American Bank Announces Potential Gain on Investment

CONTACT: Mark W. Jaindl, President and Chief Executive Officer
Allentown, PA, Friday, September 01, 2006

Allentown, PA, September 1, 2006 – American Bank Incorporated (NasdaqSC: AMBK), the parent company of American Bank, today announced that it could realize a significant gain on the sale of shares of PSB Bancorp, Inc. if the proposed acquisition of PSB Bancorp by Conestoga Bancorp, Inc. is completed. American Bank Incorporated owns 347,643 shares of PSB Bancorp common stock at an average cost per share of $9.18.

PSB Bancorp, the holding company for First Penn Bank, announced on August 31st that it has executed a definitive agreement with Conestoga Bancorp for the sale of PSB Bancorp to Conestoga Bancorp at a price of $17.00 per share, payable in cash. The price per share payable by Conestoga Bancorp is subject to a potential maximum downward adjustment of $0.66 per share.

The sale could result in an after-tax gain for American Bank Incorporated of approximately $1.66 to $1.82 million, or $0.28 to $0.30 per American Bank Incorporated share, respectively. The transaction is expected to close in the fourth quarter of 2006 or the first quarter of 2007.

About American Bank
American Bank, a locally-owned community bank based in Allentown, PA, offers a complete selection of banking products and services to suit the needs of consumers and businesses and includes checking, money market, savings, certificates of deposit, consumer and commercial loans and Visa credit cards. American Bank is dedicated to providing customers superior, personalized customer service while offering 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. Their online banking service, pcbanker, allows customers to bank conveniently and delivers a full range of real-time online banking services free of charge including online bill payment and presentment, ACH Direct, transfers between accounts, transaction history, check images and e-Statements. American Bank is FDIC insured.

American Bank Online and pcbanker.com are registered marks 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.

"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.

For additional information, please contact Mark W. Jaindl, President and Chief Executive Officer.