[AMERICAN BANK INCORPORATED LOGO]
March 29, 2006
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
American Bank Incorporated (the "Company"), which will be held at The Holiday
Inn West, Route 100 and Interstate 78, Fogelsville, Pennsylvania, at 9:00 a.m.
(local time) on April 26, 2006.
The Annual Meeting will be held for the election of four directors and such
other matters as may properly come before the annual meeting.
The Board of Directors has determined that the matter to be considered at the
Annual Meeting is in the best interest of the Company and its stockholders. The
Board of Directors unanimously recommends a vote "FOR" the matter to be
considered.
I urge you to sign, date and return the enclosed proxy card as soon as possible
even if you plan to attend the Annual Meeting. This will not prevent you from
voting in person, but will assure that your vote is counted if you are unable to
attend the Annual Meeting.
Sincerely,
/s/ Mark W. Jaindl
Mark W. Jaindl
Chairman, President and Chief Executive Officer
AMERICAN BANK INCORPORATED
4029 WEST TILGHMAN STREET
ALLENTOWN, PENNSYLVANIA 18104
(610) 366-1800
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On April 26, 2006
Notice is hereby given that the Annual Meeting of Stockholders of
American Bank Incorporated (the "Company") will be held at The Holiday Inn West,
Route 100 and Interstate 78, Fogelsville, Pennsylvania, on April 26, 2006 at
9:00 a.m., local time.
A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.
The Annual Meeting is for the purpose of considering and acting upon:
1. The election of four Directors to the Board of Directors; and
such other matters as may properly come before the Annual Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Annual Meeting.
Any action may be taken on the foregoing proposal at the Annual Meeting
on the date specified above, or on any date or dates to which the Annual Meeting
may be adjourned. Stockholders of record at the close of business on March 17,
2006 are the stockholders entitled to vote at the Annual Meeting, and any
adjournments thereof.
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL MEETING,
IS REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE. A PROXY GIVEN BY A STOCKHOLDER MAY BE
REVOKED AT ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY FILING
WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY
BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE ANNUAL MEETING MAY REVOKE
HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE ANNUAL
MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN
YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN
ORDER TO VOTE PERSONALLY AT THE ANNUAL MEETING.
By Order of the Board of Directors
/s/ Sandra A. Berg
Sandra A. Berg, Corporate Secretary
Allentown, Pennsylvania
March 29, 2006
- --------------------------------------------------------------------------------
| IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF |
| FURTHER REQUESTS FOR PROXIES. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR |
| CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES. |
- --------------------------------------------------------------------------------
PROXY STATEMENT
AMERICAN BANK INCORPORATED
4029 WEST TILGHMAN STREET
ALLENTOWN, PENNSYLVANIA 18104
(610) 366-1800
ANNUAL MEETING OF STOCKHOLDERS
April 26, 2006
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of American Bank Incorporated
(the "Company") to be used at the Annual Meeting of Stockholders of the Company
(the "Annual Meeting"), which will be held at The Holiday Inn West, Route 100
and Interstate 78, Fogelsville, Pennsylvania, on April 26, 2006, at 9:00 a.m.,
local time, and all adjournments of the Annual Meeting. The accompanying Notice
of Annual Meeting of Stockholders and this Proxy Statement are first being
mailed to stockholders on or about March 29, 2006.
REVOCATION OF PROXIES
Stockholders who execute proxies in the form solicited hereby retain
the right to revoke them in the manner described below. Unless so revoked, the
shares represented by proxies will be voted at the Annual Meeting and all
adjournments thereof. Proxies solicited on behalf of the Board of Directors will
be voted in accordance with the directions given thereon. WHERE NO DIRECTIONS
ARE INDICATED, VALIDLY EXECUTED PROXIES THAT ARE RETURNED TO THE COMPANY WILL BE
VOTED "FOR" THE PROPOSALS SET FORTH IN THIS PROXY STATEMENT FOR CONSIDERATION AT
THE ANNUAL MEETING.
Proxies may be revoked by sending written notice of revocation to the
Secretary of the Company, Sandra A. Berg, at the address shown above, or by
delivering a duly executed proxy bearing a later date. The presence at the
Annual Meeting of any stockholder who has returned a proxy shall not revoke such
proxy unless the stockholder delivers his or her ballot in person at the Annual
Meeting or delivers a written revocation to the Secretary of the Company prior
to the voting of such proxy.
VOTING SECURITIES AND METHOD OF COUNTING VOTES
Holders of record of the Company's shares of common stock, par value
$0.10 per share, as of the close of business on March 17, 2006 (the "Record
Date") are entitled to one vote for each share then held. As of the Record Date,
the Company had 6,047,586 shares of common stock issued and outstanding. The
presence in person or by proxy of stockholders entitled to vote a majority of
the outstanding shares of common stock is necessary to constitute a quorum at
the Annual Meeting. Directors are elected by a plurality of votes cast, without
regard to either broker non-votes, or proxies as to which the authority to vote
for the nominees being proposed is withheld.
1
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Persons and groups who beneficially own in excess of 5% of the
Company's shares of common stock are required to file certain reports with the
Securities and Exchange Commission (the "SEC") regarding such ownership. The
following table sets forth, as of the Record Date, the shares of common stock
beneficially owned by each person who was the beneficial owner of more than 5%
of the Company's outstanding shares of common stock.
AMOUNT OF SHARES
OWNED AND NATURE PERCENT OF SHARES
NAME AND ADDRESS OF OF BENEFICIAL OF COMMON STOCK
BENEFICIAL OWNERS OWNERSHIP (1) OUTSTANDING
- ------------------- ----------------- -------------------
Mark W. Jaindl(2) 4,007,816(3) 59.4%
1964 Diehl Court
Allentown, PA 18104
David M. Jaindl(2) 1,340,939(3) 21.3%
3150 Coffeetown Road
Orefield, PA 18069
Estate of Frederick J. Jaindl 956,756 15.9%
3150 Coffeetown Road
Orefield, PA 18069
Martin F. Spiro 484,603 7.9%
1224 Main Street
Allentown, PA 18104
- ----------
(1) Shares "beneficially owned" include shares owned by or for, among others,
the spouse and/or minor children of the individual and any other relative
who has the same home as such individual, as well as other shares as to
which the individual has or shares voting or investment power, and shares
that the individual may purchase under stock option(s) or acquire by the
conversion of trust preferred securities exercisable or convertible within
60 days of the record date.
(2) Mark W. Jaindl and David M. Jaindl are brothers.
(3) Includes shares held by the Estate of Frederick J. Jaindl, of which Mark W.
