American Bank Incorporated : Friday, July 14th, 2023 American Bank Reports Second Quarter 2023 Earnings

CONTACT: Mark W. Jaindl, Chairman and CEO
Allentown, PA, July 14, 2023

American Bank Incorporated (OTC Pink: AMBK), the parent company of American Bank, today announced earnings for the quarter and six months ended June 30, 2023. Net income for the quarter was $2,405,000, or $0.37 per diluted share, a decrease of $29,000 or 1.2% from $2,434,000, or $0.37 per diluted share, for the second quarter of 2022. The decrease in net income for the quarter was primarily attributable to an increase in interest expense and non-interest expense.

Total assets increased $36.9 million or 4.2% to $923.4 million as of June 30, 2023 compared to $886.5 million as of June 30, 2022. Net loans increased $71.0 million or 11.3% from June 30, 2022 due to significant growth in the commercial loan portfolio. Total deposits decreased $466,000 or 0.1% from June 30, 2022.

Return on average assets for the quarter ended June 30, 2023 decreased to 1.06% from 1.11% for the same period in 2022. Return on average equity for the quarter ended June 30, 2023 decreased to 11.19% from 12.50% for the same period in 2022.

Net interest income for the quarter ended June 30, 2023 was $5.8 million, an increase of $175,000 or 3.1% from the quarter ended June 30, 2022. Net interest income increased year-over-year primarily due to growth in our commercial loan portfolio and interest rate increases in our loan and investment portfolios, offset by higher rates paid on deposit products. Net interest margin remained flat at 2.71% for the quarter ended June 30, 2023 and June 30, 2022.

President and CEO Mark Jaindl stated, "The first quarter of 2023 saw many circumstances impacting the banking industry and we see that trend continuing through the second quarter of this year. Like all banks right now, we are responding to the rising interest rate environment by being intentional when it comes to pricing our loan and deposit products while still providing our customers with the competitive rates they have come to expect from us. In addition, close to 75% of our investment portfolio will be repricing in the next 16 months and it is important for us to maximize the opportunity that this presents."

"We anticipate additional margin compression as we enter into the second half of this year due to rising borrowing costs, but we are focused on maintaining the strategic plans that we have in place in order to moderate this impact."

For the quarter ended June 30, 2023, there was a release of the allowance for credit losses in the amount of $378,000 compared to a provision for credit losses of $21,000 for the quarter ended June 30, 2022. The release of the allowance for credit losses in 2023 was primarily due to a decrease in qualitative factors in the Allowance for Credit Losses calculation. On January 1, 2023, the Bank adopted Accounting Standards Update 2016-13 "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", which replaced the incurred loss methodology for determining the allowance for credit losses with an expected loss methodology that is referred to as the Current Expected Credit Loss ("CECL") model. American Bank has an allowance for credit losses of $7.3 million or 1.03% of loans outstanding at June 30, 2023 compared to $8.8 million or 1.37% of loans outstanding at June 30, 2022 under the incurred loss methodology. Loan quality remained strong at June 30, 2023 with one non-accruing loan totaling $309,000.

Non-interest income decreased $118,000 or 25.8% to $339,000 for the quarter ended June 30, 2023 compared to $457,000 for the quarter ended June 30, 2022. The decrease in non-interest income was primarily the result of unrealized losses on equity securities held at the holding company level in 2023 in comparison to unrealized gains in 2022, and lower net gains on sales of residential mortgage loans compared to the same quarter in the prior year.

Non-interest expense increased $502,000 or 16.8% for the quarter ended June 30, 2023 compared to the same quarter in 2022. The increase in non-interest expense was primarily the result of higher salaries and employee benefit costs for the addition of three full-time equivalent employees, and increased occupancy costs, hosted services and FDIC insurance. American Bank's operating expense to average asset ratio increased to 1.53% for the quarter ended June 30, 2023 compared to 1.37% for the prior period. American Bank's operating expense to average asset ratio remains one of the lowest in the country.

