10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

_____________________________________________

FORM 10-Q

_____________________________________________

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 

For the quarterly period ended  March 31, 2021

or

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 

For the transition period from____________to______________

Commission file number: 0-15536

CODORUS VALLEY BANCORP, INC. 

(Exact name of registrant as specified in its charter)

Pennsylvania	23-2428543
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

105 Leader Heights Road, P.O. Box 2887, York, Pennsylvania 17405-2287 

(Address of principal executive offices)(Zip code)

717-747-1519

(Registrant’s telephone number, including area code)

Not Applicable 

(Former name, former address and former fiscal year, 

if changed since the last report.)

_____________________________________________

Securities registered pursuant to Section 12(b) of the Act: 

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $2.50 par value	CVLY	NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. On April 23, 2021, 9,876,692 shares of common stock, par value $2.50, were outstanding.

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Codorus Valley Bancorp, Inc.

Form 10-Q Index

PART I – FINANCIAL INFORMATION		Page #
Item 1.	Financial statements (unaudited):
	Consolidated balance sheets	3
	Consolidated statements of income	4
	Consolidated statements of comprehensive income	5
	Consolidated statements of cash flows	6
	Consolidated statements of changes in shareholders’ equity	7
	Notes to consolidated financial statements	8
Item 2.	Management’s discussion and analysis of financial condition and results of operations	35
Item 3.	Quantitative and qualitative disclosures about market risk	47
Item 4.	Controls and procedures	49
PART II – OTHER INFORMATION
Item 1.	Legal proceedings	49
Item 1A.	Risk factors	49
Item 2.	Unregistered sales of equity securities and use of proceeds	50
Item 3.	Defaults upon senior securities	50
Item 4.	Mine safety disclosures	50
Item 5.	Other information	50
Item 6.	Exhibits	51
SIGNATURES		52

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Codorus Valley Bancorp, Inc.

Consolidated Balance Sheets

(Unaudited)

	March 31,		December 31,
(dollars in thousands, except per share data)	2021		2020
Assets
Interest bearing deposits with banks	$	408,884	$	313,469
Cash and due from banks		18,020		22,324
Total cash and cash equivalents		426,904		335,793
Securities, available-for-sale		179,550		185,002
Restricted investment in bank stocks, at cost		2,278		2,593
Loans held for sale		13,324		15,981
Loans (net of deferred fees of $4,248 - 2021 and $6,134 - 2020)		1,579,151		1,544,589
Less-allowance for loan losses		(22,411)		(21,264)
Net loans		1,556,740		1,523,325
Premises and equipment, net		24,816		25,206
Operating leases right-of-use assets		2,198		2,386
Goodwill		2,301		2,301
Other assets		70,393		69,612
Total assets	$	2,278,504	$	2,162,199
Liabilities
Deposits
Noninterest bearing	$	483,004	$	396,947
Interest bearing		1,481,059		1,466,592
Total deposits		1,964,063		1,863,539
Short-term borrowings		7,743		8,540
Long-term debt		46,599		46,606
Subordinated debentures - face amount $31,000 (less unamortized discount and debt
issuance cost of $378 at March 31, 2021 and $398 at December 31, 2020)		30,622		30,602
Operating leases liabilities		2,325		2,515
Other liabilities		28,401		12,437
Total liabilities		2,079,753		1,964,239
Shareholders' equity
Preferred stock, par value $2.50 per share;
1,000,000 shares authorized; shares issued and outstanding:
0 at March 31, 2021 and 0 at December 31, 2020		0		0
Common stock, par value $2.50 per share; 30,000,000 shares authorized; shares issued
and outstanding: 9,876,692 at March 31, 2021 and 9,820,882 at December 31, 2020		24,692		24,552
Additional paid-in capital		141,583		141,461
Retained earnings		31,002		28,380
Accumulated other comprehensive income		1,474		3,567
Total shareholders' equity		198,751		197,960
Total liabilities and shareholders' equity	$	2,278,504	$	2,162,199

See accompanying notes.

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Codorus Valley Bancorp, Inc.

Consolidated Statements of Income

(Unaudited)

	Three months ended
	March 31,
(dollars in thousands, except per share data)	2021		2020
Interest income
Loans, including fees	$	17,592	$	18,764
Investment securities:
Taxable		582		820
Tax-exempt		94		141
Dividends		26		72
Other		81		392
Total interest income		18,375		20,189
Interest expense
Deposits		2,220		4,276
Federal funds purchased and other short-term borrowings		8		9
Long-term debt		252		537
Subordinated debentures		418		0
Total interest expense		2,898		4,822
Net interest income		15,477		15,367
Provision for loan losses		1,231		9,435
Net interest income after provision for loan losses		14,246		5,932
Noninterest income
Trust and investment services fees		1,052		994
Income from mutual fund, annuity and insurance sales		300		261
Service charges on deposit accounts		1,221		1,130
Income from bank owned life insurance		270		286
Other income		563		439
Gain on sales of loans held for sale		1,050		298
(Loss) gain on sales of securities		(23)		15
Total noninterest income		4,433		3,423
Noninterest expense
Personnel		8,428		7,805
Occupancy of premises, net		973		926
Furniture and equipment		838		853
Professional and legal		351		205
Marketing		265		325
FDIC insurance		226		167
Debit card processing		280		389
Charitable donations		188		872
External data processing		820		704
Loss on foreclosed real estate, including provision for losses		0		20
Impaired loan carrying costs		100		286
Other		1,237		767
Total noninterest expense		13,706		13,319
Income (loss) before income taxes		4,973		(3,964)
Provision (benefit) for income taxes		1,073		(975)
Net income (loss)	$	3,900	$	(2,989)
Net income (loss) per share, basic	$	0.40	$	(0.31)
Net income (loss) per share, diluted	$	0.40	$	(0.31)

See accompanying notes.
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Codorus Valley Bancorp, Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)

	Three months ended
	March 31,
(dollars in thousands)	2021		2020
Net income (loss)	$	3,900	$	(2,989)
Other comprehensive income (loss):
Securities available for sale:
Net unrealized holding (losses) gains arising during the period
(net of tax (benefit) expense of ($561) and $747, respectively)		(2,111)		2,810
Reclassification adjustment for losses (gains) included in net income
(net of tax (benefit) expense of ($5) and $3, respectively) (a) (b)		18		(12)
Net unrealized (losses) gains		(2,093)		2,798
Comprehensive income (loss)	$	1,807	$	(191)

(a)Amounts are included in net gain (loss) on sales of securities on the Consolidated Statements of Income within noninterest income.

(b)Income tax amounts are included in the provision (benefit) for income taxes on the Consolidated Statements of Income.

See accompanying notes.

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Codorus Valley Bancorp, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	Three months ended
	March 31,
(dollars in thousands)	2021		2020
Cash flows from operating activities
Net income (loss)	$	3,900	$	(2,989)
Adjustments to reconcile net income to net cash provided by operations:
Depreciation/amortization		664		684
Net amortization of premiums on securities		295		151
Amortization of deferred loan origination fees and costs		(2,200)		(403)
Net amortization of operating lease right of use assets		147		178
Net amortization of finance lease right of use assets		12		12
Amortization of subordinated debentures issuance fees		20		0
Net change in operating lease liabilities		(150)		(189)
Provision for loan losses		1,231		9,435
Increase in bank owned life insurance		(270)		(286)
Originations of mortgage loans held for sale		(27,175)		(9,797)
Originations of SBA loans held for sale		(349)		(4,431)
Proceeds from sales of mortgage loans held for sale		31,216		11,625
Proceeds from sales of SBA loans held for sale		0		3,833
Gain on sales of mortgage loans held for sale		(1,050)		(290)
Gain on sales of SBA loans held for sale		0		(9)
Gain on disposal of premises and equipment		(6)		0
Loss (gain) on sales of securities, available-for-sale		23		(15)
Stock-based compensation		101		120
Decrease in interest receivable		262		144
Increase in other assets		(205)		(1,156)
Increase (decrease) in interest payable		349		(55)
Increase (decrease) in other liabilities		7,957		(11)
Net cash provided by operating activities		14,772		6,551
Cash flows from investing activities
Purchases of securities, available-for-sale		(123,921)		(38,070)
Maturities, repayments and calls of securities, available-for-sale		130,260		9,561
Sales of securities, available-for-sale		3,803		19,852
Net decrease in restricted investment in bank stock		315		600
Net (increase) decrease in loans made to customers		(32,445)		21,093
Purchases of premises and equipment		(276)		(1,352)
Investment in foreclosed real estate		0		(121)
Net cash (used in) provided by investing activities		(22,264)		11,563
Cash flows from financing activities
Net increase in demand and savings deposits		106,330		31,479
Net (decrease) increase in time deposits		(5,806)		17,304
Net decrease in short-term borrowings		(797)		(1,729)
Repayment of long-term debt		0		(10,000)
Net change in finance lease liabilities		(7)		0
Cash dividends paid to shareholders		(1,278)		(1,561)
Proceeds from treasury stock reissuance		5		0
Payment of taxes related to stock withheld		(5)		0
Treasury stock repurchased		0		(89)
Proceeds from issuance of stock		161		149
Net cash provided by financing activities		98,603		35,553
Net increase in cash and cash equivalents		91,111		53,667
Cash and cash equivalents at beginning of year		335,793		131,591
Cash and cash equivalents at end of period	$	426,904	$	185,258

See accompanying notes.

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Codorus Valley Bancorp, Inc.

Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)

							Accumulated
			Additional				Other
	Common		Paid-in		Retained		Comprehensive		Treasury
(dollars in thousands, except per share data)	Stock		Capital		Earnings		Income (Loss)		Stock		Total
Balance, January 1, 2021	$	24,552	$	141,461	$	28,380	$	3,567	$	0	$	197,960
Net income						3,900						3,900
Other comprehensive loss, net of tax								(2,093)				(2,093)
Cash dividends ($0.130 per share)						(1,278)						(1,278)
Stock-based compensation				101								101
Withheld stock - 279 shares										(5)		(5)
Issuance and reissuance of stock:
7,175 shares under the dividend reinvestment and stock purchase plan		18		98								116
5,702 shares under the employee stock option plan		14		31						5		50
43,212 shares of stock-based compensation awards		108		(108)								0
Balance, March 31, 2021	$	24,692	$	141,583	$	31,002	$	1,474	$	0	$	198,751
Balance, January 1, 2020	$	24,390	$	140,450	$	25,019	$	1,309	$	0	$	191,168
Net loss						(2,989)						(2,989)
Other comprehensive income, net of tax								2,798				2,798
Cash dividends ($0.160 per share)						(1,561)						(1,561)
Stock-based compensation				120								120
Repurchased stock - 5,335 shares										(87)		(87)
Withheld stock - 102 shares										(2)		(2)
Issuance and reissuance of stock:
6,706 shares under the dividend reinvestment and stock purchase plan		17		132								149
6,468 shares of stock-based compensation awards		16		(16)								0
Balance, March 31, 2020	$	24,423	$	140,686	$	20,469	$	4,107	$	(89)	$	189,596

See accompanying notes. 

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Note 1—Summary of Significant Accounting Policies

Nature of Operations and Basis of Presentation

The accompanying consolidated balance sheet at December 31, 2020 has been derived from audited financial statements, and the unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, the instructions to Form 10-Q, and Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 270. Accordingly, the interim financial statements do not include all of the financial information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the interim consolidated financial statements include all adjustments necessary to present fairly the financial condition and results of operations for the reported periods, and all such adjustments are of a normal and recurring nature.

Codorus Valley Bancorp, Inc. (“Corporation” or “Codorus Valley”) is a one-bank holding company headquartered in York, Pennsylvania that provides a full range of banking services through its subsidiary, PeoplesBank, A Codorus Valley Company (“PeoplesBank” or “Bank”). As of March 31, 2021, PeoplesBank operates one wholly-owned subsidiary, Codorus Valley Financial Advisors, Inc. d/b/a PeoplesWealth Advisors, which sells nondeposit investment products. In addition, PeoplesBank may periodically create nonbank subsidiaries for the purpose of temporarily holding foreclosed properties pending the liquidation of these properties. PeoplesBank operates under a state charter and is subject to regulation by the Pennsylvania Department of Banking and Securities, and the Federal Deposit Insurance Corporation. The Corporation is subject to regulation by the Federal Reserve Board and the Pennsylvania Department of Banking and Securities.

The consolidated financial statements include the accounts of Codorus Valley and its wholly-owned bank subsidiary, PeoplesBank, and a wholly-owned nonbank subsidiary, SYC Realty Company, Inc. SYC Realty was inactive during the period ended March 31, 2021. The accounts of CVB Statutory Trust No. 1 and No. 2 are not included in the consolidated financial statements as discussed in Note 7—Short-Term Borrowings and Long-Term Debt. All significant intercompany account balances and transactions have been eliminated in consolidation. The accounting and reporting policies of Codorus Valley and subsidiaries conform to accounting principles generally accepted in the United States of America and have been followed on a consistent basis.

These consolidated statements should be read in conjunction with the notes to the audited consolidated financial statements contained in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020.

The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year.

In accordance with FASB ASC 855, the Corporation evaluated the events and transactions that occurred after the balance sheet date of March 31, 2021 and through the date these consolidated financial statements were issued, for items of potential recognition or disclosure.