Jaindl and David M. Jaindl are Co-Executors.
PROPOSAL I - ELECTION OF DIRECTORS
The Board of Directors consists of seven members. The Company's bylaws
provide that approximately one-third of the directors are elected annually.
Directors of the Company are generally elected to serve for a three-year period
and until their respective successors are elected. Four directors will be
elected at the Annual Meeting. One director will be elected to serve for a
two-year term and until his successor is elected and three directors will be
elected to serve for a three-year term and until their respective successors are
elected. The Board of Directors has nominated Michael D. Molewski to serve as a
director for a two-year term and John F. Eureyecko, John W. Galuchie, Jr. and
Donald J. Whiting, Jr. to serve as directors for a three-year term. Each
individual is currently a member of the Board of Directors.
The table below sets forth certain information, as of March 17, 2006,
regarding members of the Company's Board of Directors and executive officers. It
is intended that the proxies solicited on behalf of the Board of Directors
(other than proxies in which the vote is withheld as to the nominees) will be
voted at the Annual Meeting for the election of the nominees identified below.
2
If a nominee is unable to serve, the shares represented by proxies will be voted
for the election of such substitute as the Board of Directors may recommend. At
this time, the Board of Directors knows of no reason why the nominees might be
unable to serve, if elected. Except as indicated herein, there are no
arrangements or understandings between the nominees and any other person
pursuant to which such nominees were selected.
POSITION(S) SHARES
HELD WITH THE COMPANY DIRECTOR CURRENT BENEFICIALLY PERCENT OF
NAME OR AMERICAN BANK AGE SINCE(1) TERM EXPIRES OWNED(2) CLASS
- ---------------------- --------------------- --------- -------- ------------ ------------ ----------
NOMINEES
Michael D. Molewski Director 43 2005 2006 2,000 *
John F. Eureyecko Director 51 2005 2006 20,768 *
John W. Galuchie, Jr. Director 53 2005 2006 12,000 *
Donald J. Whiting, Jr. Director 46 2005 2006 40,937 *
OTHER BOARD MEMBERS
Mark W. Jaindl Chairman, 46 1996 2008 4,007,816(3) 59.4%
President and CEO
Phillip S. Schwartz Director 60 1996 2007 280,640(4) 4.6%
Martin F. Spiro Director 72 1996 2007 484,603(5) 7.9%
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Harry C. Birkhimer Treasurer, Senior Vice 57 n/a n/a 17,843(6) *
President and
Chief Financial Officer
Sandra A. Berg Secretary, Senior Vice 49 n/a n/a 14,880(7) *
President and
Chief Operating Officer
Chris J. Persichetti Senior Vice President 43 n/a n/a 17,292(8) *
and Chief Lending Officer
Robert W. Turner Senior Vice President 44 n/a n/a 5,705(9) *
and Chief Technology Officer
All directors and executive 4,904,484 71.5%
officers as a group (11 persons)
- ----------
* Less than 1%.
(1) Reflects initial appointment to the Board of Directors of the Company or
American Bank.
(2) Includes shares owned by or for, among others, the spouse and/or minor
children of the individual and any other relative who has the same home as
such individual, as well as other shares as to which the individual has or
shares voting or investment power, and shares that an individual may
purchase under stock option(s) or acquire by the conversion of trust
preferred securities exercisable or convertible within 60 days of the
record date.
(3) Includes 114,750 shares that can be acquired pursuant to the exercise of
options, 106,000 shares that can be acquired pursuant to the conversion of
trust preferred securities and 6,493 shares that can be acquired pursuant
to the Senior Executive Retirement Plan. Also includes 415,000 shares that
can be acquired pursuant to the conversion of trust preferred securities
held by Jaindl Associates LP, of which Mr. Jaindl is the general partner.
Also includes 956,756 shares held by the Estate of Frederick J. Jaindl, of
which Mark W. Jaindl is a Co-Executor, and 3,923 shares that can be
acquired pursuant to the conversion of trust preferred securities held by
the Estate of Frederick J. Jaindl. Also includes 135,655 shares as to which
Mark W. Jaindl is a trustee, and 28,821 shares that can be acquired
pursuant to the conversion of trust preferred securities as to which Mark
W. Jaindl is a trustee.
(4) Includes 19,000 shares that can be acquired pursuant to the conversion of
trust preferred securities.
(5) Includes 65,000 shares that can be acquired pursuant to the conversion of
trust preferred securities.
(6) Includes 9,000 shares that can be acquired pursuant to the exercise of
options and 705 shares that can be acquired pursuant to the Senior
Executive Retirement Plan.
(7) Includes 13,500 shares that can be acquired pursuant to the exercise of
options and 705 shares that can be acquired pursuant to the Senior
Executive Retirement Plan.
(8) Includes 13,500 shares that can be acquired pursuant to the exercise of
options and 1,407 shares that can be acquired pursuant to the Senior
Executive Retirement Plan.
(9) Includes 5,000 shares that can be acquired pursuant to the exercise of
options and 705 shares that can be acquired pursuant to the Senior
Executive Retirement Plan.
3
The business experience for the past five years for each of the
Company's directors and executive officers is as follows:
MARK W. JAINDL. Mr. Jaindl has served as the Chairman of the Board of
the Company and the Bank since April 2004 and President and Chief Executive
Officer of the Bank since 1997 and of the Company since its formation in 2001.
Mr. Jaindl serves as a Trustee for the Jaindl Foundation, a philanthropic
organization benefiting charitable causes in the Lehigh Valley. Mr. Jaindl has
been on the Board of Directors of Sageworth Holdings, LLC since November 2003
and its wholly owned subsidiary Sageworth Trust Company since February 2005.
Sageworth provides fiduciary, investment and family office services to its
clients. Since May 2004, Mr. Jaindl has served as a member of the Board of
Commissioners of the Lehigh County Housing Authority, which provides affordable
housing programs to over 3,000 families throughout the Lehigh Valley. Mr. Jaindl
was a director of Massachusetts Fincorp, Inc. and its wholly owned subsidiary,
Massachusetts Co-operative Bank, from May 2000 until August 2002. He served as
Chief Financial Officer of Jaindl Turkey Farms and Jaindl Land Company from May
1982 to October 1991 and again from June 1995 to October 1997. He served as a
director of Pure World, Inc., the holding company for Pure World Botanicals,
from October 1994 until October 2001. Mr. Jaindl served as a director of
Continental Information Systems, Inc. from February 2000 to December 2001.
