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, 2002
                                       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: _________

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

              PENNSYLVANIA                           01-0593266
              ------------                           ----------
(State or Other Jurisdiction of                (I.R.S. Employer
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, 2002 were
$21.4 million.

         As of February 28, 2003, there were 6,097,955 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 February 28, 2003 was $10.4 million.

                       DOCUMENTS INCORPORATED BY REFERENCE

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

2.       Proxy Statement for the 2003 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 $33.7 million.
American Bank Incorporated's principal business is overseeing and directing the
business of American Bank. At December 31, 2002, American Bank Incorporated had
total consolidated assets of $453.3 million, total deposits of $306.8 million
and stockholders' equity of $28.6 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.

         American Bank 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 American Bank 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 discounts, and allowance for losses) as of the
dates indicated:
<TABLE>
<CAPTION>

                                                                           AT DECEMBER 31,
--------------------------------------------------------------------------------------------------------------
                                          2002                       2001                       2000
                                 ----------------------       ---------------------      --------------------
                                    AMOUNT      PERCENT         AMOUNT      PERCENT         AMOUNT    PERCENT
                                 ---------      -------       --------      -------      ---------    -------
                                                                  (IN THOUSANDS)

<S>                              <C>             <C>         <C>             <C>        <C>             <C>
Real Estate Loans:
Commercial(1)...............     $  65,569       47.89%      $  40,668       29.50%     $   29,183      23.89%
Residential(2)..............        32,344       23.62          64,810       47.01          64,466      52.78
                                 ---------      ------       ---------      ------      ----------     ------
   Total real estate loans..        97,913       71.51         105,478       76.51          93,649      76.67
                                 ---------      ------       ---------      ------      ----------     ------
Other Loans:
Consumer loans(3)...........        13,762       10.05          11,237        8.15          10,235       8.38
Commercial..................        25,249       18.44          21,139       15.34          18,264      14.95
                                 ---------      ------       ---------      ------      ----------     ------
   Total other loans........        39,011       28.49          32,376       23.49          28,499      23.33
                                 ---------      ------       ---------      ------      ----------     ------

Total loans receivable......       136,924      100.00%        137,854      100.00%        122,148     100.00%
                                 =========      ======       =========      ======      ==========     ======

Less:
Deferred fees and costs.....          (239)                       (267)                       (292)
Allowance for losses........        (1,759)                     (1,998)                     (1,242)
                                 ---------                   ---------                  ----------
   Total loans receivable, net   $ 134,926                   $ 135,589                  $  120,614
                                 =========                   =========                  ==========
</TABLE>



                                                    AT DECEMBER 31,
-------------------------------------------------------------------------------
                                           1999                    1998
                                   ---------------------    -------------------
                                      AMOUNT     PERCENT       AMOUNT   PERCENT
                                   ---------     -------    ---------   -------
                                                    (IN THOUSANDS)

Real Estate Loans:
Commercial(1)...............       $   16,726     30.83%   $    7,127     19.88%
Residential(2)..............           18,475     34.06        17,417     48.58
                                   ----------    ------    ----------    ------
   Total real estate loans..           35,201     64.89        24,544     68.46
                                   ----------    ------    ----------    ------
Other Loans:
Consumer loans(3)...........            8,085     14.90         4,945     13.79
Commercial..................           10,959     20.21         6,360     17.75
                                   ----------    ------    ----------    ------
   Total other loans........           19,044     35.11        11,305     31.54
                                   ----------    ------    ----------    ------

Total loans receivable......           54,245    100.00%       35,849    100.00%
                                   ==========    ======    ==========    ======

Less:
Deferred fees and costs.....             (165)                    (57)
Allowance for losses........             (767)                   (508)
                                   ----------              ----------
   Total loans receivable, net     $   53,313              $   35,284
                                   ==========              ==========


--------------------------
(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 $750,000 or
less may be approved by one or more authorized senior officers, as required by
policy. Loans over $750,000 require approval by a 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, 2002, $65.6 million, or 47.89% 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,
2002, the largest such loan had a balance of $3.4 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, 2002, $4.2 million, or 3.07% 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, 2002, the
largest such loan had a balance of $986,000. At that date, we had no multifamily
residential real estate loans that were delinquent in excess of 30 days.