In December 2019, a coronavirus (COVID-19) was reported in China, and, in March 2020, the World Health Organization declared it a pandemic. Since first being reported in China, the coronavirus has spread to additional countries including the United States. On March 13, 2020, President Trump declared the ongoing COVID–19 pandemic of sufficient severity and magnitude to warrant an emergency declaration for all states, territories, and the District of Columbia.

In response, many state and local governments, including the Commonwealth of Pennsylvania and the State of Maryland, have instituted emergency restrictions that have substantially limited the operation of non-essential businesses and the activities of individuals. It has been widely reported that these restrictions have resulted in significant adverse effects for many different types of businesses, particularly those in the travel, hospitality and food and beverage industries, among many others, and has resulted in a significant number of layoffs and furloughs of employees nationwide and in the regions in which the Corporation operates. The ultimate effect of COVID-19 on the local or broader economy is not known nor is the ultimate length of the restrictions described and any accompanying effects. Moreover, the Federal Reserve has taken action to lower the Federal Funds rate, which has negatively affected interest income and, therefore, earnings. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the coronavirus outbreak, and there is no guarantee that the Corporation’s efforts to address the adverse impacts of the coronavirus will be effective. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and actions taken to contain the coronavirus or its impact, among others.

The effect of COVID-19 and related events, including those described above and those not yet known or knowable, could have a negative effect on the Corporation's business prospects, financial condition and results of operations, as a result of quarantines; market volatility; market downturns; changes in consumer behavior; business closures; deterioration in the credit quality of borrowers or the inability of borrowers to satisfy their obligations (and any related forbearances or restructurings that may be implemented); changes in the value of collateral securing outstanding loans; changes in the value of the investment securities portfolio; effects on key employees, including operational management personnel and those charged with preparing, monitoring and evaluating the Corporation's financial reporting and internal controls; declines in the demand for loans and other banking services and products;

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declines in demand resulting from adverse impacts of the disease on businesses deemed to be "non-essential" by governments; and branch or office closures and business interruptions.

In addition, the adverse economic effects of the coronavirus may lead to an increase in credit risk on the Corporation’s commercial and residential loan portfolios. Likewise, the Corporation is also monitoring the fluctuations in the markets as it pertains to interest rates and fair value of our investments for other than temporary impairment (OTTI).

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law. Section 4013 of the CARES Act, “Temporary Relief From Troubled Debt Restructurings,” provides banks the option to temporarily suspend certain requirements under U.S. GAAP related to trouble debt restructurings (TDR) for a limited period of time to account for the effects of COVID-19. Section 541 of the Consolidated Appropriations Act, 2021 (CAA) was signed into law on December 27, 2020, extending the provisions in Section 4013 of the CARES Act to January 1, 2022.

While the Corporation continues to evaluate the disruption caused by the pandemic and impact of the CARES Act, these events may have a material adverse impact on the Corporation’s results of future operations, financial position, capital, and liquidity in fiscal year 2021. Further, a decrease in results of future operations may place a strain on the Corporation’s capital reserve ratios.

Loans

Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at their outstanding unpaid principal balances less amounts charged off, net of an allowance for loan losses and any deferred fees or costs. Interest income is accrued on the unpaid principal balance. Generally, loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) over the contractual life of the loan. The loans receivable portfolio is segmented into commercial and consumer loans. Commercial loans consist of the following industry classes: builder & developer, commercial real estate investor, residential real estate investor, hotel/motel, wholesale & retail, agriculture, manufacturing, service and all other. Consumer loans consist of the following classes: residential mortgage, home equity and all other.

Generally, for all classes of loans receivable, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan may be currently performing. A past due loan may remain on accrual status if it is in the process of collection and well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income is reversed in the current year. Interest received on nonaccrual loans, including impaired loans, generally is either applied against principal or reported as interest income, according to the Corporation’s judgment as to the collectability of principal. Generally, nonaccrual loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, generally six months, and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments.

Allowance for Loan Losses

The allowance for loan losses represents the Corporation’s estimate of losses inherent in the loan portfolio as of the balance sheet date and is recorded as a reduction to loans. The allowance for loan losses is increased by the provision for loan losses, and decreased by charge-offs, net of recoveries. Loans deemed to be uncollectable are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance. All, or part, of the principal balance of loans receivable are charged off to the allowance as soon as it is determined that the repayment of all, or part, of the principal balance is highly unlikely. While the Corporation attributes a portion of the allowance to individual loans and groups of loans that it evaluates and determines to be impaired, the allowance is available to cover all charge-offs that arise from the loan portfolio.

The allowance for loan losses is maintained at a level considered by management to be adequate to provide for probable incurred losses. The Corporation performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the Corporation’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available.

The allowance consists of specific and general components. The specific component relates to loans that are classified as impaired, generally nonaccrual loans and troubled debt restructurings. For loans that are classified as impaired, an allowance is established when the collateral value (or discounted cash flows or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers pools of loans by loan class, including commercial loans not considered impaired, as well as smaller balance homogeneous loans such as residential real estate, home equity and other consumer loans. These pools of loans are evaluated for loss exposure based upon historical loss rates for each of these classes of loans, adjusted for qualitative (environmental) risk factors. Historical loss rates are based on a two year rolling average of net charge-offs. Qualitative risk factors that supplement

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historical losses in the evaluation of loan pools are shown below. Each factor is assigned a value to reflect improving, stable or declining conditions based on the Corporation’s best judgment using relevant information available at the time of the evaluation.

Changes in international, US and local economies and business conditions

Changes in the value of collateral for collateral dependent loans

Changes in the level of concentrations of credit

Changes in the volume and severity of classified and past due loans

Changes in the nature and volume of the portfolio

Changes in collection, charge-off, and recovery procedures

Changes in underwriting standards and loan terms

Changes in the quality of the loan review system

Changes in the experience/ability of lending management and key lending staff

Regulatory and legal regulations that could affect the level of credit losses

Other pertinent environmental factors

Impact of COVID-19 pandemic

As disclosed in Note 4—Loans, the Corporation engages in commercial and consumer lending. Loans are made within the Corporation’s primary market area and surrounding areas, and include the purchase of whole loan or participation interests in loans from other financial institutions. Commercial loans, which pose the greatest risk of loss to the Corporation, whether originated or purchased, are generally secured by real estate. Within the broad commercial loan segment, the builder & developer and commercial real estate investor loan classes generally present a higher level of risk than other commercial loan classifications. This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effect of general economic conditions on income producing properties, unstable real estate prices and the dependency upon successful construction and sale or operation of the real estate project. As a result of the COVID-19 pandemic, the commercial loan segments of hotel/motel and the restaurant and recreation segments included under Other Commercial Loans currently present a higher level of risk than other commercial loan classifications. Within the consumer loan segment, junior (i.e., second) liens present a higher risk to the Corporation because economic and housing market conditions can adversely affect the underlying value of the collateral, which could render the Corporation under-secured or unsecured. In addition, economic and housing market conditions can adversely affect the ability of some borrowers to service their debt.

A loan is considered impaired when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered in determining impairment include payment status and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. The Corporation determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Loans that are deemed impaired are evaluated for impairment loss based on the net realizable value of the collateral, as applicable. Loans that are not collateral dependent will rely on the present value of expected future cash flows discounted at the loan’s effective interest rate to determine impairment loss. Large groups of smaller balance homogeneous loans such as residential mortgage loans, home equity loans and other consumer loans are collectively evaluated for impairment, unless they are classified as impaired.

An allowance for loan losses is established for an impaired commercial loan if its carrying value exceeds its estimated fair value. For commercial loans secured by real estate, estimated fair values are determined primarily through third-party appraisals of the underlying collateral. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the most recent appraisal and the condition of the property. Appraisals are generally discounted to provide for selling costs and other factors to determine an estimate of the net realizable value of the property. For commercial loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrower’s financial statements, inventory reports, accounts receivable aging or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets. In instances when specific consumer related loans become impaired, they may be partially or fully charged off, which eliminates the need for a specific allowance.

Loans whose terms are modified are classified as troubled debt restructurings if the Corporation grants borrowers experiencing financial difficulties concessions that it would not otherwise consider. Concessions granted under a troubled debt restructuring may involve an interest rate that is below the market rate given the associated credit risk of the loan or an extension of a loan’s stated

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maturity date. Loans classified as troubled debt restructurings are designated as impaired. Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for a reasonable period of time, generally six consecutive months after modification and future payments are reasonably assured.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. Since that time banking regulators, the SEC and FASB have all issued additional guidance and clarification on various sections of the CARES Act. Section 4013 of the CARES Act provides the option to not apply ASC 310-40 (TDRs) to a loan modification, related specifically to COVID-19 hardships, when the loan was not past due greater than 30 days as of December 31, 2019. Regulators have encouraged financial institutions to work constructively with borrowers in communities and industries affected by COVID-19 using prudent and proactive actions which are in the best interests of the financial institution, the borrower and the economy. The Corporation’s Board of Directors approved a number of options for loan modifications, including interest deferral, full payment deferral, additional extensions of credit, and SBA loan programs (i.e., Economic Injury Disaster Loans, Paycheck Protection Program). As of March 31, 2021, the Corporation has remaining loan modifications totaling approximately $88,000,000. The Corporation has been an active participant in the SBA Paycheck Protection Program (PPP), with outstanding PPP loans as of March 31, 2021 of approximately $152,000,000, which includes $64,000,000 new PPP loans originated in 2021.

Foreclosed Real Estate

Foreclosed real estate, included in other assets, is comprised of property acquired through a foreclosure proceeding or property that is acquired through in-substance foreclosure. Foreclosed real estate is initially recorded at fair value minus estimated costs to sell at the date of foreclosure, establishing a new cost basis. Any difference between the carrying value and the new cost basis is charged against the allowance for loan losses. Appraisals, obtained from an independent third party, are generally used to determine fair value. After foreclosure, management reviews valuations at least quarterly and adjusts the asset to the lower of cost or fair value minus estimated costs to sell through a valuation allowance or a write-down. Costs related to the improvement of foreclosed real estate are generally capitalized until the real estate reaches a saleable condition subject to fair value limitations. Revenue and expense from operations and changes in the valuation allowance are included in noninterest expense. When a foreclosed real estate asset is ultimately sold, any gain or loss on the sale is included in the income statement as a component of noninterest expense. At March 31, 2021 there was no foreclosed real estate. Included within loans receivable as of March 31, 2021 was a recorded investment of $182,000 of consumer mortgage loans secured by residential real estate properties, for which formal foreclosure proceedings were in process according to local requirements of the applicable jurisdiction.

Mortgage Servicing Rights

The mortgage servicing rights (MSRs) associated with the sold loans are included in other assets on the consolidated balance sheets at an amount equal to the estimated fair value of the contractual rights to service the mortgage loans. The MSR asset is amortized as a reduction to servicing income. The MSR asset is evaluated periodically for impairment and carried at the lower of amortized cost or fair value. A third party calculates fair value by discounting the estimated cash flows from servicing income using a rate consistent with the risk associated with these assets and an estimate of future net servicing income of the underlying loans. In the event that the amortized cost of the MSR asset exceeds the fair value of the asset, a valuation allowance would be established through a charge against servicing income. Subsequent fair value evaluations may determine that impairment has been reduced or eliminated, in which case the valuation allowance would be reduced through a credit to earnings. At March 31, 2021, the balance of residential mortgage loans serviced for third parties was $80,609,000 compared to $87,142,000 at December 31, 2020.

		Three months ended
		March 31,
(dollars in thousands)		2021		2020
Amortized cost:
Balance at beginning of period	$	511	$	965
Originations of mortgage servicing rights		16		13
Amortization expense		(91)		(66)
Valuation allowance		88		(173)
Balance at end of period	$	524	$	739

Goodwill and Core Deposit Intangible Assets

Goodwill arising from acquisitions is not amortized, but is subject to an annual impairment test. This test consists of a qualitative analysis. If the Corporation determines events or circumstances indicate that it is more likely than not that goodwill is impaired, a quantitative analysis must be completed. Analyses may also be performed between annual tests. Significant judgment is applied when goodwill is assessed for impairment. This judgment includes developing cash flow projections, selecting appropriate discount rates, identifying relevant market comparables, incorporating general economic and market conditions, and selecting an appropriate control premium. The Corporation completes its annual goodwill impairment test on October 1st of each year. Based upon a qualitative and quantitative analysis of goodwill, the Corporation concluded that the amount of recorded goodwill was not impaired as of October 1, 2020.

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Core deposit intangibles represent the value assigned to demand, interest checking, money market, and savings accounts acquired as part of an acquisition. The core deposit intangible value represents the future economic benefit of potential cost savings from acquiring core deposits as part of an acquisition compared to the cost of alternative funding sources and the alternative cost to grow a similar core deposit base. The core deposit intangible asset resulting from the merger with Madison Bancorp, Inc. was determined to have a definite life and is being amortized using the sum of the years’ digits method over ten years. All intangible assets must be evaluated for impairment if certain events or changes in circumstances occur. Any impairment write-downs would be recognized as expense on the consolidated statements of income.

Revenue from Contracts with Customers

Revenue from contracts with customers that are required to be recognized under FASB ASC Topic 606 - Revenue from Contracts with Customers (ASC 606) is measured based on consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Corporation recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer.