JOHN F. EUREYECKO. Mr. Eureyecko has served as a director of the
Company and the Bank since April 2005. Mr. Eureyecko is President and Chief
Executive Officer of Belhaven Capital Group, Inc., Bethlehem, Pennsylvania,
which owns and manages commercial and residential real estate properties
throughout the Lehigh Valley. From 1991 to 2001, Mr. Eureyecko served in various
positions with Piercing Pagoda, Inc. including President and Chief Executive
Officer from 1996 through 2001. Mr. Eureyecko serves on the boards of American
Home Partners, Inc. and Albarell Electric. Additionally, Mr. Eureyecko serves on
the boards of Northampton Community College, Moravian Academy, WLVT-TV39 and is
on the Finance Committee of Hillside School and a member of the Bethlehem South
Side Vision Task Force.
JOHN W. GALUCHIE, JR. Mr. Galuchie has served as a director of the
Company and the Bank since April 2005. Mr. Galuchie is the President and Chief
Operating Officer of T. R. Winston & Company, LLC, (since 1989) a registered
securities broker-dealer located in Bedminster, New Jersey. Prior to August 2003
Mr. Galuchie was also engaged in the following businesses: (i) Kent Financial
Services, Inc., as Executive Vice President and Treasurer from September 1986 to
August 2003; (ii) Pure World, Inc., a manufacturer and distributor of natural
products, as Executive Vice President from April 1998 to October 2001; (iii)
Cortech, Inc., a biopharmaceutical company, as President and director from
September 1998 to August 2003; and (iv) Gish Biomedical, Inc., a medical device
manufacturer, as a director from September 1999 (Chairman from March 2000) until
April 2003. Mr. Galuchie also served as Chairman of the Board of General
Devices, Inc., a company seeking to redeploy its assets, from September 2000 to
October 2005. He has served as Treasurer and a director of the Tennant-In-Common
Association, a securities industry trade association, since 2005. Mr. Galuchie
is a Certified Public Accountant and has been designated the Audit Committee
Financial Expert.
MICHAEL D. MOLEWSKI. Mr. Molewski has served as a director of the
Company and the Bank since October 2005. Mr. Molewski is the majority partner of
Molewski Financial Partners, Bethlehem, Pennsylvania, where he oversees the
strategic planning and directs the Family Consulting Group services of the firm.
Mr. Molewski is a graduate of King's College, Wilkes Barre, Pennsylvania. Mr.
Molewski is a Chartered Financial Consultant (ChFC) and Certified Financial
Planner (CFP). He is a member of the Association for Advanced Life Underwriting
(AALU), the National Association of Insurance and Financial Advisors (NAIFA),
and the Estate Planning Council of the Lehigh Valley. Mr. Molewski has served on
the boards of King's College, Northampton Community College Foundation and
Lehigh Valley Hospital Major Gifts Committee. Mr. Molewski is a former board
member of M Funds Investment Advisory Group, which is a mutual fund company
based in Portland, Oregon.
PHILLIP S. SCHWARTZ. Mr. Schwartz has served as a director of the Bank
since 1996 and of the Company since its formation in 2001. Mr. Schwartz has been
the President of Schwartz Heating & Plumbing, Inc., which specializes in
plumbing installation for new construction, since 1980. He serves on the
President's Council of DeSales University. Mr. Schwartz has been President of P
& M Schwartz Corporation, a land development corporation located in Whitehall,
Pennsylvania since 1993. He also served on the PNC Bank Regional Board from 1993
until the fall of 1996.
4
MARTIN F. SPIRO. Mr. Spiro has served as a director of the Bank since
1996 and of the Company since its formation in 2001. Mr. Spiro retired in 1987
from garment manufacturing and currently is an investor in bank and thrift
stocks. From 1990 until 1994, Mr. Spiro was a director of VSB Bancorp, Inc. in
Closter, New Jersey when it was acquired by UJB Financial. From 1990 until 1992,
Mr. Spiro was a director of Flagship Financial Corp. in Jenkintown,
Pennsylvania, when it was acquired by PNC Financial.
DONALD J. WHITING, JR. Mr. Whiting has served as a director of the
Company and the Bank since October 2005. Mr. Whiting is the President and CEO of
Whiting Door Manufacturing Corp, Akron, New York, a manufacturer of doors for
trailers, truck bodies and containers. Mr. Whiting is also the president of JRI
Acquisition, LLC, which holds stock in a European door manufacturer. Mr. Whiting
is a director of JR Industries, a European manufacturer of doors and other
components for trucks and trailers. Mr. Whiting is a graduate of Lehigh
University, Bethlehem, Pennsylvania. Mr. Whiting served as a member of the Board
of Directors of the Bank of Akron, Akron, New York, from 1998 until 2005 where
he was the Chairman of the Loan Committee and the Compensation Committee.
HARRY C. BIRKHIMER. Mr. Birkhimer has been employed by the Bank as
Senior Vice President and Chief Financial Officer since 1999, and has served as
Vice President and Treasurer of the Company since its formation in 2001. He is a
Certified Public Accountant. From 1991 to 1998 he was Chief Financial Officer of
Indiana First Savings Bank, Indiana, Pennsylvania.
SANDRA A. BERG. Ms. Berg has been employed by the Bank since 1997, most
recently as Senior Vice President, Chief Operating Officer and Secretary, and
serves as Vice President and Secretary of the Company. She has over 25 years of
retail banking and branch management experience. From 1990 to 1997, Ms. Berg was
employed by PNC Bank, most recently as an Assistant Vice President and Branch
Manager.
CHRIS J. PERSICHETTI. Mr. Persichetti has been employed by the Bank
since 1999, most recently as Senior Vice President and Chief Lending Officer. He
has over 20 years of banking experience. From 1986 to 1999, Mr. Persichetti was
employed by PNC Bank, most recently as a Vice President in the Business Banking
Division.
ROBERT W. TURNER. Mr. Turner has been employed by the Bank since 2001,
most recently as Senior Vice President and Chief Technology Officer. From 2000
to 2001, Mr. Turner was a Senior Systems Engineer with Guardian Life Insurance
Company. From 1995 to 2000, he was a Project Manager in the Construction and
Mining Group of Ingersoll-Rand Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The business of the Company is conducted at regular and special
meetings of the full Board and its standing committees. The standing committees
are the Executive Committee, the Audit Committee, the Compensation Committee and
the Nominating Committee. During the year ended December 31, 2005, the Board of
Directors met at twelve regular meetings. No member of the Board or any
committee thereof attended less than 75% of said meetings.
EXECUTIVE COMMITTEE. The Executive Committee consists of Directors
Martin F. Spiro (Chairman), Mark W. Jaindl, John F. Eureyecko and Donald P.