                                       4
<PAGE>

         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 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, 2002, $32.3 million, or
23.62% of American Bank's total loans receivable, consisted of one- to
four-family residential real estate and construction loans. We originated $24.7
million, $18.2 million, and $10.6 million of one- to four-family residential
mortgage and construction loans for the years ended December 31, 2002, 2001, and
2000 respectively. We purchased adjustable rate one- to four-family residential
mortgages of $-0-, $24.7 million, and $45.8 million during the years ended
December 31, 2002, 2001, and 2000, respectively. At December 31, 2002, 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, 2002, 2001, and 2000, we sold $19.7 million, $12.3 million, and
$4.9 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,
2002, $19.3 million, or 14.10% 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, 2002, $750,000, or
0.56%, 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,
2002, 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, 2002, consumer loans
amounted to $13.8 million, or 10.05% of the total loan portfolio. At that date,

                                       5
<PAGE>

we had one consumer loan, with an unpaid balance of $2,700, that was delinquent
in excess of 30 days and still accruing interest.

         At December 31, 2002, the largest component of the consumer loan
portfolio consisted of fixed-rate home equity loans, which totaled $6.3 million,
or 4.67% of the total loan portfolio. At December 31, 2002, outstanding balances
of variable-rate home equity lines of credit totaled $2.5 million with total
unused commitments of $3.9 million.

         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. In addition,
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, 2002, had a
balance of $25.2 million, which represented 18.44% of the total loan portfolio.
On that date, the largest such loan had a balance of $1.2 million. As of
December 31, 2002, American Bank had two commercial business loans, with unpaid
balances of $22,300 that were delinquent in excess of 30 days and still accruing
interest.

         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, 2002, 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
                                    ONE- TO FOUR-FAMILY          ESTATE               DEVELOPMENT             CONSUMER
                                    -------------------    ------------------     -------------------   --------------------
                                               WEIGHTED               WEIGHTED               WEIGHTED               WEIGHTED
                                               AVERAGE                AVERAGE                AVERAGE                AVERAGE
                                    AMOUNT       RATE      AMOUNT       RATE      AMOUNT       RATE      AMOUNT       RATE
                                   ---------  --------    ---------  --------    ---------  ---------   ---------   --------
                                                                                      (DOLLARS IN THOUSANDS)
Due During Years Ending December 31,
------------------------------------

<S>                                <C>            <C>     <C>            <C>     <C>            <C>     <C>         <C>
2003(1).......................     $   9,551      5.59%   $  15,581      6.13%   $   1,716      5.88%   $   7,073   5.17%
2004 to 2007..................         8,368      6.80       42,146      7.27        1,108      5.00        2,829   6.57
2008 and beyond...............        13,674      6.81        5,769      6.04           --        --        3,860   7.15
                                   ---------  --------    ---------  --------    ---------  --------    ---------   ------
Total.........................     $  31,593      6.42%   $  63,496      6.88%   $   2,824      5.53%   $  13,762   6.07%
                                   =========  ========    =========  ========    =========  ========    =========   ======
</TABLE>



                                       COMMERCIAL BUSINESS          TOTAL
                                       -------------------    -----------------
                                                  WEIGHTED             WEIGHTED
                                                  AVERAGE               AVERAGE
                                       AMOUNT       RATE      AMOUNT     RATE
                                      ---------  --------    --------  --------

Due During Years Ending December 31,
------------------------------------

2003(1).......................        $  12,758      5.35%   $ 46,679    5.65%
2004 to 2007..................           12,117      7.13      66,568    7.12
2008 and beyond...............              374      7.70      23,677    6.69
                                      ---------  --------    --------    ----
Total.........................        $  25,249      6.22%   $136,924    6.54%
                                      =========  ========    ========    ====


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


         The total amount of loans due after December 31, 2003, that have
predetermined interest rates is $53.4 million, while the total amount of loans
due after this date that have floating or adjustable interest rates is $36.8
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, 2002, we had three loans, with a total unpaid balance
of $25,000, 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, 2002, we had one loan that we classified as non-performing.
We charged off $454,000 on this loan. Following this restructuring the loan was
returned to performing status. During January of 2003, we recovered $250,000 of
the charge-off. During the years ended December 31, 2001 and 2000 we did not
foreclose on 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, 2002 we had no real estate acquired in settlement of loans.

