CONTACT: Mark W. Jaindl, American Bank Incorporated, President and CEO
Allentown, PA, July 12, 2024
American Bank Incorporated (OTC Pink: AMBK), the parent company of American Bank, today announced earnings for the quarter and six months ended June 30, 2024. Net income for the quarter was $2,319,000, or $0.36 per diluted share, a decrease of $86,000 or 3.6% from $2,405,000, or $0.37 per diluted share, for the second quarter of 2023. The decrease in net income for the quarter was attributable to a decrease in net interest income and an increase in the provision for credit losses, offset by an increase in non-interest income and a decrease in non-interest expense.
Total assets decreased $4.9 million or 0.5% to $918.5 million as of June 30, 2024 compared to $923.4 million as of June 30, 2023. Net loans increased $53.1 million or 7.6% from June 30, 2023 due to growth in the commercial and residential loan portfolios. Investment securities available-for-sale decreased $70.7 million or 49.7% from June 30, 2023 due to the Company’s decision to fund loan originations and pay down borrowings with proceeds from maturing investments. Total deposits increased $54.8 million or 8.0% from June 30, 2023, while total borrowings declined $65.0 million or 47.3%.
Return on average assets for the quarter ended June 30, 2024 decreased to 1.03% from 1.06% for the same period in 2023. Return on average equity for the quarter ended June 30, 2024 decreased to 9.99% from 11.19% for the same period in 2023. The declines in the foregoing ratios were the result of decreases in net income and average assets and an increase in average equity.
Net interest income for the quarter ended June 30, 2024 was $5.6 million, a decrease of $172,000 or 3.0% from the quarter ended June 30, 2023. Net interest income decreased year-over-year due to higher rates paid on deposit products, offset by overall growth in our loan portfolio and interest rate increases in our loan and investment portfolios. Net interest margin decreased five basis points to 2.66% for the quarter ended June 30, 2024 from 2.71% for the quarter ended June 30, 2023.
President and CEO Mark Jaindl stated, “Over the last three years we have responded to the rising interest rate environment and have been intentional when pricing our loan and deposit products to provide the competitive rates that our customers have come to expect from American Bank, while managing our interest rate risk. We will continue a similar approach as we enter the early stages of a declining interest rate environment. Even with declining interest rates, 45% of our investment portfolio will be repricing over the next 12 months and we will have an opportunity to take advantage of increased returns on those investments.”
For the quarter ended June 30, 2024, there was a release of the allowance for credit losses in the amount of $228,000 compared to a release of $378,000 for the quarter ended June 30, 2023. The release of the allowance for credit losses in 2024 was primarily due to decreases in qualitative factors in the allowance for credit losses in the second quarter despite overall growth in our loan portfolio. American Bank has an allowance for credit losses of $7.3 million or 0.95% of loans outstanding at June 30, 2024 compared to $7.3 million or 1.03% of loans outstanding at June 30, 2023. Although loan quality remained strong, there were $3.2 million in non-accruing loans at June 30, 2024 compared to $309,000 at June 30, 2023.
Non-interest income increased $163,000 or 48.1% to $502,000 for the quarter ended June 30, 2024 compared to $339,000 for the quarter ended June 30, 2023. The increase in non-interest income was primarily the result of unrealized losses on equity securities held at the holding company level and a loss on the sale of an investment security in the second quarter of 2023.
Non-interest expense decreased $37,000 or 1.1% for the quarter ended June 30, 2024 compared to the same quarter in 2023. American Bank’s operating expense to average asset ratio remained flat at 1.53% for the quarters ended June 30, 2024 and June 30, 2023. American Bank’s operating expense to average asset ratio remains one of the lowest in the country.
Income tax expense decreased $36,000 or 5.9% for the quarter ended June 30, 2024 compared to the same quarter in 2023. The effective tax rate of 19.7% for the quarter ended June 30, 2024 was comparable to the effective tax rate of 20.1% for the quarter ended June 30, 2023.
Year-to-Date Results
Net income for the six months ended June 30, 2024 was $4.2 million, or $0.64 per diluted share, a decrease of $687,000 or 14.1% from the six months ended June 30, 2023. The primary reason for the decrease in net income for the six-month period ended June 30, 2024 was a decrease in net interest income and an increase in non-interest expense, offset by an increase in non-interest income and a decrease in the provision for credit losses.
Return on average assets for the six-month period ended June 30, 2024 decreased to 0.93% compared to 1.07% for the same period in 2023. Return on average equity for the six-month period ended June 30, 2024 decreased to 9.09% compared to 11.44% for the same period in 2023.
Net interest income for the six months ended June 30, 2024 was $11.0 million, a decrease of $887,000 or 7.5% from the six-month period ended June 30, 2023. Net interest margin decreased seventeen basis points to 2.59% year-to-date for the first six months ended June 30, 2024 compared to 2.76% for the first six months of 2023.
For the six months ended June 30, 2024, there was a release of the allowance for credit losses in the amount of $219,000, which was an increase of $24,000 from the release for credit losses of $195,000 recorded for the six months ended June 30, 2023. The decrease in the provision for credit losses was for generally the same reasons as described in the quarter-to-date section.
Non-interest income was $999,000 for the six months ended June 30, 2024 compared to $866,000 for the six months ended June 30, 2023. The fluctuation in non-interest income was for generally the same reasons as described in the quarter-to-date section.
Non-interest expense increased $158,000 or 2.3% to $6.9 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase in non-interest expense was primarily the result of higher salaries and employee benefit costs, hosted services and FDIC insurance. American Bank’s operating expense to average asset ratio increased five basis points to 1.54% for the six months ended June 30, 2024 from 1.49% for the quarter ended June 30, 2023.
Income tax expense decreased $201,000 or 16.2% for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The effective tax rate for the first six months of 2024 was 19.8% compared to the effective tax rate of 20.2% for the first six months of 2023.
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, 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.