Whiting. The Executive Committee meets as necessary when the Board is not in
session to exercise general control and supervision in all matters pertaining to
the interests of the Company, subject at all times to the direction of the Board
of Directors. The Executive Committee did not meet during 2005.
AUDIT COMMITTEE. The Audit Committee consists of Directors John W.
Galuchie, Jr. (Chairman), Martin F. Spiro and John F. Eureyecko. Each member of
the Audit Committee is considered "independent" as defined in the Nasdaq
corporate governance listing standards and under SEC Rule 10A-3. Mr. Galuchie
has been designated as the Audit Committee Financial Expert. The Audit Committee
met six times during 2005.
5
The duties and responsibilities of the Audit Committee include, among
other things:
o retaining, overseeing and evaluating an independent registered
public accounting firm to audit the annual financial
statements;
o reviewing the integrity of the Company's financial reporting
processes, both internal and external in consultation with the
independent registered public accounting firm and the internal
auditor;
o approving the scope of the audit in advance;
o reviewing the financial statements and the audit report with
management and the independent registered public accounting
firm;
o considering whether the provision by the independent
registered public accounting firm of services not related to
the annual audit and quarterly reviews is consistent with
maintaining the auditor's independence;
o reviewing earnings and financial releases and quarterly
reports filed with the SEC;
o consulting with the internal audit staff and reviewing
management's administration of the system of internal
accounting controls;
o approving all engagements for audit and non-audit services by
the independent registered public accounting firm; and
o reviewing the adequacy of the audit committee charter.
COMPENSATION COMMITTEE. The Compensation Committee consists of Donald
J. Whiting (Chairman), John W. Galuchie, Jr. and Michael D. Molewski. Each
member of the Compensation Committee is considered "independent" as defined in
the Nasdaq corporate governance listing standards. The Compensation Committee
meets annually to review the performance of the Chief Executive Officer and
other executive officers, and approves changes to the base compensation, as well
as the level of bonus, if any, to be awarded to such officers. The Compensation
Committee meets when needed to review all employment policies and the
performance and remuneration of the officers and employees of the Company, and
to review and approve all compensation and benefit programs implemented by the
Company and all matters relating to pension plan administration. The
Compensation Committee met one time during the year ended December 31, 2005.
NOMINATING COMMITTEE. The independent members of the Board of Directors
act as the Nominating Committee for the Company. Each member of the Nominating
Committee is considered "independent" as defined in the Nasdaq corporate
governance listing standards. The Company's Board of Directors has adopted a
written charter for the Nominating Committee, which is available at the
Company's website at www.pcbanker.com.
The functions of the Nominating Committee include the following:
o to lead the search for individuals qualified to become members
of the Board and to select director nominees to be presented
for stockholder approval; and
o to develop and recommend to the Board criteria for the
selection of individuals to be considered for election or
re-election to the Board.
The Nominating Committee identifies nominees by first evaluating the
current members of the Board of Directors willing to continue in service.
Current members of the Board with skills and experience that are relevant to the
Company's business and who are willing to continue in service are first
6
considered for re-nomination, balancing the value of continuity of service by
existing members of the Board with that of obtaining a new perspective. If any
member of the Board does not wish to continue in service, or if the Committee or
the Board decides not to re-nominate a member for re-election, or if the size of
the Board is increased, the Committee would solicit suggestions for director
candidates from all Board members. In addition, the Committee is authorized by
its charter to engage a third party to assist in the identification of director
nominees.
The Nominating Committee would seek to identify a candidate who at a
minimum satisfies the following criteria:
o has the highest personal and professional ethics and integrity
and whose values are compatible with the Company's;
o has had experiences and achievements that have given them the
ability to exercise and develop good business judgment;
o is willing to devote the necessary time to the work of the
Board and its committees, which includes being available for
Board and committee meetings;
o is familiar with the communities in which the Company operates
and/or is actively engaged in community activities;
o is involved in other activities or interests that do not
create a conflict with their responsibilities to the Company
and its stockholders; and
o has the capacity and desire to represent the balanced, best
interests of the stockholders of the Company as a group, and
not primarily a special interest group or constituency.
The Nominating Committee will also take into account whether a
candidate satisfies the criteria for "independence" under Nasdaq corporate
governance rules, and if a nominee is sought for service on the Audit Committee,
the financial and accounting expertise of a candidate, including whether an
individual qualifies as an audit committee financial expert.
Procedures for the Consideration of Board Candidates Submitted by
Stockholders. The Nominating Committee has adopted procedures for the submission
of director nominees by stockholders for consideration by the Nominating
Committee. If a determination is made that an additional candidate is needed for
the Board, the Nominating Committee will consider candidates submitted by the
Company's stockholders. Stockholders can submit the names of candidates for
Director by writing to the Company's Corporate Secretary, 4029 West Tilghman
Street, Allentown, Pennsylvania 18104. A submission must be received not less
than ninety (90) days prior to the anniversary date of the Company's proxy
materials for the preceding year's annual meeting. If the date of the annual
meeting is advanced more than thirty (30) days prior to or delayed by more than
thirty (30) days after the anniversary of the preceding year's annual meeting,
the stockholder's recommendation must be so delivered not later than the close
of business on the tenth day following the day on which public announcement of
the date of such annual meeting is first made. The submission must include the
following information:
o A statement that the writer is a stockholder and is proposing
a candidate for consideration by the Committee;
o The name and address of the stockholder as they appear on the
Company's books, and number of shares of the Company's common
stock that are owned beneficially by such stockholder (if the
stockholder is not a holder of record, appropriate evidence of
the stockholder's ownership will be required);
o The name, address and contact information for the candidate,
and the number of shares of common stock of the Company that
are owned by the candidate (if the candidate is not a holder
of record, appropriate evidence of the stockholder's ownership
should be provided);
7
o A statement of the candidate's business and educational
experience;
o Such other information regarding the candidate as would be
required to be included in the proxy statement pursuant to SEC
Regulation 14A;
o A statement detailing any relationship between the candidate
and American Bank Incorporated;
o A statement detailing any relationship between the candidate
and any customer, supplier or competitor of American Bank
Incorporated;
o Detailed information about any relationship or understanding
between the proposing stockholder and the candidate; and
o A statement that the candidate is willing to be considered and
willing to serve as a Director if nominated and elected.
A nomination submitted by a stockholder for presentation by the
stockholder at an annual meeting of stockholders must comply with the procedural
and informational requirements described in "Stockholder Proposals."