The majority of the Corporation’s revenue-generating transactions are not within the scope of ASC 606, including revenue generated from financial instruments, such as our loans, letters of credit, derivatives and investment securities, as well as revenue related to our mortgage servicing activities, as these activities are subject to other U.S. Generally Accepted Accounting Principles (GAAP) discussed elsewhere within our disclosures. Descriptions of our revenue-generating activities that are within the scope of ASC 606, which are presented in our consolidated statements of income as components of non-interest income are as follows:

Trust and investment service fees – The Corporation provides trust, investment management custody and irrevocable life insurance trust services to customers. Such services are rendered in accordance with the underlying contracts for which fees are earned. The Corporation’s performance obligations are generally satisfied, and the related revenue recognized, over the period in which the service is provided. Payment for services rendered is primarily received in the following month.

Income from mutual fund, annuity and insurance sales – The Corporation sells mutual funds, annuity and insurance products to its customers. The Corporation’s performance obligation is met upon the signing of the product agreement and, in certain cases, a time component may exist when the customer has the right to rescind the agreement with or without penalty. The Corporation recognizes revenues upon delivery of the product or service unless there is a time component in which case revenues are recognized utilizing the expected value method. Payment for services rendered is primarily received in the following month.

Service charges on deposits accounts – These represent general service fees for monthly account maintenance and activity- or transaction based fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Other service charges include revenue from processing wire transfers, cashier’s checks and other services. Revenue is recognized when the performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to the customers’ accounts.

Other noninterest income – The Corporation evaluated individual components of other noninterest income, such as credit card merchant fees, credit and gift card fees and ATM fees. Debit card income is primarily comprised of interchange fees earned whenever the Corporation’s debit cards are processed through payment networks, such as Visa. Credit and gift card income is realized through a third party provider who issues cards as private label in the Corporation’s name. ATM fees are primarily generated when a non-Corporation cardholder uses a Corporation ATM. The income is primarily comprised as a percentage of interchange fees earned whenever the issuer’s card is processed through card payment networks, such as Visa or Pulse. Merchant services income is realized through a third party service provider who is contracted by the Corporation under a referral arrangement. Such fees represent fees charged to merchants to process their debit card transactions. The Corporation’s performance obligation for these fees are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received within a one to three day lag or in the following month.

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Per Share Data

The computation of net income per share is provided in the table below.

	Three months ended
	March 31,
(in thousands, except per share data)	2021		2020
Net income (loss)	$	3,900	$	(2,989)
Weighted average shares outstanding (basic)		9,842		9,759
Effect of dilutive stock options		25		53
Weighted average shares outstanding (diluted)		9,867		9,812
Basic earnings (loss) per share	$	0.40	$	(0.31)
Diluted earnings (loss) per share	$	0.40	$	(0.31)

Comprehensive Income

Accounting principles generally accepted in the United States require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the shareholders’ equity section of the balance sheet, such items, along with net income, are components of comprehensive income.

Cash Flow Information

For purposes of the consolidated statements of cash flows, the Corporation considers interest bearing deposits with banks, cash and due from banks, and federal funds sold to be cash and cash equivalents.

Supplemental cash flow information is provided in the table below.

		Three months ended
		March 31,
(dollars in thousands)		2021		2020
Cash paid during the period for:
Income taxes	$	0	$	0
Interest	$	2,549	$	4,877
Noncash investing and financing activities:
Transfer of loans to foreclosed real estate	$	0	$	121
Initial recognition of operating lease right-of-use assets	$	0	$	186
Initial recognition of operating lease liabilities	$	0	$	186

Recent Accounting Pronouncements

Pronouncements Adopted in 2021

In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20). The amendments in this update remove disclosures that are no longer considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. The update is effective for fiscal years ending after December 15, 2020. The adoption of this standard did not have a material impact on its consolidated financial statements.

Pronouncements Not Yet Effective

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326). This standard adds a new Topic 326 which requires companies to measure and record impairment on financial instruments at the time of origination using the expected credit loss (CECL) model. The CECL model calculates impairment based on historical experience, current conditions, and reasonable and supportable forecasts, and reflects the organization’s current estimate of all expected credit losses over the contractual term of its financial assets. The new standard was delayed and is now effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Corporation expects the provisions of ASU No. 2016-13 to impact its consolidated financial statements, in particular, the level of the reserve for credit losses. The Corporation is continuing to evaluate the extent of the potential impact and expects that portfolio composition and economic conditions at the time of adoption will be a factor.

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Note 2 – Securities

A summary of securities available-for-sale at March 31, 2021 and December 31, 2020 is provided below. The securities available-for-sale portfolio is generally comprised of high quality debt instruments, principally obligations of the United States government or agencies thereof and investments in the obligations of states and municipalities. The majority of municipal bonds in the portfolio are general obligation bonds, which can draw upon multiple sources of revenue, including taxes, for payment. Only a few bonds are revenue bonds, which are dependent upon a single revenue stream for payment, but they are for critical services such as water and sewer. In many cases, municipal debt issues are insured or, in the case of school districts of selected states, backed by specific loss reserves. At March 31, 2021, 81.2 percent of the fair value of the municipal bond portfolio was concentrated in the Commonwealth of Pennsylvania and 10.3 percent was concentrated in the state of Texas. The portfolio was intentionally distributed to limit exposure with the largest issuer at $2.6 million. At March 31, 2021 and December 31, 2020, there we no holdings of securities of any one issuer, other than the US Government and its agencies, in an amount greater than 10% of shareholders’ equity.

	Amortized		Gross Unrealized				Fair
(dollars in thousands)	Cost		Gains		Losses		Value
March 31, 2021
Debt securities:
U.S. agency	$	14,000	$	0	$	(73)	$	13,927
U.S. agency mortgage-backed, residential		120,786		3,125		(890)		123,021
State and municipal		30,576		253		(660)		30,169
Corporates		12,323		175		(65)		12,433
Total debt securities	$	177,685	$	3,553	$	(1,688)	$	179,550
December 31, 2020
Debt securities:
U.S. agency	$	40,000	$	0	$	0	$	40,000
U.S. agency mortgage-backed, residential		106,792		4,133		(29)		110,896
State and municipal		24,014		311		(25)		24,300
Corporates		9,681		139		(14)		9,806
Total debt securities	$	180,487	$	4,583	$	(68)	$	185,002

The proceeds from sales of securities and the associated gains and losses are listed below. Realized gains and losses are computed on the basis of specific identification of the adjusted cost of each security and are shown net as a separate line item in the income statement.

	Three months ended
	March 31,
(dollars in thousands)	2021		2020
Proceeds	$	3,803	$	19,852
Gross gains		24		74
Gross losses		(47)		(59)

The tax (provision) benefit related to these net realized gain and losses were $5 and $(3) respectively.

The amortized cost and estimated fair value of debt securities at March 31, 2021 by contractual maturity are shown below. Actual maturities may differ from contractual maturities if call options on select debt issues are exercised in the future. Mortgage-backed securities are included in the maturity categories based on average expected life.

	Available-for-sale
	Amortized		Fair
(dollars in thousands)	Cost		Value
Due in one year or less	$	15,432	$	15,468
Due after one year through five years		77,513		79,896
Due after five years through ten years		45,595		45,321
Due after ten years		39,145		38,865
Total debt securities	$	177,685	$	179,550

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Investment securities having a carrying value of $149,302,000 and $170,313,000 on March 31, 2021 and December 31, 2020, respectively, were pledged to secure public and trust deposits, repurchase agreements and other short-term borrowings.

The table below shows gross unrealized losses and fair value, aggregated by investment category and length of time, for securities that have been in a continuous unrealized loss position, at March 31, 2021 and December 31, 2020.

	Less than 12 months					12 months or more					Total
	Number of	Fair		Unrealized		Number of	Fair		Unrealized		Number of	Fair		Unrealized
(dollars in thousands)	Securities	Value		Losses		Securities	Value		Losses		Securities	Value		Losses
March 31, 2021
Debt securities:
U.S. agency	2	$	13,927	$	(73)	0	$	0	$	0	2	$	13,927	$	(73)
U.S. agency mortgage-backed, residential	20		36,267		(890)	0		0		0	20		36,267		(890)
State and municipal	21		19,369		(660)	0		0		0	21		19,369		(660)
Corporates	5		3,986		(65)	0		0		0	5		3,986		(65)
Total temporarily impaired debt
securities, available-for-sale	48	$	73,549	$	(1,688)	0	$	0	$	0	48	$	73,549	$	(1,688)
December 31, 2020
Debt securities:
U.S. agency	2	$	40,000	$	0	0	$	0	$	0	2	$	40,000	$	0
U.S. agency mortgage-backed, residential	8		8,706		(29)	0		0		0	8		8,706		(29)
State and municipal	4		3,808		(25)	0		0		0	4		3,808		(25)
Corporates	3		4,075		(14)	0		0		0	3		4,075		(14)
Total temporarily impaired debt
securities, available-for-sale	17	$	56,589	$	(68)	0	$	0	$	0	17	$	56,589	$	(68)

Securities available-for-sale are analyzed quarterly for possible other-than-temporary impairment. The analysis considers, among other factors: 1) whether the Corporation has the intent to sell its securities prior to market recovery or maturity; 2) whether it is more likely than not that the Corporation will be required to sell its securities prior to market recovery or maturity; 3) default rates/history by security type; 4) third-party securities ratings; 5) third-party guarantees; 6) subordination; 7) payment delinquencies; 8) nature of the issuer; and 9) current financial news.

The Corporation believes that unrealized losses at March 31, 2021 were primarily the result of changes in market interest rates and that the Corporation has the ability to hold these investments for a time necessary to recover the amortized cost. Through March 31, 2021 the Corporation has collected all interest and principal on its investment securities as scheduled. The Corporation believes that collection of the contractual principal and interest is probable and, therefore, all impairment is considered to be temporary.

Note 3—Restricted Investment in Bank Stocks

Restricted stock, which represents required investments in the common stock of correspondent banks, is carried at cost and, as of March 31, 2021 and December 31, 2020, consisted primarily of the common stock of the Federal Home Loan Bank of Pittsburgh (“FHLBP”) and, to a lesser degree, Atlantic Community Bancshares, Inc. (“ACBI”), the parent company of Atlantic Community Bankers Bank (“ACBB”). Under the FHLBP’s Capital Plan member banks, including PeoplesBank, are required to maintain a minimum stock investment. The FHLBP uses a formula to determine the minimum stock investment, which is based on the volume of loans outstanding, unused borrowing capacity and other factors.

The FHLBP paid dividends during the periods ended March 31, 2021 and 2020. The FHLBP restricts the repurchase of the excess capital stock of member banks. The amount of excess capital stock that can be repurchased from any member is currently the lesser of five percent of the member’s total capital stock outstanding or its excess capital stock outstanding.

Management evaluates the restricted stock for impairment in accordance with FASB ASC Topic 942. Management’s determination of whether these investments are impaired is based on their assessment of the ultimate recoverability of their cost rather than by recognizing temporary declines in value. Using the FHLBP as an example, the determination of whether a decline affects the ultimate recoverability of cost is influenced by criteria such as: (1) the significance of the decline in net assets of the FHLBP as compared to the capital stock amount for the FHLBP and the length of time this situation has persisted; (2) commitments by the FHLBP to make

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payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLBP; and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the FHLBP. Management believes no impairment charge was necessary related to the restricted stock during the periods ended March 31, 2021 and 2020.

Note 4—Loans

Loan Portfolio Composition

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. Since that time banking regulators, the SEC and FASB have all issued additional guidance and clarification on various sections of the CARES Act. Section 4013 of the CARES Act provides the option to not apply ASC 310-40 (TDRs) to a loan modification, related specifically to COVID-19 hardships. Regulators have encouraged financial institutions to work constructively with borrowers in communities and industries affected by COVID-19 using prudent and proactive actions which are in the best interests of the financial institution, the borrower and the economy. The Corporations’s Board of Directors approved a number of options for loan modifications, including interest deferral, full payment deferral, additional extensions of credit, and SBA loan programs (i.e., Economic Injury Disaster Loans, Paycheck Protection Program). As of March 31, 2021, the Corporation has remaining loan modifications totaling approximately $88,000,000. The Corporation has been an active participant in the SBA Paycheck Protection Program (PPP), with outstanding PPP loans as of March 31, 2021 of approximately $152,000,000, which includes $64,000,000 new PPP loans originated in 2021.

The table below provides the composition of the loan portfolio at March 31, 2021 and December 31, 2020. The portfolio is comprised of two segments, commercial and consumer loans. The commercial loan segment is disaggregated by industry class which allows the Corporation to monitor risk and performance.

‎

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Those industries representing the largest dollar investment and most risk are listed separately. The “Other” commercial loans category is comprised of various industries. The consumer related segment is comprised of residential mortgages, home equity and other consumer loans. The Corporation has not engaged in sub-prime residential mortgage originations.

