobile bankingdebit cardscredit cardsNFCNFCpaypal launchedonline bankingATMsmobile e-walletsmobile20-30 timesHistorically, banks have existed to meet threebroad 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 phonesto perform all the depository bankingfunctions that we used to have to stand inline to do. Parallel payment systems, likePayPal, facilitate funds transfers without theuse of any bank. Even digital currencies arebeginning to appear — Bitcoin and BostonBean come to mind. The lending side has alsobeen breached by crowd sourcing and peer topeer lending, with the likes of Lending Cluband Prosper appearing in the market.per monthChanges in Number ofFDIC-Insured Commercial Banks16,000desktop7-10 timesper month14,00012,000Banks, today, are scrambling to get ahead ofthis trend by embracing the technology inorder to remain relevant. Banking in the futurewill certainly be faster, more convenient andmore democratized than it has been in thepast. It will also continue to become more andmore of a commodity.10,000callcenter8,0005-10 timesper month6,0004,0001975198019851990199520002005atm3-5 timesper monthMost consumers can imaginethey’ll bank 100% digitallyin the futurebranch1-2 timesper monthConsumers who agree with thestatement, “I can envision a daywhen I’ll do all my banking virtually.”74%20102015

So,WHAT ARE WEGIVING UP?The answer is the third leg of the traditionalbanking stool — the advisory, relationship rolesof the bank and the customer.All of the technological advancements in the newera, just described, are transactional in nature.Big banks, in particular, have surrendered theadvisory relationship role they traditionallyplayed in favor of speed, accuracy and price.We believe that the business banking client ofthe future will demand all of the new technology,as a given. We also believe, however, that as webecome more connected electronically, we willneed to connect more strongly on a personallevel. American Business Bank’s relationships aredesigned to do just that — to help solve problemsand take advantage of opportunities.

no appthere’sfor thisAt American Business bank, werealize relationships can not becreated with a touch of a button.Rather, it is something tangiblethat produces tangible results.

1deposit growth ( millions)2we don’t leaverelationships to chanceReal relationships take work. To us, it means that,as a bank, we must invest time with individuals, todevelop understanding and to foster mutual trust.If we’re doing our jobs right, our clients will knowhow we think, every bit as much as our knowinghow they think.some people hear,we listenOne of the keys to our success over time is thatwe actually listen to our clients with the intentto understand. We ask questions. We providefeedback. We act. One size does not fit all.140031050700350020102011201220132014Our ability to listen strengthens relationships which in turn,grows deposits. Deposits increased more than 10% during theyear, reflecting the bank’s continuing growth in our client base.we put the piecestogether - togetherAt inception, we built American Business Bank theway that you would have designed it to meet yourbanking needs. This means, talented, interestedbankers, who are not afraid to consult with theirclients, are empowered to act on their behalfand are involved enough to respond to our everchanging environment. That was our promise atthe beginning, and it remains our promise today.

Financials16001200ASSET GROWTH800( millions)400Asset growth of 14% reflects an increase in our loan portfolioand a continued shift toward more liquidity in our investmentportfolio, as we anticipate higher interest rates.15 14011.25 1057.5 703.75 350 102011201220132014ASSETS PEREMPLOYEECAPITALAND RESERVES( millions)( millions)American Business Bank’s business modelis efficient. Our assets per employeeremain among the best in the industry,approximately double the industry average.We continue to grow our capital throughretention of earnings and by adding to ourreserves, at a time when other banks arereducing them.20.017015.012810.0855.043NET LOANS OUTSTANDING350( millions)175Loans increased nearly 14% during 2014. This is a resultof continued market share growth, along with a marginalimprovement in our economy.02010201120122013201414000010500NET PROFIT( thousands)7000American Business Bank increased our core earnings, this yearby over 17%. Total profits were down from the prior year, due tomanagement’s decision to harvest unrealized bond gains intoincome in 2013.3500core earningstotal 20102011201220132014ADJUSTED BOOKVALUE PER SHAREMARKETCAPITALIZATION( dollars)( millions)American Business Bank has nearly doubledits book value over the past five years throughretention of earnings, negligible credit lossesand prudent investment management.While we don’t try to drive stock price,American Business Bank’s market value hassteadily grown since inception.

