Embassy Bancorp's Net Income Jumps 39.7% on Strong Loan Growth

TL;DR

**Embassy Bancorp is crushing it with double-digit profit growth, but keep an eye on those underwater securities.**

AI Summary

Embassy Bancorp, Inc. (EMYB) reported a significant increase in net income for the three and nine months ended September 30, 2025. Net income for the three months rose by 39.7% to $3.793 million from $2.714 million in the prior year, while net income for the nine months increased by 30.7% to $10.117 million from $7.742 million. Total assets grew to $1.778 billion as of September 30, 2025, up from $1.704 billion at December 31, 2024. This growth was primarily driven by an increase in securities available for sale to $334.314 million from $280.828 million, and a rise in loans receivable, net, to $1.268 billion from $1.256 billion. Total deposits also increased to $1.620 billion from $1.552 billion. The company's net interest income after provision for credit losses saw a substantial increase of 17.65% for the three months to $10.824 million and 14.85% for the nine months to $31.202 million. Despite these gains, the company continues to hold a significant amount of securities with unrealized losses totaling $53.338 million as of September 30, 2025, primarily due to increased market interest rates.

Why It Matters

This strong performance by Embassy Bancorp, Inc. signals robust operational health and effective management in a challenging interest rate environment, which is crucial for investors seeking stable regional bank exposure. The significant increase in net income and assets suggests a competitive edge in the Lehigh Valley market, potentially attracting more customers and talent. For employees, this growth could mean increased job security and opportunities. However, the substantial unrealized losses on securities, though deemed temporary, highlight interest rate sensitivity and could impact future capital flexibility, a key consideration for long-term investors and a potential competitive disadvantage if rates remain elevated.

Risk Assessment

Risk Level: medium — The company reported $53.338 million in gross unrealized losses on securities available for sale as of September 30, 2025, primarily due to increased market interest rates. While management believes these are temporary impairments and intends to hold the securities, sustained high interest rates or a need for liquidity could force realization of these losses, impacting capital.

Analyst Insight

Investors should consider Embassy Bancorp's strong net income growth and increasing deposits as positive indicators, but remain cautious about the significant unrealized losses in its securities portfolio. Monitor future interest rate trends and the company's ability to manage these assets without realizing losses, as this could affect long-term shareholder value.

Financial Highlights

total Assets

$1.778B

net Income

$10.117M

eps

$0.50

Key Numbers

• $3.793M — Net Income (3 months) (Up 39.7% from $2.714M in 2024)
• $10.117M — Net Income (9 months) (Up 30.7% from $7.742M in 2024)
• $1.778B — Total Assets (Increased from $1.704B at Dec 31, 2024)
• $1.268B — Loans Receivable, Net (Increased from $1.256B at Dec 31, 2024)
• $1.620B — Total Deposits (Increased from $1.552B at Dec 31, 2024)
• $53.338M — Gross Unrealized Losses on Securities (As of September 30, 2025, primarily due to interest rates)
• $0.50 — Basic EPS (3 months) (Up from $0.36 in 2024)
• $0.48 — Dividends Per Share (9 months) (Up from $0.42 in 2024)
• 7,646,114 — Common Shares Outstanding (As of November 7, 2025)
• $5.0M — Stock Repurchase Program (Authorized effective October 31, 2025)

Key Players & Entities

• Embassy Bancorp, Inc. (company) — registrant
• Embassy Bank For The Lehigh Valley (company) — principal operating subsidiary
• SEC (regulator) — Securities and Exchange Commission
• $3.793 million (dollar_amount) — Net Income for three months ended September 30, 2025
• $2.714 million (dollar_amount) — Net Income for three months ended September 30, 2024
• $10.117 million (dollar_amount) — Net Income for nine months ended September 30, 2025
• $7.742 million (dollar_amount) — Net Income for nine months ended September 30, 2024
• $1.778 billion (dollar_amount) — Total Assets as of September 30, 2025
• $53.338 million (dollar_amount) — Gross unrealized losses on securities available for sale as of September 30, 2025
• $5.0 million (dollar_amount) — Authorized stock repurchase program