	March 31,		% Total		December 31,		% Total
(dollars in thousands)	2021		Loans		2020		Loans
Builder & developer	$	144,777		9.2	$	147,609		9.6
Commercial real estate investor		272,919		17.3		236,924		15.3
Residential real estate investor		233,669		14.8		238,458		15.4
Hotel/Motel		81,045		5.1		79,421		5.2
Wholesale & retail		99,216		6.3		108,425		7.0
Manufacturing		84,082		5.3		79,142		5.1
Agriculture		86,008		5.4		80,450		5.2
Service		87,812		5.6		76,838		5.0
Other		276,108		17.5		280,616		18.2
Total commercial related loans		1,365,636		86.5		1,327,883		86.0
Residential mortgages		95,028		6.0		95,751		6.2
Home equity		94,980		6.0		96,711		6.3
Other		23,507		1.5		24,244		1.5
Total consumer related loans		213,515		13.5		216,706		14.0
Total loans	$	1,579,151		100.0	$	1,544,589		100.0

Loan Risk Ratings

The Corporation’s internal risk rating system follows regulatory guidance as to risk classifications and definitions. Every approved loan is assigned a risk rating. Generally, risk ratings for commercial related loans are determined by a formal evaluation of risk factors performed by the Corporation’s underwriting staff. For consumer and residential mortgage loans, the bank follows the Uniform Retail Credit Classification guidance. Commercial loans up to $500,000 may be scored using a third-party credit scoring software model for risk rating purposes. The loan portfolio is monitored on a continuous basis by loan officers, loan review personnel and senior management. Adjustments of loan risk ratings within the Watch, Criticized and Classified categories are generally performed by the Special Asset Committee, which includes senior management. The Committee, which typically meets at least quarterly, makes changes, as appropriate, to risk ratings when it becomes aware of credit events such as payment delinquency, cessation of a business or project, bankruptcy or death of the borrower, or changes in collateral value. In addition to review by the Committee, existing loans are monitored by the primary loan officer and loan review officer to determine if any changes, upward or downward, in risk ratings are appropriate. An external consultant is also used to review a portion of the existing portfolio and recommends risk rating changes as appropriate. Primary loan officers may recommend a change to a risk rating and internal loan review officers may downgrade existing loans, except to non-accrual status. Only the Committee, Executive Chairman or President/CEO may downgrade a loan to non-accrual status or upgrade a loan that is criticized or classified.

The Corporation uses ten risk ratings to grade commercial loans. The first seven ratings are considered “pass” ratings. A pass rating is a satisfactory credit rating, which applies to a loan that is expected to perform in accordance with the loan agreement and has a low probability of loss. A loan rated “special mention” has a potential weakness which may, if not corrected, weaken the loan or inadequately protect the Corporation’s position at some future date. A loan rated “substandard” is inadequately protected by the current sound worth or paying capacity of the obligor, or of the collateral pledged. A “substandard” loan has a well-defined weakness or weaknesses that could jeopardize liquidation of the loan, which exposes the Corporation to potential loss if the deficiencies are not corrected. When circumstances indicate that collection of the loan is doubtful, the loan is risk-rated “nonaccrual,” the accrual of interest income is discontinued, and any unpaid interest previously credited to income is reversed. The table below does not include the regulatory classification of “doubtful,” nor does it include the regulatory classification of “loss”, because the Corporation promptly charges off loan losses.

‎

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The table below presents a summary of loan risk ratings by loan class at March 31, 2021 and December 31, 2020.

			Special
(dollars in thousands)	Pass		Mention		Substandard		Nonaccrual		Total
March 31, 2021
Builder & developer	$	131,672	$	9,318	$	2,965	$	822	$	144,777
Commercial real estate investor		266,920		4,759		1,047		193		272,919
Residential real estate investor		229,636		474		686		2,873		233,669
Hotel/Motel		49,967		537		18,090		12,451		81,045
Wholesale & retail		90,772		6,987		1,457		0		99,216
Manufacturing		72,735		0		3,608		7,739		84,082
Agriculture		78,712		421		3,774		3,101		86,008
Service		81,832		249		4,760		971		87,812
Other		251,358		1,452		13,597		9,701		276,108
Total commercial related loans		1,253,604		24,197		49,984		37,851		1,365,636
Residential mortgage		95,017		0		11		0		95,028
Home equity		94,276		49		0		655		94,980
Other		23,250		0		0		257		23,507
Total consumer related loans		212,543		49		11		912		213,515
Total loans	$	1,466,147	$	24,246	$	49,995	$	38,763	$	1,579,151
December 31, 2020
Builder & developer	$	133,804	$	11,305	$	2,121	$	379	$	147,609
Commercial real estate investor		230,113		6,379		231		201		236,924
Residential real estate investor		234,316		1,215		130		2,797		238,458
Hotel/Motel		48,264		542		18,143		12,472		79,421
Wholesale & retail		99,821		8,591		13		0		108,425
Manufacturing		67,968		0		3,610		7,564		79,142
Agriculture		72,829		416		3,776		3,429		80,450
Service		75,618		249		0		971		76,838
Other		256,040		1,481		13,804		9,291		280,616
Total commercial related loans		1,218,773		30,178		41,828		37,104		1,327,883
Residential mortgage		95,466		123		11		151		95,751
Home equity		96,026		55		0		630		96,711
Other		23,954		0		0		290		24,244
Total consumer related loans		215,446		178		11		1,071		216,706
Total loans	$	1,434,219	$	30,356	$	41,839	$	38,175	$	1,544,589

‎

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Impaired Loans

The table below presents a summary of impaired loans at March 31, 2021 and December 31, 2020. Generally, impaired loans are all loans risk rated nonaccrual or classified troubled debt restructuring. An allowance is established for those individual loans that are commercial related where the Corporation has doubt as to the full recovery of the outstanding principal balance. Typically, impaired consumer related loans are partially or fully charged-off eliminating the need for specific allowance. The recorded investment represents outstanding unpaid principal loan balances adjusted for payments collected on a non-cash basis and charge-offs.

	With No Allowance				With A Related Allowance						Total
	Recorded		Unpaid		Recorded		Unpaid		Related		Recorded		Unpaid
(dollars in thousands)	Investment		Principal		Investment		Principal		Allowance		Investment		Principal
March 31, 2021
Builder & developer	$	1,016	$	1,084	$	0	$	0	$	0	$	1,016	$	1,084
Commercial real estate investor		1,108		1,118		0		0		0		1,108		1,118
Residential real estate investor		657		944		2,216		2,216		416		2,873		3,160
Hotel/Motel		12,451		12,453		0		0		0		12,451		12,453
Wholesale & retail		236		236		0		0		0		236		236
Manufacturing		7,739		7,858		0		0		0		7,739		7,858
Agriculture		2,025		2,172		1,078		1,154		570		3,103		3,326
Service		971		1,061		0		0		0		971		1,061
Other commercial		5,550		5,935		4,151		4,523		3,442		9,701		10,458
Total impaired commercial related loans		31,753		32,861		7,445		7,893		4,428		39,198		40,754
Residential mortgage		0		0		0		0		0		0		0
Home equity		655		686		0		0		0		655		686
Other consumer		257		271		0		0		0		257		271
Total impaired consumer related loans		912		957		0		0		0		912		957
Total impaired loans	$	32,665	$	33,818	$	7,445	$	7,893	$	4,428	$	40,110	$	41,711

December 31, 2020
Builder & developer	$	575	$	790	$	0	$	0	$	0	$	575	$	790
Commercial real estate investor		1,163		1,170		0		0		0		1,163		1,170
Residential real estate investor		581		862		2,216		2,216		216		2,797		3,078
Hotel/Motel		12,472		12,472		0		0		0		12,472		12,472
Wholesale & retail		237		237		0		0		0		237		237
Manufacturing		7,564		7,564		0		0		0		7,564		7,564
Agriculture		2,270		2,382		1,159		1,217		615		3,429		3,599
Service		971		1,061		0		0		0		971		1,061
Other commercial		5,739		5,954		3,552		3,888		2,481		9,291		9,842
Total impaired commercial related loans		31,572		32,492		6,927		7,321		3,312		38,499		39,813
Residential mortgage		151		151		0		0		0		151		151
Home equity		630		653		0		0		0		630		653
Other consumer		290		301		0		0		0		290		301
Total impaired consumer related loans		1,071		1,105		0		0		0		1,071		1,105
Total impaired loans	$	32,643	$	33,597	$	6,927	$	7,321	$	3,312	$	39,570	$	40,918

‎

- 19 -

The table below presents a summary of average impaired loans and related interest income that was included in net income for the three months ended March 31, 2021 and 2020. Interest income on loans with no related allowance is the result of interest collected on a cash basis, except accruing TDRs.

	With No Related Allowance				With A Related Allowance				Total
	Average		Total		Average		Total		Average		Total
	Recorded		Interest		Recorded		Interest		Recorded		Interest
(dollars in thousands)	Investment		Income		Investment		Income		Investment		Income
Three months ended March 31, 2021
Builder & developer	$	796	$	0	$	0	$	0	$	796	$	0
Commercial real estate investor		1,136		11		0		0		1,136		11
Residential real estate investor		618		0		2,216		0		2,834		0
Hotel/Motel		12,461		0		0		0		12,461		0
Wholesale & retail		236		1		0		0		236		1
Manufacturing		7,651		0		0		0		7,651		0
Agriculture		2,147		37		1,119		0		3,266		37
Service		971		0		0		0		971		0
Other commercial		6,130		0		3,851		0		9,981		0
Total impaired commercial related loans		32,146		49		7,186		0		39,332		49
Residential mortgage		76		0		0		0		76		0
Home equity		643		0		0		0		643		0
Other consumer		274		3		0		0		274		3
Total impaired consumer related loans		993		3		0		0		993		3
Total impaired loans	$	33,139	$	52	$	7,186	$	0	$	40,325	$	52
Three months ended March 31, 2020
Builder & developer	$	957	$	12	$	308	$	0	$	1,265	$	12
Commercial real estate investor		1,347		22		0		0		1,347		22
Residential real estate investor		844		6		5,020		0		5,864		6
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		272		2		7,127		0		7,399		2
Manufacturing		13		3		1,073		0		1,086		3
Agriculture		2,098		19		1,012		0		3,110		19
Service		704		1		0		0		704		1
Other commercial		2,113		30		3,634		0		5,747		30
Total impaired commercial related loans		8,348		95		18,174		0		26,522		95
Residential mortgage		214		3		0		0		214		3
Home equity		672		21		0		0		672		21
Other consumer		223		3		0		0		223		3
Total impaired consumer related loans		1,109		27		0		0		1,109		27
Total impaired loans	$	9,457	$	122	$	18,174	$	0	$	27,631	$	122

‎

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Past Due and Nonaccrual

The performance and credit quality of the loan portfolio is also monitored by using an aging schedule that shows the length of time a loan is past due. The table below presents a summary of past due loans, nonaccrual loans and current loans by loan segment and class at March 31, 2021 and December 31, 2020.

					≥ 90 Days
	30-59		60-89		Past Due				Total Past
	Days		Days		and				Due and				Total
(dollars in thousands)	Past Due		Past Due		Accruing		Nonaccrual		Nonaccrual		Current		Loans
March 31, 2021
Builder & developer	$	0	$	282	$	363	$	822	$	1,467	$	143,310	$	144,777
Commercial real estate investor		819		0		0		193		1,012		271,907		272,919
Residential real estate investor		0		0		0		2,873		2,873		230,796		233,669
Hotel/Motel		0		0		0		12,451		12,451		68,594		81,045
Wholesale & retail		198		38		0		0		236		98,980		99,216
Manufacturing		0		0		0		7,739		7,739		76,343		84,082
Agriculture		0		3,379		0		3,101		6,480		79,528		86,008
Service		0		0		0		971		971		86,841		87,812
Other		64		0		1,035		9,701		10,800		265,308		276,108
Total commercial related loans		1,081		3,699		1,398		37,851		44,029		1,321,607		1,365,636
Residential mortgage		67		153		0		0		220		94,808		95,028
Home equity		0		0		109		655		764		94,216		94,980
Other		1,423		373		0		257		2,053		21,454		23,507
Total consumer related loans		1,490		526		109		912		3,037		210,478		213,515
Total loans	$	2,571	$	4,225	$	1,507	$	38,763	$	47,066	$	1,532,085	$	1,579,151
December 31, 2020
Builder & developer	$	427	$	489	$	322	$	379	$	1,617	$	145,992	$	147,609
Commercial real estate investor		0		0		0		201		201		236,723		236,924
Residential real estate investor		136		0		0		2,797		2,933		235,525		238,458
Hotel/Motel		0		0		0		12,472		12,472		66,949		79,421
Wholesale & retail		29		0		0		0		29		108,396		108,425
Manufacturing		0		0		0		7,564		7,564		71,578		79,142
Agriculture		0		0		0		3,429		3,429		77,021		80,450
Service		0		709		0		971		1,680		75,158		76,838
Other		679		887		0		9,291		10,857		269,759		280,616
Total commercial related loans		1,271		2,085		322		37,104		40,782		1,287,101		1,327,883
Residential mortgage		0		0		937		151		1,088		94,663		95,751
Home equity		206		177		36		630		1,049		95,662		96,711
Other		717		321		0		290		1,328		22,916		24,244
Total consumer related loans		923		498		973		1,071		3,465		213,241		216,706
Total loans	$	2,194	$	2,583	$	1,295	$	38,175	$	44,247	$	1,500,342	$	1,544,589

Troubled Debt Restructurings

Loans classified as troubled debt restructurings (TDRs) are designated impaired and arise when the Corporation grants borrowers experiencing financial difficulties concessions that it would not otherwise consider. Concessions granted with respect to these loans involve an extension of the maturity date or a below market interest rate relative to new debt with similar credit risk. The principal balance of outstanding TDRs was $1,344,000 at March 31, 2021 and $1,395,000 at December 31, 2020. There were no allowances allocated to any TDRs at March 31, 2021 or December 31, 2020. There are no commitments to lend to existing TDRs. A TDR is considered to be in payment default once it is contractually past due pursuant to the terms of the loan documents. Generally, these loans are secured by real estate. If repayment of the loan is determined to be collateral dependent, the loan is evaluated for impairment loss based on the fair value of the collateral. For loans that are not collateral dependent, the present value of expected future cash flows, discounted at the loan’s original effective interest rate, is used to determine any impairment loss. A nonaccrual TDR represents a nonaccrual loan, as previously defined, which includes an economic concession. Nonaccrual TDRs are restored to accrual status if

- 21 -

principal and interest payments, under the modified terms, are current for six consecutive payments after the modification and future principal and interest payments are reasonably assured. In contrast, an accruing TDR represents a loan that, at the time of the modification, has a demonstrated history of payments and with respect to which management believes that future loan payments are reasonably assured under the modified terms.