1998sinceINCEPT IONWe are a legacy bank. We believe incontinuity.Allfiveofourfoundingexecutives are still involved with the bank,six of our original seven board membersstill serve and sixteen of our seventeenstarting employees are still with us. Ourrelationship managers have an average of 27years experience in banking, which is oneof our most valuable assets.Why does all this matter? It means that weget it. We’ve seen a lot and we’re not afraidto share our experience with our clients. It’sall part of the relationships that we offer atAmerican Business Bank.Wes E. Schaefervice chairmanLeon I. Blanksteinpresident & ceo25Robertyears experienceF. Schackchairman154years of bankexperienceRobin C. Patersonexecutive vice president

BALANCE SHEET AND INCOME STATEMENTdeposit growthof more than10%14%17%10loan growthof nearlycore earningsof more thanreturn onequity of%DEC 2014ASSETSOvernight Interest Bearing Funds Investment SecuritiesLoans and Leases (net)Cash, Checks in Process of Collection, Due from BanksPremises, Equipment and other AssetsTotal Assets DEC 201319,278 790,643645,86125,14554,6111,535,538 46,028644,898568,43342,30050,7931,352,452Demand Deposits Money Market and NOW DepositsSavings and Time DepositsTotal Deposits 695,461 589,79679,1871,364,444 576,792586,49775,9221,239,211FHLB Advances Other LiabilitiesShareholders’ EquityTotal Liabilities and Shareholders’ Equity 41,000 11,203118,8911,535,538 5,00012,75395,4891,352,453LIABILITY AND SHAREHOLDERS’ EQUITYTWELVE MONTHS ENDEDInterest IncomeLoans and LeasesInvestment SecuritiesTotal Interest IncomeDEC 2014 Interest ExpenseMoney Market and NOW Accounts Savings and Time DepositsFHLB AdvancesTotal Interest Expense Net Interest Income Provisions for Loan LossesNet Interest Income After Provision for Loan Losses 27,68214,74242,424DEC 2013 25,14116,22441,3651,183 282671,532 40,892 89839,994 1,3403591321,83139,5341,67537,859Non Interest Income 3,354 7,580Non Interest Expense 26,790 25,291Operating Income Before TaxesIncome Tax ExpenseNet IncomeNet Income Per Share – BasicNet Income Per Share – Diluted 16,5585,09811,4601.931.86 996,068,401 Weighted Average Shares – BasicWeighted Average Shares – Diluted

Board of DirectorsFoundersAcorn GroupJohn HancockBrian RobertsEd ActkinsonEdward HandlerMarty & René RomellArthur J. AlperMark S. HierbaumAl & Elaine Ruhl TrustPaul H. ApelDan HoltzmanWilliam A. SaundersAnthony P. AronsThomas H. HurlburtRobert & Gail SchackJames A. AsherDonald P. & Lana R. JohnsonKathy SchaeferJohn A. AsherKarl Johnson & Barbara SmithWes SchaeferRobert L. AsherMorley JustmanJon SchlobohmPeter BarsocchiniRussell JustmanRoy SchlobohmBen BernieCharles KingRichard C. SeffPeter H. BettiR. DeWitt KirwanSandy M. SingerLeon & Mary BlanksteinRichard KoralD. Van SkillingJay W. BlighBeverly & Andy LiggettRichard St. JohnMr. & Mrs. Michael J. BonesteelMartin & Sandy LuboviskiDonald P. TobinWilliam BrodersenLarry D. LyonRobert G. TwistJohn CirelleJoel Matta, M.D., Ph.D.Ervin (Erv) UnvertBarry CohnDonald V. McCannJim ValestrinoJoseph ConzonireGeorge B. McGregor, IIIRalph Van De MoereBen F. Smith, Inc.Trent D. MerrillChuck Von Der AheKen MillerT/C Von Der AheGerald P. Cotter, PresidentFrom top left:Don Johnson, Vice Chairman and Co-Founder of American Business BankRobert I. Usdan, Principal of The Endicott GroupJon Schlobohm, Former Chairman National Corset SupplyEdith Matthai, Managing Partner Robie & MatthaiTrent Merrill, CEO, Triple R, LLCD. Van Skilling, Chairman of the Board, Onvia, Inc.Frank Cutrone, Jr.Thomas E. MillerDebbie L. DairGene MontesanoCarl Von WolffradtFrank DelReStan & Aileen MorseMarshall WaxDavid DennisRobert MurphyMax WeissbergAurella DeZoniaMarc MyersFred & Sue WestbergRoger & Diane DuhlRaymond V. O’Brien, IIIMyra & Louis WienerJack EdelsteinJohn & Laura O’ConnorA. Charles WilsonLeonard A. Faas, Jr.Norma OwenTimothy WilsonHerb FieldsRobin C. PatersonKenneth WoltEd FountainBarry L. PerlmanTerrence L. YoungArnold L. Gilberg, M.D., Ph.D.Darrel ReifschneiderWilliam L. Young, Jr.Harold Greene & Charlene GreeneRob ReifschneiderUri HalabeRichard A. RiddleRevocable Trust