American Business Bank (AMBZ-OTCBB)
December 17, 2012 Issue
The Most Powerful Name In Corporate News and Information
With Fourteen Years of Record Growth and Earnings, American Business Bank has shown that they can navigate through the Toughest Times in United States History
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. The Bank
has opened four Loan Production Offices in strategic areas including our
Orange County Office in Irvine, our South Bay Office in Torrance, our San
Fernando Valley Office in the Warner Center and our Inland Empire Office in
After Mellon Bank made an offer for 1st Business Bank in 1997, which closed in 1998, Mr. Johnson and four other senior banking officers left 1st Business Bank to form American Business Bank. Mr. Johnson realized that with the banking mergers occurring, there were few locally based business banks to serve the burgeoning small and mid-sized company market. Mr. Johnson and his partners personally raised the more than $14.2 million used to capitalize American Business Bank. This was the second largest management driven capitalization in California history at that time.
Mr. Johnson obtained his undergraduate degree in 1968 from the University of North Carolina where he served as both the Junior and the Senior class President. After college, he was a full Lieutenant in the U.S. Navy and served a tour of duty in Vietnam. He earned his MBA from Pepperdine University in 1977. He is currently a member of Toastmasters where he has achieved the ATM Gold status. He is also a member of the Jonathan Club and Lakeside Golf Club where he has served in various executive capacities.
American Business Bank
W. 6th Street, Suite 900
Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, To be published – December 17, 2012
Mr. Johnson: We have seen business in southern California stabilize. Our customers seemed to have found the bottom and some have started to improve. I think the business climate has gotten a little better, with a rebound in housing prices and other key indicators. The biggest change coming is an increased regulatory environment that we still cannot estimate a cost as most of the regulations have not been written. It is being done by different bureaucracies in Washington.
CEOCFO: What about the impending “fiscal cliff”? How do you counsel your customers when nobody knows what is going to happen?
Mr. Johnson: Even the people in Washington do not know what is going to happen. Many people are moving money, sales, stock sales, bonuses and other things into this year, anticipating much higher taxes. In California under Prop.30 we just approved a 13.3% state tax. If we go back to the 39.6% pre-Bush, Medicare going to 3%, and 3.8% for Obamacare on investment income/dividend income, you are probably looking at high income workers in California keeping about 43% of what they make. In different enclaves of money in this the southern California community, I have heard people say they are moving to Scottsdale for six months and a day or moving their company to Nevada. I am worried about the southern California business climate in the sense that we may see major departures of high-earning people who are job creators.
CEOCFO: We have spoken before and I know you are a partner with your customers and you have a very comprehensive consultative approach. How do you, as an organization deal, with the frustration of not being able to give the best of advice when everything is in such turmoil?
Mr. Johnson: It has been that way for a long time! It seems as if our country’s tax policy is written six months to twelve months at a time. The fiscal side is all over the place but I think the killer is regulations. Yesterday the IRS came out with 159 more pages of regulation. EPA generated 10% of all regulations written in the last twelve months. You just have endless regulations that nobody even knows they apply to them. At least when a law passes you get to see it, when a regulation is passed, you do not know about it until you get in its crosshairs. I think that is going to be a problem across the United States and in southern California.
CEOCFO: How do you reach out to new customers these days?
Mr. Johnson: We are still presenting the same thing. In the regulatory and tax world I have spoken of, we cannot change that. Inside, we are the same successful bank, have the same motivated employees, have the same account officers, provide the same attention to our customers needs and maintain the safety of a well run company. In ABB, we are really selling the same thing, which is continuity, safety and personal service.
CEOCFO: Are there any products or services that you would like to add to the mix?
Mr. Johnson: We do not use the word ‘products’. We use the term ‘banking experience,’ which I lifted from StarBucks. It is not that we need anything extra, it is just the constant requirement to do it well. When something electronic comes along, we certainly get it. But most of the time people are just happy to be able to talk to a person, talk to somebody here in the states, present their case and see if there are one or two things where we can help them run their business.
CEOCFO: Do you think being in the States has become more of a factor as time goes on with customer service and answering calls?
