SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

             [X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

                                       OR

           [ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

               For the transaction period from _______ to _______

                         Commission File Number: 0-31246

                           AMERICAN BANK INCORPORATED
                           --------------------------
             (Exact Name of Registrant as Specified in its Charter)

          PENNSYLVANIA                                        01-0593266
          ------------                                       ----------
    (State or Other Jurisdiction                          (I.R.S. Employer
  of Incorporation or Organization)                     Identification Number)

            4029 WEST TILGHMAN STREET, ALLENTOWN, PENNSYLVANIA 18104
            --------------------------------------------------------
               (Address of Principal Executive Office) (Zip Code)

                                 (610) 366-1800
                                 --------------
               (Registrant's Telephone Number including area code)

           Securities Registered Pursuant to Section 12(b) of the Act:

                                      NONE
                                      ----

           Securities Registered Pursuant to Section 12(g) of the Act:

                     COMMON STOCK, PAR VALUE $0.10 PER SHARE
                     ---------------------------------------
                                (Title of Class)

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the  preceding  twelve  months (or for such shorter  period that the
Registrant  was  required  to file  reports)  and (2) has been  subject  to such
requirements for the past 90 days.

(1)  YES [X].    NO [ ].
         ----       ----

(2)  YES [X].    NO [ ].
         ----       ----

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-B is not contained herein, and will not be contained, to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference in Part III of this Form 10-KSB or any  amendments to
this Form 10-KSB. [ ]

     The  Registrant's  revenues for the year ended December 31, 2003 were $21.2
million.

     As of March 15, 2004, there were 7,172,058 shares issued and outstanding of
the  Registrant's  Common Stock. The aggregate value of the voting stock held by
non-affiliates of the Registrant,  computed by reference to the closing price of
the Common Stock as of March 15, 2004 was $21.1 million.

                       DOCUMENTS INCORPORATED BY REFERENCE

1.       Portions of Annual Report to Stockholders (Parts II and IV)

2.       Proxy Statement for the 2004 Annual Meeting of Stockholders (Part III)

<PAGE>

                                     PART I
                                     ------

ITEM 1. BUSINESS
----------------

AMERICAN BANK INCORPORATED

     American Bank Incorporated was organized in August 2001 at the direction of
the Board of Directors  of American  Bank for the purpose of acting as the stock
holding company of American Bank.  American Bank  Incorporated's  assets consist
primarily of its  investment  in American Bank of $36.8  million.  American Bank
Incorporated's  principal  business is overseeing  and directing the business of
American  Bank.  At December  31, 2003,  American  Bank  Incorporated  had total
consolidated  assets of $482.0  million,  total  deposits of $332.3  million and
stockholders' equity of $35.0 million.

     American  Bank  Incorporated's  office is  located  at 4029  West  Tilghman
Street, Allentown, Pennsylvania 18104. Its telephone number is (610) 366-1800.

AMERICAN BANK

     American Bank commenced  full-service  banking activities in June 1997, and
operates  from a 21,400  square-foot  banking  center  and  executive  office in
Allentown,  Pennsylvania.  While American Bank currently  services its customers
from a single  location,  we may, in the future,  develop  additional  branches.
American  Bank's local service area primarily  includes  Lehigh and  Northampton
counties,  along with  portions  of Berks,  Bucks and  Montgomery  counties,  in
Pennsylvania.  American Bank has rapidly  established and intends to continue to
develop market recognition, along with growth in both customers and accounts, by
delivering friendly, dedicated and knowledgeable customer service,  high-quality
banking products and related financial  services and attractive  interest rates.
American  Bank's  products  are  strengthened  by an absence of many service and
maintenance fees common among other financial institutions.

     Our principal  business is attracting  deposits from the general public and
using those  deposits,  together with  borrowings and other funds,  to originate
loans and to purchase  investment  securities.  We offer a comprehensive menu of
deposit and loan products for consumer, business, institutional and governmental
customers,  including  interest-bearing  checking  and  money  market  accounts,
savings accounts, certificates of deposit and individual retirement accounts. We
also engage in  mortgage  banking  activities,  which  include the  origination,
purchase and, in certain  instances,  subsequent  sale of  residential  mortgage
loans.

     AmericanBank Online and pcbanker.com are registered  trademarks of American
Bank and the brand names for Internet banking and financial services provided by
American  Bank.  Through  AmericanBank  Online and  pcbanker.com,  American Bank
delivers convenience through innovative  technology,  absent the restrictions of
time and  geography,  by offering an expanding  menu of  real-time,  web-browser
based Internet banking and financial  services.  As America's first  "Nationwide
Community  Bank," American Bank offers the convenience of Internet  banking with
the  "old-fashioned"  service  expected  from a traditional  community  bank. By
incorporating  current technology and the resulting economies of scale, the Bank
offers some of the best  interest  rates in the country on both deposit and loan
products, delivered with a premier level of service.

     American Bank's office is located at 4029 West Tilghman Street,  Allentown,
Pennsylvania 18104. Its telephone number is (610) 366-1800.

LENDING ACTIVITIES

     American Bank  concentrates its lending  activities on commercial  mortgage
loans,  commercial  business loans,  commercial  construction loans and consumer
loans,   including  home  equity  loans,  home  equity  lines  of  credit,   and
conventional first mortgage loans secured by one- to four-family  properties.  A
substantial  portion  of  our  loan  portfolio  is  secured  by  commercial  and
residential real estate, either as primary or secondary  collateral,  located in
our local market area. We also  purchase  adjustable-rate  residential  mortgage
loans on a nationwide basis.

                                       2
<PAGE>

     LOAN  PORTFOLIO   COMPOSITION.   The  following   information  details  the
composition of our loan  portfolio in dollar amounts and in percentages  (before
deductions  for deferred  fees and costs,  and  allowance  for losses) as of the
dates indicated:

<TABLE>
<CAPTION>
                                                                           AT DECEMBER 31,
                                  -------------------------------------------------------------------------------------------
                                         2003              2002               2001              2000              1999
                                  -----------------  -----------------  ----------------- ----------------- -----------------
                                   AMOUNT   PERCENT   AMOUNT   PERCENT   AMOUNT  PERCENT   AMOUNT   PERCENT  AMOUNT   PERCENT
                                  --------  -------  --------  -------  -------- -------- --------  ------- --------  -------
                                                                           (IN THOUSANDS)
Real Estate Loans:
------------------
<S>                               <C>        <C>     <C>        <C>     <C>        <C>    <C>        <C>    <C>        <C>
Commercial(1) ..................  $ 96,609   46.66%  $ 65,569   47.89%  $ 40,668   29.50% $ 29,183   23.89% $ 16,726   30.83%
Residential(2) .................    53,393   25.79     32,344   23.62     64,810   47.01    64,466   52.78    18,475   34.06
                                  --------  ------   --------  ------   --------  ------  --------  ------  --------  ------
   Total real estate loans .....   150,002   72.45     97,913   71.51    105,478   76.51    93,649   76.67    35,201   64.89
                                  --------  ------   --------  ------   --------  ------  --------  ------  --------  ------
Other Loans:
------------
Consumer loans(3) ..............    15,098    7.29     13,762   10.05     11,237    8.15    10,235    8.38     8,085   14.90
Commercial .....................    41,937   20.26     25,249   18.44     21,139   15.34    18,264   14.95    10,959   20.21
                                  --------  ------   --------  ------   --------  ------  --------  ------  --------  ------
   Total other loans ...........    57,035   27.55     39,011   28.49     32,376   23.49    28,499   23.33    19,044   35.11
                                  --------  ------   --------  ------   --------  ------  --------  ------  --------  ------
Total loans receivable .........   207,037  100.00%   136,924  100.00%   137,854  100.00%  122,148  100.00%   54,245  100.00%
                                  --------  ======   --------  ======   --------  ======  --------  ======  --------  ======
Less:
-----
Deferred (fees) and costs ......       207               (239)              (267)             (292)             (165)
Allowance for losses ...........    (2,412)            (1,759)            (1,998)           (1,242)             (767)
                                  --------           --------           --------          --------          --------
   Total loans receivable, net .  $204,832           $134,926           $135,589          $120,614          $ 53,313
                                  ========           ========           ========          ========          ========
</TABLE>

----------
(1)  Commercial real estate loans include multi-family residential real estate
     loans.

(2)  Residential real estate loans include one- to four-family real estate loans
     and residential construction loans.

(3)  Consumer loans include home equity loans and home equity lines of credit.

                                       3
<PAGE>

     LOAN APPROVALS. Loan approvals are made in accordance with a policy that
includes delegated authorities approved by the Board of Directors. Loans are
approved at various management levels up to and including the Board of
Directors, depending on the amount of the loan. Generally, loans of $1,000,000
or less may be approved by one or more authorized senior officers, as required
by policy. Loans over $1,000,000 require approval by the Loan Committee or by
the Board of Directors.

     COMMERCIAL REAL ESTATE LOANS. American Bank originates mortgage loans for
the acquisition and refinancing of commercial real estate properties. At
December 31, 2003, $96.6 million, or 46.66% of American Bank's total loan
portfolio consisted of loans secured by commercial real estate properties, which
include multi-family residential real estate loans. The majority of our
commercial real estate loans are secured by office buildings, manufacturing
facilities, distribution/warehouse facilities, and retail centers, which are
generally located in our local market area. The interest rates for our
commercial real estate loans generally adjust at one- to five-year intervals,
and are typically renegotiated at the end of such period or automatically
converted to a floating interest rate. The loans generally have a five-year term
with an amortization period of no greater than twenty years. At December 31,
2003, the largest such loan had a balance of $5.2 million. At that date we had
no commercial real estate loans that were delinquent in excess of 30 days.

     American Bank generally requires appraisals of the properties securing
commercial real estate loans. Appraisals are performed by an independent
appraiser designated by American Bank and all appraisals are reviewed by
management. American Bank considers the quality and location of the real estate,
the credit of the borrower, the cash flow of the project and the quality of
management involved with the property.

     Loan-to-value ratios on our commercial real estate loans are generally
limited to 80% of the appraised value of the secured property. As part of the
criteria for underwriting commercial real estate loans, we generally impose a
debt service coverage ratio (the ratio of net operating income before payment of
debt service compared to debt service) of not less than 1.2-to-1. It is also our
general practice to obtain personal guarantees from the principals of our
corporate borrowers on commercial real estate loans.

     Loans secured by commercial real estate typically have higher balances and
are more difficult to evaluate and monitor and, therefore, involve a greater
degree of credit risk than other types of loans. If the estimate of value proves
to be inaccurate, the property may not provide us with full repayment in the
event of default and foreclosure. Because payments on these loans are often
dependent on the successful development, operation, and management of the
properties, repayment of these loans may be affected by adverse conditions in
the real estate market or the economy. American Bank seeks to minimize these
risks by limiting the maximum loan-to-value ratio and strictly scrutinizing the
financial condition of the borrower, the quality of the collateral and the
management of the property securing the loan. American Bank also generally
obtains loan guarantees from financially capable parties based on a review of
personal financial statements.