         RESTRUCTURED LOANS. Under Generally Accepted Accounting Principles,
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, 2002.

         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, 2002, the aggregate amount of our assets classified as
"Special Mention" and "Substandard" were $529,000 and $453,000, 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, 2002
had recorded losses on two 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, 2002 and December 31, 2001, American Bank had an
allowance for loan losses of approximately $1,759,000 and $1,998,000,
respectively. Management believes that the allowance for loan losses at December
31, 2002 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,
                                         --------------------------------------------------------------
                                            2002         2001        2000         1999         1998
                                         ---------    ---------    ---------   ---------    ---------
                                                             (DOLLARS IN THOUSANDS)

<S>                                      <C>          <C>          <C>         <C>          <C>
Balance at beginning period............  $   1,998    $   1,242    $     767   $     508    $     111
Provision for loan losses..............        212          651          475         259          397
Allowance recorded in connection
  with purchase of loan pools..........         --          105           --          --           --
Recoveries.............................          4           --           --          --           --
Charge-offs............................       (455)          --           --          --           --
                                         ---------    ---------    ---------   ---------    ---------
Net charge-offs........................       (451)          --           --          --           --
                                         =========    =========    =========   =========    =========
Balance at end of period...............  $   1,759    $   1,998    $   1,242   $     767    $     508
                                         =========    =========    =========   =========    =========
Ratio of net charge-offs during the
  period to average loans outstanding
  during the period....................       0.34%           0%           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,
                   ----------------------------------------------------------------------------------------------------
                                 2002                              2001                               2000
                   -------------------------------   -------------------------------   --------------------------------
                                           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.......  $     370  $  25,249      18.44%  $     610   $  21,139     15.34%   $     274  $  18,264      14.95%
Commercial
 mortgage........        959     65,569      47.89         578      40,668     29.50          391     29,183      23.89
Residential
 mortgage........        182     32,344      23.62         400      64,810     47.01          341     64,466      52.78
Consumer.........        112     13,762      10.05         125      11,237      8.15          107     10,235       8.38
Unallocated......        136         --         --         285          --        --          129         --         --
                   ---------  ---------   --------   ---------   ---------  --------    ---------  ---------   --------

 Total...........  $   1,759  $ 136,924     100.00%  $   1,998   $ 137,854    100.00%   $   1,242  $ 122,148     100.00%
                   =========  =========   ========   =========   =========  ========    =========  =========   ========
</TABLE>
<TABLE>
<CAPTION>

                                                DECEMBER 31,
                    ---------------------------------------------------------------------
                                  1999                                1998
                    ---------------------------------   ---------------------------------
                                             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........  $    164    $   10,959     20.21%  $       95   $   6,360     17.75%
Commercial
 mortgage.........       231        16,726     30.83           91       7,127     19.88
Residential
 mortgage.........       125        18,475     34.06          126      17,417     48.58
Consumer..........        84         8,085     14.90           52       4,945     13.79
Unallocated.......       163            --        --          144          --        --
                    --------    ----------  --------   ----------   ---------  --------

 Total............  $    767    $   54,245    100.00%  $      508   $  35,849    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, 2002, our securities portfolio equaled $290.0 million,
or 63.98% of total assets. Our investment 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, 2002, mortgage-backed securities amounted to $171.9 million, U.S.
government and agency securities amounted to $38.6 million, corporate
obligations amounted to $29.2 million, trust preferred securities amounted to
$7.2 million, common stock in domestic corporations amounted to $2.5 million and
mutual funds amounted to $40.6 million. At December 31, 2002, there were no
securities of a single issuer (excluding 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.

