CONTACT: Mark W. Jaindl, President and Chief Executive Officer
Allentown, PA, July 14, 2020
American Bank Incorporated (OTC Pink: AMBK), the parent company of American Bank, today announced earnings for the quarter and six months ended June 30, 2020. Net income for the quarter was $1,606,000, or $0.26 per diluted share, a decrease of $341,000 or 17.5% from $1,947,000, or $0.30 per diluted share, for the second quarter of 2019. The decrease in net income for the quarter was primarily the result of a decrease in net interest income and an increase in non-interest expense.
Total assets reached $713.1 million at June 30, 2020, an increase of $75.3 million or 11.8% compared to $637.8 million as of June 30, 2019. Net loans increased $82.3 million or 16.1% and total deposits increased $63.0 million or 13.2% from June 30, 2019, primarily due to PPP loan originations of $76.1 million.
The Bank is currently participating 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 to five years and have fixed interest rates of 1% with payments deferred for the first six months. The Bank has disbursed funds in excess of $76.1 million to over 490 businesses affected by COVID-19.
President and CEO Mark Jaindl stated, “The second quarter of 2020 saw American Bank continue to navigate through the uncertainty brought on by the COVID-19 pandemic. We remain focused on doing our part to keep our customers, team members and community safe. While we have resumed our normal banking hours, at this time, our branch is open for our customers’ banking needs by appointment. We have found that by providing appointments, customers are able to complete their banking when it is safe and convenient for them.”
Jaindl continued, “We are proud to have been able to assist many local small businesses in our community through our participation in the Paycheck Protection Program. Our lending team worked tirelessly to help numerous small businesses throughout the process. As these businesses look to begin the loan forgiveness portion of the program, we are committed to continuing to support them at a critical time for them and our economy.”
Return on assets for the quarter ended June 30, 2020 decreased to 0.91% from 1.24% for the same period in 2019. Return on equity for the quarter ended June 30, 2020 decreased to 10.32% from 13.45% for the same period in 2019.
Net interest income for the quarter ended June 30, 2020 was $4.3 million, a decrease of $296,000 or 6.4% from the quarter ended June 30, 2019. Net interest margin decreased fifty-two basis points to 2.61% for the quarter ended June 30, 2020 from 3.13% for the quarter ended June 30, 2019.
The provision for loan losses was $34,000 for the quarter ended June 30, 2020 compared to $12,000 for the three months ended June 30, 2019. Loan quality remained strong at June 30, 2020 with three non-accruing loans totaling $456,000. American Bank has an allowance for loan losses of $7.1 million or 1.19% of loans outstanding at June 30, 2020 compared to $6.8 million or 1.31% of loans outstanding at June 30, 2019.
Non-interest income remained relatively flat at $361,000 for the quarter ended June 30, 2020 compared to $342,000 for the quarter ended June 30, 2019.
Non-interest expense increased $142,000 or 5.6% to $2.7 million for the quarter ended June 30, 2020 compared to the same quarter in 2019. The increase was primarily due to an 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 490 PPP loans, ensuring that funds were received by local businesses in as short a timeframe as possible. American Bank’s operating expense to average asset ratio decreased to 1.51% for the quarter ended June 30, 2020 compared to 1.60% 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 $100,000 or 19.7% for the quarter ended June 30, 2020 compared to the same quarter in 2019. The effective tax rate of 20.3% for the quarter ended June 30, 2020 was comparable to the effective tax rate of 20.7% for the quarter ended June 30, 2019.
Year-to-Date Results
Net income for the six months ended June 30, 2020 was $3.4 million, or $0.54 per diluted share, a decrease of $528,000 or 13.5% from the six months ended June 30, 2019. The primary reason for the decrease in net income for the six-month period ended June 30, 2020 was a decrease in net interest income and an increase in non-interest expense.
Return on assets for the six-month period ended June 30, 2020 fell to 1.00% compared to 1.25% for the same period in 2019. Return on equity for the six-month period ended June 30, 2020 was 10.88% compared to 13.65% for the same period in 2019.
Net interest income for the six months ended June 30, 2020 was $8.8 million, a decrease of $394,000 or 4.3% from the six-month period ended June 30, 2019. Net interest margin decreased thirty-seven basis points to 2.76% year-to-date for the first six months ended June 30, 2020 compared to 3.13% for the first six months of 2019.
The provision for loan losses for the six months ended June 30, 2020 was $55,000, a decrease of $106,000 from the provision of $161,000 recorded for the six months ended June 30, 2019.
Non-interest income was $678,000 for the six months ended June 30, 2020 compared to $734,000 for the six months ended June 30, 2019. The decrease in non-interest income was primarily the result of net unrealized losses on equity securities at the holding company level offset by income generated from commercial loan interest rate swaps. The adverse impact on net unrealized gains/losses on equity securities was due to increased volatility in share prices of the Company’s equity holdings, as unrealized gains and losses held in the reporting period are required to be recorded in earnings.
Non-interest expense increased $364,000 to $5.2 million for the six months ended June 30, 2020 compared to the six months ended June 30, 2019.
Income tax expense decreased $180,000 or 17.5% for the six months ended June 30, 2020 compared to the six months ended June 30, 2019. The effective tax rate for the first six months of 2020 was 20.1% compared to the effective tax rate of 20.8% for the first six months of 2019.
American Bank is a "well capitalized" institution under all regulatory capital standards.
American Bank Incorporated common stock last traded at $11.75 per share. American Capital Trust I Preferred Securities last traded at $12.50.
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.