     MULTIFAMILY RESIDENTIAL REAL ESTATE LENDING. American Bank originates
mortgage loans secured by multifamily dwelling units (more than four units). At
December 31, 2003, $6.9 million, or 3.35% of our total loan portfolio consisted
of loans secured by multifamily residential real estate (multi-family
residential real estate loans are included in commercial real estate loans in
the loan portfolio composition table above). The majority of our multifamily
residential real estate loans are secured by apartment buildings located in the
Bank's local market area. The interest rates for our multifamily residential
real estate loans generally adjust at one- to five-year intervals, with the rate
to be negotiated at the end of such term or to automatically convert to a
floating interest rate. These loans generally have a five-year term with an
amortization period of no more than twenty years. At December 31, 2003, the
largest such loan had a balance of $902,000. At that date, we had no multifamily
residential real estate loans that were delinquent in excess of 30 days.

     ONE- TO FOUR-FAMILY REAL ESTATE MORTGAGE LENDING. American Bank originates
loans secured by first mortgages on existing or new construction, one- to
four-family residences located in its local market area. We may purchase one- to
four-family real estate loans, primarily adjustable rate mortgages, from other
lenders. The loans purchased are of similar credit quality and meet
substantially similar credit standards as loans we originate. We monitor this
portfolio for geographic concentrations. At December 31, 2003, $53.4 million, or
25.79% of American Bank's total loans receivable, consisted of one- to
four-family residential real estate and construction loans. We

                                       4
<PAGE>

originated $31.1 million, $24.7 million, and $18.2 million of one- to
four-family residential mortgage and construction loans for the years ended
December 31, 2003, 2002, and 2001, respectively. We purchased adjustable rate
one- to four-family residential mortgages of $-0-, $-0-, and $24.7 million
during the years ended December 31, 2003, 2002, and 2001, respectively. At
December 31, 2003, American Bank had no mortgage loans secured by one- to
four-family real estate that were delinquent in excess of 30 days.

     Generally, our fixed-rate one- to four-family mortgage loans have
maturities ranging from ten to 30 years and are fully amortizing, with monthly
payments sufficient to repay the total amount of the loan with interest by the
end of the loan term. Due to the inherent interest rate risk associated with
holding long-term assets, we have historically sold a substantial portion of the
fixed-rate residential mortgage loans we originate. During the years ended
December 31, 2003, 2002, and 2001, we sold $25.0 million, $19.7 million, and
$12.3 million of fixed-rate one- to four-family mortgage loans, respectively.
However, depending on interest rates, we may keep fixed-rate mortgages in our
portfolio. Our residential mortgage loans customarily include "due on sale"
clauses, which gives us the right to declare a loan immediately due and payable
in the event the borrower sells or otherwise disposes of the real property
subject to the mortgage and the loan has not been paid in full.

     American Bank originates and purchases adjustable-rate mortgage ("ARM")
loans at rates and terms competitive with market conditions. At December 31,
2003, $27.2 million, or 13.16% of our total loan portfolio, was comprised of
residential ARM loans and subject to periodic interest rate adjustments. We
typically originate and purchase ARM loans primarily for our own portfolio. Our
ARM loans provide for an initial interest rate period, which may be from one to
ten years. After the initial interest rate period the loans adjust every year
and are based on the one-year U.S. Treasury constant maturity index plus a
margin. Our ARM loans are typically based on up to a 30-year amortization
schedule. For one-year ARM loans, we qualify the borrowers at the initial rate
plus two percent. For all other ARM loans, we qualify the borrowers at the
initial rate. Our current ARM loans do not provide for negative amortization.
American Bank's ARM loans generally provide for initial, ongoing, and lifetime
interest rate caps and may include discounted or "teaser" initial interest rates
that may be more than 2% below the interest rate to which the loan would adjust
at the first interest adjustment date, based on the market rates of interest at
the time the loan was originated or purchased. The retention of ARM loans in our
loan portfolio helps reduce our exposure to changes in interest rates.

     RESIDENTIAL CONSTRUCTION LENDING. American Bank originates residential
construction loans to individuals who have a contract with an approved builder
for the construction of their residence. As of December 31, 2003, $261,000, or
0.13%, of our total loan portfolio consisted of residential construction loans.
Our construction loans are generally secured by property located in our primary
market area. Construction loans to individuals are generally originated pursuant
to the same policy regarding loan-to-value ratios as are used in connection with
loans secured by one- to four-family residential real estate. At December 31,
2003, we had no residential construction loans that were delinquent in excess of
30 days.

     CONSUMER LENDING. American Bank originates a variety of consumer loans
primarily on a secured basis. The loans are generally originated in our local
market area, however, we currently originate consumer loans (primarily home
equity loans) throughout the Commonwealth of Pennsylvania through pcbanker.com.
Our business plan provides for continued growth in originating and closing home
equity loan products throughout the Commonwealth of Pennsylvania. Consumer loans
include home equity loans, home equity lines of credit, loans secured by
certificates of deposit, savings accounts, automobiles and unsecured personal
loans. Our home equity loans are typically secured by a first or second mortgage
on residential property and have repayment terms ranging from one year to 15
years. American Bank's home equity lines of credit are also secured, typically
by a first or second mortgage on residential property, and have variable
interest rates that are tied to The Wall Street Journal prime lending rate (the
"Prime Rate"), which may adjust daily. These loans generally mature in 15 years
or less. Other consumer loans are made with fixed interest rates and have terms
that generally do not exceed five years. At December 31, 2003, consumer loans
amounted to $15.1 million, or 7.29% of the total loan portfolio. At that date,
we had no consumer loans that were delinquent in excess of 30 days.

     At December 31, 2003, the largest component of the consumer loan portfolio
consisted of fixed-rate home equity loans, which totaled $6.9 million, or 3.34%
of the total loan portfolio. At December 31, 2003, outstanding balances of
variable-rate home equity lines of credit totaled $2.6 million with total unused
commitments of $5.2 million.

                                       5
<PAGE>

     American Bank views consumer lending as an important part of its business,
as consumer loans generally have shorter terms and higher yields than fixed rate
residential mortgage loans, thus reducing exposure to changes in interest rates.
In addition, we believe that offering consumer loans helps to expand and create
stronger ties to our customer base. Subject to market conditions, we intend to
continue emphasizing consumer lending. Consumer loans entail greater credit risk
than one- to four-family residential mortgage loans, particularly in the case of
consumer loans that are unsecured or secured by rapidly depreciating assets. In
such cases, any repossessed collateral for a defaulted consumer loan may not
provide an adequate source of repayment of the outstanding loan balance as a
result of the greater likelihood of damage, loss, or depreciation. The remaining
deficiency often does not warrant further substantial collection efforts against
the borrower, beyond obtaining a deficiency judgment. In addition, consumer loan
collections are dependent on the borrower's financial stability and may be
adversely affected by job loss, divorce, illness or personal bankruptcy.
Furthermore, the application of various Federal and state laws, including
Federal and state bankruptcy and insolvency laws, may limit the amount that can
be recovered on such loans. Home equity loans have greater credit risk than one-
to four-family residential mortgage loans because they often are secured by
mortgages subordinated to the existing first mortgage on the property, which we
may or may not hold.

     American Bank's underwriting procedures for consumer loans include an
assessment of the applicant's credit history and the ability to meet existing
and proposed debt obligations. Although the applicant's creditworthiness is the
primary consideration, the underwriting process also includes a comparison of
the value of the collateral, if any, to the proposed loan amount. We generally
underwrite and originate our consumer loans internally, which we believe limits
our exposure to credit risks associated with loans underwritten or purchased
from brokers and other external sources.

     COMMERCIAL LOANS. American Bank originates commercial loans, which are
frequently secured by real estate, although the decision to grant a commercial
loan depends primarily on the creditworthiness and cash flow of the borrower,
and secondarily on the value of and ability to liquidate the collateral. We
generally require annual financial statements and Federal tax returns from our
corporate borrowers, and personal guarantees from the business principals. We
also generally require an appraisal of any real estate that secures the loan.
Our portfolio of commercial business loans as of December 31, 2003, had a
balance of $41.9 million, which represented 20.26% of the total loan portfolio.
On that date, the largest such loan had a balance of $1.1 million. As of
December 31, 2003, American Bank had no commercial business loans that were
delinquent in excess of 30 days.

     Commercial lending generally involves greater credit risk than residential
mortgage or consumer lending, and involves risks that are different from those
associated with commercial real estate lending. Although commercial loans may be
collateralized by equipment or other business assets, the liquidation of
collateral in the event of a borrower default may represent an insufficient
source of repayment because equipment and other business assets may, among other
things, be obsolete or of limited use. Accordingly, the repayment of a
commercial loan depends primarily on the creditworthiness and projected cash
flow of the borrower (and any guarantors), while liquidation of collateral is
considered a secondary source of repayment.

                                       6
<PAGE>

     MATURITY OF LOAN PORTFOLIO. The following table sets forth certain
information at December 31, 2003, regarding the dollar amount of loans maturing
in our portfolio based on their contractual terms to maturity, but does not
include scheduled payments or potential prepayments. Demand loans, and loans
having no stated schedule of repayments and no stated maturity, are reported as
becoming due within one year. Loan balances do not include undisbursed loan
proceeds, unearned discounts, unearned income, and allowance for loans losses.
Mortgages that have adjustable or renegotiable interest rates are shown as
maturing in the period during which the interest rate adjusts. The table does
not reflect the effects of enforcement of due-on-sale clauses.

<TABLE>
<CAPTION>
                                      MULTI-FAMILY AND
                                       COMMERCIAL REAL    CONSTRUCTION OR                         COMMERCIAL
                 ONE- TO FOUR-FAMILY       ESTATE           DEVELOPMENT         CONSUMER           BUSINESS             TOTAL
                 ------------------- ------------------ ------------------ ------------------ ------------------ ------------------
                            WEIGHTED           WEIGHTED           WEIGHTED           WEIGHTED           WEIGHTED           WEIGHTED
                            AVERAGE            AVERAGE            AVERAGE            AVERAGE            AVERAGE            AVERAGE
                   AMOUNT     RATE    AMOUNT     RATE    AMOUNT     RATE    AMOUNT     RATE    AMOUNT     RATE    AMOUNT     RATE
                 ---------  -------- --------  -------- --------  -------- --------  -------- --------  -------- --------  --------
                                                               (DOLLARS IN THOUSANDS)
DUE DURING
 YEARS ENDING
 DECEMBER 31,
-------------

<C>               <C>        <C>     <C>        <C>     <C>        <C>     <C>        <C>     <C>        <C>     <C>        <C>
2004(1) .......   $  1,160   4.22%   $    549   7.81%   $ 12,218   5.72%   $  2,676   4.96%   $ 21,101   5.64%   $ 37,704   5.61%
2005 to 2008 ..        510   5.50      17,939   6.37          --     --       6,451   4.64      16,720   5.87      41,620   5.89
2009 and beyond     51,461   5.25      66,165   6.00          --     --       5,971   5.59       4,116   5.96     127,713   5.68
                  --------   ----    --------   ----    --------   ----    --------   ----    --------   ----    --------   ----
Total .........   $ 53,131   5.24%   $ 84,653   6.09%   $ 12,218   5.72%   $ 15,098   5.07%   $ 41,937   5.76%   $207,037   5.71%
                  ========   ====    ========   ====    ========   ====    ========   ====    ========   ====    ========   ====
</TABLE>

----------

(1)  Includes demand loans, loans having no stated maturity and overdraft loans.

