American Bank Incorporated : Monday, October 16th, 2023 American Bank Reports Third Quarter 2023 Earnings

CONTACT: Mark W. Jaindl, Chairman and CEO
Allentown, PA, October 16, 2023

American Bank Incorporated (OTC Pink: AMBK), the parent company of American Bank, today announced earnings for the quarter and nine months ended September 30, 2023. Net income for the quarter was $2,402,000 or $0.38 per diluted share, a decrease of $674,000 or 21.9% from $3,076,000 or $0.47 per diluted share for the third quarter of 2022.

Total assets decreased $52.6 million or 5.6% to $881.3 million as of September 30, 2023 compared to $933.9 million as of September 30, 2022. Total investments decreased $120.0 million or 54.0% from September 30, 2022, primarily due to the Company's decision to pay down borrowings with proceeds from maturing investments. Net loans increased $72.0 million or 11.3% from September 30, 2022 due to strong organic loan growth. Total deposits decreased $33.6 million or 4.8% from September 30, 2022. Total borrowings decreased $27.9 million or 20.3% from September 30, 2022.

Return on average assets for the quarter ended September 30, 2023 decreased to 1.07% from 1.33% for the quarter ended September 30, 2022. Return on average equity for the quarter ended September 30, 2023 decreased to 10.93% from 15.31% for the same period in 2022.

Net interest income for the quarter ended September 30, 2023 was $5,665,000, a decrease of $721,000 or 11.3% from the quarter ended September 30, 2022. Net interest income decreased year over year primarily due to higher interest rates paid on deposit products and borrowings. Net interest margin decreased twenty-three basis points to 2.68% for the quarter ended September 30, 2023 from 2.91% for the quarter ended September 30, 2022.

President and CEO Mark Jaindl stated, "The banking industry continues to react to the challenges resulting from elevated interest rates, which has resulted in a compression of the net interest margin at many financial institutions. That compression has been minimized at American Bank as we have kept the average maturities of our Investment Portfolio below two years. With interest rates likely to stay elevated for the next six months, we will make adjustments to address our customers' loan and deposit needs as we remain focused on developing and maintaining solid relationships throughout our market area."

For the quarter ended September 30, 2023, there was a release of the allowance for credit losses in the amount of $154,000 compared to no provision for loan losses for the quarter ended September 30, 2022. The release of the allowance for credit losses in 2023 was primarily due to decreases 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 a expected credit loss methodology that is referred to as the Current Expected Credit Loss ("CECL") model. American Bank has an allowance for credit losses of $7.1 million or 0.98% of loans outstanding at September 30, 2023 compared to $8.8 million or 1.36% of loans outstanding at September 30, 2022. Although loan quality remained strong, there were $3.2 million in non-accruing loans at September 30, 2023 compared $309,000 at September 30, 2022. One commercial mortgage relationship consisting of ten loans was placed on non-accrual during the quarter, and the Bank has initiated foreclosure proceedings.

Non-interest income increased $35,000 or 6.9% to $544,000 for the quarter ended September 30, 2023 as compared to $509,000 for the quarter ended September 30, 2022.

Non-interest expense increased $324,000 or 10.7% to $3.4 million for the quarter ended September 30, 2023 compared to the same quarter in 2022. The increase in non-interest expense was primarily the result of increased occupancy costs, hosted services and FDIC insurance. American Bank's operating expense to average asset ratio increased to 1.49% for the quarter ended September 30, 2023 compared to 1.31% for the prior nine months. American Bank's operating expense to average asset ratio remains one of the lowest in the country.

Income tax expense decreased $182,000 or 23.1% for the quarter ended September 30, 2023 compared to the same quarter in 2022. The effective tax rate of 20.1% for the quarter ended September 30, 2023 was comparable to the effective tax rate of 20.4% for the quarter ended September 30, 2022.

Year-to-Date Results

Net income for the nine months ended September 30, 2023 was $7.3 million, or $1.11 per diluted share, a decrease of $120,000 or 1.6% from the nine months ended September 30, 2022. The decrease in net income for the nine-month period ended September 30, 2023 was primarily attributable to a decrease in non-interest income and an increase in non-interest expense offset by an increase in net interest income and a decrease in the provision for credit losses.

Return on average assets for the nine-month period ended September 30, 2023 decreased to 1.07% compared to 1.12% for the same period in 2022. Return on average equity for the nine-month period ended September 30, 2023 was 11.26% compared to 12.48% for the same period in 2022.

Net interest income for the nine months ended September 30, 2023 was $17.5 million, an increase of $407,000 or 2.4% from the nine-month period ended September 30, 2022. Net interest margin increased two basis points to 2.74% year-to-date for the nine months ended September 30, 2023 compared to 2.72% for the nine months ended September 30, 2022.

For the nine months ended September 30, 2023, there was a release of the allowance for credit losses in the amount of $349,000, which was a decrease of $592,000 from the provision for credit losses of $243,000 recorded for the year ended September 30, 2022. The decrease in the provision for credit losses was for generally the same reasons as described in the quarter-to-date section above.

Non-interest income decreased $42,000 or 2.9% for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

Non-interest expense increased $1.1 million or 12.5% for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. The increase in non-interest expense was for generally the same reasons as described in the quarter-to-date section above.

Income tax expense decreased $46,000 or 2.4% for the nine months ended September 30, 2023 compared to the same period in 2022. The effective tax rate for the first nine months of 2023 was 20.2% compared to the effective tax rate of 20.3% for the first nine 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.