As of March 31, 2021, there are no modifications for consumer loans, five mortgage loans totaling approximately $2,060,000 and 38 commercial loans totaling approximately $86,091,000 under the CARES Act, which are not considered TDRs.

The table below shows loans whose terms have been modified under TDRs during the three months ended March 31, 2021 and 2020. There were no defaults during the three months ended March 31, 2021 and March 31, 2020 for TDRs entered into during the previous 12 month period.

	Modifications
		Pre-Modification	Post-Modification
	Number	Outstanding	Outstanding	Recorded
	of	Recorded	Recorded	Investment
(dollars in thousands)	Contracts	Investments	Investments	at Period End
Three months ended:
March 31, 2021
None
March 31, 2020
None

NOTE 5 – Allowance for Loan Losses

The table below shows the activity in and the composition of the allowance for loan losses by loan segment and class detail as of and for the three months ended March 31, 2021 and 2020.

	Allowance for Loan Losses
	January 1, 2021								March 31, 2021
(dollars in thousands)	Balance		Charge-offs		Recoveries		Provision		Balance
Builder & developer	$	2,034	$	0	$	0	$	32	$	2,066
Commercial real estate investor		3,177		0		0		233		3,410
Residential real estate investor		3,944		(50)		4		111		4,009
Hotel/Motel		1,440		0		0		208		1,648
Wholesale & retail		2,416		0		0		(305)		2,111
Manufacturing		840		0		0		(65)		775
Agriculture		1,288		0		0		163		1,451
Service		457		0		0		281		738
Other commercial		5,002		(42)		1		603		5,564
Total commercial related loans		20,598		(92)		5		1,261		21,772
Residential mortgage		256		0		0		0		256
Home equity		287		(5)		2		(2)		282
Other consumer		101		(7)		13		(9)		98
Total consumer related loans		644		(12)		15		(11)		636
Unallocated		22		0		0		(19)		3
Total	$	21,264	$	(104)	$	20	$	1,231	$	22,411

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	Allowance for Loan Losses
	January 1, 2020								March 31, 2020
(dollars in thousands)	Balance		Charge-offs		Recoveries		Provision		Balance
Builder & developer	$	2,263	$	(170)	$	0	$	133	$	2,226
Commercial real estate investor		2,565		0		0		117		2,682
Residential real estate investor		4,632		0		3		124		4,759
Hotel/Motel		742		0		0		314		1,056
Wholesale & retail		3,575		0		7		976		4,558
Manufacturing		1,252		0		0		64		1,316
Agriculture		1,304		0		0		(164)		1,140
Service		367		0		0		6		373
Other commercial		3,837		(7,511)		0		7,766		4,092
Total commercial related loans		20,537		(7,681)		10		9,336		22,202
Residential mortgage		158		0		0		77		235
Home equity		203		0		0		101		304
Other consumer		167		(5)		13		(78)		97
Total consumer related loans		528		(5)		13		100		636
Unallocated		1		0		0		(1)		0
Total	$	21,066	$	(7,686)	$	23	$	9,435	$	22,838

The table below shows the allowance amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for March 31, 2021 and December 31, 2020.

	Allowance for Loan Losses						Loans
	Individually		Collectively				Individually		Collectively
	Evaluated For		Evaluated For				Evaluated For		Evaluated For
(dollars in thousands)	Impairment		Impairment		Balance		Impairment		Impairment		Balance
March 31, 2021
Builder & developer	$	0	$	2,066	$	2,066	$	1,016	$	143,761	$	144,777
Commercial real estate investor		0		3,410		3,410		1,108		271,811		272,919
Residential real estate investor		416		3,593		4,009		2,873		230,796		233,669
Hotel/Motel		0		1,648		1,648		12,451		68,594		81,045
Wholesale & retail		0		2,111		2,111		236		98,980		99,216
Manufacturing		0		775		775		7,739		76,343		84,082
Agriculture		570		881		1,451		3,103		82,905		86,008
Service		0		738		738		971		86,841		87,812
Other commercial		3,442		2,122		5,564		9,701		266,407		276,108
Total commercial related		4,428		17,344		21,772		39,198		1,326,438		1,365,636
Residential mortgage		0		256		256		0		95,028		95,028
Home equity		0		282		282		655		94,325		94,980
Other consumer		0		98		98		257		23,250		23,507
Total consumer related		0		636		636		912		212,603		213,515
Unallocated		0		3		3		0		0		0
Total	$	4,428	$	17,983	$	22,411	$	40,110	$	1,539,041	$	1,579,151

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December 31, 2020
Builder & developer	$	0	$	2,034	$	2,034	$	575	$	147,034	$	147,609
Commercial real estate investor		0		3,177		3,177		1,163		235,761		236,924
Residential real estate investor		216		3,728		3,944		2,797		235,661		238,458
Hotel/Motel		0		1,440		1,440		12,472		66,949		79,421
Wholesale & retail		0		2,416		2,416		237		108,188		108,425
Manufacturing		0		840		840		7,564		71,578		79,142
Agriculture		615		673		1,288		3,429		77,021		80,450
Service		0		457		457		971		75,867		76,838
Other commercial		2,481		2,521		5,002		9,291		271,325		280,616
Total commercial related		3,312		17,286		20,598		38,499		1,289,384		1,327,883
Residential mortgage		0		256		256		151		95,600		95,751
Home equity		0		287		287		630		96,081		96,711
Other consumer		0		101		101		290		23,954		24,244
Total consumer related		0		644		644		1,071		215,635		216,706
Unallocated		0		22		22		0		0		0
Total	$	3,312	$	17,952	$	21,264	$	39,570	$	1,505,019	$	1,544,589

Note 6—Deposits

The composition of deposits as of March 31, 2021 and December 31, 2020 is shown below. The aggregate amount of demand deposit overdrafts that were reclassified as loans is $24,000 at March 31, 2021, compared to $55,000 at December 31, 2020.

	March 31,		December 31,
(dollars in thousands)	2021		2020
Noninterest bearing demand	$	483,004	$	396,947
Interest bearing demand		245,690		224,764
Money market		581,995		598,398
Savings		126,893		111,143
Time deposits less than $100		280,076		283,910
Time deposits $100 to $250		177,307		180,674
Time deposits $250 or more		69,098		67,703
Total deposits	$	1,964,063	$	1,863,539

- 24 -

Note 7—Short-Term Borrowings and Long-Term Debt

Short-term borrowings consist of securities sold under agreements to repurchase, federal funds purchased and other borrowings. At March 31, 2021, the balance of securities sold under agreements to repurchase was $7,743,000 compared to $8,540,000 at December 31, 2020. At March 31, 2021 and December 31, 2020, there were no other short-term borrowings.

The following table presents a summary of long-term debt as of March 31, 2021 and December 31, 2020. PeoplesBank’s long-term debt obligations to the FHLBP are fixed rate instruments. Under terms of a blanket collateral agreement with the FHLBP, the obligations are secured by FHLBP stock and PeoplesBank qualifying loan receivables, principally real estate secured loans.

	March 31,		December 31,
(dollars in thousands)	2021		2020
PeoplesBank’s obligations:
Federal Home Loan Bank of Pittsburgh (FHLBP)
Due June 2021, 2.81%	$	10,000	$	10,000
Due June 2021, 2.14%		15,000		15,000
Due May 2022, 2.93%		10,000		10,000
Total FHLBP	$	35,000	$	35,000
Codorus Valley Bancorp, Inc. obligations:
Junior subordinated debt
Due 2034, 2.20%, floating rate based on 3 month
LIBOR plus 2.02%, callable quarterly		3,093		3,093
Due 2036, 1.78% floating rate based on 3 month
LIBOR plus 1.54%, callable quarterly		7,217		7,217
Due 2030, 4.50% fixed rate, callable on or after December 2025		30,622		30,602
Total junior subordinated debt	$	40,932	$	40,912
Lease obligations included in long-term debt:
Finance lease liabilities		1,289		1,296
Total long-term debt	$	77,221	$	77,208

At March 31, 2021 there were no municipal deposit letters of credit compared to $42,000,000 at December 31, 2020. These letters of credit are issued by the FHLBP on behalf of PeoplesBank naming applicable municipalities as beneficiaries. The letters of credit took the place of securities pledged to the municipalities for their deposits maintained at PeoplesBank.

In June 2006, Codorus Valley formed CVB Statutory Trust No. 2, a wholly-owned special purpose subsidiary whose sole purpose was to facilitate a pooled trust preferred debt issuance of $7,217,000. In November 2004, Codorus Valley formed CVB Statutory Trust No. 1 to facilitate a pooled trust preferred debt issuance of $3,093,000. The Corporation owns all of the common stock of these nonbank subsidiaries, and the debentures are the sole assets of the Trusts. The accounts of both Trusts are not consolidated for financial reporting purposes in accordance with FASB ASC 810. For regulatory capital purposes, all of the Corporation’s trust preferred securities qualified as Tier 1 capital for all reported periods. Trust preferred securities are subject to capital limitations under the FDIC’s risk-based capital guidelines. The Corporation used the net proceeds from these offerings to fund its operations.

In December 2020, Codorus Valley issued subordinated notes in the amount of $31,000,000. The Corporation may redeem the subordinated notes, in whole or in part, in a principal amount with integral multiples of $10,000, on or after December 9, 2025 and prior to the maturity date at 100% of the principal amount, plus accrued and unpaid interest. The subordinated notes mature on December 9, 2030. The subordinated notes are also redeemable in whole or in part from time to time, upon the occurrence of specific events defined within the Note Purchase Agreements. The subordinated notes may be included in Tier 2 capital (with certain limitations applicable) under current regulatory guidelines and interpretations. The subordinated notes have a fixed rate of interest equal to 4.50% until December 30, 2025. After that term, the variable rate of interest is equal to the then current 90-Day Average SOFR (Secured Oversight Financing Rate) plus 404 basis points.

Note 8—Leases

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On January 1, 2019, the Corporation adopted ASU 2016-02 “Leases” (Topic 842) and all subsequent ASUs that modified Topic 842. For the Corporation, Topic 842 affected the accounting treatment for operating lease agreements in which the Corporation is the lessee.

- 25 -

Substantially all of the leases in which the Corporation is the lessee are comprised of real estate property, ATM locations, and office space. Substantially all of our leases are classified as operating leases, and therefore, were previously not recognized on the Corporation’s consolidated statements of condition. With the adoption of Topic 842, operating lease agreements are required to be recognized on the consolidated statements of condition as a right-of-use (“ROU”) asset and a corresponding lease liability. The Corporation has one finance lease for one financial center.

Leases with an initial term of 12 months or less are not recorded on the consolidated statement of condition. All other leases have remaining lease terms of 1 year to 25 years, some of which include options to extend. Upon opening a new financial center, we typically install brand-specific leasehold improvements which are depreciated over the shorter of the useful life or length of the lease. To the extent that the initial lease term of the related lease is less than the useful life of the leasehold improvements and, taking into consideration the dollar amount of the improvements, we conclude that it is reasonably certain that a renewal option will be exercised, the renewal period is included in the lease term, and the related payments are reflected in the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Corporation utilizes its incremental borrowing rate at lease inception, on an amortizing and collateralized basis, over a similar term.

All of our leases include fixed rental payments. We commonly enter into leases under which the lease payments increase at pre-determined dates based on the change in the consumer price index. While the majority of our leases are gross leases, we also have a number of leases in which we make separate payments to the lessor based on the lessor’s property and casualty insurance cost and the property taxes assessed on the property, as well as a portion of the common area maintenance associated with the property. We have elected the practical expedient not to separate lease and nonlease components for all of our building leases.

