Company: EMYB
Filing Date: 2025-04-28
Form Type: DEF 14A
Source: 0001449794-25-000004
Chunk: 39

Company: Embassy Bancorp, Inc.
Filing Date: 2025-04-28
Form: DEF 14A
Chunk 39
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 were primarily fixed rate and of a longer duration. Similarly, the securities we invested in were largely government-backed mortgage-backed securities, which allowed for low credit risk and a higher yield but were also of a relatively longer duration. This deployment of liquidity in loans and investments allowed us to maintain an overall yield on loans of 3.59% and yield on available for sale securities of 1.81% through the quarter ended March 2022. The returns on these loans and investments importantly supplemented our capital ratios during this period of rapid deposit growth and therefore overall asset growth. Commencing in March 2022 there was an unprecedented 5.25% increase in the Fed Funds rate over a 16-month period in response to what turned out to be persistent inflationary pressures despite comments made by the Federal Reserve Chairman and the Secretary of the Treasury in late 2021 that such inflation would not persist but would be “transitory” in nature. This dynamic started

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what was in essence an industry-wide interest rate battle, that still persists today, to simply retain existing deposit levels, let alone grow deposits. We are extraordinarily proud that from March 2022 to December 2024, we not only just retained deposits, but we also increased them from the aforementioned $1.507 billion to $1.553 billion, an increase of $46 million, or 3%, primarily attributed to adding new household accounts and business customers.

Our core philosophy is to not sell, in any form, the loans we have originated, regardless of the prevailing interest rate environment at any given time or the duration of the loans. We are immensely proud of our strong historical loan to deposit ratio and level of loans to total assets, which are consistently above our national and state peers. At December 31, 2024, our loans make up just over 74% of our total assets. Further, it has been our philosophy to supplement our loans with purchases of low credit risk available for sale securities. The sustained high-interest rate environment resulting from such persistent inflation has negatively impacted the fair value of our, and many other community banks’ loan and investment portfolios. With our investment portfolio being characterized for accounting treatment as available for sale, the unrealized losses on this portfolio are captured in unrealized losses on the balance sheet. While we continue to believe that this unrealized loss position is temporary and primarily attributable to the rapid rise in interest rates following our purchase of those investment securities, management and the board continue to evaluate various balance sheet optimization strategies