Stockholder Communications with the Board. A stockholder of the Company
who wants to communicate with the Board or with any individual Director may do
so through our website at www.pcbanker.com or by writing to:
American Bank Incorporated
Attention: Board of Directors
4029 West Tilghman Street
Allentown, Pennsylvania 18104
The communication should indicate that the author is a stockholder and
if shares are not held of record, should include appropriate evidence of stock
ownership. Depending on the subject matter, the Corporate Secretary will:
o forward the communication to the Director(s) to whom it is
addressed;
o attempt to handle the inquiry directly, for example where it
is a request for information about the Company or it is a
stock-related matter; or
o not forward the communication if it is primarily commercial in
nature, relates to an improper or irrelevant topic, or is
unduly hostile, threatening, illegal or otherwise
inappropriate.
ATTENDANCE AT ANNUAL MEETINGS OF STOCKHOLDERS
The Company does not have a policy regarding director attendance at
annual meetings of stockholders. All of the Company's then-current directors
attended the prior year's annual meeting of stockholders.
CODE OF ETHICS
The Company has adopted a Code of Ethics that is applicable to senior
financial officers of the Company, including the Company's principal executive
officer, principal financial officer, principal accounting officer and all
officers performing similar functions as defined in the Code of Ethics. The Code
of Ethics is available on the Company's website at www.pcbanker.com. Amendments
to and waivers from the Code of Ethics with respect to the principal executive
officer, principal financial officer, principal accounting officer and all
officers performing similar functions will also be disclosed on the Company's
website.
8
AUDIT COMMITTEE REPORT
The Audit Committee operates under a written charter adopted by the
Board of Directors, which is attached to this proxy statement as Appendix A.
Each member of the Audit Committee satisfies the definition of independent
director as established by the Nasdaq corporate governance listing standards.
Management is responsible for the Company's internal controls and
financial reporting process. The independent registered public accounting firm
is responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with the standards of Public Company
Accounting Oversight Board (United States) and to issue a report thereon. The
Audit Committee's responsibility is to monitor and oversee these processes.
As part of its ongoing activities, the Audit Committee has:
o Reviewed and discussed with management, and the independent
registered public accounting firm, the Company's audited
consolidated financial statements for the fiscal year ended
December 31, 2005;
o Discussed with the independent registered public accounting
firm the matters required to be discussed by Statement on
Auditing Standards No. 61, Communications with Audit
Committees, as amended; and
o Received the written disclosures and the letter from the
independent registered public accounting firm required by
Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, and has discussed with the
independent registered public accounting firm its independence
from the Company.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited consolidated
financial statements be included in the Company's Annual Report on Form 10-KSB
for the year ended December 31, 2005 and for filing with the SEC.
This report shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
The Audit Committee
John W. Galuchie, Jr., Chairman
Martin F. Spiro
John F. Eureyecko
DIRECTORS' COMPENSATION
Each non-employee Director receives $18,000 per year for attendance at
Board and Committee meetings. Directors who attend all twelve regular meetings
receive a bonus of $3,000. Directors who attend eleven regular monthly meetings
receive a bonus of $2,000. Directors who attend ten regular monthly meetings
receive a bonus of $1,000. Directors who attend less than ten regular monthly
meetings receive no bonus. For the year ended December 31, 2005, directors as a
group received $77,750 in fees for their services. Under the Company's
Non-Qualified Stock Option Plan, and beginning in 1999, each non-employee
director received an annual option grant of 2,000 shares of common stock. Option
grants to Directors were discontinued in 2002. At December 31, 2005, all options
to purchase shares of common stock that had been granted to non-employee
directors have been exercised.
9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth for the
three years ended December 31, 2005, certain information as to the total
remuneration paid by the Bank to the President and Chief Executive Officer and
Senior Vice President and Chief Lending Officer and the Senior Vice President
and Chief Information Officer. No other employee's salary and bonuses exceeded
$100,000 in 2005. The Company does not separately compensate its employees.
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------- --------------------------------------
RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS(#) PAYOUTS COMPENSATION
- ------------------ ---- --------- --------- ------------ ---------- --------------- ------- ------------
Mark W. Jaindl, 2005 $ 219,230 $ 38,700 -- -- 10,000 -- $ 25,126(1)
Chairman, President 2004 187,923 10,400 -- -- 10,000 -- 22,192(1)
and Chief Executive 2003 175,000 16,100 -- -- -- -- 41,439(1)
Officer
Chris Persichetti, 2005 $ 100,000 $ 35,136 -- -- 1,500 -- $ 8,982(2)
Senior Vice President 2004 90,000 16,625 -- -- 1,500 -- 9,585(2)
and Chief Lending 2003 84,000 24,293 -- -- 1,088 -- 7,731(2)
Officer
Robert W. Turner 2005 $ 95,769 $ 10,653 -- -- -- -- $ 17,650(3)
Senior Vice President 2004 89,912 7,110 -- -- -- -- 14,702(3)
and Chief Information 2003 87,068 5,902 -- -- -- -- 13,694(3)
Officer
- ----------
(1) Includes $5,000, $5,000 and $25,000 contributed to the deferred
compensation plan in 2005, 2004 and 2003. For the years ended December 31,
2005, 2004 and 2003 the amount includes $10,310, $9,092 and $7,772 of
health, life and disability insurance premiums paid on behalf of Mr.
Jaindl. For the years ended December 31, 2005, 2004 and 2003 the amount
includes 346, 250 and 300 shares under the ESOP valued at the closing
market price per share of $8.17, $8.60 and $9.78, respectively. For the
years ended December 31, 2005, 2004 and 2003 the amount includes $7,000,
$5,950 and $5,733 in matching funds for the 401(k) Plan.
(2) Includes $3,097, $5,000 and $3,500 contributed to the deferred compensation
plan in 2005, 2004 and 2003. For the years ended December 31, 2005, 2004
and 2003 the amount includes $1,252, $1,163 and $7,772 of health, life and
disability insurance premiums paid on behalf of Mr. Persichetti. For the
years ended December 31, 2005, 2004 and 2003 the amount includes 223, 135
and 167 shares under the ESOP valued at the closing market price per share
of $8.17, $8.60 and $9.78, respectively. For the years ended December 31,
2005, 2004 and 2003 the amount includes $2,811, $2,261 and $5,733 in
matching funds for the 401(k) Plan.
(3) Includes $3,000, $2,000 and $2,000 contributed to the deferred compensation
plan in 2005, 2004 and 2003. For the years ended December 31, 2005, 2004
and 2003 the amount includes $9,980, $8,742 and $7,428 of health, life and
disability insurance premiums paid on behalf of Mr. Turner. For the years
ended December 31, 2005, 2004 and 2003 the amount includes 177, 122 and 151
shares under the ESOP valued at the closing market price per share of
$8.17, $8.60 and $9.78, respectively. For the years ended December 31,
2005, 2004 and 2003 the amount includes $3,224, $2,911 and $2,789 in
matching funds for the 401(k) Plan.