     The total amount of loans due after December 31, 2004, that have
predetermined interest rates is $66.5 million, while the total amount of loans
due after this date that have floating or adjustable interest rates is $102.8
million.

                                       7
<PAGE>

PROBLEM ASSET CLASSIFICATION PROCEDURES

     NON-PERFORMING ASSETS AND DELINQUENCIES. When a borrower fails to make a
required payment on a loan, we attempt to cure the deficiency by contacting the
borrower and seeking the payment. Late notices are mailed no more than 16 days
after the payment is due. In most cases, deficiencies are cured promptly. If a
delinquency continues, additional contact is made through written notice and
direct contact from an assigned account officer. American Bank will remain in
continual contact with the borrower and, if needed, will attempt to work out a
payment schedule acceptable to us and the borrower. While we generally prefer to
work with borrowers to resolve such problems, we will institute foreclosure or
other proceedings, as necessary, to minimize any potential loss.

     Loans are generally placed on non-accrual status if, in the opinion of
management, principal or interest payments are not likely to be made in
accordance with the terms of the loan agreement, or when principal or interest
is past due more than 90 days. Interest accrued but not collected at the date
the loan is placed on non-accrual status is reversed against income in the
current period. Loans may be reinstated to accrual status when payments are less
than 90 days past due and, in the opinion of management, collection of the
remaining balance can be reasonably expected. The Board of Directors is informed
monthly of the status of all loans delinquent more than 15 days.

     At December 31, 2003, we had no loans delinquent more than 30 days, no
loans classified as non-performing or non-accrual and no assets acquired in
settlement of loans. During the year ended December 31, 2003, we had two loans
that we classified as non-performing. We charged off these two loans, which
totaled $2,900. During the year ended December 31, 2002, we had one loan that we
classified as non-performing. We charged off $455,000 on this loan and
originated a new loan to new borrowers for the same business, which is
performing in accordance with its terms. During January of 2003, we recovered
$250,000 of the charge-off. During the year ended December 31, 2001 we did not
charge off any loans, nor were any loans classified as nonperforming or
nonaccrual.

     REAL ESTATE ACQUIRED IN SETTLEMENT OF LOANS. Real estate acquired by
American Bank as a result of foreclosure or by deed in lieu of foreclosure would
be classified as real estate acquired in settlement of loans until sold. At
December 31, 2003 we had no real estate acquired in settlement of loans.

     RESTRUCTURED LOANS. Under accounting principles generally accepted in the
United States of America, American Bank is required to account for certain loan
modifications or restructurings as "troubled debt restructurings." In general,
the modification or restructuring of a debt constitutes a troubled debt
restructuring if American Bank, for economic or legal reasons related to the
borrower's financial difficulties, grants a concession to the borrower that we
would not otherwise consider. Debt restructurings or loan modifications for a
borrower do not necessarily always constitute troubled debt restructurings, and
troubled debt restructurings do not necessarily result in non-accrual loans. We
had no restructured loans as of December 31, 2003.

     ASSET CLASSIFICATION. The Pennsylvania Department of Banking and Board of
Governors of the Federal Reserve System have adopted various regulations
regarding problem assets of banking institutions. The regulations require that
each insured institution review and classify its assets on a regular basis. In
addition, in connection with examinations of insured institutions, regulatory
examiners have authority to identify problem assets and, if appropriate, require
them to be classified. There are three classifications for problem assets:
"Substandard," "Doubtful," and "Loss." "Substandard" assets have one or more
defined weaknesses and are characterized by the distinct possibility that
American Bank will sustain some loss if the deficiencies are not corrected.
"Doubtful" assets have the weaknesses of "Substandard" assets with the
additional characteristic that the weaknesses make collection or liquidation in
full on the basis of currently existing facts, conditions, and values
questionable, and there is a high probability of loss, although the amount of
such loss may not be determinable at such time. An asset classified as "Loss" is
considered uncollectible and of such little value that continuance as an asset
of American Bank is not warranted. If an asset or portion thereof is classified
as "Loss", we must establish a specific allowance for loss for the amount of the
portion of the asset classified as "Loss." All or a portion of general loan loss
allowances established to cover possible losses related to assets classified
"Substandard" or "Doubtful" can be included in determining our regulatory
capital, while specific valuation allowances for loan losses generally do not
qualify as regulatory capital. Assets that do not currently expose us to
sufficient risk to warrant classification in one of the aforementioned
categories but possess weaknesses are designated as "Special Mention" and
monitored by us.

                                       8
<PAGE>

     At December 31, 2003, the aggregate amount of our assets classified as
"Special Mention" and "Substandard" were $1,550,000 and $1,432,000,
respectively. No assets were classified as "Doubtful," and no assets were
classified as "Loss."

     ALLOWANCE FOR LOAN LOSSES. American Bank has established a systematic
methodology for the determination of provisions for loan losses. The methodology
is set forth in a formal policy and takes into consideration the need for an
overall general valuation allowance as well as specific allowances that are tied
to individual loans.

     In originating loans, we recognize that losses will occur and that the risk
of loss will vary with, among other things, the type of loan being made, the
creditworthiness of the borrower over the term of the loan, general economic
conditions and, in the case of a secured loan, the quality of the collateral for
the loan.

     The general valuation allowance is maintained to cover losses inherent in
the loan portfolio. Management's periodic evaluation of the adequacy of the
allowance is based on known and inherent risks in the portfolio, adverse
situations that may affect the borrower's ability to repay, the estimated value
of any underlying collateral and current economic conditions, as such factors
may be applicable. Specific valuation allowances are established to absorb
losses on loans for which full collectibility cannot be reasonably assured.

     Our evaluation of the adequacy of the allowance for loan losses includes a
review of all loans on at least a quarterly basis. For residential mortgage
loans and consumer loans, the primary factors used to determine the adequacy of
the allowance are delinquency, collateral value, general economic conditions
and, where applicable, individual borrower information that is known to us. For
commercial loans and commercial real estate loans the review includes financial
performance of the borrower, payment history, collateral value, general economic
conditions and more specific economic conditions affecting specific industries
or business activities of the borrowers within the portfolio segments.

     The amount of the general portion of the allowance for loan losses is
determined by applying loss factors to the outstanding loans in the portfolio.
The amount of the factor applied to the loans is dependent upon the type of loan
and management's assessment of the relative risk associated with that loan type.
The factors may change from time to time if conditions or events warrant such
change. American Bank commenced operations in 1997, and as of December 31, 2003
had recorded losses on three loans. In addition, we have had very limited
amounts of loan delinquencies. As a result, we rely upon the past experience and
knowledge of management, gained at other banking institutions where they have
worked, as a basis for determining our loss factors.

     Management maintains an allowance for loan losses that it considers
adequate based on the evaluation process that it performs on a quarterly basis.
As part of this process, management considers it appropriate to maintain a
portion of the allowance that is based on credit quality trends, loan volume,
current economic trends and other uncertainties. This portion of the allowance
for loan losses is reflected as the unallocated portion in the table below that
indicates the distribution of the allowance.

     At December 31, 2003 and December 31, 2002, American Bank had an allowance
for loan losses of approximately $2,412,000 and $1,759,000, respectively.
Management believes that the allowance for loan losses at December 31, 2003 was
adequate to absorb losses inherent in the portfolio at that date. Although
management believes that it uses the best information available to make such
determinations, future adjustments to the allowance for loan losses may be
necessary, and the results of operations could be significantly and adversely
affected if circumstances differ substantially from the assumptions used in
making the determinations. Furthermore, while American Bank believes it has
established its existing allowance for loan losses in accordance with accounting
principles generally accepted in the United States of America, there can be no
assurance that the Pennsylvania Department of Banking or the Board of Governors
of the Federal Reserve System, in reviewing our loan portfolio, will not request
us to increase our allowance for loan losses. In addition, because future events
affecting borrowers and collateral cannot be predicted with certainty, there can
be no assurance that the existing allowance for loan losses is adequate or that
material increases will not be necessary should the quality of any loans
deteriorate as a result of the factors discussed above. Any material increase in
the allowance for loan losses may adversely affect American Bank's financial
condition and results of operations.

                                       9
<PAGE>

     The following table sets forth an analysis of American Bank's allowance for
loan losses.

<TABLE>
<CAPTION>
                                                              YEARS ENDED
                                                              DECEMBER 31,
                                        -----------------------------------------------------
                                          2003        2002        2001       2000      1999
                                        -------     -------     -------    -------    -------
                                                         (DOLLARS IN THOUSANDS)
<S>                                     <C>         <C>         <C>        <C>        <C>
Balance at beginning period .........   $ 1,759     $ 1,998     $ 1,242    $   767    $   508
Provision for loan losses ...........       405         212         651        475        259
Allowance recorded in connection
  with purchase of loan pools .......        --          --         105         --         --
Recoveries ..........................       251           4          --         --         --
Charge-offs .........................        (3)       (455)         --         --         --
                                        -------     -------     -------    -------    -------
Net (charge-offs) recoveries ........       248        (451)         --         --         --
                                        -------     -------     -------    -------    -------
Balance at end of period ............   $ 2,412     $ 1,759     $ 1,998    $ 1,242    $   767
                                        =======     =======     =======    =======    =======
Ratio of net charge-offs during the                                               %          %
  period to average loans outstanding
  during the period .................     (0.15)       0.34           0%         0%         0%
                                        =======     =======     =======    =======    =======
Ratio of net charge-offs during the
  period to average non-performing
  assets ............................         0%          0%          0%         0%         0%
                                        =======     =======     =======    =======    =======
</TABLE>

     The allocation of our allowance for loan losses at the dates indicated is
summarized as follows:

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                -------------------------------------------------------------------------------------------------------------
                                2003                                2002                                   2001
                ---------------------------------    ----------------------------------     ---------------------------------
                                         PERCENT                               PERCENT                               PERCENT
                                         OF LOANS                              OF LOANS                              OF LOANS
                               LOAN      IN EACH                     LOAN      IN EACH                     LOAN      IN EACH
                 AMOUNT       AMOUNTS    CATEGORY    AMOUNT OF      AMOUNTS    CATEGORY      AMOUNT       AMOUNTS    CATEGORY
                 OF LOSS        BY       TO TOTAL       LOSS          BY       TO TOTAL      OF LOSS        BY       TO TOTAL
                ALLOWANCE    CATEGORY      LOANS     ALLOWANCE     CATEGORY      LOANS      ALLOWANCE    CATEGORY     LOANS
                ---------    --------    --------    ---------     --------    --------     ---------    --------    --------
                                                          (DOLLARS IN THOUSANDS)
<S>             <C>          <C>          <C>         <C>          <C>          <C>         <C>          <C>          <C>
Commercial .... $    576     $ 41,937      20.26%     $    370     $ 25,249      18.44%     $    610     $ 21,139      15.34%
Commercial
 mortgage .....    1,327       96,609      46.66           959       65,569      47.89           578       40,668      29.50
Residential
 mortgage            245       53,393      25.79           182       32,344      23.62           400       64,810      47.01
Consumer ......      116       15,098       7.29           112       13,762      10.05           125       11,237       8.15
Unallocated ...      148           --         --           136           --         --           285           --         --
                --------     --------     ------      --------     --------     ------      --------     --------     ------
 Total ........ $  2,412     $207,037     100.00%     $  1,759     $136,924     100.00%     $  1,998     $137,854     100.00%
                ========     ========     ======      ========     ========     ======      ========     ========     ======
</TABLE>