FAQ

Risk Factors

• Unrealized Losses on Securities [medium — market]: The company holds a significant amount of securities with unrealized losses totaling $53.338 million as of September 30, 2025. These losses are primarily attributed to increased market interest rates, which have reduced the fair value of these investments below their amortized cost. While management believes these are temporary impairments, the large unrealized loss position represents a potential risk if the company were forced to sell these securities.
• Interest Rate Sensitivity [medium — market]: The substantial increase in unrealized losses on securities available for sale, from $64.121 million at December 31, 2024, to $53.338 million at September 30, 2025, highlights the company's sensitivity to interest rate fluctuations. While the net unrealized loss position has improved, the underlying cause (rising interest rates) continues to pose a risk to the valuation of the investment portfolio.
• Loan Portfolio Concentration [medium — financial]: The loan portfolio is heavily concentrated in commercial real estate (43.04% or $550.530 million) and residential real estate (53.17% or $680.177 million) as of September 30, 2025. While these segments are performing well with minimal classified assets, any downturn in the real estate market could disproportionately impact the company's loan portfolio and overall financial health.
• Dependence on Subsidiary Bank [medium — operational]: Embassy Bancorp, Inc. operates as a bank holding company, with its principal operating subsidiary being Embassy Bank For The Lehigh Valley. The company's financial performance and operational success are therefore heavily reliant on the performance and management of this single banking subsidiary.
• Bank Holding Company Regulations [low — regulatory]: As a registered bank holding company, Embassy Bancorp is subject to the Bank Holding Company Act of 1956 and other regulations. Compliance with these regulations is crucial for maintaining operational flexibility and meeting capital needs, and any changes or stringent enforcement could impact the company's strategic options.

Industry Context

Embassy Bancorp operates within the community banking sector, a highly competitive landscape characterized by a mix of large national banks and numerous regional and local institutions. The industry is currently navigating a period of rising interest rates, which impacts net interest margins, investment portfolio valuations, and loan demand. Community banks like Embassy Bancorp often differentiate themselves through personalized service and deep local market knowledge, but face challenges in competing on technology and scale with larger players.

Regulatory Implications

As a bank holding company, Embassy Bancorp is subject to stringent regulatory oversight from bodies like the Federal Reserve. Changes in capital requirements, liquidity rules, or consumer protection regulations can significantly impact operations and profitability. The current environment of increased interest rates also brings heightened scrutiny on interest rate risk management and the valuation of investment portfolios.

What Investors Should Do

1. Monitor the trend of unrealized losses on securities.
2. Analyze the growth drivers of net interest income.
3. Evaluate the composition and performance of the loan portfolio.
4. Assess the impact of the stock repurchase program.

Key Dates

• 2025-09-30: Quarterly Financials Reported — Reported increased net income, asset growth, and deposit growth, but also highlighted significant unrealized losses on securities.
• 2025-10-31: Stock Repurchase Program Authorized — Authorization of a $5.0 million stock repurchase program indicates management's confidence in the company's valuation and a potential return of capital to shareholders.
• 2025-03-17: Form 10-K Filed — Provided audited financial statements for the year ended December 31, 2024, which are referenced for comparison in the current 10-Q.

Glossary

Bank Holding Company Act of 1956

A U.S. federal law that regulates bank holding companies, which are companies that control one or more banks. (Embassy Bancorp, Inc. is registered as a bank holding company, making this act the primary regulatory framework governing its structure and operations.)

Securities Available For Sale

Investments in debt or equity securities that are not classified as held-to-maturity or trading securities. They are reported at fair value, with unrealized gains and losses included in other comprehensive income. (A significant portion of Embassy Bancorp's assets are in this category, and their fair value fluctuations, particularly unrealized losses, are a key focus in the financial reporting.)

Amortized Cost

The original cost of a security adjusted for amortization of premium or accretion of discount over its life. (Used as a basis for comparison with fair value to determine unrealized gains or losses on securities.)

Unrealized Losses

Losses on securities that have not yet been sold. These occur when the market value of a security falls below its purchase price or amortized cost. (A significant amount of unrealized losses on securities available for sale are reported, driven by interest rate changes, impacting the company's comprehensive income.)

Allowance for Credit Losses

A contra-asset account that reduces the carrying amount of loans to their net realizable value, representing the estimated losses expected from the loan portfolio. (This allowance is deducted from total loans to arrive at net loans, and its adequacy is a key indicator of credit risk management.)

Special Mention

A loan classification indicating a well-defined weakness that could jeopardize the repayment of the loan, but which is not yet sufficient to warrant a substandard classification. (Part of the internal risk rating system for loans, indicating potential credit concerns within the portfolio.)

Substandard

A loan classification indicating a well-defined weakness that jeopardizes the ultimate repayment of the loan. It is characterized by the possibility of loss if deficiencies are not corrected. (Represents a higher level of credit risk within the loan portfolio, requiring close monitoring.)

