American Bank Incorporated : 2021 American Bank Incorporated Annual Report

Consolidated Financial Highlights

(Dollars in Thousands, except per share data)

Percentage 2021 2020 Change

AT YEAR END

Assets ........................................................................ $ Loans receivable, net ................................................ Deposits .................................................................... Stockholders' Equity .................................................

FOR THE YEAR

Net Interest Income ................................................... $ Net Income ................................................................

PER SHARE DATA

Earnings - Basic ....................................................... $ Earnings - Diluted .................................................... Book Value ...............................................................

FINANCIAL RATIOS

Return on average assets ........................................... Return on average equity .......................................... Average stockholders' equity to average assets ........ Net interest margin .................................................... Net interest spread .................................................... Non-interest expense to average assets ..................... Efficiency ratio ......................................................... Non-accruing loans/Total loans ................................ Allowance for loan losses/Non-performing loans ....

849,150 606,572 660,880 76,250

$

734,290 15.6%

586,949 3.3%

550,941 20.0%

66,364 14.9%

21,640 10,103

$

19,833 9.1%

8,714 15.9%

1.82 1.68 12.78

$

1.57 15.9%

1.37 22.6%

11.90 7.4%

1.28% 1.25%

14.40% 13.73%

8.91% 9.07%

2.90% 3.00%

2.74% 2.91%

1.38% 1.46%

45.50% 46.37%

0.06% 0.08%

2,497.07%

1,751.75%

TABLE OF CONTENTS

PageMessage to Our Stockholders ............................................................................................................... Selected Consolidated Financial Information and Other Data .............................................................. Management's Discussion and Analysis of Financial Condition and Results of Operations ............... Common Stock and Related Matters .................................................................................................... Independent Auditor's Report ............................................................................................................... Consolidated Balance Sheets ................................................................................................................ Consolidated Statements of Income ...................................................................................................... Consolidated Statements of Comprehensive Income ............................................................................ Consolidated Statements of Stockholders' Equity ................................................................................ Consolidated Statements of Cash Flows ............................................................................................... Notes to Consolidated Financial Statements .........................................................................................

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March 25, 2022

Dear Fellow Shareholder:

As I reflect on the past year, I look for a word that can be best used to define it. When thinking about 2021, for me, the word that encapsulates this year is "extraordinary." It was a year of record-breaking financial performance for your Company as highlighted by a significant increase in net income while surpassing $800 million in assets at the end of 2021. However, I am aware that when I refer to 2021 as extraordinary, I use that word to further highlight that there were also unusual circumstances that impacted our performance, and it is important to include that in my message to you.

Revenue Growth

Net income was $10,103,000 for the year ended December 31, 2021, a 15.9% increase from net income of $8,714,000 for the year ended December 31, 2020. The increase in net income for the year ended December 31, 2021 was primarily due to an increase in net interest income and non-interest income and a decrease in the provision for loan losses, offset by an increase in non-interest expense. Net interest income increased $1.8 million, or 9.1%, to $21.6 million, as compared to $19.8 million for the year ended December 31, 2020. The increase in net interest income was primarily due to $2.7 million in fee income recorded from the SBA's Paycheck Protection Program (PPP).

We recognize that the positive impact we experienced from participating in the Paycheck Protection Program is temporary and, while we will not have unusual items such as the fee income from PPP in 2022, we are focused on continuing the loan growth we saw in 2021.

Strength of the Balance Sheet

Our balance sheet continued to grow and exceeded our 2021 strategic plan as total assets grew $114.9 million to $849.2 million compared to $734.3 million at December 31, 2020. Net loans outstanding increased by $19.6 million, or 3.3%, to $606.5 million from $586.9 million at December 31, 2020. As has consistently been the case for many years, we maintained our emphasis on serving the needs of small and medium sized businesses and, as a result, we experienced an increase in our commercial loan portfolio, which included over $54.4 million in organic loan growth. This increase was offset by $34.8 million in PPP loan forgiveness payments received during the year. Our participation in the SBA's Paycheck Protection Program allowed us to disburse funds in excess of $40.6 million to over 350 businesses affected by COVID-19 in the second round of the program. As of December 31, 2021, $4.7 million in PPP loans were outstanding. Total deposits grew $110.0 million, or 20.0%, to $660.9 million at December 31, 2021, from $550.9 million at December 31, 2020.

Overview of Earnings Ratios

We saw improvements in both our return on assets and, most important to our shareholders, our return on equity. Return on assets increased to 1.28% from 1.25% for the same period in 2020. Return on equity for the 2021 year was 14.40% compared to 13.73% for the same period in 2020. Your Company's return on equity continues to outperform its peers and, as a result, we were recognized as one of Magazine.

the Top 50 Community Banks in the nation, and the Top Community Bank in the Lehigh Valley, by

American Banker

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