         The amortized  cost and  approximate  fair value of  securities as of
December 31, 2002,  2001 and 2000 are summarized as follows:
<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>


                                       11
<PAGE>

<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>
<TABLE>
<CAPTION>

                                                                      AT DECEMBER 31, 2000
                                                --------------------------------------------------------------
                                                                      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................     $      27,168    $          74    $        (113)  $      27,129
   Corporate notes.........................            21,379              234              (55)         21,558
   Mortgage-backed securities..............            12,700               73             (105)         12,668
   Trust preferred obligations.............             1,979               --             (113)          1,866
                                                -------------    -------------    -------------   -------------
     Total.................................     $      63,226    $         381    $        (386)  $      63,221
                                                =============    =============    =============   =============
Held to maturity:
   Trust preferred obligations.............     $       1,870    $          10    $        (155)  $       1,725
   Corporate notes.........................             2,247               51               --           2,298
   Mortgage-backed securities..............             8,281              177               --           8,458
   Other...................................             5,100               --               --           5,100
                                                -------------    -------------    -------------   -------------
     Total.................................     $      17,498    $         238    $        (155)  $      17,581
                                                =============    =============    =============   =============
</TABLE>


                                       12
<PAGE>

         The maturity schedule of the investment portfolio, by contractual
maturity, as of December 31, 2002, 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                            NON-MATURITY AND
                              LESS           THROUGH FIVE YEARS          YEARS          DUE AFTER TEN YEARS       MUTUAL FUNDS
                       ------------------    ------------------    -----------------    -------------------    -----------------
                       AMOUNT      RATE      AMOUNT      RATE      AMOUNT      RATE      AMOUNT      RATE      AMOUNT      RATE
                       --------    ------    ------      ------    ------      -----    -------      ------    ------      -----
                                                                      (DOLLARS IN THOUSANDS)
Investment Securities
---------------------

<S>                   <C>            <C>    <C>            <C>    <C>              <C>  <C>            <C>    <C>            <C>
U.S. Government
   agency             $   2,999      4.27%  $  32,994      3.45%  $      --        --%  $      --        --%  $      --        --%
Corporate notes.....     21,200      6.25       7,808      6.09          --        --          --        --          --        --
Trust preferred
   obligations......         --       --           --        --          --        --       7,436      7.67          --        --
Mutual funds........         --       --           --        --          --        --          --        --      40,552      2.31
Mortgage backed
   securities.......         --       --           --        --          --        --          --        --          --        --
U.S. Government
   agency preferred
   stock                     --       --           --        --          --        --       2,505      6.20          --        --
Common stock                 --       --           --        --          --        --          --        --       2,622      3.35
Other...............         --       --           --        --         100      3.00          --        --          --        --
                      ---------  -------    ---------  --------   ---------  --------   ---------  --------   ---------  --------
     Total..........  $  24,199     6.00%   $  40,802      3.96%  $     100      3.00%  $   9,941      7.30%  $  43,174      2.37%
                      =========  =======    =========  ========   =========  ========   =========  =========  =========  ========
</TABLE>


                        MORTGAGE-BACKED
                           SECURITIES              TOTAL
                       ----------------      ----------------
                       AMOUNT      RATE      AMOUNT      RATE
                       ------      ----      ------      ----

Investment Securities
---------------------

U.S. Government
   agency             $      --        --%  $  35,993      3.52%
Corporate notes.....         --        --      29,008      6.21
Trust preferred
   obligations......         --        --       7,436      7.67
Mutual funds........         --        --      40,552      2.31
Mortgage backed
   securities.......    169,858      4.22     169,858      4.22
U.S. Government
   agency preferred
   stock                     --        --       2,505      6.20
Common stock                 --        --       2,622      3.35
Other...............         --        --         100      3.00
                      ---------  --------   ---------  --------
     Total..........  $ 169,858      4.22%  $ 288,074      4.47%
                      =========  =========  =========  =========


                                       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 may seek to pay interest rates on deposits that are very
competitive, typically in the top one percent (1%) 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,
                         ------------------------------------------------------------------------------------------------------
                                       2002                               2001                               2000
                         -------------------------------    -------------------------------   ---------------------------------