<TABLE>
<CAPTION>
                                                DECEMBER 31,
                ------------------------------------------------------------------------
                                  2000                                1999
                ----------------------------------    ----------------------------------
                                          PERCENT                               PERCENT
                                          OF LOANS                              OF LOANS
                               LOAN       IN EACH                     LOAN      IN EACH
                AMOUNT OF     AMOUNTS     CATEGORY    AMOUNT OF     AMOUNTS     CATEGORY
                  LOSS          BY        TO TOTAL       LOSS         BY        TO TOTAL
                ALLOWANCE    CATEGORY      LOANS      ALLOWANCE    CATEGORY      LOANS
                ---------    --------    ---------    ---------    --------    ---------
                                           (DOLLARS IN THOUSANDS)
<S>             <C>          <C>           <C>        <C>          <C>           <C>
Commercial ...  $    274     $ 18,264      14.95%     $    164     $ 10,959      20.21%
Commercial
 mortgage ....       391       29,183      23.89           231       16,726      30.83
Residential
 mortgage ....       341       64,466      52.78           125       18,475      34.06
Consumer             107       10,235       8.38            84        8,085      14.90
Unallocated ..       129           --         --           163           --         --
                --------     --------     ------      --------     --------     ------
 Total .......  $  1,242     $122,148     100.00%     $    767     $ 54,245     100.00%
                ========     ========     ======      ========     ========     ======
</TABLE>

                                       10
<PAGE>

INVESTMENT ACTIVITIES

     Our securities portfolio is managed by our President and our Chief
Financial Officer in accordance with a written investment policy of the Board of
Directors that addresses strategies, types, and levels of permitted investments.

     At December 31, 2003, our securities portfolio equaled $252.1 million, or
52.30% of total assets. Our securities portfolio is comprised of mortgage-backed
securities, U.S. government and agency securities, corporate debt securities,
trust preferred securities, mutual funds and common stock. At December 31, 2003,
mortgage-backed securities amounted to $187.9 million, U.S. government and
agency securities amounted to $16.0 million, corporate obligations amounted to
$6.8 million, trust preferred securities amounted to $13.5 million, common stock
in domestic corporations amounted to $4.9 million and mutual funds amounted to
$20.3 million. At December 31, 2003, there were no securities of a single issuer
(excluding the U.S. Government and its agencies and corporations) that exceeded
10% of stockholders' equity.

     We classify securities as either available for sale or held to maturity
based upon our intent and ability to hold such securities. Securities available
for sale include debt and equity securities that are held for an indefinite
period of time and are not intended to be held to maturity. Securities available
for sale include securities that we intend to use as part of our overall
asset/liability management strategy and that may be sold in response to changes
in interest rates and resultant prepayment risk and other factors related
thereto. Securities available for sale are carried at fair value and unrealized
gains and losses (net of related tax effects) on such securities are excluded
from earnings but are included in stockholders' equity. Upon realization, such
gains and losses will be included in our earnings. Investment securities and
mortgage-backed securities that we have the positive intent and the ability to
hold to maturity are classified as held to maturity. Securities held to maturity
are carried at cost and are adjusted for amortization of premiums and accretion
of discounts over the estimated lives of the securities.

     Our securities portfolio composition is designed to provide a liquid
portfolio, yet maximize yield on a risk-adjusted basis. The process by which we
decide to acquire debt instruments, trust preferred securities, and corporate
and municipal obligations is similar to that of underwriting a loan. We evaluate
the potential credit risk associated with these types of investment instruments
by becoming familiar with the institution, its earnings history, and its ability
to meet its debt obligations.

     In management's opinion, the unrealized losses reflect changes in interest
rates subsequent to the acquisition of specific securities. The Company has the
ability to hold these securities until maturity or market price recovery.
Management believes that the unrealized losses represent temporary impairment of
the securities.

     The amortized cost and approximate fair value of securities as of
December 31, 2003, 2002 and 2001 are summarized as follows:

<TABLE>
<CAPTION>
                                                                   AT DECEMBER 31, 2003
                                                ------------------------------------------------------------
                                                                    GROSS           GROSS
                                                                 UNREALIZED       UNREALIZED
                                                AMORTIZED COST      GAINS           LOSSES        FAIR VALUE
                                                --------------   ----------       ----------      ----------
                                                                         (IN THOUSANDS)
<S>                                               <C>             <C>                  <C>         <C>
Available for sale securities:
   U.S. Government agencies ..............        $ 15,997        $     36        $     --         $ 16,033
   Corporate notes .......................           6,685             127              --            6,812
   Mortgage-backed securities ............         184,774             689            (999)         184,464
     Mutual funds, mortgage-backed mutual
       funds .............................          20,427              --            (100)          20,327
     U.S. Government agency preferred
       stock .............................           2,505              25            (273)           2,257
     Common stock ........................           4,224             677              --            4,901
     Trust preferred obligations .........           2,047               9            (104)           1,952
                                                  --------        --------        --------         --------
     Total ...............................        $236,659        $  1,563        $ (1,476)        $236,746
                                                  ========        ========        ========         ========
Held to maturity:
   Trust preferred obligations ...........        $ 11,530        $    263        $    (94)        $ 11,699
   Mortgage-backed securities ............           3,481              54              --            3,535
   Other .................................             350              --              --              350
                                                  --------        --------        --------         --------
     Total ...............................        $ 15,361        $    317        $    (94)        $ 15,584
                                                  ========        ========        ========         ========
</TABLE>

                                       11
<PAGE>

<TABLE>
<CAPTION>
                                                                       AT DECEMBER 31, 2002
                                                  -------------------------------------------------------------
                                                                       GROSS          GROSS
                                                                    UNREALIZED      UNREALIZED
                                                  AMORTIZED COST       GAINS          LOSSES         FAIR VALUE
                                                  --------------    ----------      ----------       ----------
                                                                          (IN THOUSANDS)
<S>                                                  <C>             <C>                  <C>         <C>
Available for sale securities:
   U.S. Government agencies .................        $ 35,993        $    181        $     --         $ 36,174
   Corporate notes ..........................          26,759             570            (372)          26,957
   Mortgage-backed securities ...............         164,192           2,198            (179)         166,211
   Mutual funds .............................          40,552              18              --           40,570
   Trust preferred obligations ..............           1,985              --            (232)           1,753
    U.S. Government agency preferred stock ..           2,505              27            (115)           2,417
   Common stock .............................           2,622              --            (135)           2,487
                                                     --------        --------        --------         --------
     Total ..................................        $274,608        $  2,994        $ (1,033)        $276,569
                                                     ========        ========        ========         ========
Held to maturity:
   Trust preferred obligations ..............        $  5,451        $     82        $    (33)        $  5,500
   Corporate notes ..........................           2,249              36              --            2,285
   Mortgage-backed securities ...............           5,666              93              --            5,759
   Other ....................................             100              --              --              100
                                                     --------        --------        --------         --------
     Total ..................................        $ 13,466        $    211        $    (33)        $ 13,644
                                                     ========        ========        ========         ========
</TABLE>

<TABLE>
<CAPTION>
                                                                       AT DECEMBER 31, 2001
                                                  -------------------------------------------------------------
                                                                       GROSS          GROSS
                                                                    UNREALIZED      UNREALIZED
                                                  AMORTIZED COST       GAINS          LOSSES         FAIR VALUE
                                                  --------------    ----------      ----------       ----------
                                                                          (IN THOUSANDS)
<S>                                                  <C>             <C>             <C>              <C>
Available for sale securities:
   U.S. Government agencies .................        $ 26,351        $    294        $     --         $ 26,645
   Corporate notes ..........................          45,079           1,216            (228)          46,067
   Mortgage backed securities ...............          67,375             326             (83)          67,618
   Mutual funds .............................          30,470              15              --           30,485
   Trust preferred obligations ..............           1,984              --             (93)           1,891
   Other securities .........................           2,505               3             (37)           2,471
                                                     --------        --------        --------         --------
     Total ..................................        $173,764        $  1,854        $   (441)        $175,177
                                                     ========        ========        ========         ========

Held to maturity:
   Trust preferred obligations ..............        $  2,113        $     51        $     (3)        $  2,161
   Corporate notes ..........................           2,249             119              --            2,368
   Mortgage backed securities ...............          10,360             181             (64)          10,477
   Other ....................................             100              --              --              100
                                                     --------        --------        --------         --------
     Total ..................................        $ 14,822        $    351        $    (67)        $ 15,106
                                                     ========        ========        ========         ========
</TABLE>

                                       12
<PAGE>

     The maturity schedule of the investment portfolio, by contractual maturity,
as of December 31, 2003, is shown below. Expected maturities may differ from
contractual maturities because the securities may be called or prepaid with or
without any penalty.

<TABLE>
<CAPTION>
                                                                          DUE AFTER FIVE
                             DUE IN ONE YEAR OR    DUE AFTER ONE YEAR    YEARS THROUGH TEN
                                    LESS           THROUGH FIVE YEARS          YEARS           DUE AFTER TEN YEARS
                             ------------------    ------------------    -----------------     -------------------
                               AMOUNT     RATE       AMOUNT     RATE      AMOUNT      RATE       AMOUNT     RATE
                             --------     -----    --------     -----     -------     ----     --------    -------
                                                                      (DOLLARS IN THOUSANDS)
<S>                           <C>         <C>       <C>         <C>       <C>         <C>       <C>         <C>
INVESTMENT
SECURITIES
----------
U.S. Government
   Agency ...............     $ 2,011     3.37%     $14,021     3.32%     $    --      --%      $    --       --%
Corporate notes .........       5,800     6.04        1,012     6.30           --       --           --       --
Trust preferred
   Obligations ..........          --       --           --       --           --       --       13,482     9.08
Mutual funds ............          --       --           --       --           --       --           --       --
Mortgage backed
   Securities ...........          --       --           --       --           --       --           --       --
U.S. Government
   agency preferred
   stock ................          --       --           --       --           --       --        2,257     4.41
Common stock ............          --       --           --       --           --       --           --       --
Other ...................         250     3.71           --       --          100     1.94           --       --
                              -------     ----      -------     ----      -------     ----      -------     ----
     Total ..............     $ 8,061     5.35%     $15,033     3.52%     $   100     1.94%     $15,739     8.41%
                              =======     ====      =======     ====      =======     ====      =======     ====
[restubbed]
<CAPTION>
                             NON-MATURITY AND       MORTGAGE-BACKED
                               MUTUAL FUNDS            SECURITIES                TOTAL
                            -----------------      -----------------      -----------------
                             AMOUNT      RATE       AMOUNT      RATE       AMOUNT      RATE
                            --------     ----      --------     ----      --------     ----
<S>                         <C>          <C>       <C>          <C>       <C>          <C>
INVESTMENT
SECURITIES
----------
U.S. Government
   Agency .............     $     --      --%      $     --      --%      $ 16,033     3.35%
Corporate notes .......           --       --            --       --         6,812     6.08
Trust preferred
   Obligations ........           --       --            --       --        13,482     9.08
Mutual funds ..........       20,327     1.82            --       --        20,327     1.82
Mortgage backed
   Securities .........           --       --       187,945     3.38       187,945     3.38
U.S. Government
   agency preferred
   stock ..............           --       --            --       --         2,257     4.41
Common stock ..........        4,901     1.22            --       --         4,901     1.22
Other .................           --       --            --       --           350     3.45
                            --------     ----      --------     ----      --------     ----
     Total ............     $ 25,228     1.70%     $187,945     3.38%     $252,107     3.60%
                            ========     ====      ========     ====      ========     ====
</TABLE>

                                       13
<PAGE>

DEPOSIT ACTIVITIES AND OTHER SOURCES OF FUNDS

     Deposits are the major source of funds for our lending and investment
activities. In addition, we also generate funds from loan principal repayments
and prepayments and from the maturities and cash flow of investment securities.
Scheduled loan repayments are a relatively stable source of funds, while deposit
inflows and outflows and loan prepayments are influenced significantly by
general interest rates and money market conditions. Borrowings from the Federal
Home Loan Bank of Pittsburgh may be used to supplement the availability of funds
from other sources or for long-term funding purposes. We enter into agreements
with customers as part of our cash management services whereby we sell
securities to the customer under an agreement to repurchase the security at par.
Securities sold under agreements to repurchase, which are secured borrowings,
generally mature within one day and are recorded at the amount of cash received
in connection with the transaction.