EMPLOYEE BENEFIT PLANS
NON-QUALIFIED STOCK OPTION PLAN. American Bank adopted a Non-Qualified
Stock Option Plan, which was succeeded to by the Company. The Non-Qualified
Stock Option Plan covers options to purchase 313,575 shares of common stock, of
which 184,088 options were granted and outstanding at December 31, 2005. Options
granted under this plan will have an option price at least equal to the fair
market value of the common stock on the date of the grant. Options available for
grant at December 31, 2005, were 129,487. The weighted-average remaining
contractual life of the outstanding options at December 31, 2005 was
approximately 7.06 years.
10
Set forth in the table that follows is information relating to options
granted under the Non-Qualified Stock Option Plan to the Named Executive
Officers during the year ended December 31, 2005.
- --------------------------------------------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- ---------------------------- ---------------- ------------------- ------------ ------------ ------------------------
PERCENT OF TOTAL EXERCISE
OPTIONS GRANTED OR BASE
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION GRANT DATE PRESENT
NAME GRANTED 2005 ($)(1) DATE VALUE ($)(2)
- ---------------------------- ---------------- ------------------- ------------ ------------ ------------------------
Mark W. Jaindl 10,000 76.9 8.44 1/05/2015 21,300
- ---------------------------- ---------------- ------------------- ------------ ------------ ------------------------
Chris Persichetti 1,500 11.5 8.44 1/05/2015 3,195
- ---------------------------- ---------------- ------------------- ------------ ------------ ------------------------
Robert W. Turner -- -- -- -- --
- ---------------------------- ---------------- ------------------- ------------ ------------ ------------------------
- ----------
(1) The exercise price of the options is equal to the fair market value of the
underlying shares on the date of the award.
(2) Based on a grant date present value of $2.13 per share derived using the
Black-Scholes option pricing model with the following assumptions:
volatility of 27%; risk free rate of return of 4.28%; dividend yield of
1.30% and a 10-year option life.
Set forth in the table that follows is certain information concerning
options outstanding to the Named Executive Officers at December 31, 2005.
- --------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
- ---------------------------- ---------------- ----------------- ------------------------- --------------------------
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
YEAR-END YEAR-END(1)
- ---------------------------- ---------------- ----------------- ------------------------- --------------------------
SHARES ACQUIRED VALUE EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME UPON EXERCISE REALIZED (#) ($)
- ---------------------------- ---------------- ----------------- ------------------------- --------------------------
Mark W. Jaindl -- $-- 124,750 / 10,000 $191,530 / $-0-
- ---------------------------- ---------------- ----------------- ------------------------- --------------------------
Chris J. Persichetti -- $-- 13,500 / 4,088 $33,775 / $-0-
- ---------------------------- ---------------- ----------------- ------------------------- --------------------------
Robert W. Turner -- $-- 5,000 / -0- $850 / $-0-
- ---------------------------- ---------------- ----------------- ------------------------- --------------------------
- ----------
(1) Equals the difference between the aggregate exercise price of such options
and the aggregate fair market value of the shares of common stock that would
be received upon exercise, assuming such exercise occurred on December 31,
2005, at which date the last trade price of the common stock as quoted on
the Nasdaq Capital Market was $8.17.
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST. American Bank has established
an employee stock ownership plan. Employees with at least one year of employment
with American Bank and who have attained age 21 are eligible to participate.
Participants in the employee stock ownership plan receive credit for vesting
purposes for each calendar year of continuous employment with American Bank in
which the employee completed 1,000 hours of service prior to the effective date
of the employee stock ownership plan. A participant is 20% vested in his/her
benefits after three years of service and in an additional 20% for each
subsequent year until a participant is 100% vested after seven years. A
participant is also 100% vested in his benefits upon normal retirement (as
defined in the employee stock ownership plan), early retirement, disability or
death. A participant who terminates employment before becoming fully vested will
forfeit his or her non-vested benefits under the employee stock ownership plan.
Benefits are payable in the form of common stock and cash or, at the election of
the participant, in common stock only or cash only, upon separation from
service. American Bank's contributions to the employee stock ownership plan are
discretionary and, therefore, benefits payable under the employee stock
ownership plan cannot be estimated.
In connection with the establishment of the employee stock ownership
plan, American Bank appointed a committee of non-employee directors to
administer the employee stock ownership plan, and to appoint a trustee. The
employee stock ownership plan trustee, subject to its fiduciary duty, must vote
all allocated shares held in the employee stock ownership plan in accordance
with the instructions of participating employees. Under the employee stock
ownership plan, nondirected shares, and shares held in the suspense account,
will be voted in a manner calculated to most accurately reflect the instructions
it has received from participants regarding the allocated stock so long as such
vote is in accordance with the provisions of ERISA.
11
EMPLOYMENT AGREEMENT. American Bank has entered into an employment
agreement with its President and Chief Executive Officer for a three-year term,
which automatically extends by one day for each day of the contract term.
American Bank can terminate the executive's employment for cause at any time
without obligation under the agreement. If employment is terminated without
cause or following a change in control, American Bank shall pay the executive's
salary and benefits for the remaining term of the agreement. The agreement
includes restrictions on competition and confidentiality following termination
of employment.
NON-QUALIFIED DEFERRED COMPENSATION PLAN FOR SENIOR EMPLOYEES. The Bank
established a Non-qualified Deferred Compensation Plan for Senior Employees (the
"Plan"), effective January 1, 2003, for senior employees designated by the Board
of Directors. Each year, the Bank may, but is not required to, make
discretionary contributions to the Plan on behalf of participants. The rate of
return credited to participants' accounts each year is equal to the one-year
treasury yield, unless, in the Board of Directors' sole discretion, a higher
rate of earnings shall be credited. A participant will vest in his account at
the rate of 10% per year, beginning the first day of the second year following
the initial contribution, and become fully vested after ten years of
participation in the Plan. A participant's account will become fully vested upon
a participant's death, disability, retirement at or after attaining age 65, or
due to a change in control. In the event a participant is terminated for cause
or violates the Plan's provisions on non-disclosure, trade secrets and
non-solicitation, his account would be forfeited. Upon the later of the
participant's attainment of age 65 or termination of services due to retirement,
or at such other date as approved by the Board of Directors, the Bank will
distribute the amount credited to the participant's account, commencing or
within 60 days following the last day of the month of such termination, or
within a reasonable period of time thereafter as American Bank and the
participant will determine. In the event of a participant's death or disability,
American Bank will commence distribution within 60 days of notice of the
participant's death or determination of disability. Benefits under the Plan will
be paid in five installments or in a lump sum, at the Board's discretion. A
participant may request distribution of benefits in a lump sum; however, the
determination as to whether to grant such request rests solely with the Board,
and if granted, the lump sum distribution will be conditioned on the
participant's entering into a two-year non-compete agreement. For as long as the
participant participates in the Plan as an employee of the Bank or while
receiving benefits under the Plan, the participant will be bound by the
non-disclosure/trade secret and non-solicitation provisions of the Plan.