The components of lease expense were as follows:

	Three months ended
	March 31,
(dollars in thousands)	2021		2020
Operating lease cost	$	169	$	203
Finance lease cost:
Amortization of right-of-use assets	$	12	$	12
Interest on lease liability		12		12
Total finance lease cost	$	24	$	24
Total lease cost	$	193	$	227

Supplemental cash flow information related to leases was as follows:

	Three months ended
	March 31,
	2021		2020
Operating cash flows from operating leases	$	173	$	208
Operating cash flows from financing leases		12		12
Financing cash flows from financing leases		7		6
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		0		186
Finance leases		0		0

- 26 -

Amounts recognized as right-of-use assets related to finance leases are included in fixed assets in the accompanying statement of financial position, while related lease liabilities are included in long-term debt. Supplemental balance sheet information related to leases was as follows:

	March 31,		December 31,
	2021		2020
Assets:
Operating leases right-of-use assets	$	2,198	$	2,386
Finance leases assets		1,076		1,087
Total lease assets	$	3,274	$	3,473
Liabilities:
Operating	$	2,325	$	2,515
Financing		1,289		1,296
Total lease liabilities	$	3,614	$	3,811
Weighted Average Remaining Lease Term (years)
Operating leases		4.5		5.2
Finance leases		22.9		23.2
Weighted Average Discount Rate
Operating leases		2.63%		2.68%
Finance leases		3.69%		3.69%

Future minimum payments for financing leases and operating leases as of March 31, 2021 and December 31, 2020 were as follows:

(dollars in thousands:)	March 31, 2021
Year Ending December 31,	Operating Leases		Finance Leases
2021	$	500	$	56
2022		611		75
2023		484		75
2024		397		75
2025		176		79
Thereafter		304		1,588
Total lease payments		2,472		1,948
Less imputed interest		(147)		(659)
Total	$	2,325	$	1,289

(dollars in thousands:)	December 31, 2020
Year Ending December 31,	Operating Leases		Finance Leases
2021	$	667	$	75
2022		604		75
2023		489		75
2024		413		75
2025		192		79
Thereafter		317		1,588
Total lease payments		2,682		1,967
Less imputed interest		(167)		(671)
Total	$	2,515	$	1,296

Note 9—Regulatory Matters

The Corporation is subject to restrictions on the payment of dividends to its shareholders pursuant to the Pennsylvania Business Corporation Law of 1988, as amended (“BCL”). The BCL prohibits dividend payments if such payment would render the Corporation insolvent or result in negative net worth. Federal and state banking regulations place certain restrictions on dividends paid and loans or advances made by PeoplesBank to the Corporation. The amount of total dividends, which may be paid at any date, is generally limited to the retained earnings of PeoplesBank. Furthermore, dividend payments would be prohibited if the effect thereof would cause PeoplesBank’s capital to be reduced below applicable minimum capital requirements as discussed below. Loans and advances by PeoplesBank to affiliates, including the Corporation, are limited to 10 percent of PeoplesBank’s capital stock and contributed capital on a secured basis.

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Banks and bank holding companies 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.  The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital.  Management believes as of March 31, 2021, the Corporation and Bank 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. At March 31,2021 and December 31, 2020, 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 man32

agement believes have changed the institution’s category.

Actual and required capital amounts (in thousands) and ratios are presented below.

					Minimum for Basel III				Well Capitalized
	Actual (1)				Capital Adequacy				Minimum (2)
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Codorus Valley Bancorp, Inc. (consolidated)
at March 31, 2021
Capital ratios:
Common equity Tier 1	$	194,747	13.13	%	$	103,788	7.00	%		n/a	n/a
Tier 1 risk based		204,747	13.81			126,029	8.50			n/a	n/a
Total risk based		253,951	17.13			155,683	10.50			n/a	n/a
Leverage		204,747	9.39			87,203	4.00			n/a	n/a
at December 31, 2020
Capital ratios:
Common equity Tier 1	$	191,863	13.10	%	$	102,504	7.00	%		n/a	n/a
Tier 1 risk based		201,863	13.79			124,469	8.50			n/a	n/a
Total risk based		250,806	17.13			153,756	10.50			n/a	n/a
Leverage		201,863	9.58			84,250	4.00			n/a	n/a
PeoplesBank, A Codorus Valley Company
at March 31, 2021
Capital ratios:
Common equity Tier 1	$	221,272	14.96	%	$	103,570	7.00	%	$	96,172	6.50	%
Tier 1 risk based		221,272	14.96			125,763	8.50			118,365	8.00
Total risk based		239,815	16.21			155,355	10.50			147,957	10.00
Leverage		221,272	10.17			87,070	4.00			108,838	5.00
at December 31, 2020
Capital ratios:
Common equity Tier 1	$	198,184	13.56	%	$	102,274	7.00	%	$	94,968	6.50	%
Tier 1 risk based		198,184	13.56			124,190	8.50			116,884	8.00
Total risk based		216,484	14.82			153,411	10.50			146,105	10.00
Leverage		198,184	9.43			84,109	4.00			105,137	5.00

 (1) Net unrealized gains and losses on securities available-for-sale, net of taxes, are disregarded for capital ratio computation purposes in accordance with federal regulatory banking guidelines.

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

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Note 10—Shareholders’ Equity

Share Repurchase

The Corporation’s Board of Directors approved a Share Repurchase Program (“Program”) in March 2020. Under the Program, the Corporation is authorized to repurchase up to $5 million of the Corporation’s issued and outstanding common stock. All shares of common stock repurchased pursuant to the Program shall be held as treasury shares and be available for use and reissuance for purposes as and when determined by the Board of Directors including, without limitation, pursuant to the Corporation’s Dividend Reinvestment and Stock Purchase Plan and its equity compensation program. During the first quarter of 2020 the Corporation repurchased 5,335 shares at an average price of $16.37. Shortly after the Program began, and in response to COVID-19, the Corporation suspended the Program. That program expired by its own terms in October, 2020.

The Corporation’s Board of Directors approved a new Share Repurchase Program (“Program”) in January 2021. Under the newly approved Program, the Corporation is authorized to repurchase up to $5 million of the Corporation’s issued and outstanding common stock. All shares of common stock repurchased pursuant to the Program shall be held as treasury shares and be available for use and reissuance for purposes as and when determined by the Board of Directors including, without limitation, pursuant to the Corporation’s Dividend Reinvestment and Stock Purchase Plan and its equity compensation progam.

Note 11—Contingent Liabilities

There are no legal proceedings pending against Codorus Valley Bancorp, Inc. or any of its subsidiaries which are expected to have a material impact upon the consolidated financial position and/or operating results of the Corporation, other than routine litigation incidental to the business. Management is not aware of any proceedings known or contemplated by government authorities.

Note 12—Guarantees

Codorus Valley does not issue any guarantees that would require liability recognition or disclosure, other than its standby letters of credit.  Standby letters of credit are written conditional commitments issued by PeoplesBank to guarantee the performance of a client to a third party.  Generally, all letters of credit, when issued, have expiration dates within one year.  The credit risk involved in issuing letters of credit is essentially the same as those that are involved in extending loan facilities to clients.  The Corporation generally holds collateral and/or personal guarantees supporting these commitments.  The Corporation had $17,278,000 of standby letters of credit outstanding on March 31, 2021, compared to $15,206,000 on December 31, 2020. Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding letters of credit. The amount of the liability as of March 31, 2021 and December 31, 2020, for guarantees under standby letters of credit issued, was not material. Many of the commitments are expected to expire without being drawn upon and, therefore, generally do not present significant liquidity risk to the Corporation or PeoplesBank.

Note 13—Fair Value of Assets and Liabilities

The Corporation uses its best judgment in estimating the fair value of the Corporation’s assets and liabilities; however, there are inherent weaknesses in any estimation technique. The estimated fair value amounts have been measured as of their respective period-ends and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values subsequent to the respective reporting dates may be different than the amounts reported at each period end.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date. GAAP establishes a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:

Level 1: Inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available.

Level 2: Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets; inputs to the valuation methodology include quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs to the valuation methodology that utilize model-based techniques for which all significant assumptions are observable in the market.

Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement; inputs to the valuation methodology that utilize model-based techniques for which significant assumptions are not observable in the

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market; or inputs to the valuation methodology that require significant management judgment or estimation, some of which may be internally developed.

Since management maximizes the use of observable inputs and minimizes the use of unobservable inputs when determining fair value, an asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Management reviews and updates the fair value hierarchy classifications on a quarterly basis.

Assets Measured at Fair Value on a Recurring Basis

Securities available-for-sale

The fair values of investment securities were measured using information from a third-party pricing service. The pricing service uses quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique, used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities, but rather, by relying on the securities’ relationship to other benchmark quoted prices.

			Fair Value Measurements
(dollars in thousands)	Total		(Level 1) ‎Quoted Prices in ‎Active Markets for ‎Identical Assets		(Level 2) ‎Significant Other ‎Observable Inputs		(Level 3) ‎Significant Other ‎Unobservable Inputs
March 31, 2021
Securities available-for-sale:
U.S. agency		13,927		0		13,927		0
U.S. agency mortgage-backed, residential		123,021		0		123,021		0
State and municipal		30,169		0		30,169		0
Corporate debt		12,433		0		12,433		0
December 31, 2020
Securities available-for-sale:
U.S. agency		40,000		0		40,000		0
U.S. agency mortgage-backed, residential		110,896		0		110,896		0
State and municipal		24,300		0		24,300		0
Corporates		9,806		0		9,806		0

Assets Measured at Fair Value on a Nonrecurring Basis

Impaired loans

Impaired loans are those that are accounted for under FASB ASC Topic 310, in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral.  Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds.  These loans are generally included as Level 3 fair values, based on the lowest level of input that is significant to the fair value measurements.  At March 31, 2021, the fair value of impaired loans with a valuation allowance or partial charge-off was $3,422,000, net of valuation allowances of $4,428,000 and partial

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charge-offs of $373,000.  At December 31, 2020 the fair value of impaired loans with a valuation allowance or charge-off was $4,020,000, net of valuation allowances of $3,312,000 and charge-offs of $373,000. 

Foreclosed Real Estate

Other real estate property acquired through foreclosure is initially recorded at fair value of the property at the transfer date less estimated selling cost. Subsequently, other real estate owned is carried at the lower of its carrying value or the fair value less estimated selling cost.  Fair value is usually determined based on an independent third-party appraisal of the property or occasionally on a recent

sales offer. At March 31, 2021 and December 31, 2020, there were no foreclosed real estate assets with a valuation allowance or write-down.

Mortgage Servicing Rights

Mortgage servicing rights are initially recorded at fair value upon the sale of residential mortgage loans to secondary market investors. The fair value of servicing rights is based on the present value of estimated future cash flows on pools of mortgages stratified by rate and original time to maturity. Mortgage servicing rights are subsequently evaluated for impairment on a quarterly basis. Significant inputs to the valuation include expected cash flow, expected net servicing income, a cash flow discount rate and the expected life of the underlying loans. At March 31, 2021, the fair value of the mortgage servicing rights asset was $524,000. At December 31, 2020, the fair value of the mortgage servicing rights asset was $511,000.

			Fair Value Measurements
(dollars in thousands)		Total	(Level 1) ‎Quoted Prices in ‎Active Markets for ‎Identical Assets		(Level 2) ‎Significant Other ‎Observable Inputs		(Level 3) ‎Significant Other ‎Unobservable Inputs
March 31, 2021
Impaired builder & developer loans	$	196	$	0	$	0	$	196
Impaired residential real estate investor loans		2,009		1,800		0		209
Impaired agriculture loans		508		0		0		508
Impaired other loans		709		0		0		709
Mortgage servicing rights		147		0		0		147
December 31, 2020
Impaired builder & developer loans	$	196	$	0	$	0	$	196
Impaired residential real estate investor loans		2,209		2,000		0		209
Impaired agriculture loans		544		0		0		544
Impaired other loans		1,071		0		0		1,071
Mortgage servicing rights		511		0		0		511

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The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Corporation has utilized Level 3 inputs to determine fair value:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value		Valuation	Unobservable		Weighted
(dollars in thousands)	Estimate		Techniques	Input	Range	Average
March 31, 2021
Impaired builder & developer loans	$	196	Appraisal (1)	Appraisal adjustments (2)	15% -15%	15%
Impaired residential real estate investor loans		209	Appraisal (1)	Appraisal adjustments (2)	15%-15%	15%
Impaired agriculture loans		508	Appraisal (1)	Appraisal adjustments (2)	22% -25%	23%
Impaired other loans		441	Appraisal (1)	Appraisal adjustments (2)	15% - 25%	20%
Impaired other loans		268	Business asset valuation (3)	Business asset valuation adjustments (4)	50% - 50%	50%
Mortgage Servicing Rights		147	Multiple of annual service fee	Estimated prepayment speed based on rate and term	13.8% - 13.8%	13.8%
December 31, 2020
Impaired builder & developer loans	$	196	Appraisal (1)	Appraisal adjustments (2)	15% - 15%	15%
Impaired residential real estate investor loans		209	Appraisal (1)	Appraisal adjustments (2)	15% - 15%	15
Impaired agriculture loans		544	Appraisal (1)	Appraisal adjustments (2)	25% - 25%	25%
Impaired other loans		89	Appraisal (1)	Appraisal adjustments (2)	15% - 15%	15%
Impaired other loans		982	Business asset valuation (3)	Business asset valuation adjustments (4)	40% - 50%	44%
Mortgage servicing rights		511	Multiple of annual service fee	Estimated prepayment speed based on rate and term	18.5% - 18.5%	18.5%

(1)Fair value is generally determined through independent appraisals, which generally include various level 3 inputs that are not identifiable.

(2)Appraisal amounts may be adjusted downward by the Corporation's management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expense adjustments are presented as a percent of the appraisal.

(3)Fair value is generally determined through customer-provided financial statements and bankruptcy court documents.

(4)Business asset valuation may be adjusted downward by the corporation's management qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses adjustments are presented as a percent of the financial statement book value.

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The following presents the carrying amounts and estimated fair values of the Corporation’s financial instruments as of March 31, 2021 and December 31, 2020.