                           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............     $   12,286   $     --       --%    $   21,358   $     --         --%  $    8,919   $     --         --%
Demand,
 interest-bearing...         76,535      1,673     2.19         52,993      1,795       3.39       30,649        868       2.83
Savings.............         85,818      1,975     2.30         55,460      2,188       4.13       38,127      1,844       4.84
Certificates of deposit     103,007      4,115     3.99         94,130      5,394       5.73       58,212      3,605       6.19
                         ----------   --------     ----     ----------   --------   --------   ----------   --------   --------
   Total deposits...     $  277,646   $  7,763     2.80%    $  223,941   $  9,377       4.23%  $  135,907   $  6,317       4.65%
                         ==========   ========     ====     ==========   ========       ====   ==========   ========   ========
</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, 2002.
<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.     $    13,073   $    12,132  $    20,615  $    46,157  $    91,977
Certificates of deposit of $100,000 or more           4,341         2,303        4,927       11,736       23,307
Public funds(1)............................             202            --          505            6          713
                                                -----------   -----------  -----------  -----------  -----------
Total certificates of deposit..............     $    17,616   $    14,435  $    26,047  $    57,899  $   115,997
                                                ===========   ===========  ===========  ===========  ===========
</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 8 to the Consolidated Financial Statements for additional
information related to Federal Home Loan Bank of Pittsburgh advances.

EMPLOYEES

         As of December 31, 2002, we had 45 full-time employees and five
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 predicted at this

                                       15
<PAGE>

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.
Under federal law, in the event of a loss suffered by the FDIC in connection
with a banking subsidiary of a bank holding company (whether due to a default or
the provision of FDIC assistance), other banking subsidiaries of the holding
company could be assessed for such loss.

         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.

                                       16
<PAGE>

         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 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. On July 30, 2002, the President signed into
law the Sarbanes-Oxley Act of 2002 implementing legislative reforms intended to
address corporate and accounting irregularities. In addition to the
establishment of a new accounting oversight board which will enforce auditing,
quality control and independence standards and will be 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 will require preapproval 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

                                       17
<PAGE>

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 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.

                                       18
<PAGE>


American Bank is not aware of any circumstances that would result in termination
of its deposit insurance.

         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, 2002, 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, 2002,
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

                                       19
<PAGE>

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 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.

                                       20
<PAGE>

         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 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.

         THE USA PATRIOT ACT. In response to the events of September 11th, the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, or the USA PATRIOT Act, was signed
into law on October 26, 2001. The USA PATRIOT Act gives the federal government
new powers to address terrorist threats through enhanced domestic security
measures, expanded surveillance powers, increased information sharing, and
broadened anti-money laundering requirements. By way of amendments to the Bank
Secrecy Act, Title III of the USA PATRIOT Act takes measures intended to
encourage information sharing among bank regulatory agencies and law enforcement
bodies. Further, certain provisions of Title III impose affirmative obligations
on a broad range of financial institutions, including banks, thrifts, brokers,
dealers, credit unions, money transfer agents and parties registered under the
Commodity Exchange Act.

         Among other requirements, Title III of the USA PATRIOT Act imposes the
following requirements with respect to financial institutions:

o    Pursuant to Section 352, all financial institutions must establish
     anti-money laundering programs that include, at minimum: (i) internal
     policies, procedures, and controls; (ii) specific designation of an
     anti-money laundering compliance officer; (iii) ongoing employee training
     programs; and (iv) an independent audit function to test the anti-money
     laundering program.

o    Section 326 of the Act authorizes the Secretary of the Department of
     Treasury, in conjunction with other bank regulators, to issue regulations
     that provide for minimum standards with respect to customer identification
     at the time new accounts are opened.

o    Section 312 of the Act requires financial institutions that establish,
     maintain, administer, or manage private banking accounts or correspondence
     accounts in the United States for non-United States persons or their
     representatives (including foreign individuals visiting the United States)
     to establish appropriate, specific, and, where necessary, enhanced due
     diligence policies, procedures, and controls designed to detect and report
     money laundering.

o    Effective December 25, 2001, financial institutions are prohibited from
     establishing, maintaining, administering or managing correspondent accounts
     for foreign shell banks (foreign banks that do not have a physical presence
     in any country), and will be subject to certain record keeping obligations
     with respect to correspondent accounts of foreign banks.

o    Bank regulators are directed to consider a holding company's effectiveness
     in combating money laundering when ruling on Federal Reserve Act and Bank
     Merger Act applications.

         The federal banking agencies have begun to propose and implement
regulations pursuant to the USA PATRIOT Act. These proposed and interim
regulations would require financial institutions to adopt the policies and
procedures contemplated by the USA PATRIOT Act.

         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.

                                       21
<PAGE>

         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.