INCENTIVE COMPENSATION
Incentive compensation bonuses paid to executive officers, other
officers, and staff are determined and paid at the sole discretion of the Board
of Directors, typically on an annual basis. Total incentive compensation bonuses
paid to all employees was $86,871, $138,517 and $60,409 for the years ended
December 31, 2005, 2004 and 2003, respectively.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The common stock of the Company is registered with the SEC pursuant to
Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act"). The
officers and directors of the Company and beneficial owners of greater than 10%
of the Company's Common Stock ("10% beneficial owners") are required to file
reports on Forms 3, 4 and 5 with the SEC disclosing beneficial ownership and
changes in beneficial ownership of the Common Stock. SEC rules require
disclosure in the Company's proxy statement of the failure of an officer,
director or 10% beneficial owner of the Company's common stock to file a Form 3,
4, or 5 on a timely basis. No officer, director or 10% beneficial owner of the
Company failed to file ownership reports as required for the year ended December
31, 2005.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
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 and has notified the lessor of its intent to exercise its option to renew
12
the lease for an additional five years beginning in November 2007. The lessor
and the Bank have reached agreement on the terms of the lease renewal at that
date. 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 is The Jaindl Building, LP and Mark W. Jaindl Properties, LLC is the
general partner of that limited partnership. Mark W. Jaindl is the owner of Mark
W. Jaindl Properties LLC. Mr. Jaindl is the Chairman of the Board, President and
Chief Executive Officer and a principal stockholder of American Bank
Incorporated. The minimum lease payments due in 2006 under the original terms of
the lease are $361,000.
American Bank has had, and may be expected to have in the future,
banking transactions in the ordinary course of business with its executive
officers, directors, principal stockholders, their immediate families and
affiliated companies (commonly referred to as related parties), on the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with others and have not involved more than the
normal risk of collectibility or present other unfavorable features.
FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Set forth below is certain information concerning aggregate fees billed
for professional services rendered by Beard Miller Company LLP, the Company's
independent registered public accounting firm during 2005 and 2004:
AUDIT FEES. The aggregate fees billed to the Company by Beard Miller
Company LLP for professional services rendered by Beard Miller Company LLP for
the audit of the Company's annual consolidated financial statements, review of
the financial statements included in the Company's Quarterly Reports on Form
10-QSB and services that are normally provided by Beard Miller Company LLP in
connection with statutory and regulatory filings and engagements was $58,629 and
$48,969 during the years ended December 31, 2005 and 2004, respectively.
AUDIT RELATED FEES. The aggregate fees billed to the Company by Beard
Miller Company LLP for assurance and related services rendered by Beard Miller
Company LLP that are reasonably related to the performance of the audit of and
review of the financial statements and that are not already reported in "Audit
Fees," above, was $3,235 and $-0- during the years ended December 31, 2005 and
2004, respectively. These services primarily included accounting consultations.
TAX FEES. The aggregate fees billed to the Company Beard Miller Company
LLP for professional services rendered by Beard Miller Company LLP for tax
compliance, tax advice and tax planning was $8,750 and $13,127 during the years
ended December 31, 2005 and 2004, respectively. These services primarily
included the preparation of tax returns.
ALL OTHER FEES. The aggregate fees billed to the Company by Beard
Miller Company LLP that are not described above was $-0- and $-0- during the
years ended December 31, 2005 and 2004.
POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee's policy is to pre-approve all audit and non-audit
services provided by the independent registered public accounting firm. These
services may include audit services, audit-related services, tax services and
other services. Pre-approval is generally provided for up to one year and any
pre-approval is detailed as to particular service or category of services and is
generally subject to a specific budget. The Audit Committee has delegated
pre-approval authority to its Chairman when expedition of services is necessary.
The independent registered public accounting firm and management are required to
periodically report to the full Audit Committee regarding the extent of services
provided by the independent registered public accounting firm in accordance with
this pre-approval, and the fees for the services performed to date. For the
years ended December 31, 2005 and 2004, 100% of audit related services, tax
services and all other services were approved by the Audit Committee prior to
engagement.
The Audit Committee has considered whether the provision of non-audit
services, which relate primarily to tax services rendered, is compatible with
maintaining Beard Miller Company LLP's independence. The Audit Committee
concluded that performing such services does not affect Beard Miller Company
LLP's independence in performing its function as the independent registered
public accounting firm of the Company.
13
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the proxy materials for next
year's Annual Meeting of Stockholders, any stockholder proposal to take action
at such meeting must be received at the Company's executive office, 4029 West
Tilghman Street, Allentown, Pennsylvania 18104, no later than November 28, 2006.
Any such proposals shall be subject to the requirements of the proxy rules
adopted under the Exchange Act.
Under the Company's Bylaws, certain procedures are provided which a
stockholder must follow to introduce an item of business at an annual meeting of
stockholders. These procedures provide, generally, that stockholders desiring to
bring a proper subject of business before the meeting, must have given timely
notice thereof in writing to the Secretary of the Corporation. To be timely a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Company not later than ninety (90) days prior
to the anniversary date of the mailing of proxy materials by the Company in
connection with the immediately preceding annual meeting of stockholders of the
Company. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting, (b)
the name and address, as they appear on the Company's books, of the stockholder
proposing such business, (c) the class and number of shares of the Company which
are beneficially owned by the stockholder, and (d) any material interest of the
stockholder in such business. The chairman of an annual meeting shall, if the
facts warrant, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the provisions of the
Company's Bylaws, and if he should so determine, he shall so declare to the
meeting and any such business not properly brought before the meeting shall not
be transacted.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Annual Meeting other than the matter described above in the Proxy Statement.
However, if any matters should properly come before the Annual Meeting, it is
intended that holders of the proxies will act as directed by a majority of the
Board of Directors, except for matters related to the conduct of the Annual
Meeting, as to which they shall act in accordance with their best judgment.