						Fair Value Estimates
					(Level 1)		(Level 2)		(Level 3)
					Quoted Prices		Significant		Significant
					in Active		Other		Other
	Carrying		Estimated		Markets for		Observable		Unobservable
(dollars in thousands)	Amount		Fair Value		Identical Assets		Inputs		Inputs
March 31, 2021
Financial assets
Cash and cash equivalents	$	426,904	$	426,904	$	426,904	$	0	$	0
Securities available-for-sale		179,550		179,550		0		179,550		0
Restricted investment in bank stocks		2,278		N/A		N/A		N/A		N/A
Loans held for sale		13,324		14,592		0		14,592		0
Loans, net		1,556,740		1,550,508		0		0		1,550,508
Interest receivable		8,089		8,089		0		8,089		0
Financial liabilities
Deposits	$	1,964,063	$	1,967,314	$	0	$	1,967,314	$	0
Short-term borrowings		7,743		7,743		0		7,743		0
Long-term debt (1)		45,310		43,275		0		35,387		7,888
Subordinated debentures		30,622		32,408		0		32,408		0
Interest payable		881		881		0		881		0
Off-balance sheet instruments		0		0		0		0		0
December 31, 2020
Financial assets
Cash and cash equivalents	$	335,793	$	335,793	$	335,793	$	0	$	0
Securities available-for-sale		185,002		185,002		0		185,002		0
Restricted investment in bank stocks		2,593		N/A		N/A		N/A		N/A
Loans held for sale		15,981		17,228		0		17,228		0
Loans, net		1,523,325		1,527,295		0		0		1,527,295
Interest receivable		8,352		8,352		0		8,352		0
Financial liabilities
Deposits	$	1,863,539	$	1,868,203	$	0	$	1,868,203	$	0
Short-term borrowings		8,540		8,540		0		8,540		0
Long-term debt (1)		45,310		43,005		0		35,571		7,434
Subordinated debentures		30,602		31,159		0		31,159		0
Interest payable		532		532				532		0
Off-balance sheet instruments		0		0		0		0		0
(1) Exclude leases included in Long-term debt

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Note 14—Assets and Liabilities Subject to Offsetting

Securities Sold Under Agreements to Repurchase

PeoplesBank enters into agreements with clients in which it sells securities subject to an obligation to repurchase the same securities (“repurchase agreements”). The contractual maturity of the repurchase agreement is overnight and continues until either party terminates the agreement. These repurchase agreements are accounted for as a collateralized financing arrangement (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as a liability (short-term borrowings) in the Corporation’s consolidated financial statements of condition, while the securities underlying the repurchase agreements are appropriately segregated for safekeeping purposes and remain in the respective securities asset accounts. Thus, there is no offsetting or netting of the securities with the repurchase agreement liabilities.

							Gross amounts Not Offset in
							the Statements of Condition
							Financial Instruments
(dollars in thousands)	Gross ‎Amounts of ‎Recognized ‎Liabilities		Gross ‎Amounts ‎Offset in the ‎Statements ‎of Condition		Net Amounts ‎of Liabilities ‎Presented in ‎the Statements ‎of Condition		U.S. agency ‎mortgage-backed, ‎residential		U.S. agency		Cash ‎Collateral ‎Pledged		Net ‎Amount
March 31, 2021
Repurchase Agreements	$	7,743	$	0	$	7,743	$	(8,673)	$	0	$	0	$	(930)
December 31, 2020
Repurchase Agreements	$	8,540	$	0	$	8,540	$	(10,255)	$	0	$	0	$	(1,715)

‎

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis of the significant changes in the results of operations, capital resources and liquidity presented in the accompanying consolidated financial statements for Codorus Valley Bancorp, Inc. (“Codorus Valley” or “the Corporation”), a bank holding company, and its wholly-owned subsidiary, PeoplesBank, A Codorus Valley Company (“PeoplesBank”), are provided below. Codorus Valley’s consolidated financial condition and results of operations consist almost entirely of PeoplesBank’s financial condition and results of operations. Current performance does not guarantee, and may not be indicative of, similar performance in the future.

Forward-looking Statements

Management of the Corporation has made forward-looking statements in this Form 10-Q. These forward-looking statements may be subject to risks and uncertainties. Forward-looking statements include information concerning possible or assumed future results of operations of the Corporation and its subsidiaries. When words such as “believes,” “expects,” “anticipates” or similar expressions occur in the Form 10-Q, management is making forward-looking statements.

Note that many factors, some of which are discussed elsewhere in this report and in the documents that are incorporated by reference, could affect the future financial results of the Corporation and its subsidiaries, both individually and collectively, and could cause those results to differ materially from those expressed in the forward-looking statements contained or incorporated by reference in this Form 10-Q. These factors include, but are not limited to, the following:

Operating, legal and regulatory risks;

Credit risk, including an increase in nonperforming assets requiring loss provisions and the incurrence of carrying costs related to nonperforming assets;

Interest rate fluctuations which could increase our cost of funds or decrease our yield on earning assets and therefore reduce our net interest income;

Declines in the market value of investment securities considered to be other-than-temporary;

Unavailability of capital when needed, or availability at less than favorable terms;

Unauthorized disclosure of sensitive or confidential client or customer information, whether through a breach of our computer systems or otherwise, which may adversely affect the Corporation’s operations, net income or reputation;

Inability to achieve merger-related synergies, and difficulties in integrating the business and operations of acquired institutions;

A prolonged economic downturn or excessive inflation;

Political and competitive forces affecting banking, securities, asset management and credit services businesses;

Occurrence of natural or man-made disasters or calamities, including health emergencies, the spread of infectious diseases, or pandemics;

The effects of and changes in the rate of FDIC premiums, including special assessments;

Future legislative or administrative changes to U.S. governmental capital programs;

Future changes in federal or state tax laws or tax rates;

Enacted financial reform legislation, e.g., Dodd-Frank Wall Street Reform and Consumer Protection Act, may have a significant impact on the Corporation’s business and results of operations;

The risk that management’s analyses of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful; and

Impact of COVID-19 pandemic.

COVID-19

The rollout of vaccines in the Company’s Pennsylvania and Maryland markets, coupled with the decline in COVID-19 cases compared to the last quarter of 2020, provided the impetus for Management to re-open financial center lobbies. On March 1^st, PeoplesBank re-opened all financial center lobbies and reverted to full staffing complements in all financial centers. The re-opening of lobbies in March also resulted in the highest level of new retail deposit account openings since January 2020. March also set a new record for the highest online banking engagement with retail clients.

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Associates

Approximately 38 percent of associates continue to work remotely on a full or part-time basis. A phased approach and a comprehensive plan to safely return associates working remotely has been developed, and will be implemented as the number of COVID-19 cases decline and after the majority of associates are able to obtain a COVID vaccine.

Re-Opening

At this time, all Financial Centers are operating with pre-pandemic lobby and drive thru hours, with the exception of two financial centers that are operating with limited lobby hours. All Retirement Community Office lobbies remain open by appointment only with several modifications to ensure safety of clients and associates. Three Loan Production Offices (Hanover, Centerville and Bel Air) remain closed.

Client Hardship

PeoplesBank continues to responsibly and prudently extend credit to qualified borrowers. PeoplesBank began accepting applications for a second round of SBA Paycheck Protection Program (PPP) funding on January 20, 2021. PeoplesBank has processed approximately 722 second round PPP loans totaling $72.6 million. These PPP loans support 9,076 jobs. The majority of these loans (83 percent) support small businesses with loan amounts below $150,000, of which a portion (39 percent) support very small businesses with loan amounts below $25,000. Nearly 16 percent of the second round loan applicants were first time applicants of PPP loans.

The Corporation undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this report.

Critical Accounting Policies

The Corporation’s critical accounting policies, as summarized in Note 1—Summary of Significant Accounting Policies, include those related to the allowance for loan losses and the fair value of its available-for-sale securities portfolio, which require management to make significant judgments, estimates and assumptions that have a material impact on the carrying value of the respective assets and liabilities. For this Form 10-Q, there were no material changes made to the Corporation’s critical accounting policies, which are more fully disclosed in Item 7 of the Corporation’s previously filed Annual Report on Form 10-K for the year ended December 31, 2020.

‎

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Three Months Ended March 31, 2021 vs. Three Months Ended March 31, 2020

FINANCIAL HIGHLIGHTS

The Corporation’s net income (earnings) was $3,900,000 for the quarter ended March 31, 2021, as compared to a net loss of $(2,989,000) for the quarter ended March 31, 2020, an increase of $6,889,000 or 230 percent.

Net interest income for the first quarter of 2021 increased $110,000 or 1 percent above the same period in 2020, primarily due to lower deposits rates, partially offset by lower rates on loans in the first quarter 2021 as compared to the first quarter 2020.

The Corporation’s net interest margin (tax-equivalent basis) for the first quarter 2021 was 3.04 percent, compared to 3.44 percent for the first quarter 2020. The net interest margin contraction was a result of lower rates on interest bearing deposits with banks and lower rates on loans, partially offset by lower rates on interest bearing demand and time deposits.

The provision for loan losses for the first quarter 2021 was $1,231,000, as compared to $9,435,000 for the first quarter 2020. The decreased provision expense in the first quarter 2021 was attributed primarily to a partial charge off arising from a single, large commercial lending relationship in the prior period. Changes in the external environment created by COVID-19 continue to impact the qualitative factors for certain loan segments in the allowance for loan loss analysis. Both periods supported adequate allowance for loan loss coverage, however, changing economic conditions associated with the COVID-19 pandemic may require future adjustments. The allowance as a percentage of total loans was 1.42 percent at March 31, 2021 as compared to 1.38 percent at December 31, 2020 and 1.55 percent at March 31, 2020.

Noninterest income for the first quarter 2021 increased $1,010,000 or 30 percent compared to the first quarter 2020. Trust and investment service fees and mutual fund, annuity and insurance sales, gain on sales from loans held for sale and other income each increased over the prior period.

Noninterest expense in the first quarter 2021 was $387,000 or 3 percent higher than the first quarter 2020. Personnel costs, professional and legal, FDIC insurance, external data processing and other expense each increased over the prior period. The increase was partially offset by a decrease in marketing, debit card processing and charitable donations.

The provision for income taxes for the first quarter 2021 increased by $2,048,000 or 210 percent as compared to the first quarter 2020 as a result of the higher income before taxes in the first quarter 2021 as compared to the first quarter 2020.

 
‎

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The schedule below presents selected performance metrics for the first quarter of both 2021 and 2020.

	Three months ended
	March 31,
	2021			2020
Basic earnings (loss) per share	$	0.40		$	(0.31)
Diluted earnings (loss) per share	$	0.40		$	(0.31)
Cash dividend payout ratio		32.75	%		(52.30)	%
Return (loss) on average assets		0.71	%		(0.63)	%
Return (loss) on average equity		7.96	%		(6.15)	%
Net interest margin (tax equivalent basis)		3.04	%		3.44	%
Net overhead ratio		1.69	%		2.09	%
Efficiency ratio		68.36	%		70.42	%
Average equity to average assets		8.97	%		10.23	%

A more detailed analysis of the factors and trends affecting the Corporation’s earnings and financial position follows.

INCOME STATEMENT ANALYSIS

Net Interest Income

Unless otherwise noted, this section discusses interest income and interest expense amounts as reported in the Consolidated Statements of Income, which are not presented on a tax equivalent basis.

Net interest income for the quarter ended March 31, 2021 was $15,477,000, an increase of $110,000 or 1 percent compared to net interest income of $15,367,000 for the first quarter 2020. The increase was primarily attributable to lower deposit rates, partially offset by lower rates on loans in the first quarter 2021 as compared to the first quarter 2020.

The Corporation’s net interest margin, computed as interest income (tax-equivalent basis) annualized as a percentage of average interest earning assets, was 3.04 percent for the first quarter 2021 compared to the 3.44 percent for the first quarter 2020. The net interest margin contraction was a result of lower rates on interest bearing deposits with banks and lower interest rates on loans, partially offset by lower rates on interest bearing demand and time deposits.

Total interest income for the first quarter 2021 totaled $18,375,000, a decrease of $1,814,000 or 9 percent below the amount of total interest income for the first quarter 2020. The change was primarily a result of lower rates on commercial loans, lower rates on investment securities, and lower rates on interest bearing deposits with banks.

Interest and dividend income on investments decreased $331,000 or 32 percent in the first quarter 2021 compared to the same period in 2020. The average balance of the investment securities portfolio increased $7,449,000 or 5 percent when comparing the first quarter 2021 to the same period in 2020. The tax-equivalent yield on investments for the first quarter 2021 was 1.75 percent or 88 basis points lower than the 2.63 percent experienced in the first quarter 2020.

Interest income on loans decreased $1,172,000 or 6 percent in the first quarter 2021 compared to the same period in 2020. The average balance of outstanding loans, primarily commercial loans, increased approximately $72,300,000 or 5 percent comparing the first quarter 2021 to the same period in 2020. Lower rates on the loan portfolio were the primary driver of the decrease in interest income on loans, which was partially offset by a higher volume of commercial loans. The tax-equivalent yield on loans for the first quarter 2021 was 4.53 percent or 49 basis points less than the 5.02 percent experienced in the first quarter 2020.

Total interest expense for the first quarter 2021 was $2,898,000, a decrease of $1,924,000 or 40 percent as compared to total interest expense of $4,822,000 for the first quarter 2020. The change was primarily the result of a decrease in the cost of interest bearing demand and time deposits.

