Regulatory Matters

9 Months Ended

Sep. 30, 2020

Regulatory Matters [Abstract]

Regulatory Matters

Note 9—Regulatory Matters

The Corporation and PeoplesBank are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action that, if imposed, could have a material adverse effect on the Corporation’s financial statements. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. Management believes as of September 30, 2020, the Corporation and PeoplesBank meet all capital adequacy requirements to which they are subject.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. As of September 30, 2020 and December 31, 2019, the most recent regulatory notifications categorized PeoplesBank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.

The table below provides a comparison of the Corporation’s and PeoplesBank’s risk-based capital ratios and leverage ratios to the minimum regulatory requirement for the periods indicated. Minimum amounts and ratios include the full phase in of the capital conservation buffer of 2.5 percent required by the Basel III framework.

					Minimum for Basel III				Well Capitalized
	Actual				Capital Adequacy				Minimum (1)
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Codorus Valley Bancorp, Inc. (consolidated)
at September 30, 2020
Capital ratios:
Common equity Tier 1	$	187,741	13.20	%	$	99,597	7.00	%		n/a	n/a
Tier 1 risk based		197,741	13.90			120,939	8.50			n/a	n/a
Total risk based		215,565	15.15			149,396	10.50			n/a	n/a
Leverage		197,741	9.51			83,130	4.00			n/a	n/a
at December 31, 2019
Capital ratios:
Common equity Tier 1	$	187,312	12.45	%	$	105,359	7.00	%		n/a	n/a
Tier 1 risk based		197,312	13.11			127,936	8.50			n/a	n/a
Total risk based		216,154	14.36			158,039	10.50			n/a	n/a
Leverage		197,312	10.55			74,820	4.00			n/a	n/a
PeoplesBank, A Codorus Valley Company
at September 30, 2020
Capital ratios:
Common equity Tier 1	$	194,064	13.67	%	$	99,349	7.00	%	$	92,253	6.50	%
Tier 1 risk based		194,064	13.67			120,638	8.50			113,542	8.00
Total risk based		211,844	14.93			149,024	10.50			141,928	10.00
Leverage		194,064	9.35			82,990	4.00			103,737	5.00
at December 31, 2019
Capital ratios:
Common equity Tier 1	$	193,421	12.88	%	$	105,118	7.00	%	$	97,610	6.50	%
Tier 1 risk based		193,421	12.88			127,643	8.50			120,135	8.00
Total risk based		212,220	14.13			157,677	10.50			150,169	10.00
Leverage		193,421	10.36			74,673	4.00			93,341	5.00

(1) To be “well capitalized” under the prompt corrective action provisions in the Basel III framework. “Well capitalized” applies to PeoplesBank only.