         LOANS TO ONE BORROWER. American Bank generally may not make a loan or
extend credit to a single or related group of borrowers in excess of 15% of
unimpaired capital and surplus. Additional amounts may be lent if the loan is
secured by specified collateral, such as obligations of, or guaranteed by,
Federal or state governments or agencies thereof. As of December 31, 2002,
American Bank was in compliance with its loans-to-one-borrower limitations.

         REGULATORY ENFORCEMENT AUTHORITY. Applicable banking laws include
substantial enforcement powers available to Federal banking regulators. This
enforcement authority includes, among other things, the ability to assess civil
monetary penalties, to issue cease-and-desist or removal orders and to initiate
injunctive actions against banking organizations and institution-affiliated
parties. In general, these enforcement actions may be initiated for violations
of laws and regulations and unsafe or unsound practices. Other actions or
inactions may provide the basis for enforcement action, including misleading or
untimely reports filed with regulatory authorities.

         American Bank is not subject to any cease-and-desist or removal orders,
injunctive actions, civil money penalties or other enforcement actions.

         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.

         LENDING ACTIVITIES. Interest and certain other charges collected or
contracted for by American Bank are subject to state usury laws and certain
Federal laws concerning interest rates. American Bank's loan operations are also
subject to certain Federal laws applicable to credit transactions, such as (a)
the Federal Truth-In-Lending Act governing disclosures of credit terms to
consumer borrowers, (b) the Home Mortgage Disclosure Act of 1975 requiring
financial institutions to provide information to enable the public and public
officials to determine whether a financial institution is fulfilling its
obligation to help meet the housing needs of the communities it serves, (c) the
Equal Credit Opportunity Act prohibiting discrimination on the basis of race,
creed or other prohibited factors in extending credit, (d) the Fair Credit
Reporting Act of 1978 governing the use and provision of information to credit
reporting agencies, (e) the Fair Debt Collection Act governing the manner in
which consumer debts may be collected by collection agencies, and (f) the rules
and regulations Federal agencies charged with the responsibility of implementing
such Federal laws.

                                       22
<PAGE>

         DEPOSIT ACTIVITIES. The deposit operations of American Bank also are
subject to (i) the Right to Financial Privacy Act, which imposes a duty to
maintain confidentiality of consumer financial records and prescribes procedures
for complying with administrative subpoenas of financial records, and (ii) the
Electronic Funds Transfer Act and Regulation E issued by the Board of Governors
of the Federal Reserve System to implement that act, which govern automatic
deposits to and withdrawals from deposit accounts and customers' rights and
liabilities arising from the use of automated teller machines and other
electronic banking services.

         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.

         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 intend to 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.

                                       23
<PAGE>

         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.

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.

WE NEED TO MAINTAIN ADEQUATE CAPITAL TO SUPPORT OUR ANTICIPATED GROWTH

         We are required by Federal and state regulations to maintain adequate
levels of capital to support our operations. To the extent our operations
expand, we will be required to support such growth by increasing our capital to
acceptable regulatory levels. We expect our operations, including our asset
base, to grow consistently as a result of implementing our Internet banking
strategy. Accordingly, we may need to raise additional capital in the future to
support our operations should they continue to expand. This may be accomplished
through the sale of additional securities of American Bank Incorporated,
including the issuance of additional shares of our common stock. There is no
assurance that we will be able to raise additional capital when needed. If we
cannot raise additional capital when needed, our business, financial condition,
results of operations, capital levels, and cash flows will be materially
adversely affected. If we issue additional common stock, stockholders of
American Bank Incorporated may not have a right to purchase any new issue of

                                       24
<PAGE>

shares of our common stock in order to maintain their proportionate ownership
interest. Should we choose to raise capital through the sale of our common
stock, such action would dilute the ownership and voting power of the
outstanding shares and reduce the portion of any dividend and liquidation
proceeds payable to the holders of the common stock.

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 2003, 2004 and 2005 under the original terms of the lease are $303,000,
$303,000 and $305,000 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 payments under this lease are
$ 16,000 and $14,600 for the years ended 2003 and 2004, respectively.

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, 2002, 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 COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
--------------------------------------------------------------------------

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

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.


                                       25
<PAGE>

                                    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 2003 Annual Meeting of Stockholders
(the "2003 Proxy Statement") is incorporated herein by reference.

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

         The "Proposal I--Election of Directors" section of the Company's 2003
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 2003
Proxy Statement is incorporated herein by reference.

