Company: EMYB
Filing Date: 2025-04-28
Form Type: DEF 14A
Source: 0001449794-25-000004
Chunk: 40

Company: Embassy Bancorp, Inc.
Filing Date: 2025-04-28
Form: DEF 14A
Chunk 40
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 in order to mitigate the impact of the unrealized loss position in the portfolio and restore the Company to its historical profitability. Those strategies may include holding securities to maturity to avoid any loss of capital and/or selling lower yield, underwater investment securities at a loss in order to redeploy such funds into higher yielding loans and securities or balance sheet hedges on new asset growth.

All of these factors have temporarily negatively impacted our ROA. However, in an environment over the past five years where competitors were shuttering branches in search of “operational efficiencies” and even limiting lending to their communities in order to conserve capital, we remained a stalwart supporter of the Lehigh Valley community, continuing to grow the balance sheet with strong local lending through local deposit growth. Importantly, because the Company’s capital and liquidity positions remain sound and asset quality remains strong, the Company need not act in haste and can be deliberate in its selection of the best strategy for addressing our cost of funding levels, perceived balance sheet duration misalignment and return ROA back to historical levels. Importantly, our balance sheet is currently designed for a lowering interest rate environment. The Company is liability sensitive, which means that if interest rates fall, interest income will fall slower than interest expense and net interest income will likely increase. Recent economic indicators suggest that our patience will be rewarded, as our cost of funds, already well below our peers, appears to have peaked and is now trending downwards and our net interest margin is expanding, each of which is expected to drive an increase in ROA and value to our shareholders.

Adoption of the Proposal Could Negatively Impact Shareholder Value. The board unanimously believes that approving the proposal to “promptly” take steps to “sell” the Company could create significant uncertainty with respect to the Company’s future, which would undermine the Company’s relationship with its customers, employees and the communities we serve, and significantly erode the value created over the last twenty-three years of strong financial performance.

The board believes a decision to sell is the single most important decision in a company’s lifecycle and should be made only after careful consideration of all relevant factors, including the impact of the decision on all of the Company’s stakeholders. Further, the board, with its institutional knowledge of the Company and the benefit of receiving the input and advice of the executive management team and its financial and legal advisors, is uniquely positioned to undertake such an evaluation and make an informed decision as to whether a sale is in the best interests of the Company.

In this regard, the board is continuously evaluating alternatives available