     DEPOSITS. Deposit instruments include NOW accounts, demand deposit
accounts, money market accounts, statement savings accounts and certificates of
deposit. Deposit account terms vary, with the principal differences being the
minimum balance, early withdrawal penalties and interest rate. We review our
deposit mix and pricing on a frequent basis. We do not utilize brokered
deposits, nor have we actively sought jumbo or other significant sources of
certificates of deposit.

     We believe we are competitive in the types of accounts and interest rates
we offer on our deposit products. Commensurate with our Internet banking
strategy, we pay interest rates on deposits that are very competitive, and are
typically in the top five percent (5%) of banks nationally. We determine deposit
interest rates based on a number of conditions, including rates paid by
competitors, rates on U.S. Treasury securities, rates offered on various Federal
Home Loan Bank of Pittsburgh advance programs and the deposit growth rate we are
seeking to achieve.

     We may use premiums to attract new deposit accounts. Such premiums would be
reflected in an increase in our advertising and promotion expense, as well as
our cost of funds. We also seek business checking accounts and promote
individual retirement accounts.

     The following table sets forth the dollar amount of deposits in the various
types of deposit programs offered by American Bank for the years indicated.

<TABLE>
<CAPTION>
                                                               YEARS ENDED DECEMBER 31,
                           ----------------------------------------------------------------------------------------------------
                                        2003                              2002                               2001
                           -------------------------------  ----------------------------------   ------------------------------
                             AVERAGE                           AVERAGE                             AVERAGE
                           OUTSTANDING  INTEREST   AVERAGE   OUTSTANDING   INTEREST    AVERAGE   OUTSTANDING  INTEREST  AVERAGE
                             BALANCE      PAID      RATE       BALANCE       PAID       RATE       BALANCE      PAID      RATE
                           -----------  --------   -------  -----------    --------    -------   -----------  --------  -------
                                                               (DOLLARS IN THOUSANDS)
<S>                         <C>         <C>         <C>       <C>          <C>          <C>       <C>          <C>        <C>
Demand, non-interest
 bearing ................   $ 15,324    $     --      --%     $ 12,286     $     --       --%     $ 21,358     $  --        --%
Demand,
 interest-bearing .......     94,011       1,263    1.34        76,535        1,673     2.19        52,993      1,795     3.39
Savings .................     91,416       1,386    1.52        85,818        1,975     2.30        55,460      2,188     4.13
Certificates of deposit      120,628       4,163    3.45       103,007        4,115     3.99        94,130      5,394     5.73
                            --------    --------    ----      --------     --------     ----      --------     ------     ----
   Total deposits .......   $321,379    $  6,812    2.12%     $277,646     $  7,763     2.80%     $223,941     $9,377     4.23%
                            ========    ========    ====      ========     ========     ====      ========     ======     ====
</TABLE>

                                       14
<PAGE>

     The following table indicates the amount of American Bank's certificates of
deposit and other deposits by time remaining until maturity as of December 31,
2003.

<TABLE>
<CAPTION>
                                                                                    MATURITY
                                                        --------------------------------------------------------------
                                                        3 MONTHS OR    OVER 3 TO    OVER 6 TO    OVER 12
                                                            LESS       6 MONTHS     12 MONTHS     MONTHS        TOTAL
                                                        -----------    ---------    ---------    --------     --------
                                                                                 (IN THOUSANDS)
<S>                                                       <C>          <C>          <C>          <C>          <C>
Certificates of deposit less than $100,000  .........     $ 16,037     $ 13,331     $ 21,988     $ 40,922     $ 92,278
Certificates of deposit of $100,000 or more .........        5,845        2,971        4,426       12,993       26,235
Public funds(1) .....................................          119           --            3            3          125
                                                          --------     --------     --------     --------     --------
Total certificates of deposit .......................     $ 22,001     $ 16,302     $ 26,417     $ 53,918     $118,638
                                                          ========     ========     ========     ========     ========
</TABLE>

----------

(1)  Deposits from governmental and other public entities.

     FEDERAL HOME LOAN BANK ADVANCES. American Bank has the ability to use
advances from the Federal Home Loan Bank of Pittsburgh to supplement its funds
and to meet deposit withdrawal requirements. The Federal Home Loan Bank of
Pittsburgh provides various forms of advances, or secured credit, for member
financial institutions. As a member of the Federal Home Loan Bank of Pittsburgh,
we are required to own capital stock in the Federal Home Loan Bank of Pittsburgh
and are authorized to apply for advances on the security of such stock and
certain of our mortgage loans and other assets (principally securities that are
obligations of, or guaranteed by, the U.S. Government and government agencies),
subject to certain creditworthiness standards. Depending on the program,
limitations on the amount of advances are based on the financial condition of
the member institution and the adequacy of collateral pledged to secure the
credit. See Note 10 to the Consolidated Financial Statements for additional
information related to Federal Home Loan Bank of Pittsburgh advances.

EMPLOYEES

     As of December 31, 2003, we had 46 full-time employees and three part-time
employees. The employees are not represented by any collective bargaining group.
We believe our relations with our employees are good.

                           REGULATION AND SUPERVISION

     The following discussion of certain laws and regulations that are
applicable to American Bank Incorporated and American Bank, as well as
descriptions of laws and regulations contained elsewhere herein, summarizes the
aspects of such laws and regulations which are deemed to be material to American
Bank Incorporated and American Bank. However, the summary does not purport to be
complete and is qualified in its entirety by reference to applicable laws and
regulations. Any change in this regulation, whether by the Federal Deposit
Insurance Corporation, the Pennsylvania Department of Banking, the Board of
Governors of the Federal Reserve System or Congress, could have a material
adverse impact on American Bank Incorporated and American Bank and their
operations.

AMERICAN BANK INCORPORATED

     HOLDING COMPANY ACQUISITIONS. American Bank Incorporated is a bank holding
company within the meaning of the Bank Holding Company Act. Federal law
generally prohibits a company, without prior Federal Reserve approval, from
acquiring the ownership or control of any bank. In accordance with Board of
Governors of the Federal Reserve System policy, American Bank Incorporated is
expected to act as a source of financial strength to American Bank and to commit
resources to support American Bank in circumstances where American Bank
Incorporated might not do so absent such policy. Under the Bank Holding Company
Act, American Bank Incorporated is subject to periodic examination by the Board
of Governors of the Federal Reserve System and is required to file periodic
reports of its operations and such additional information as the Board of
Governors of the Federal Reserve System may require.

     From time to time legislation may be introduced in the United States
Congress which could result in additional or in less regulation of the business
of American Bank Incorporated and American Bank. It cannot be

                                       15
<PAGE>

predicted at this time whether any such legislation actually will be adopted or
how such adoption would affect the business of American Bank Incorporated or
American Bank.

     BANK HOLDING COMPANY ACT ACTIVITIES AND OTHER LIMITATIONS. A bank holding
company is a legal entity separate and distinct from its subsidiary bank or
banks. Normally, the major source of a holding company's revenue is dividends a
holding company receives from its subsidiary banks. The right of a bank holding
company to participate as a stockholder in any distribution of assets of its
subsidiary banks upon their liquidation or reorganization or otherwise is
subject to the prior claims of creditors of such subsidiary banks. The
subsidiary banks are subject to claims by creditors for long-term and short-term
debt obligations, including obligations for Federal funds purchased and
securities sold under repurchase agreements, as well as deposit liabilities.

     The Bank Holding Company Act also prohibits a bank holding company, with
certain exceptions, from acquiring more than 5% of the voting shares of any
company that is not a bank and from engaging in any business other than banking
or managing or controlling banks. Under the Bank Holding Company Act, the Board
of Governors of the Federal Reserve System is authorized to approve the
ownership of shares by a bank holding company in any company, the activities of
which the Board of Governors of the Federal Reserve System has determined to be
so closely related to banking or to managing or controlling banks as to be a
proper incident thereto. In making such determinations, the Board of Governors
of the Federal Reserve System is required to weigh the expected benefit to the
public, such as greater convenience, increased competition or gains in
efficiency, against the possible adverse effects, such as undue concentration of
resources, decreased or unfair competition, conflicts of interest or unsound
banking practices. A bank holding company that becomes a Financial Holding
Company under the 1999 Act is permitted to engage in activities that are
financial in nature or incidental to such financial activities. The 1999 Act
lists certain activities that are considered financial in nature and permits the
Board of Governors of the Federal Reserve System to expand that list to include
other activities that are complementary to the activities on the preapproved
list. The preapproved activities include (1) securities underwriting, dealing
and market making; (2) insurance underwriting; (3) merchant banking; and (4)
insurance company portfolio investments.

     The Board of Governors of the Federal Reserve System has by regulation
determined that certain activities are closely related to banking within the
meaning of the Bank Holding Company Act. These activities include operating a
mortgage company, finance company, credit card company, factoring company, trust
company or savings association; performing certain data processing operations;
providing limited securities brokerage services; acting as an investment or
financial advisor; acting as an insurance agent for certain types of
credit-related insurance; leasing personal property on a full-payout,
non-operating basis; providing tax planning and preparation services; operating
a collection agency; and providing certain courier services. The Board of
Governors of the Federal Reserve System also has determined that certain other
activities, including real estate brokerage and syndication, land development,
property management and underwriting of life insurance not related to credit
transactions, are not closely related to banking and a proper incident thereto.
However, under the Gramm-Leach-Bliley Act of 1999, certain of these activities
are permissible for a bank holding company that becomes a financial holding
company under the Gramm-Leach-Bliley Act. American Bank Incorporated has not
elected to qualify as a financial holding company, although it may seek to do so
in the future. Bank holding companies may qualify to become a financial holding
company if:

o    each of its depository institution subsidiaries is "well capitalized";

o    each of its depository institution subsidiaries is "well managed";

o    each of its depository institution subsidiaries has at least a
     "satisfactory" Community Reinvestment Act rating at its most recent
     examination; and

o    the bank holding company has filed a certification with the Federal Reserve
     Board that it elects to become a financial holding company.