Income tax expense decreased $17,000 or 2.7% for the quarter ended June 30, 2023 compared to the same quarter in 2022. The effective tax rate of 20.1% for the quarter ended June 30, 2023 was comparable to the effective tax rate of 20.4% for the quarter ended June 30, 2022.

Year-to-Date Results

Net income for the six months ended June 30, 2023 was $4.9 million, or $0.74 per diluted share, an increase of $554,000 or 12.8% from the six months ended June 30, 2022. The primary reason for the increase in net income for the six-month period ended June 30, 2023 was an increase in net interest income and a decrease in the provision for credit losses, offset by an increase in non-interest expense.

Return on average assets for the six-month period ended June 30, 2023 increased to 1.07% compared to 1.01% for the same period in 2022. Return on average equity for the six-month period ended June 30, 2023 increased to 11.44% compared to 11.04% for the same period in 2022.

Net interest income for the six months ended June 30, 2023 was $11.8 million, an increase of $1.1 million or 10.5% from the six-month period ended June 30, 2022. Net interest margin increased fourteen basis points to 2.76% year-to-date for the first six months ended June 30, 2023 compared to 2.62% for the first six months of 2022.

For the six months ended June 30, 2023, there was a release of the allowance for credit losses in the amount of $195,000, which was a decrease of $438,000 from the provision for credit losses of $243,000 recorded for the six months ended June 30, 2022. The decrease in the provision for credit losses was for generally the same reason as described in the quarter-to-date section.

Non-interest income was $866,000 for the six months ended June 30, 2023 compared to $943,000 for the six months ended June 30, 2022. Non-interest expense increased $799,000 or 13.4% to $6.8 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The fluctuations in non-interest income and non-interest expense were for generally the same reasons as described in the quarter-to-date section.

Income tax expense increased $136,000 or 12.3% for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The effective tax rate for the first six months of 2023 was 20.2% compared to the effective tax rate of 20.3% for the first six months of 2022.

American Bank is a "well capitalized" institution under all regulatory capital standards.

Selected Financial Information

About American Bank

American Bank, headquartered in Allentown, PA, is a locally owned community bank dedicated to serving customers in the Lehigh Valley for over 25 years. American Bank is an early innovator of online banking technology and continues that tradition by providing customers across the country online services that make banking easy and convenient. Their online banking service, AmericanBank Online (available at AMBK.com), allows customers to bank using a full range of real-time online banking services including online bill pay, online ACH, transfers between accounts, transaction history, check images and e-Statements. At a time when customers need the ability to bank on the go, American Bank also has mobile banking and mobile deposit for consumer and business customers. To further enhance customers' online experience, American Bank's Virtual Assistant, "Penny," is conversational artificial intelligence (AI) technology available via the website or mobile app and provides convenient, 24/7 access to information and resources.

American Bank offers a complete selection of deposit and loan products and convenient services to suit the needs of consumers and businesses. Dedicated to providing customers superior, personalized customer service, American Bank offers some of the best loan and deposit rates available and as a result, has received the Bankrate.com® Top Tier award for consistently offering annual percentage yields (APYs) that were among the highest reported.

In addition, it is recognized as a 5-Star Superior rated financial institution (the highest rating possible) by Bauer Financial Inc., designating it as one of the strongest banks in the nation and was named one of the safest banks in the nation by MSN Money. American Bank was ranked #1 by the Morning Call's Top Workplaces in the Lehigh Valley and has been named one of the Best Places to Work in Pennsylvania.

AmericanBank Online is a registered trademark for the Internet financial services provided by American Bank, a state-chartered, FDIC-insured, full-service financial institution serving customers throughout the United States. American Bank is a member of the Federal Reserve System. American Bank is FDIC insured and an Equal Housing Lender.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

Statements in this press release regarding American Bank's business which are not historical facts, including expectations regarding future financial results, are "forward-looking statements" that involve risks and uncertainties which could cause actual results to differ materially from such statements.