DEF 14A: Embassy Bancorp Sets Date for Virtual Annual Shareholder Meeting, Seeks Director Elections and Auditor Ratification

Embassy Bancorp will hold its annual shareholder meeting virtually on June 20, 2024, to elect directors and ratify the appointment of its independent auditor.

Summary

• Embassy Bancorp, Inc. will hold its annual meeting of shareholders on June 20, 2024, at 5:30 p.m. EDT, in a virtual-only format.
• Shareholders of record as of April 22, 2024, are entitled to vote.
• The meeting will address the election of two Class 2 Directors for a three-year term and the ratification of Baker Tilly US, LLP as the company's independent registered public accounting firm for the year ending December 31, 2024.
• The Board of Directors recommends voting FOR the election of the director nominees and FOR the ratification of the accounting firm.
• Shareholders can vote online, by mail, or by telephone prior to the meeting, and registered holders can also vote online during the virtual meeting.
• The proxy statement and annual report are available online at investorvote.com/EMYB.
• The company's bylaws state that the business shall be managed by a Board of Directors of not less than five and not more than twenty-five Directors, who shall hold office for a three-year term or until their successors are duly elected and qualified.
• The Board has set the number of Directors at eight (8).
• The Board of Directors is divided into three Classes: Class 1, Class 2 and Class 3, with each class serving a staggered, three-year term of office and being as nearly equal in number as possible.
• The Board of Directors proposes the following two (2) nominees be elected as Class 2 Directors to hold office for a period of three (3) years and until their successors have been elected and qualified: John G. Englesson and Patti Gates Smith.
• Each of the nominees currently serves as a Class 2 Director with a term expiring in 2024.
• The two (2) nominees for Director receiving the highest number of votes cast by shareholders entitled to vote for the election of Directors shall be elected.

Sentiment

Score: 7

Explanation: The document is primarily informational, outlining the details of the upcoming shareholder meeting and related governance matters. The tone is professional and forward-looking, with a focus on shareholder engagement and corporate responsibility. The company highlights its strong financial performance and commitment to its local community, contributing to a positive overall sentiment.

Positives

• The virtual meeting format provides greater accessibility for shareholders and improves meeting efficiency.
• The Board of Directors and executive management team collectively hold over 28% of the Company's outstanding shares, ensuring alignment with shareholder interests.
• The company has a strong history of growth and financial performance, growing to over $1.6 billion in assets, $1.2 billion in loans and $1.4 billion in deposits, all without any acquisitions and under the guidance of a majority of an executive management team that has now been together for more than two decades.
• The company has preserved shareholder value over the years, in part, by funding its growth through a combination of retained earnings and holding company leverage, rather than dilutive equity offerings.

Risks

• The proxy statement contains forward-looking statements that are subject to various risks and uncertainties, including economic conditions, credit risks, interest rate changes, and regulatory changes.
• Succession planning is an important aspect of the Boards strategic planning process, particularly as members of the Companys Board and management team continue to age.
• While no individual member of the Board or executive management team has communicated an expectation or desire to retire in the near-term, the Board continues to work with executive management to implement programs and procedures designed to mitigate against the risk of disruption caused by expected and unexpected departures of key personnel.

Future Outlook

The Board regularly engages with members of the Company's executive management team and professional advisors in order to review and evaluate the Company's business plan and strategic direction, paying particular attention to trends in the financial services industry, customer migration toward mobile and electronic banking products and services, developments in cyber-security, and overall risk management.

Management Comments

• The Board believes that the efficiency ratio and employee ratios are particularly important in determining compensation because it views such ratios as reasonable indicators of individual and team efforts.
• The Board believes that its compensation philosophy and the resultant compensation paid to the Company's employees, and the programs and practices on which such compensation decisions are based, are reasonable and do not present any risks that are reasonably likely to have a material adverse effect on the Company.
• The Board believes that its approach to compensation has enabled the Company to enjoy a stable team of highly engaged banking professionals who have continued to fine tune the Company's unique business model, culture, and resulting performance growing the Company from $0 in assets to over $1.6 billion in assets with minimal shareholder dilution over approximately the last fifteen (15) years.

Industry Context

The company differentiates itself from larger competitors by focusing on personalized service and responsiveness to local needs, employing an experienced and motivated staff.

Comparison to Industry Standards

• For the year ended December 31, 2023, the Companys team productivity benchmarks were ahead in comparison to those institutions that the Company considers its peers (banks headquartered in Pennsylvania with assets between $100 million and $5 billion).
• Those financial institutions the Company considers its peers have 61% greater overall salary expense as a percent of average assets than that of the Companys.
• For the year ended December 31, 2023, the Companys efficiency ratio was 61.1%, compared to the peer group average efficiency ratio of 68.3%.

Related Party Transactions

• Loans and commitments of approximately $14.0 million were outstanding to our Executive Officers, Directors, and their affiliated businesses, which represented approximately 13% of our shareholders equity at such date.
• Red Bird Associates, LLC, which includes several Directors and Executive Officers as equity holders, receives rent from the Bank for the Gateway Drive location.
• Director Frank Banko III receives rent from the Bank for the West Broad St. branch location.
• Bernard M. Lesavoy, Esquire, a Director, provides legal services to the Company and the Bank through Lesavoy Butz & Seitz LLC.

Stakeholder Impact

• Shareholders are encouraged to participate in the annual meeting and vote on the proposals.
• The company's focus on local community needs benefits customers and the Lehigh Valley community.
• Employees are recognized as a key factor in the company's success, with a focus on fair compensation and long-term engagement.

Next Steps

• Shareholders should review the proxy materials and vote on the proposals.
• The company will hold its annual meeting on June 20, 2024.
• The Board of Directors will implement programs and procedures designed to mitigate against the risk of disruption caused by expected and unexpected departures of key personnel.

Key Dates

Keywords

annual meeting, proxy statement, directors, shareholders, Baker Tilly, election, ratification, governance, voting, Embassy Bancorp