     CAPITAL REQUIREMENTS. The Board of Governors of the Federal Reserve System
has adopted capital adequacy guidelines for bank holding companies (on a
consolidated basis) substantially similar to those of American Bank, discussed
below. On a pro forma basis following completion of the offering, American Bank
Incorporated's

                                       16
<PAGE>

pro forma Tier 1 and total capital would exceed the Board of Governors of the
Federal Reserve System's capital adequacy requirements.

     SARBANES-OXLEY ACT OF 2002. The Sarbanes-Oxley Act of 2002 implemented
legislative reforms intended to address corporate and accounting irregularities.
In addition to the establishment of a new accounting oversight board which
enforces auditing, quality control and independence standards and is funded by
fees from all publicly traded companies, the Act restricts accounting companies
from providing both auditing and consulting services. To ensure auditor
independence, any non-audit services being provided to an audit client require
pre-approval by the company's audit committee members. In addition, the audit
partners must be rotated. The Act requires chief executive officers and chief
financial officers, or their equivalent, to certify to the accuracy of periodic
reports filed with the SEC, subject to civil and criminal penalties if they
knowingly or willfully violate this certification requirement. In addition,
under the Act, counsel will be required to report evidence of a material
violation of the securities laws or a breach of fiduciary duty by a company to
its chief executive officer or its chief legal officer, and, if such officer
does not appropriately respond, to report such evidence to the audit committee
or other similar committee of the board of directors or the board itself.

     The legislation accelerates the time frame for disclosures by public
companies, as they must immediately disclose any material changes in their
financial condition or operations. Directors and executive officers must also
provide information for most changes in ownership in a company's securities
within two business days of the change. The period during which certain types of
law suits can be instituted against a company or its officers has been extended,
and bonuses issued to top executives prior to restatement of a company's
financial statements are now subject to disgorgement if such restatement was due
to corporate misconduct. Executives are also prohibited from insider trading
during retirement plan "blackout" periods, and loans to company executives are
restricted. In addition, civil and criminal penalties have been enhanced.

     The Act also increases the oversight of, and codifies certain requirements
relating to, audit committees of public companies and how they interact with the
company's "registered public accounting firm" (RPAF). Audit Committee members
must be independent and are barred from accepting consulting, advisory or other
compensatory fees from the issuer. In addition, companies must disclose whether
at least one member of the committee is a "financial expert" (as such term will
be defined by the SEC) and if not, why not. Under the Act, a RPAF is prohibited
from performing statutorily mandated audit services for a company if such
company's chief executive officer, chief financial officer, comptroller, chief
accounting officer or any person serving in equivalent positions has been
employed by such firm and participated in the audit of such company during the
one-year period preceding the audit initiation date. The Act also prohibits any
officer or director of a company or any other person acting under their
direction from taking any action to fraudulently influence, coerce, manipulate
or mislead any independent public or certified accountant engaged in the audit
of the company's financial statements for the purpose of rendering the financial
statement's materially misleading. In accordance with the Act, the SEC proposed
rules requiring inclusion of an internal control report and assessment by
management in the annual report to shareholders. The Act requires the RPAF that
issues the audit report to attest to and report on management's assessment of
the company's internal controls. In addition, the Act requires that each
financial report required to be prepared in accordance with (or reconciled to)
generally accepted accounting principles and filed with the SEC reflect all
material correcting adjustments that are identified by a RPAF in accordance with
generally accepted accounting principles and the rules and regulations of the
SEC.

     RESTRICTIONS ON TRANSACTIONS WITH AFFILIATES. Transactions between a bank
and its "affiliates" are subject to quantitative and qualitative restrictions
under Sections 23A and 23B of the Federal Reserve Act and FDIC regulations.
Affiliates of a bank include, among other entities, the bank's holding company
and companies that are controlled by or under common control with the bank.

     In general, the extent to which a bank or its subsidiaries may engage in
certain "covered transactions" with affiliates is limited to an amount equal to
10% of the institution's capital and surplus, in the case of covered
transactions with any one affiliate, and to an amount equal to 20% of such
capital and surplus, in the case of covered transactions with all affiliates. In
addition, a bank and its subsidiaries may engage in covered transactions and
certain other transactions only on terms and under circumstances that are
substantially the same, or at least as favorable to the savings bank or its
subsidiary, as those prevailing at the time for comparable transactions with
nonaffiliated companies. A "covered transaction" is defined to include a loan or
extension of credit to an affiliate; a

                                       17
<PAGE>

purchase of investment securities issued by an affiliate; a purchase of assets
from an affiliate, with certain exceptions; the acceptance of securities issued
by an affiliate as collateral for a loan or extension of credit to any party; or
the issuance of a guarantee, acceptance or letter of credit on behalf of an
affiliate.

     In addition, Sections 22(h) and (g) of the Federal Reserve Act place
restrictions on loans to executive officers, directors and principal
stockholders. Under Section 22(h), loans to a director, an executive officer and
to a greater than 10% stockholder of a bank, and certain affiliated interests of
either, may not exceed, together with all other outstanding loans to such person
and affiliated interests, the bank's loans to one borrower limit (generally
equal to 15% of the institution's unimpaired capital and surplus). Section 22(h)
also requires that loans to directors, executive officers and principal
stockholders be made on terms substantially the same as offered in comparable
transactions to other persons and also requires prior board approval for certain
loans. In addition, the aggregate amount of extensions of credit by a bank to
all insiders cannot exceed the institution's unimpaired capital and surplus.
Furthermore, Section 22(g) places additional restrictions on loans to executive
officers.

     FEDERAL SECURITIES LAWS. American Bank Incorporated's common stock is
registered with the SEC under Section 12(g) of the Securities Exchange Act of
1934. American Bank Incorporated is subject to the proxy and tender offer rules,
insider trading reporting requirements and restrictions, and certain other
requirements under the Exchange Act.

AMERICAN BANK

     American Bank operates as a state-chartered commercial bank incorporated
under the Pennsylvania Banking Code, and is a member bank of the Federal Reserve
Bank of Philadelphia. As such, we are subject to extensive regulation and
examination by the Pennsylvania Department of Banking and the Board of Governors
of the Federal Reserve System, as well as by the Federal Deposit Insurance
Corporation as the insurer of our deposit accounts. These regulatory authorities
regulate or monitor all areas of our operations, including capital requirements,
loans, interest rates, investments, borrowings, deposits, record keeping,
security devices, issuances of securities, payment of dividends, interest rate
risk management, acquisitions, mergers, establishment of branches, and corporate
reorganizations. There are periodic examinations by the Pennsylvania Department
of Banking and the Board of Governors of the Federal Reserve System to evaluate
our compliance with various regulatory requirements. This regulation and
supervision establishes a comprehensive framework of activities in which an
institution can engage and is intended primarily for the protection of the
insurance fund and depositors. The regulatory structure also gives the
regulatory authorities extensive discretion in connection with their supervisory
and enforcement activities and examination policies, including policies with
respect to the classification of assets and the establishment of adequate loan
loss reserves for regulatory purposes. Any change in such regulation, whether by
the Pennsylvania Department of Banking, the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System, or Congress
could have a material adverse impact on American Bank and its operations.

     FEDERAL DEPOSIT INSURANCE CORPORATION ASSESSMENTS. The depositors of
American Bank are insured by the Bank Insurance Fund of the Federal Deposit
Insurance Corporation, up to applicable limits, and are subject to deposit
premium assessments by the Bank Insurance Fund. Under the Federal Deposit
Insurance Corporation's risk-based insurance system, Bank Insurance Fund
assessed deposits have been subject to premiums, which have varied, depending
upon the institution's capital position and other supervisory factors.

     The Federal Deposit Insurance Corporation may terminate the deposit
insurance of any insured depository institution, including American Bank, if it
determines after a hearing that the institution has engaged or is engaging in
unsafe or unsound practices, is in an unsafe or unsound condition or has
violated any applicable law, regulation, order, or any condition imposed by an
agreement with the Federal Deposit Insurance Corporation. The Federal Deposit
Insurance Corporation may also suspend deposit insurance temporarily prior to
the hearing process for the permanent termination of insurance, if, among other
things, the institution has no tangible capital. If insurance of accounts is
terminated, the accounts at the institution at the time of the termination, less
subsequent withdrawals, shall continue to be insured for a period of six months
to two years, as determined by the Federal Deposit Insurance Corporation.
American Bank is not aware of any circumstances that would result in termination
of its deposit insurance.

                                       18
<PAGE>

     CAPITAL REQUIREMENTS. The Board of Governors of the Federal Reserve System
has promulgated regulations and adopted a statement of policy regarding the
capital adequacy of state-chartered banks that are members of the Federal
Reserve System. The Board of Governors of the Federal Reserve System's capital
regulations establish a minimum 3% Tier 1 leverage capital requirement for the
most highly-rated member banks, with an additional cushion of at least 100 to
200 basis points for all other state-chartered member banks, which effectively
will increase the minimum Tier 1 leverage ratio for such other banks to 4% to 5%
or more. The highest-rated banks are those that the Board of Governors of the
Federal Reserve System determines are not anticipating or experiencing
significant growth and have well diversified risk, including no undue interest
rate risk exposure, excellent asset quality, high liquidity, good earnings, and,
in general, which are considered a strong banking organization and are rated
composite 1 under the Uniform Financial Institutions Rating System. Tier 1 or
core capital is defined as the sum of common stockholders' equity (including
retained earnings), non-cumulative perpetual preferred stock and related
surplus, and minority interests in consolidated subsidiaries, minus all
intangible assets other than certain qualifying supervisory goodwill and certain
purchased mortgage servicing rights.

     The Board of Governors of the Federal Reserve System also requires that
banks meet a risk-based capital standard, which requires the maintenance of
total Tier 1 capital and supplementary (Tier 2) capital to risk-weighted assets
of 8.0%, of which at least 4.0% shall be Tier 1 capital.

     In determining the amount of risk-weighted assets, all assets, plus certain
off-balance sheet assets, are multiplied by a risk-weight of 0% to 100%, based
on risks the Board of Governors of the Federal Reserve System believes are
inherent in the type of asset or item. The components of Tier 1 capital are
equivalent to those discussed above under the leverage capital standard. The
components of supplementary capital include certain perpetual preferred stock,
certain mandatory convertible securities, certain subordinated debt and
intermediate preferred stock and general allowances for loan and lease losses.
Allowance for loan and lease losses includable in supplementary capital is
limited to a maximum of 1.25% of risk-weighted assets. Overall, the amount of
capital counted toward supplementary capital cannot exceed 100% of core capital.
As of December 31, 2003, American Bank met each of its capital requirements.

