AMERICAN FEDERAL ANNOUNCES FIFTH STRAIGHT YEAR OF RECORD INCOME.

GREENVILLE, S.C.--(BUSINESS WIRE)--Jan. 15, 1997--American Federal Bank, FSB, (Nasdaq: AMFB) today announced record income from operations of $18.1 million, a 10% increase from $16.5 million in 1995.

Operating earnings per share for the year were $1.60 compared with $1.45 in 1995.

Net income was reduced to $14.5 million or $1.28 per share, however, by a special assessment of $5.6 million (pre-tax) in the third quarter. The one-time charge was the Bank's share in recapitalizing the FDIC fund.

Net income in the fourth quarter set another record at $4.7 million or $.42 per share, compared with $4.3 million or $.38 per share in the fourth quarter of 1995. Net interest income rose $1.0 million or 8% from the fourth quarter a year ago, and the net interest margin increased 30 basis points to 4.37%.

Fee and commission income for the quarter was $4.1 million, an increase of 26% from the same quarter last year. Fees and commissions now constitute over 23% of net revenue. The Bank's efficiency ratio was 55.08% for the quarter and 54.03% for the year.

Roy Abercrombie, Chairman and Chief Executive Officer, said, "Our market economy continues to outperform the national average, and it has allowed us to enjoy quality growth in consumer and commercial loans. Our success in 1996 was a great way to conclude American Federal's first 75 years of operation."

At December 31, nonperforming assets were $6.4 million or .48% of total assets, a decrease of 33% from the fourth quarter of 1995. The allowance for loan losses was $10.7 million or 1.26% of total loans.

Total loans increased 9% in 1996, excluding the $33 million credit card portfolio which the Bank sold early in the fourth quarter. The gain on the sale was used to restructure the mortgage-backed securities portfolio by eliminating $121.1 million of low yielding investments.

While total deposits at the end of 1996 were comparable with yearend 1995, checking accounts increased 7%. The Bank continues to target checking accounts because of their strategic significance as the primary banking relationship through which customers select additional services.

"We are as well-positioned as we have ever been," Abercrombie said. "In the last couple of years we have invested heavily in our future growth and the results have been very gratifying."

American Federal has $1.3 billion in assets and 40 branch offices covering twelve counties in northwestern South Carolina. The Bank also owns a consumer finance company, Finance South, with 17 branch offices.

American Federal's common stock trades on the Nasdaq National Market under the symbol AMFB. Market makers include J.C. Bradford & Co., Davenport & Co. of Virginia, Herzog, Heine, and Geduld, Inc., Interstate/Johnson Lane, Keefe, Bruyette & Woods, Inc., The Robinson Humphrey Co., Inc., Ryan Beck & Co., Inc., and Wheat First Butcher & Singer. -0-

                                 At or for the twelve months ended
                                           December 31,
                                      1996               1995
KEY PERFORMANCE MEASURES:
Return on average assets              1.34%(a)           1.28%
Return on average equity             16.37%(a)          16.14%
Efficiency ratio                     54.03%(a)          56.02%

PER SHARE DATA:
Book value                          $10.54              $9.80
Annual dividend                        .40                .28

    (a) Excluding special FDIC assessment


                     CONSOLIDATED FINANCIAL DATA
                            (Unaudited)
OPERATIONS DATA:
                               Three Months Ended Twelve Months Ended
                                  December 31,        December 31,
                                 1996      1995      1996      1995
                                (In thousands, except per share data)

Net interest income            $13,678   $12,652   $53,983   $48,653
Provision for loan losses          896       782     4,338     2,279
Noninterest income               4,176     3,585    15,661    12,968
Noninterest expense              9,793     8,828    43,014    34,600
Net income before income taxes   7,165     6,627    22,292    24,742
Income taxes                     2,504     2,255     7,800     6,502
Net income before extraordinary
 item                            4,661     4,372    14,492    18,240
Extraordinary item                   -       (56)        -    (1,709)
Net income                     $ 4,661   $ 4,316   $14,492   $16,531
Net earnings per share before
 extraordinary item            $   .42   $   .38   $  1.28   $  1.60
Extraordinary item             $     -   $     -   $     -   $  (.15)
Net earnings per share         $   .42   $   .38   $  1.28   $  1.45
Weighted average shares:
 Primary                        11,174    11,449    11,287    11,425
 Fully Diluted                  11,180    11,449    11,316    11,438

SUMMARY OF FINANCIAL CONDITION:
                                       December 31,  December 31,
                                          1996          1995
                                            (In thousands)
Total assets                           $1,318,400    $1,345,884
Loans, net                             $  837,855    $  805,365
Securities                             $  342,341    $  439,485
Deposits                               $  986,780    $  977,957
Stockholders' equity                   $  115,592    $  109,792

CONTACT: American Federal Bank, Greenville

Mary Margaret Dragoun, 864/255-7253