Year-Over-Year Comparison

Compared to the prior year's filings (likely for the period ending September 30, 2024, and the full year 2024), Embassy Bancorp has demonstrated robust growth in net income, with a 39.7% increase for the quarter and 30.7% for the nine months. Total assets have also grown, driven by increases in securities available for sale and loans. Net interest income has shown strong positive momentum. However, a key area of concern that may have evolved is the management of unrealized losses on securities, which remain substantial due to rising interest rates, a factor that may have been less pronounced in prior periods.

Key Financial Figures

• $1.00 — s outstanding as of November 7, 2025 ($1.00 Par Value) 7,646,114 (Title Class)

Filing Documents

• emyb-20250930x10q.htm (10-Q) — 7985KB
• emyb-20250930xex31_1.htm (EX-31.1) — 18KB
• emyb-20250930xex31_2.htm (EX-31.2) — 18KB
• emyb-20250930xex32.htm (EX-32) — 13KB
• 0001449794-25-000035.txt ( ) — 28989KB
• emyb-20250930.xsd (EX-101.SCH) — 39KB
• emyb-20250930_cal.xml (EX-101.CAL) — 89KB
• emyb-20250930_def.xml (EX-101.DEF) — 215KB
• emyb-20250930_lab.xml (EX-101.LAB) — 402KB
• emyb-20250930_pre.xml (EX-101.PRE) — 408KB
• emyb-20250930x10q_htm.xml (XML) — 9122KB

– Financial Information

Part I – Financial Information 3

– Financial Statements

Item 1 – Financial Statements Consolidated Balance Sheets (Unaudited) 3 Consolidated Statements of Income (Unaudited) 4 Consolidated Statements of Comprehensive Income (Unaudited) 5 Consolidated Statements of Stockholders' Equity (Unaudited) 6 Consolidated Statements of Cash Flows (Unaudited) 8

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 9

– Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations 28

– Quantitative and Qualitative Disclosures About Market Risk

Item 3 – Quantitative and Qualitative Disclosures About Market Risk 40

– Controls and Procedures

Item 4 – Controls and Procedures 41

- Other Information

Part II - Other Information 41

- Legal Proceedings

Item 1 - Legal Proceedings 41

- Risk Factors

Item 1A - Risk Factors 41

- Unregistered Sales of Equity Securities and Use of Proceeds

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds 42

- Defaults Upon Senior Securities

Item 3 - Defaults Upon Senior Securities 42

– Mine Safety Disclosures

Item 4 – Mine Safety Disclosures 42

- Other Information

Item 5 - Other Information 42

- Exhibits

Item 6 - Exhibits 43

Signatures

Signatures 44 2 Embassy Bancorp, Inc.

– Financial Information

Part I – Financial Information

– Fi nan cial Statements

Item 1 – Fi nan cial Statements Consolidated Balance Sheets (Current Period Unaudited) September 30, December 31, ASSETS 2025 2024 (In Thousands, Except Share Data) Cash and due from banks $ 17,394 $ 16,399 Interest bearing demand deposits with banks 89,603 79,123 Federal funds sold 1,000 1,000 Cash and Cash Equivalents 107,997 96,522 Securities available for sale 334,314 280,828 Restricted investment in bank stock 1,051 1,663 Loans receivable, net of allowance for credit losses of $ 11,941 in 2025; $ 12,166 in 2024 1,268,139 1,256,256 Premises and equipment, net of accumulated depreciation 3,014 3,322 Bank owned life insurance 37,656 36,652 Accrued interest receivable 4,054 3,604 Other assets 21,834 25,573 Total Assets $ 1,778,059 $ 1,704,420 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits: Non-interest bearing $ 336,060 $ 351,371 Interest bearing 1,284,503 1,201,588 Total Deposits 1,620,563 1,552,959 Securities sold under agreements to repurchase 12,116 4,895 Short-term borrowings - 15,625 Accrued interest payable 7,068 7,812 Other liabilities 15,878 16,649 Total Liabilities 1,655,625 1,597,940 Stockholders' Equity: Common stock, $ 1 par value; authorized 20,000,000 shares; 2025 issued 7,812,476 shares; outstanding 7,646,114 shares; 2024 issued 7,792,654 shares; outstanding 7,626,292 shares; 7,813 7,793 Surplus 29,185 28,802 Retained earnings 129,707 123,259 Accumulated other comprehensive loss ( 41,532 ) ( 50,635 ) Treasury stock, at cost: 166,362 shares at September 30, 2025 and December 31, 2024, respectively ( 2,739 ) ( 2,739 ) Total Stockholders' Equity 122,434 106,480 Total Liabilities and Stockholders' Equity $ 1,778,059 $ 1,704,420 See notes to consolidated financial statements (unaudited). 3 Embassy Bancorp, Inc. Consolidated Statemen