     The Board of Governors of the Federal Reserve System, along with the other
Federal bank regulatory agencies, adopted a regulation providing that the
agencies will take account of the exposure of a bank's capital and economic
value to changes in interest rate risk in assessing a bank's capital adequacy.
According to the agencies, applicable considerations include the quality of
American Bank's interest rate risk management process, the overall financial
condition of American Bank and the level of other risks at American Bank for
which capital is needed. Institutions with significant interest rate risk may be
required to hold additional capital. The agencies also have issued a joint
policy statement providing guidance on interest rate risk management, including
a discussion of the critical factors affecting the agencies' evaluation of
interest rate risk in connection with capital adequacy.

     A bank may be subject to higher minimum requirements than those described
above if, for example, a bank has previously received special attention or has a
high susceptibility to interest rate risk. Banks with capital ratios below the
required minimum are subject to certain administrative actions, including prompt
corrective action, the termination of deposit insurance upon notice and hearing,
or a temporary suspension of insurance without a hearing.

     American Bank is also subject to more stringent Pennsylvania Department of
Banking capital guidelines. Although not adopted in regulation form, the
Pennsylvania Department of Banking utilizes capital standards requiring a
minimum of 6% leverage capital and 10% risk-based capital. The components of
leverage and risk-based capital are substantially the same as those defined by
the Board of Governors of the Federal Reserve System. As of December 31, 2003,
American Bank exceeded the Pennsylvania Department of Banking's capital
guidelines.

     PROMPT CORRECTIVE ACTION. In addition to the capital adequacy guidelines,
the Board of Governors of the Federal Reserve System is required to take "prompt
corrective action" with respect to any state-chartered bank that does not meet
specified minimum capital requirements. Federal regulations applicable to
financial institutions establish five capital levels: "well capitalized,"
"adequately capitalized," "undercapitalized," "severely undercapitalized" and
"critically undercapitalized."

o    An institution is considered "well capitalized" if it has a total
     risk-based capital ratio of 10% or greater, a Tier 1

                                       19
<PAGE>

     risk-based capital ratio of 6% or greater, and a leverage ratio of 5% or
     greater, and it is not subject to an order, written agreement, capital
     directive, or prompt corrective action directive to meet and maintain a
     specific capital level for any capital measure.

o    An institution is considered "adequately capitalized" if it has a total
     risk-based capital ratio of 8% or greater, a Tier 1 risk-based capital
     ratio of at least 4% and leverage capital ratio of 4% or greater (or a
     leverage ratio of 3% or greater if the institution is rated composite 1 in
     its most recent report of examination, subject to appropriate Federal bank
     regulatory agency guidelines), and the institution does not meet the
     definition of an undercapitalized institution.

o    An institution is considered "undercapitalized" if it has a total
     risk-based capital ratio that is less than 8%, a Tier 1 risk-based capital
     ratio that is less than 4%, or a leverage ratio that is less than 4% (or a
     leverage ratio that is less than 3% if the institution is rated composite 1
     in its most recent report of examination, subject to appropriate Federal
     Banking agency guidelines).

o    A "significantly undercapitalized" institution is one which has a total
     risk-based capital ratio that is less than 6%, a Tier 1 risk-based capital
     ratio that is less than 3%, or a leverage ratio that is less than 3%.

o    A "critically undercapitalized" institution is one that has a ratio of
     tangible equity to total assets that is equal to or less than 2%.

     Under certain circumstances, a "well capitalized," "adequately
capitalized," or "undercapitalized" institution may be treated as if the
institution were in the next lower capital category.

     Federal banking regulators are authorized to take "prompt corrective
action" with respect to capital-deficient institutions. In addition to requiring
the submission of a capital restoration plan, Federal law contains broad
restrictions on certain activities of undercapitalized institutions involving
asset growth, acquisitions, branch establishment, and expansion into new lines
of business. With certain exceptions, an insured depository institution is
prohibited from making capital distributions, including dividends, and is
prohibited from paying management fees to control persons (e.g., a holding
company) if the institution would be undercapitalized after any such
distribution or payment.

     As an institution's capital decreases, the powers of the Federal regulators
become greater. A significantly undercapitalized institution is subject to
mandated capital raising activities, restrictions on interest rates paid and
transactions with affiliates, removal of management, and other restrictions. The
regulators have very limited discretion in dealing with a critically
undercapitalized institution and are in most cases required to appoint a
receiver or conservator if the capital deficiency is not corrected promptly.

     ACTIVITIES AND INVESTMENTS OF INSURED STATE-CHARTERED BANKS. The activities
and equity investments of Federal Deposit Insurance Corporation-insured,
state-chartered member banks are generally limited to those that are permissible
for national banks. Under regulations dealing with equity investments, an
insured state bank generally may not directly or indirectly acquire or retain
any equity investment of a type, or in an amount that is not permissible for a
national bank unless the Federal Deposit Insurance Corporation has determined
that such activities would pose no risk to the insurance fund of which it is a
member and the bank is in compliance with applicable regulatory capital
requirements. An insured state bank is not prohibited from, among other things,
(a) acquiring or retaining a majority interest in a subsidiary, (b) investing as
a limited partner in a partnership, the sole purpose of which is direct or
indirect investment in the acquisition, rehabilitation, or new construction of a
qualified housing project, provided that such limited partnership investments
may not exceed 2% of the bank's total assets, and (c) acquiring up to 10% of the
voting stock of a company that solely provides or reinsures directors',
trustees', and officers' liability insurance coverage or bankers' blanket bond
group insurance coverage for insured depository institutions.

     In addition, an insured state-chartered bank may not, directly, or
indirectly through a subsidiary, engage as "principal" in any activity that is
not permissible for a national bank, unless the Federal Deposit Insurance
Corporation has determined that such activities would pose no risk to the
insurance fund of which it is a member and

                                       20
<PAGE>

the bank is in compliance with applicable regulatory capital requirements. Any
insured state-chartered bank directly or indirectly engaged in any activity that
is not permitted for a national bank must cease the impermissible activity.

     PENNSYLVANIA BANKING LAW. The Pennsylvania Banking Code contains detailed
provisions governing the organization, location of offices, rights and
responsibilities of directors, officers, employees, and depositors, as well as
corporate powers, savings and investment operations, and other aspects of
American Bank and its affairs. The Pennsylvania Banking Code delegates extensive
rule making power and administrative discretion to the Pennsylvania Department
of Banking so that the supervision and regulation of state-chartered commercial
banks may be flexible and readily responsive to changes in economic conditions
and in savings and lending practices.

     One of the purposes of the Pennsylvania Banking Code is to provide banks
with the opportunity to be competitive with each other and with other financial
institutions existing under other Pennsylvania laws and other state, Federal and
foreign laws. A Pennsylvania bank may locate or change the location of its
principal place of business and establish an office anywhere in the
Commonwealth, with the prior approval of the Pennsylvania Department of Banking.

     The Pennsylvania Department of Banking generally examines each bank not
less frequently than once every two years. The Pennsylvania Department of
Banking may order any bank to discontinue any violation of law or unsafe or
unsound business practice and may direct any trustee, officer, attorney or
employee of a bank engaged in an objectionable activity, after the Pennsylvania
Department of Banking has ordered the activity to be terminated, to show cause
at a hearing before the Pennsylvania Department of Banking why such person
should not be removed.

     RESTRICTIONS ON THE PAYMENT OF DIVIDENDS. Under Pennsylvania law, American
Bank may pay dividends only out of accumulated net earnings and may not declare
or pay any dividend requiring a reduction of our statutorily required surplus.
As previously discussed, state and Federal regulatory authorities have adopted
standards for the maintenance of adequate levels of capital by banks. Adherence
to such standards further limits our ability to pay dividends. In addition, our
regulators have authority to prohibit us from engaging in an unsafe or unsound
practice in conducting our business. The payment of dividends, depending upon
our financial condition, could be deemed to constitute such an unsafe or unsound
practice.

     COMMUNITY REINVESTMENT ACT. The Community Reinvestment Act requires that,
in connection with examinations of financial institutions, the Federal
regulatory authorities evaluate the record of such financial institutions in
meeting the credit needs of their local communities, including low- and
moderate-income neighborhoods, consistent with the safe and sound operation of
those institutions. These factors are also considered in evaluating mergers,
acquisitions, and applications to open a branch or facility. American Bank
received a "satisfactory" Community Reinvestment Act rating under the current
Community Reinvestment Act regulations in its most recent examination by the
Board of Governors of the Federal Reserve System.

     These and any other proposed laws, rules, and regulations could force us to
comply with more complex and perhaps more burdensome regulatory requirements,
which could materially adversely affect our business, financial condition,
results of operations, and cash flows.

TAXATION

FEDERAL TAXATION

     For federal income tax purposes, American Bank Incorporated files a
consolidated federal income tax return with its wholly owned subsidiaries on a
fiscal year basis. The applicable federal income tax expense or benefit is
properly allocated to each company based upon taxable income or loss calculated
on a separate company basis.

     Deferred income taxes arise from the recognition of items of income and
expense for tax purposes in years different from those in which they are
recognized in the consolidated financial statements. American Bank Incorporated
accounts for deferred income taxes by the asset and liability method, applying
the enacted statutory rates in effect at the balance sheet date to differences
between the book basis and the tax basis of assets and liabilities. The
resulting deferred tax liabilities and assets will be adjusted to reflect
changes in the tax laws.

                                       21
<PAGE>

     American Bank Incorporated is subject to the corporate alternative minimum
tax to the extent it exceeds American Bank Incorporated's regular income tax for
the year. The alternative minimum tax is imposed at the rate of 20% of a
specially computed tax base. For purposes of the alternative minimum tax, the
amount of alternative minimum taxable income that may be offset by net operating
losses is limited to 90% of alternative minimum taxable income.

     American Bank Incorporated`s income tax returns have not been audited by
the Internal Revenue Service for the past five years.

STATE TAXATION

     American Bank Incorporated is subject to the Corporate Net Income Tax and
the Capital Stock Tax of the Commonwealth of Pennsylvania. Dividends received
from American Bank qualify for a 100% dividends-received deduction and are not
subject to Corporate Net Income Tax. In addition, American Bank Incorporated's
investments in its subsidiaries qualify as exempt intangible assets and greatly
reduce the amount of Capital Stock Tax assessed. American Bank is subject to the
Pennsylvania Bank Shares Tax based on its financial net income determined in
accordance with generally accepted accounting principles with certain
adjustments.

ADDITIONAL RISK FACTORS

     In addition to factors discussed in the description of the business of
American Bank Incorporated and American Bank and elsewhere in this report, the
following are factors that could adversely affect future results of operations
and the financial condition of American Bank Incorporated.

NETWORK AND COMPUTER SYSTEMS COULD FAIL, WHICH COULD ADVERSELY AFFECT OUR
BUSINESS

     Our computer systems and network infrastructure could be vulnerable to
unforeseen problems. Because we conduct a substantial portion of our business
over the Internet and because we may now or in the future outsource certain
critical functions to qualified third parties, our operations depend on our
ability, as well as that of our third-party service providers, to protect our
computer systems and network infrastructure against damage from fire, power
loss, telecommunications failure, physical break-ins, or similar catastrophic
events.

