American Bank Incorporated : Thursday, October 15th, 2020 American Bank Reports Third Quarter 2020 Earnings

CONTACT: Mark W. Jaindl, President and Chief Executive Officer
Allentown, PA, October 15, 2020

American Bank Incorporated (OTC Pink: AMBK), the parent company of American Bank, today announced earnings for the quarter and nine months ended September 30, 2020. Net income for the quarter was $2,581,000 or $0.40 per diluted share, an increase of $561,000 or 27.8% from $2,020,000 or $0.32 per diluted share for the third quarter of 2019. The increase in net income for the quarter was primarily the result of an increase in non-interest income.

Total assets reached $721.2 million as of September 30, 2020, an increase of $70.3 million or 10.8% compared to $650.9 million as of September 30, 2019. Net loans increased $105.1 million or 20.7% from September 30, 2019, which was primarily due to PPP loan originations, and total deposits increased $49.9 million or 10.2% from September 30, 2019.

The Bank participated in the Small Business Administration's ('SBA') Paycheck Protection Program ('PPP') established under The Coronavirus Aid, Relief and Economic Security Act (The CARES Act or the Act). This Act expanded the SBA's 7(a) loan program to help small businesses cover their near-term operating expenses and retain employees. These loans are fully guaranteed by the SBA, have terms of two or five years and have fixed interest rates of 1% with payments deferred up to ten months following the coverage period. To date, the Bank has disbursed funds in excess of $76.1 million to over 490 businesses affected by COVID-19.

Return on assets for the quarter ended September 30, 2020 increased to 1.45% from 1.25% for the same period in 2019. Return on equity for the quarter ended September 30, 2020 increased to 16.17% from 13.61% for the same period in 2019.

President and CEO Mark Jaindl stated, 'The third quarter of 2020 was a strong one for American Bank, despite still navigating through the effects caused by the ongoing COVID-19 pandemic. Our solid results further illustrate why we were recently listed as one of the top 200 community banks in the nation by American Banker magazine, most notably as the number 2 top performing community bank in Pennsylvania. This list, which includes the best performers based on the banks' return on average equity over the past three years, highlights our commitment to superior quality and service.'

Net interest income for the quarter ended September 30, 2020 was $5,204,000, an increase of $568,000 or 12.3% from the quarter ended September 30, 2019. Net interest income increased primarily due to the significant growth in our loan portfolio and amortization of income received from the SBA as a result of the origination of PPP loans. Net interest margin increased 4 basis points to 3.08% for the quarter ended September 30, 2020 from 3.04% for the quarter ended September 30, 2019.

The provision for loan losses was $574,000 for the quarter ended September 30, 2020 compared to $0 for the three months ended September 30, 2019. The provision for loan losses increased due to significant growth in the loan portfolio along with an increase in qualitative factors in the Allowance for Loan Losses calculation in response to the COVID-19 pandemic and its impact on the current economy. Loan quality remained strong at September 30, 2020 with three non-accruing loans totaling $456,000. American Bank has an allowance for loan losses of $7.7 million or 1.24% of loans outstanding at September 30, 2020 compared to $6.8 million or 1.32% of loans outstanding at September 30, 2019.

Non-interest income increased $648,000 or 190.6% to $988,000 for the quarter ended September 30, 2020 as compared to the same quarter in 2019. This increase was primarily the result of income generated by commercial loan interest rate swaps and death benefits received on bank-owned life insurance policies.

Non-interest expense increased $37,000 or 1.5% to $2.5 million for the quarter ended September 30, 2020 compared to the same quarter in 2019. American Bank's operating expense to average asset ratio decreased to 1.38% for the quarter ended September 30, 2020 compared to 1.51% for the prior period. American Bank's operating expense to average asset ratio remains one of the lowest in the country.

Income tax expense increased $44,000 or 8.4% for the quarter ended September 30, 2020 compared to the same quarter in 2019. The effective tax rate of 18.1% for the quarter ended September 30, 2020 was comparable to the effective tax rate of 20.7% for the quarter ended September 30, 2019.

Year-to-Date Results

Net income for the nine months ended September 30, 2020 was $6.0 million, or $0.94 per diluted share, an increase of $33,000 or 0.6% from the nine months ended September 30, 2019.

Return on assets for the nine-month period ended September 30, 2020 fell to 1.15% compared to 1.25% for the same period in 2019. Return on equity for the nine-month period ended September 30, 2020 was 12.69% compared to 13.63% for the same period in 2019.

Net interest income for the nine months ended September 30, 2020 was $14.0 million, an increase of $174,000 or 1.3% from the nine-month period ended September 30, 2019. Net interest margin decreased 23 basis points to 2.87% year-to-date for the nine months ended September 30, 2020 compared to 3.10% for the nine months ended September 30, 2019.

The provision for loan losses for the nine months ended September 30, 2020 was $629,000, an increase of $468,000 from the provision of $161,000 recorded for the nine months ended September 30, 2019 for generally the same reasons as described in the quarter-to-date section above.

Non-interest income increased $592,000 for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 for generally the same reasons as described in the quarter-to-date section above.

Non-interest expense increased $401,000 for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. The increase in non-interest expense was primarily due to increase in salaries and benefits incurred as a direct result of the pandemic and the extraordinary efforts put forth by our team members to process over 490 PPP loans, and an increase in hosted services associated with an upgrade to the Bank's online and mobile banking platform in the first quarter of 2020 .

Income tax expense decreased $136,000 or 8.8% for the nine months ended September 30, 2020 compared to the same period in 2019. The effective tax rate for the first nine months of 2020 was 19.2% compared to the effective tax rate of 20.8% for the first nine months of 2019.

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

American Bank Incorporated common stock last traded at $11.89 per share. American Capital Trust I Preferred Securities last traded at $12.52.

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 over 20 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, ACH Direct, 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.

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.