Mr. Johnson: Yes. When I was in San Francisco last week at a banking conference, they canceled my flight back to Los Angeles. I was talking to somebody in another country about a reschedule and I could not understand what they were saying. I finally told them they had to spell one of the phrases they were using because I could not understand what they were saying. They hung up on me. Many big systems are designed to be automated and save employee time. As long as everything is OK, there is no problem but if something goes wrong, standby. That is what we sell and deliver. If something goes wrong, there are people here who are knowledgeable, trained, hardworking, know your account and will take care of you. You will not spend the rest of the day dialing call-centers.
CEOCFO: Would you give us an example of what you do that is over and above?
Mr. Johnson: There is a meeting going on right now in the conference room next to me with a company that is selling a percentage of their business to an investment firm out of New York. They want an increased credit facility. Instead of just sending them forms or telling them that the request is denied, we have the people from New York here, the owners of the company, our chairman of the board, our senior loan and credit officer and our regional vice president sitting with them right now to see how we can help this new structure.
CEOCFO: Are you planning expansions in any of the locations?
Mr. Johnson: We are adding on as we find more talented bankers. It has been more of expanding the space we have rather than finding another location. We are constantly looking for different locations but because of the type of banking we do, we do not need offices on every corner. With deposit scan and couriers, 98% of the people that bank with us have never been to one of our offices.
CEOCFO: Are there new types of businesses that you are including in the fold or is it across the board still?
Mr. Johnson: We have always been a horizontal marketing company, which means we do not have a specialty. We want to acquire the best companies available each month as customers. It does not matter what they do. If we get four contractors this month, four manufacturers next month, four law firms next month, so be it. All we want is a well run company as a customer. That is why we we’re able to avoid many of the problems other banks had. We do not say we just want more loans or more deposits. We say to our account staff that we want them to bring in well run companies whatever that configuration generates. We have almost $1.3 billion here today with 940 accounts and there are 30,000 or more companies within an hour in any direction that we would like to bank. It is an unlimited marketplace.
CEOCFO: Are you finding more local competition lasts about the same?
Mr. Johnson: Many banks are gone that used to give the store away. The bigger banks are in the middle of their own problems. We do not take business from small banks. We get customers from bigger banks. It is the $5-$200 million a year company that is banking in a branch or banking center. They have had turnover, changes in policy and fight corporate silos inside the bank. They cannot find anybody to talk to. Eventually, they get frustrated and move to ABB.
CEOCFO: Do many potential customers understand the benefit of your approach?
Mr. Johnson: It is more like “we have heard that before”. They have been promised over the last thirty years by different banks that they are better and that the service is great. They want to know why our bank is any different than the stories they have been told before. When they finally come here, they ask us why the heck didn’t we get them to change banks sooner.
CEOCFO: How do you encourage people to believe?
Mr. Johnson: The same person will call them constantly over the years. The same account officer gets to know their business. The same executives will come out and meet them. Eventually they feel that this bank knows them better than their own bank. They ask for a proposal and use it to decide whether to change to ABB.
CEOCFO: Would you tell us about your upcoming change of role?
Mr. Johnson: I will step down as CEO in April. Mr. Leon Blankstein will assume the role; we have worked together for 29 years. I will stay on full-time for most of next year and will continue to stay on the board.
CEOCFO: What is the hardest thing about letting go with the day-to-day activities?
Mr. Johnson: Watching this bank grow over fourteen years into the most successful bank around, being part of every decision and solicitation, coaching the employees and then watching somebody else drive the bus.
CEOCFO: Why should the business and investment community pay attention to American Business Bank?
Mr. Johnson: The reason is fourteen years of record growth and earnings. If you take the original stock offering and adjust with splits and dividends, it would be roughly $4.85 on the initial offering. The stock today is $26.20. In fourteen years, investors have made five times their money. Our first nine months of this year, we had record earnings again. We did $7.2 million after tax in 2009. We did $8.7 million in 2010. We did $9.8 million after tax in 2011 and we are on target for another record year through some of the toughest times in United States history. If you want a company that looks like a AAA rating as far as security, consistent earnings and constant growth, then we are the company for you. We will never be a runaway growth company but I think if you want something in your portfolio that constantly gets better, American Business Bank is that company.
CEOCFO: Final thoughts?
Mr. Blankstein will be the CEO. I started working with Leon when he was 24
years-old. Twenty nine years later we are still working together. He is an
outstanding banker, has worked his heart out and has been a pillar in
building this place. He is a smart individual and cares for this company. I
think Leon will do an incredible job and eclipse anything I did.
The reason the business and investment community should pay attention is fourteen years of record growth and earnings. - Don Johnson
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