American Bank Reports 20% Increase in Third Quarter Earnings Per Share

CONTACT: Mark W. Jaindl, President and Chief Executive Officer
Allentown, PA, Tuesday, October 10, 2006

Allentown, PA, October 10, 2006 – American Bank Incorporated (NasdaqSC: AMBK), the parent company of American Bank, today announced earnings for the quarter and nine months ended September 30, 2006. Net income for the quarter was $734,000, or $0.12 per diluted share, an increase of 20.0% from the $0.10 per diluted share reported in the same period of the prior year. While total quarterly earnings increased slightly from the prior year, the increase in earnings per share was positively impacted by the repurchase of approximately 1.56 million shares of common stock since the beginning of 2006. American Bank currently has approximately 169,000 shares remaining in its previously announced repurchase program.

American Bank’s net loans outstanding totaled $318.3 million as of September 30, 2006, up from $287.7 million at the same time last year, an increase of 10.6%, or $30.6 million. At the end of the quarter, assets totaled $520.6 million, which was down from $528.5 million at September 30, 2005. President and CEO Mark W. Jaindl stated, “In addition to implementing changes aimed at enhancing net interest margin through increased loan growth, American Bank remains focused on maintaining strong asset quality as was evidenced by the loan portfolio which remains strong with less than $190,000 in non-performing loans at the end of the quarter.”

On September 1, 2006, American Bank reported 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 31, 2006 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.

On September 21, 2006, the Board of Directors of American Bank declared a quarterly dividend of $0.04 per share of common stock to shareholders of record on October 13, 2006 and payable on October 27, 2006. In addition, the Board approved the continuance of the reinvestment of dividends by shareholders to purchase additional shares of American Bank Inc. common stock at a 5% discount to the average of the closing "bid" and "ask" price on the Record Date.

American Bank common stock last traded at $7.55 per share. American Bank Trust Preferred Securities last traded at $9.25.

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.

Forward-Looking Statements
Certain statements contained herein are not based on historical facts and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which the Bank operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, risks associated with the conduct of the Bank's business over the internet, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.

The Bank wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Bank wishes to advise readers that the factors listed above could affect the Bank's financial performance and could cause the Bank's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Bank does not undertake and specifically declines any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

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