Notes to Consolidated Financial Statements (Unaudited )

Notes to Consolidated Financial Statements (Unaudited ) Note 1 – Basis of Presentation Embassy Bancorp, Inc. (the "Company") is a Pennsylvania corporation organized in 2008 and registered as a bank holding company pursuant to the Bank Holding Company Act of 1956, as amended (the "BHC Act"). The Company was formed for purposes of acquiring Embassy Bank For The Lehigh Valley (the "Bank") in connection with the reorganization of the Bank into a bank holding company structure, which was consummated on November 11, 2008. Accordingly, the Company owns all of the capital stock of the Bank, giving the organization more flexibility in meeting its capital needs as the Company continues to grow. Embassy Holdings, LLC (the "LLC") is a wholly-owned subsidiary of the Bank organized to engage in the holding of property acquired by the Bank in satisfaction of debts previously contracted. As such, the consolidated financial statements contained herein include the accounts of the Company, the Bank and the LLC. All significant intercompany transactions and balances have been eliminated. The Bank, which is the Company's principal operating subsidiary, was originally incorporated as a Pennsylvania bank on May 11, 2001 and opened its doors on November 6, 2001. It was formed by a group of local business persons and professionals with significant prior experience in community banking in the Lehigh Valley area of Pennsylvania, the Bank's primary market area. The accompanying unaudited financial statements have been prepared in accordance with United States of America generally accepted accounting principles ("US GAAP") for interim financial information and in accordance with instructions for Form 10-Q and Rule 10-01 of the Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals)

Notes to Consolidated Financial Statements (Unaudited )

Notes to Consolidated Financial Statements (Unaudited ) Note 3 – Securities Available For Sale At September 30, 2025 and December 31, 2024, respectively, the amortized cost and fair values of securities available-for-sale were as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value (In Thousands) September 30, 2025: U.S. Treasury securities $ 75,348 $ 588 $ ( 2 ) $ 75,934 U.S. Government agency obligations 19,059 80 ( 1 ) 19,138 Municipal bonds 72,607 40 ( 13,088 ) 59,559 U.S. Government Sponsored Enterprise (GSE) - Mortgage-backed securities - residential 219,872 58 ( 40,247 ) 179,683 Total $ 386,886 $ 766 $ ( 53,338 ) $ 334,314 December 31, 2024: U.S. Treasury securities $ 34,777 $ 10 $ ( 47 ) $ 34,740 U.S. Government agency obligations 12,499 3 ( 56 ) 12,446 Municipal bonds 72,669 13 ( 14,682 ) 58,000 U.S. Government Sponsored Enterprise (GSE) - Mortgage-backed securities - commercial 508 - ( 72 ) 436 U.S. Government Sponsored Enterprise (GSE) - Mortgage-backed securities - residential 224,470 - ( 49,264 ) 175,206 Total $ 344,923 $ 26 $ ( 64,121 ) $ 280,828 The amortized cost and fair value of securities as of September 30, 2025, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to prepay obligations with or without any penalties. Amortized Fair Cost Value (In Thousands) September 30, 2025: Due in one year or less $ 30,891 $ 30,904 Due after one year through five years 66,129 66,732 Due after five years through ten years 9,489 8,927 Due after ten years 60,505 48,068 167,014 154,631 U.S. Government Sponsored Enterprise (GSE) - Mortgage-backed securities - residential 219,872 179,683 Total $ 386,886 $ 334,314 There

Notes to Consolidated Financial Statements (Unaudited )