MISCELLANEOUS
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telephone without additional compensation.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED
DECEMBER 31, 2005, WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS UPON WRITTEN
OR TELEPHONIC REQUEST TO SANDRA A. BERG, CORPORATE SECRETARY, 4029 WEST TILGHMAN
STREET, ALLENTOWN, PENNSYLVANIA 18104, (610) 366-1800.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Sandra A. Berg
Sandra A. Berg
Corporate Secretary
Allentown, Pennsylvania
March 29, 2006
14
APPENDIX A
AUDIT COMMITTEE CHARTER
ORGANIZATION AND MEMBERSHIP
- ---------------------------
There shall be a committee of the board of directors of American Bank
Incorporated (the "Company") known as the Audit Committee. The Audit Committee
shall be composed of directors who are independent directors, as defined in
Section 301 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and do
not own or control 20% or more of the voting securities of the Company. In
addition to each member of the Audit Committee being independent, they are
barred from receiving consulting, advisory or any other compensation from the
Company, other than as a Board or Committee member. The members of the committee
must be able to read and understand basic financial statements, including the
Company's balance sheet, statement of income and expense and statement of cash
flows.
STATEMENT OF POLICY
- -------------------
The Audit Committee shall provide assistance to corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the corporation, and the quality and integrity of the financial reports of the
corporation. In so doing, it is the responsibility of the Audit Committee to
maintain free and open means of communication between and among the directors,
management, the independent auditors and the internal auditors. The audit
committee shall meet four times per year, or more frequently as circumstances
warrant.
DUTIES OF THE AUDIT COMMITTEE
- -----------------------------
The duties of the Audit Committee consist of the following:
a. Oversight of Auditors.
The Audit Committee is directly responsible for the
appointment, compensation and oversight of the work of the
independent auditors engaged by the Company for the purpose of
issuing audit reports and related work. In addition, the Audit
Committee is responsible for the resolution of disagreements
between management and the external auditors regarding
financial reporting.
b. Procedures to Hear Complaints.
The Audit Committee shall put in place procedures for the
receipt, retention and treatment of complaints received by the
Company regarding accounting, internal accounting controls, or
auditing matters. This shall also include confidential,
anonymous submission by employees of the Company of concerns
regarding questionable accounting or auditing matters.
c. Authority to Hire Staff.
The Audit Committee is expressly granted the authority to
engage independent counsel and other advisors necessary to
carry out its duties.
d. Funding.
The Audit Committee shall at all times be provided with
sufficient funds necessary to fulfill its duties including,
payments to independent accountants for audit services, Audit
Committee member salaries or fees and payments to retain Audit
Committee staff.
A-1
e. Overseeing the internal audit function, including but not limited to:
1. reviewing and approving the internal audit plan,
which shall include all appropriate control and
compliance matters.
2. reviewing reports of internal auditors as well as
management's response;
3. monitoring adherence to the internal audit plan;
4. monitoring corrective action taken by management;
5. reviewing reports issued pursuant to the Bank's
Internal Loan Review policies and monitoring
corrective action; and
6. monitoring corrective actions resulting from
examination reports or external audit reports;
7. reviewing the policies adopted by the Board of
Directors governing the Internal Audit Department and
recommending modifications thereof if indicated.
f. Reviewing with management and its independent auditor the scope of
services required by the audit, significant accounting policies, and
audit conclusions regarding significant accounting estimates;
g. Reviewing with management and its independent auditor their assessments
of the adequacy of internal controls and the resolution of identified
material weaknesses and reportable conditions in internal controls,
including the prevention or detection of management override or
compromise of the internal control structure;
h. Reviewing with management the institution's compliance with laws and
regulations;
i. Taking other action, independent of management, whenever appropriate.
j. Through its chairman, or in the absence of the chairman another
designated member, review interim financial data and discuss with the
Chief Financial Officer (or other appropriate officer in the absence of
the Chief Financial Officer) and independent auditor, in person or by
telephone conference, the results of the auditor's review of the data
prior to the filing of the Form 10 KSB or 10 QSB, and preferably prior
to the public announcement of financial results.
k. Perform such other duties as assigned by law, the company's charter and
bylaws, or the board of directors.
RELATIONSHIP TO INTERNAL AUDIT DEPARTMENT
- -----------------------------------------
The scope of the functions of the internal auditing firm is under the direction
of the Audit Committee. The internal auditing firm is hired by and reports
directly to the Audit Committee.
A-2
PROXY
AMERICAN BANK INCORPORATED
ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 2006
The undersigned hereby appoints the official proxy committee of the
Board of Directors, with full powers of substitution, to act as attorneys and
proxies for the undersigned to vote all shares of Common Stock of the Company
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
("Annual Meeting") to be held at The Holiday Inn West, Route 100 and Interstate
78, Fogelsville, Pennsylvania on April 26, 2006, at 9:00 a.m. local time. The
official proxy committee is authorized to cast all votes to which the
undersigned is entitled as follows:
VOTE
FOR WITHHELD
--- --------
(except as
marked to
the
contrary
below)
1. The election as Director of Michael D. Molewski to
serve for a two-year term and the election as Directors [ ] [ ]
of John F. Eureyecko, John W. Galuchie, Jr. and Donald
J. Whiting, Jr. each to serve for a three-year term.
INSTRUCTION: To withhold your vote for one or more nominees,
write the name of the nominee(s) on the line(s) below.
- ------------------------------
- ------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSAL.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY, IF SIGNED AND RETURNED, WILL BE VOTED FOR THE PROPOSITION STATED ABOVE.
IF ANY OTHER BUSINESS IS PRESENTED AT SUCH ANNUAL MEETING, THIS PROXY WILL BE
VOTED AS DIRECTED BY A MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME,
THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL
MEETING.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Annual Meeting or at
any adjournment thereof and after notification to the Secretary of the Company
at the Annual Meeting of the stockholder's decision to terminate this proxy,
then the power of said attorneys and proxies shall be deemed terminated and of
no further force and effect. This proxy may also be revoked by sending written
notice to the Secretary of the Company at the address set forth on the Notice of
Annual Meeting of Stockholders, or by the filing of a later proxy prior to a
vote being taken on a particular proposal at the Annual Meeting.
The undersigned acknowledges receipt from the Company prior to the execution of
this proxy of notice of the Annual Meeting, a proxy statement dated March 29,
2006, and audited financial statements.
Dated: _________________________ [ ] Check Box if You Plan
to Attend Annual Meeting
- ------------------------------- ----------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ------------------------------- ----------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this card. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title.
- --------------------------------------------------------------------------------
PLEASE COMPLETE AND DATE THIS PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
- --------------------------------------------------------------------------------