         Set forth below is certain information as of December 31, 2002
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............             265,250                       $6.02                       71,250
--------------------------------------------------------------------------------------------------------------------
Plans not approved by
   Shareholders............               -0-                         $-0-                         -0-
====================================================================================================================
         Total.............             265,250                       $6.02                       71,250
====================================================================================================================
</TABLE>


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

         The "Transactions with Certain Related Persons" section of the
Company's 2003 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

                                       26
<PAGE>

         (b)      Reports on Form 8-K
                  -------------------

                  None.

         (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*
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*
13       Portions of Annual Report to Stockholders
21       Subsidiaries of the Registrant*
99.1     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.  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-14(c) under the Exchange Act) as of a date
(the "Evaluation Date") within 90 days prior to the filing date of this report.
Based upon that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that, as of the Evaluation Date, our disclosure controls and
procedures were effective in timely alerting them to the material information
relating to us (or our consolidated subsidiaries) required to be included in our
periodic SEC filings.

(b)       Changes in internal controls.

There were no significant changes made in our internal controls during the
period covered by this report or, to our knowledge, in other factors that could
significantly affect these controls subsequent to the date of their evaluation.


                                       27
<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 28, 2003                      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 28, 2003
   Frederick J. Jaindl

   /s/   Mark W. Jaindl
   _____________________________________            President,  Chief Executive Officer          March 28, 2003
   Mark W. Jaindl                                   and   Vice   Chairman    (Principal
                                                    Executive Officer)
   /s/  Harry C. Birkhimer
   _____________________________________            Vice President and Chief  Financial          March 28, 2003
   Harry C. Birkhimer                               Officer  (Principal  Financial  and
                                                    Accounting Officer)
   /s/ David M. Jaindl
   _____________________________________            Director                                     March 28, 2003
   David M. Jaindl

   /s/ Elizabeth B. Gaul
   _____________________________________            Director                                     March 28, 2003
   Elizabeth B. Gaul

   /s/ Arthur A. Haberberger
   _____________________________________            Director                                     March 28, 2003
   Arthur A. Haberberger

   /s/ John C. Long
   _____________________________________            Director                                     March 28, 2003
   John C. Long

   /s/ Philip S. Schwartz
   _____________________________________            Director                                     March 28, 2003
   Philip S. Schwartz

   /s/  Martin F. Spiro
   _____________________________________            Director                                     March 28, 2003
   Martin F. Spiro
</TABLE>


                                       28
<PAGE>

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
            PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


         I, Mark W. Jaindl, President and Chief Executive Officer, certify that:

1.       I have reviewed this annual report on Form 10-KSB of American Bank
         Incorporated;

2.       Based on my knowledge, this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this annual report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this annual report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this annual report;

4.       The registrant's other certifying officer and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

         a)       designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this annual report is being prepared;


         b)       evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this annual report (the "Evaluation Date");
                  and


         c)       presented in this annual report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officer and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent functions):

         a)       all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

         b)       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         annual report whether there were significant changes in internal
         controls or in other factors that could significantly affect internal
         controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

March 28, 2003                       /s/  Mark W. Jaindl
---------------------                -----------------------------------
Date                                 Mark W. Jaindl
                                     President and Chief Executive Officer


                                       29
<PAGE>

                    CERTIFICATION OF CHIEF FINANCIAL OFFICER
            PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


         I, Harry C. Birkhimer, Vice President and Chief Financial Officer,
certify that:

1.       I have reviewed this annual report on Form 10-KSB of American Bank
         Incorporated;

2.       Based on my knowledge, this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this annual report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this annual report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this annual report;

4.       The registrant's other certifying officer and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

         a)       designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this annual report is being prepared;


         b)       evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this annual report (the "Evaluation Date");
                  and


         c)       presented in this annual report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officer and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent functions):

         a)       all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

         b)       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6.       The registrant's other certifying officer and I have indicated in this
         annual report whether there were significant changes in internal
         controls or in other factors that could significantly affect internal
         controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

March 28, 2003                       /s/ Harry C. Birkhimer
---------------------                -----------------------------------
Date                                 Harry C. Birkhimer
                                     Vice President and Chief Financial Officer



                                       30
<PAGE>