Notes to Consolidated Financial Statements (Unaudited ) The following table shows the Company's investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2025 and December 31, 2024: Less Than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses September 30, 2025: (In Thousands) U.S. Treasury securities $ 10,017 $ ( 2 ) $ - $ - $ 10,017 $ ( 2 ) U.S. Government agency obligations 7,503 ( 1 ) - - 7,503 ( 1 ) Municipal bonds 9,167 ( 646 ) 47,769 ( 12,442 ) 56,936 ( 13,088 ) U.S. Government Sponsored Enterprise (GSE) - Mortgage -backed securities - residential - - 172,295 ( 40,247 ) 172,295 ( 40,247 ) Total Temporarily Impaired Securities $ 26,687 $ ( 649 ) $ 220,064 $ ( 52,689 ) $ 246,751 $ ( 53,338 ) . December 31, 2024: U.S. Treasury securities $ - $ - $ 9,946 $ ( 47 ) $ 9,946 $ ( 47 ) U.S. Government agency obligations 5,009 ( 8 ) 2,437 ( 48 ) 7,446 ( 56 ) Municipal bonds 13,433 ( 1,248 ) 43,888 ( 13,434 ) 57,321 ( 14,682 ) U.S. Government Sponsored Enterprise (GSE) - Mortgage -backed securities - commercial - - 436 ( 72 ) 436 ( 72 ) U.S. Government Sponsored Enterprise (GSE) - Mortgage -backed securities - residential 18 - 175,149 ( 49,264 ) 175,167 ( 49,264 ) Total Temporarily Impaired Securities $ 18,460 $ ( 1,256 ) $ 231,856 $ ( 62,865 ) $ 250,316 $ ( 64,121 ) The Company had one hundred eighty-eight ( 188 ) securities in an unrealized loss position at September 30, 2025 and one hundred ninety-seven ( 197 ) securities in an unrealized loss position at December 31, 2024. The Company reviews its investment portfoli

Notes to Consolidated Financial Statements (Unaudited )

Notes to Consolidated Financial Statements (Unaudited ) time this situation has persisted, (2) commitments by the issuer to make payments required by law or regulation and the level of such payments in relation to the operating performance of the issuer, and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the issuer. Based upon its evaluation of the foregoing criteria, management believes no impairment charge is necessary related to the FHLB or ACBB stock as of September 30, 2025. Note 5 – Loans and Credit Quality The following table presents the composition of loans receivable at September 30, 2025 and December 31, 2024, respectively: September 30, 2025 December 31, 2024 Percentage of Percentage of Balance total Loans Balance total Loans (Dollars in Thousands) Commercial real estate $ 550,530 43.04 % $ 536,594 42.33 % Commercial construction 16,202 1.27 % 22,556 1.78 % Commercial 31,672 2.48 % 39,384 3.10 % Residential real estate 680,177 53.17 % 668,725 52.75 % Consumer 567 0.04 % 475 0.04 % Total loans 1,279,148 100.00 % 1,267,734 100.00 % Unearned origination fees 932 688 Allowance for credit losses ( 11,941 ) ( 12,166 ) Net Loans $ 1,268,139 $ 1,256,256 12 Embassy Bancorp, Inc.

Notes to Consolidated Financial Statements (Unaudited )

Notes to Consolidated Financial Statements (Unaudited ) The following table presents the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention (potential weakness), substandard (well defined weakness) and doubtful (full collection unlikely) within the Company's internal risk rating system as of September 30, 2025 by year of origination: 2025 2024 2023 2022 2021 Prior Revolving Total (In Thousands) Commercial real estate Pass $ 40,712 $ 51,924 $ 57,669 $ 138,191 $ 50,454 $ 206,492 $ 4,523 $ 549,965 Special Mention - - - - - - - - Substandard - - - - - 565 - 565 Total 40,712 51,924 57,669 138,191 50,454 207,057 4,523 550,530 Commercial construction Pass 263 1,750 6,835 7,035 - 27 - 15,910 Special Mention - - - - - - - - Substandard - - - - - 237 55 292 Total 263 1,750 6,835 7,035 - 264 55 16,202 Commercial Pass 2,730 6,230 1,194 2,470 437 9,042 7,902 30,005 Special Mention - 152 - 246 188 46 1,035 1,667 Substandard - - - - - - - - Total 2,730 6,382 1,194 2,716 625 9,088 8,937 31,672 Residential real estate Pass 63,231 67,628 56,700 81,945 134,442 247,488 27,120 678,554 Special Mention - - - - - 400 - 400 Substandard - - 59 129 591 444 - 1,223 Total 63,231 67,628 56,759 82,074 135,033 248,332 27,120 680,177 Consumer Pass 107 78 37 38 2 - 305 567 Special Mention - - - - - - - - Substandard - - - - - - - - Total 107 78 37 38 2 - 305 567 Total Loans Receivable $ 107,043 $ 127,762 $ 122,494 $ 230,054 $ 186,114 $ 464,741 $ 40,940 $ 1,279,148 The Company had gross charge-o

Notes to Consolidated Financial Statements (Unaudited )

Notes to Consolidated Financial Statements (Unaudited ) The following table presents the classes of the loan portfolio summarized by the aggregate pass rating and

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