     Customers may become dissatisfied by any system failure that interrupts our
ability to provide our services. Sustained or repeated system failures would
reduce the attractiveness of the electronic banking services that we provide.
Slower response time or system failures may also result from straining the
capacity of our software or hardware due to an increase in the volume of
services delivered through our servers. To the extent that we do not effectively
address any capacity constraints or system failures, our customers could seek
other providers of banking services. Any damage or failure that causes
interruptions in our operations could materially adversely affect our business,
financial condition, results of operations, and cash flows.

OUR SECURITY COULD BE BREACHED, WHICH COULD DAMAGE OUR REPUTATION AND DETER
CUSTOMERS FROM USING OUR SERVICES

     We must protect our computer systems and network from physical break-ins,
security breaches, and other disruptive problems caused by the Internet or other
users. Computer break-ins could jeopardize the security of information stored in
and transmitted through our computer systems and network, which would likely
adversely affect our ability to retain or attract customers, could damage our
reputation and could subject us to litigation. Although we rely on encryption
and authentication technology to provide the security and authentication
necessary to effect secure transmissions of confidential information, and
although we intend to continue to implement security technology and establish
operational procedures to prevent break-ins, damage, and failures, these
security measures may fail. Advances in computer capabilities, new discoveries
in the field of cryptography or other developments could result in a compromise
or breach of the algorithms we and our third-party service providers use to
protect customer transaction data. If any compromise of our security were to
occur, it could have a material adverse effect on our business, financial
condition, results of operations, and cash flows.

                                       22
<PAGE>

RAPIDLY CHANGING TECHNOLOGIES MAY CAUSE US TO DELAY INTRODUCTION OF NEW
PRODUCTS, SERVICES AND ENHANCEMENTS, WHICH MAY RESULT IN A LOSS OF EXISTING
CUSTOMERS OR A FAILURE TO ATTRACT NEW CUSTOMERS

     Our future success will depend on our ability to adapt to rapidly changing
technologies. We also will have to enhance existing products and services and
develop and introduce a variety of new products and services to address our
customers' changing demands. If we are unable to develop and bring additional
products and services to market in a timely manner, we could lose market share
to competitors who are able to offer these services, which could materially
adversely affect our business, financial condition, results of operations, and
cash flows.

WE OBTAIN ESSENTIAL SOFTWARE FROM, OR OUTSOURCE ESSENTIAL SERVICES TO,
THIRD-PARTY PROVIDERS WHO MAY TERMINATE THEIR AGREEMENTS WITH US, RESULTING IN
INTERRUPTIONS TO OUR INTERNET AND GENERAL BANKING OPERATIONS

     We obtain essential software and/or technical support from third-party
providers. We obtain or outsource our core banking software, certain electronic
bill payment functions and other additional software and services from or to
qualified third-party vendors. Our agreements with each service provider are
generally cancelable by either party upon specified notice periods. If one of
our third-party service providers terminates its agreement with us and we are
unable to replace such provider with another service provider, our operations
may be interrupted. If an interruption were to continue for a significant period
of time, our business, financial condition, results of operations, and cash
flows could be materially adversely affected.

ITEM 2. PROPERTIES
------------------

PROPERTIES

     The premises from which we operate are located at 4029 West Tilghman
Street, Allentown, Pennsylvania. American Bank leases the premises for its
principal office under a five-year operating lease agreement expiring November
2007. American Bank has the option to extend the lease agreement for four
additional five-year lease terms. American Bank is responsible for its direct or
proportionate share of real estate taxes, insurance, utilities, and maintenance
and repairs on the building. The lessor, Frederick J. Jaindl, is Chairman and a
principal shareholder of American Bank Incorporated. The minimum lease payments
due in 2004, 2005 and 2006 under the original terms of the lease are $303,000,
$305,000 and $322,000, respectively. We maintain a disaster recovery backup site
for our computers and data processing systems. This site is leased from a third
party. The lease is for three years expiring in November 2004 and can be renewed
for additional 3-year periods. The minimum annual payment under this lease is
$14,600 for the year ended 2004.

ITEM 3. LEGAL PROCEEDINGS
-------------------------

     American Bank is involved, from time to time, as plaintiff or defendant in
various legal actions arising in the normal course of its business. At December
31, 2003, American Bank was not involved in any material legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-----------------------------------------------------------

     No matters were submitted to a vote of stockholders during the fourth
quarter of the year under report.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
----------------------------------------------------------------

     The "Market for Common Stock" section of American Bank Incorporated's
Annual Report to Stockholders is incorporated herein by reference.


                                       23
<PAGE>

     Set forth below is certain information as of December 31, 2003 regarding
compensation plans that authorize equity securities for issuance to employees
and directors of the Company.

<TABLE>
<CAPTION>
====================================================================================================================
                               NUMBER OF SECURITIES TO BE
                                ISSUED UPON EXERCISE OF                                    NUMBER OF SECURITIES
                                OUTSTANDING OPTIONS AND         WEIGHTED AVERAGE         REMAINING AVAILABLE FOR
                                         RIGHTS                  EXERCISE PRICE            ISSUANCE UNDER PLAN
--------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                           <C>                        <C>
Stock Option Plan Approved by
   Shareholders............             255,588                       6.07                       116,385
--------------------------------------------------------------------------------------------------------------------
Plans not approved by
   Shareholders............               -0-                          -0-                         -0-
====================================================================================================================
         Total.............             255,588                       6.07                       116,385
====================================================================================================================
</TABLE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-------------------------------------------------------------------------------
        OF OPERATIONS
        -------------

     The "Management's Discussion and Analysis of Financial Condition and
Results of Operations" section of American Bank Incorporated's Annual Report to
Stockholders is incorporated herein by reference.

ITEM 7. FINANCIAL STATEMENTS
----------------------------

     The financial statements of American Bank Incorporated's Annual Report to
Stockholders are incorporated herein by reference.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
-----------------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------

     None.

ITEM 8A. CONTROLS AND PROCEDURES
--------------------------------

(a)  Evaluation of disclosure controls and procedures.

     Under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, we evaluated
the effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15(e)) under the Exchange Act) as of the end
of the period covered by this report. Based upon that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that, as of that date,
our disclosure controls and procedures were effective for the purpose of
ensuring that the information required to be disclosed in the reports that the
Company files or submits under the Exchange Act with the SEC (1) is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms, and (2) is accumulated and communicated to our
management, including our principal executive and principal financial officers,
as appropriate to allow timely decisions regarding required disclosure.

(b)  Changes in internal controls.

     There were no changes made in our internal controls during the quarter
ended December 31, 2003 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
--------------------------------------------------------------------------------
        WITH SECTION 16(A) OF THE EXCHANGE ACT
        --------------------------------------

     The "Proposal I--Election of Directors" section of the Company's definitive
Proxy Statement for the Company's 2004 Annual Meeting of Stockholders (the "2004
Proxy Statement") is incorporated herein by reference.


                                       24
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION
-------------------------------

     The "Proposal I--Election of Directors" section of the Company's 2004 Proxy
Statement is incorporated herein by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
---------------------------------------------------------------------------
         RELATED STOCKHOLDER MATTERS
         ---------------------------

     The "Proposal I--Election of Directors" section of the Company's 2004 Proxy
Statement is incorporated herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------

     The "Transactions with Certain Related Persons" section of the Company's
2004 Proxy Statement is incorporated herein by reference.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------

     (a)  FINANCIAL STATEMENTS
          --------------------

          (A) Independent Auditor's Report

          (B) Consolidated Balance Sheets

          (C) Consolidated Statements of Income

          (D) Consolidated Statements of Stockholders' Equity

          (E) Consolidated Statements of Cash Flows

          (F) Notes to Consolidated Financial Statements

     (b)  REPORTS ON FORM 8-K
          -------------------

          On October 20, 2003, the Company filed a Current Report on Form 8-K
          under Item 7-Financial Statements, Pro Forma Financial Information,
          and Exhibits and Item 12-Results of Operations and Financial
          Condition, announcing the results of its operations for the fiscal
          quarter ended September 30, 2003.

     (c)  EXHIBITS
          --------

3.1  Articles of Incorporation of American Bank Incorporated*

3.2  Bylaws of American Bank Incorporated*

4.1  Trust Agreement*

4.2  Form of Amended and Restated Trust Agreement of American Capital Trust I*

4.3  Form of Certificate of Trust*

4.4  Form of Common Stock Certificate of American Capital Trust I*

4.5  Form of Agreement as to Expenses and Liabilities of American Capital Trust
     *

4.6  Form of Preferred Stock Certificate of American Capital Trust I*

4.7  Form Certificate of Authentication*

4.8  Form of Preferred Securities Guarantee Agreement between American Bank
     Incorporated and Bankers Trust Company, as guarantee trustee*


                                       25
<PAGE>

4.9  Form of Indenture between American Bank Incorporated and Bankers Trust
     Company*

4.10 Form of Subordinated Debenture due 2032*

4.11 Form of Common Stock Certificate of American Bank Incorporated*

10.1 Employment Agreement with Mark W. Jaindl*

10.2 Stock Option Plan*

13   Portions of Annual Report to Stockholders

21   Subsidiaries of the Registrant*

23.1 Consent of Beard Miller Company LLP, Independent Auditors

31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the
     Sarbanes-Oxley Act of 2002

31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the
     Sarbanes-Oxley Act of 2002

32   Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
     Section 906 of the Sarbanes-Oxley Act of 2002

* Incorporated by reference to the Registration Statement on Form SB-2 of
American Bank Incorporated (file no. 333-75582), originally filed with the
Securities and Exchange Commission on December 21, 2001.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
-----------------------------------------------

     The "Proposal II--Ratification of Appointment of Auditors" section of the
Company's 2004 Proxy Statement is incorporated herein by reference.


                                       26
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Company has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

                                       AMERICAN BANK INCORPORATED

Date: March 26, 2004                   By: /s/ Mark W. Jaindl
                                           -------------------------------------
                                           Mark W. Jaindl
                                           President and Chief Executive Officer
                                           (Duly Authorized Representative)

     Pursuant to the requirements of the Securities Exchange of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
               SIGNATURES                         TITLE                                     DATE
               ----------                         -----                                     ----
<S>                                        <C>                                          <C>
/s/ Frederick J. Jaindl                    Chairman of the Board                        March 26, 2004
------------------------------------
Frederick J. Jaindl

/s/ Mark W. Jaindl                         President,  Chief Executive Officer          March 26, 2004
------------------------------------       and Vice Chairman (Principal
Mark W. Jaindl                             Executive Officer)

/s/ Harry C. Birkhimer                     Vice President and Chief  Financial          March 26, 2004
------------------------------------       Officer (Principal Financial and
Harry C. Birkhimer                         Accounting Officer)

/s/ David M. Jaindl                        Director                                     March 26, 2004
------------------------------------
David M. Jaindl

/s/ Elizabeth B. Gaul                      Director                                     March 26, 2004
------------------------------------
Elizabeth B. Gaul

/s/ John C. Long                           Director                                     March 26, 2004
------------------------------------
John C. Long

/s/ Philip S. Schwartz                     Director                                     March 26, 2004
------------------------------------
Philip S. Schwartz

/s/ Martin F. Spiro                        Director                                     March 26, 2004
------------------------------------
Martin F. Spiro

</TABLE>


                                       27