Interest expense on deposits decreased $2,056,000 or 48 percent in the first quarter 2021 compared to the same period in 2020. The average rate paid on interest bearing deposits was 0.62 percent in the first quarter 2021 or 67 basis points lower than the average rate paid of 1.29 percent in the first quarter 2020. The average balance of interest bearing deposits for the first quarter 2021 increased by $128,678,000 or 10 percent compared to the first quarter 2020. Also, the Corporation experienced favorable growth in noninterest-bearing deposits, with the average volume for the first quarter 2021 increasing 59 percent to $423,830,000 as compared to $267,366,000 for the first quarter 2020. The increase was primarily related to deposits associated with the origination of Paycheck Protection Program (PPP) loans and consumer stimulus payments.

For the first quarter 2021 interest expense on borrowings (long-term debt and subordinated debentures) increased $133,000 or 25 percent compared to the first quarter 2020. Short-term borrowings consisting of repurchase agreements and other short-term borrowings averaged $7,735,000 for the first quarter 2021, compared to an average balance of $7,040,000 for the first quarter 2020.

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The rate on average short-term borrowings for the first quarter 2021 was 0.42 percent, a decrease as compared to a rate of 0.51 percent for the first quarter 2020. Long-term debt, which includes borrowings from the Federal Home Loan Bank of Pittsburgh (FHLBP) and subordinated debentures issued in December 2020 by the Corporation, averaged $79,659,000 for the first quarter 2021 and $84,669,000 for the first quarter 2020. For the first quarter 2021, the rate on average long-term borrowings was 3.41 percent, an increase of 86 basis points as compared to a rate of 2.55 percent for the first quarter 2020, primarily related to the issuance of subordinated debentures in December 2020 by the Corporation.

Table 1-Average Balances and Interest Rates (tax equivalent basis)
	Three months ended March 31,
	2021							2020
	Average				Yield/			Average				Yield/
(dollars in thousands)	Balance		Interest		Rate			Balance		Interest		Rate
Assets
Interest bearing deposits with banks	$	325,193	$	81		0.10	%	$	132,346	$	392		1.19	%
Investment securities:
Taxable		151,517		608		1.63			139,897		892		2.56
Tax-exempt		19,401		118		2.47			23,572		175		2.99
Total investment securities		170,918		726		1.72			163,469		1,067		2.63
Loans:
Taxable (1)		1,567,817		17,515		4.53			1,493,590		18,668		5.03
Tax-exempt		9,899		97		3.97			11,826		120		4.09
Total loans		1,577,716		17,612		4.53			1,505,416		18,788		5.02
Total earning assets		2,073,827		18,419		3.60			1,801,231		20,247		4.52
Other assets (2)		111,868							98,372
Total assets	$	2,185,695						$	1,899,603
Liabilities and Shareholders' Equity
Deposits:
Interest bearing demand	$	814,058	$	430		0.21	%	$	694,589	$	1,297		0.75	%
Savings		117,627		15		0.05			87,549		20		0.09
Time		529,466		1,775		1.36			550,335		2,959		2.16
Total interest bearing deposits		1,461,151		2,220		0.62			1,332,473		4,276		1.29
Short-term borrowings		7,735		8		0.42			7,040		9		0.51
Long-term debt		79,659		670		3.41			84,669		537		2.55
Total interest bearing liabilities		1,548,545		2,898		0.76			1,424,182		4,822		1.36
Noninterest bearing deposits		423,830							267,366
Other liabilities		17,340							13,688
Shareholders' equity		195,980							194,367
Total liabilities and
shareholders' equity	$	2,185,695						$	1,899,603
Net interest income (tax equivalent basis)			$	15,521						$	15,425
Net interest margin (3)						3.04	%						3.44	%
Tax equivalent adjustment				(44)							(58)
Net interest income			$	15,477						$	15,367

(1)Average balance includes average nonaccrual loans of $37,711,000 for 2021 and $26,630,000 for 2020.

Interest includes net loan fees of $2,705,000 for 2021 and $819,000 for 2020.

(2)Average balance includes average bank owned life insurance, foreclosed real estate and unrealized holding gains (losses) on investment securities.

(3)Net interest income (tax equivalent basis) annualized as a percentage of average earning assets.

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Table 2-Rate/Volume Analysis of Changes in Net Interest Income (tax equivalent basis)
	Three months ended
	March 31,
	2021 vs. 2020
	Increase (decrease) due to change in*
(dollars in thousands)	Volume		Rate			Net
Interest Income
Interest bearing deposits with banks	$	571	$	(882)	$	(311)
Investment securities:
Taxable		98		(382)		(284)
Tax-exempt		(31)		(26)		(57)
Loans:
Taxable		2,664		(3,817)		(1,153)
Tax-exempt		(19)		(4)		(23)
Total interest income		3,283		(5,111)		(1,828)
Interest Expense
Deposits:
Interest bearing demand		189		(1,056)		(867)
Savings		7		(12)		(5)
Time		(112)		(1,072)		(1,184)
Short-term borrowings		1		(2)		(1)
Long-term debt		(214)		347		133
Total interest expense		(129)		(1,795)		(1,924)
Net interest income (tax equivalent basis)	$	3,412	$	(3,316)	$	96

*Changes which are due to both volume and rate are allocated in proportion to their relationship to the amount of change attributed directly to volume or rate.

Provision for Loan Losses

The provision for loan losses is an expense charged to earnings to cover the estimated losses attributable to uncollected loans. The provision reflects management’s judgment of an appropriate level for the allowance for loan losses. Provision for loan losses for the first quarter 2021 was $1,231,000, an $8,204,000 decrease as compared to $9,435,000 provision for the first quarter 2020. The decreased provision expense in the first quarter 2021 was attributed primarily to a partial charge off arising from a single, large commercial lending relationship in the prior period. Changes in the external environment created by COVID-19 continue to impact the qualitative factors for certain loan segments in the allowance for loan loss analysis. Both periods supported adequate allowance for loan loss coverage, however, changing economic conditions associated with the COVID-19 pandemic may require future adjustments. The allowance as a percentage of total loans was 1.42 percent at March 31, 2021, as compared to 1.38 percent at December 31, 2020 and 1.55 percent at March 31, 2020.

More information about the allowance for loan losses can be found in this report under the caption Allowance for Loan Losses on page 45.

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Noninterest Income

The following table presents the components of total noninterest income for the first quarter 2021, compared to the first quarter 2020.

Table 3 - Noninterest income
		Three months ended				Change
		March 31,				Increase (Decrease)
(dollars in thousands)	2021		2020		$		%
Trust and investment services fees	$	1,052	$	994	$	58	6	%
Income from mutual fund, annuity and insurance sales		300		261		39	15
Service charges on deposit accounts		1,221		1,130		91	8
Income from bank owned life insurance		270		286		(16)	(6)
Other income		563		439		124	28
Gain on sales of loans held for sale		1,050		298		752	252
(Loss) gain on sales of securities		(23)		15		(38)	*nm
Total noninterest income	$	4,433	$	3,423	$	1,010	30	%

*nm – not meaningful

The discussion that follows addresses changes in selected categories of noninterest income.

Other income—The $124,000 or 28 percent increase in other income is due to an increase in mortgage servicing fees during the first quarter 2021 compared to the first quarter 2020.

Gain on sales of loans held for sale—The $752,000 or 252 percent increase in gain on sales of loans was due to the sale of a larger volume of the mortgage loans to the secondary market during the first quarter 2021 compared to the first quarter 2020.

Noninterest Expense

The following table presents the components of total noninterest expense for the first quarter 2021, compared to the first quarter 2020.

Table 4 - Noninterest expense
		Three months ended						Change
		March 31,						Increase (Decrease)
(dollars in thousands)	2021		2020			$			%
Personnel	$	8,428		$	7,805		$	623		8	%
Occupancy of premises, net		973			926			47		5
Furniture and equipment		838			853			(15)		(2)
Professional and legal		351			205			146		71
Marketing		265			325			(60)		(18)
FDIC insurance		226			167			59		35
Debit card processing		280			389			(109)		(28)
Charitable donations		188			872			(684)		(78)
External data processing		820			704			116		16
Loss on foreclosed real estate, including provision for losses		0			20			(20)		(100)
Impaired loan carrying costs		100			286			(186)		(65)
Other		1,237			767			470		61
Total noninterest expense	$	13,706		$	13,319		$	387		3	%

The discussion that follows addresses changes in selected categories of noninterest expense.

Personnel—The $623,000 or 8 percent increase in personnel expense is primarily the result of higher bonus accruals, mortgage lender commissions and actual medical claims expense in 2021 compared to the prior period.

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Professional and legal—The $146,000 or 71 percent increase in professional and legal expense is attributed to additional CPA fees associated with the prior period’s change in auditor and higher legal fees during the period to support various company initiatives.

Marketing—The $60,000 or 18 percent decrease in marketing expense is attributed to continuing delays with various marketing campaigns due to the COVID-19 pandemic.

FDIC insurance—The $59,000 or 35 percent increase in FDIC insurance expense is attributed to the asset growth of the company.

Charitable donations—The $684,000 or 78 percent decrease in charitable donations expense is attributed to a delay in charitable donations due to the COVID-19 pandemic.

Loss on foreclosed real estate, including provision for losses—The $20,000 decrease in loss on foreclosed real estate expense is primarily attributed to expenses associated with a loss on foreclosed real estate recognized in the prior period.

Impaired loan carrying costs—The $186,000 or 65 percent decrease in impaired loan carrying costs expense is primarily attributed to a decrease in expenses associated with impaired loans compared to the prior period.

Other—The $470,000 or 61 percent increase in other expense is primarily attributed to the lack in tax benefits associated with charitable donations in the current period due to the delay of those donations.

Provision for Income Taxes

The provision for income taxes for the first quarter 2021 was $1,073,000, an increase of $2,048,000 or 210 percent as compared to the first quarter 2020. The increase was attributed to higher pre-tax net income for the first quarter 2021 compared to the first quarter 2020. The effective tax rate for the three months ended March 31, 2021 was 21.6 percent. The effective tax rate differs from the statutory tax rate primarily due to the impact of certain elements with specific tax benefits, including tax-exempt income, such as income from tax-exempt investments, tax-exempt loans, and bank-owned life insurance.

BALANCE SHEET REVIEW

Interest Bearing Deposits with Banks

On March 31, 2021, interest bearing deposits with banks totaled $408,884,000, an increase of $95,415,000 or 30 percent, compared to the level at year-end 2020. The increase is primarily the result of the growth in client deposits, offset by loan growth.

Investment Securities (Available-for-Sale)

The Corporation’s entire investment securities portfolio is classified available-for-sale, and is comprised of interest-earning debt securities. The overall composition of the Corporation’s investment securities portfolio is provided in Note 2—Securities. On March 31, 2021, the fair value of investment securities available-for-sale totaled $179,550,000, which represented a decrease of $5,452,000 as compared to the fair value of investment securities at year-end 2020. Cash flows from principal reductions, sales and maturities during the first three months of 2021 exceeded the purchases during the period.

Loans

On March 31, 2021, total loans, net of deferred fees, were $1.56 billion, which was $33,415,000 or 2 percent higher than the level at year-end 2020. The change in volume was due primarily to an increase in PPP loans, which totaled approximately $152.2 million at March 31, 2021. Commercial loans within the commercial real estate investor and residential real estate investor sectors each represented more than 10 percent of the total portfolio. The composition of the Corporation’s loan portfolio is provided in Note 4—Loans.

Deposits

Deposits are the Corporation’s principal source of funding for earning assets. On March 31, 2021, deposits totaled $1.96 billion, which reflected a $100,524,000 or 5 percent increase compared to the level at year-end 2020. Of the increase in total deposits, $86,057,000 is attributable to noninterest bearing deposits and $14,467,000 is related to growth in interest bearing deposits. The composition of the Corporation’s total deposit portfolio is provided in Note 6—Deposits.

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Short-term Borrowings

Short-term borrowings, which consist of securities sold under agreements to repurchase (repurchase agreements), federal funds purchased, and other short-term borrowings, totaled $7,743,000 at March 31, 2021, which reflected a $797,000 or 9 percent decrease compared to the level at year-end 2020.

Long-term Debt

The Corporation uses long-term borrowings as a secondary funding source for asset growth and to manage interest rate risk. On March 31, 2021, long-term debt, including subordinated debentures totaled $77,221,000 compared to $77,208,000 at year-end 2020. A listing of outstanding long-term debt obligations is provided in Note 7—Short-Term Borrowings and Long-Term Debt. The composition of the Corporation’s leases is provided in Note 8—Leases.

Other Liabilities

Other liabilities totaled $28,401,000 at March 31, 2021, which reflected a $15,964,000 or 128 percent increased compared to the level at year-end 2020. The increase was due divided between securities purchased prior to quarter end with settlement dates after quarter end and participation loans paid off where funds were due to the participant bank.

Shareholders’ Equity and Capital Adequacy

Shareholders’ equity, or capital, enables Codorus Valley to maintain asset growth and absorb losses. Capital adequacy can be affected by a multitude of factors, including profitability, new stock issuances, corporate expansion and acquisitions, dividend policy and distributions, and regulatory mandates. The Corporation’s total shareholders’ equity was approximately $198,751,000 on March 31, 2021, an increase of approximately $791,000 or less than 1 percent compared to the level at year-end 2020.

Cash Dividends on Stock

The Corporation has historically paid cash dividends on its stock on a quarterly basis. The Board of Directors determines the dividend rate after considering the Corporation's capital requirements, current and projected net income, and other relevant factors. As recently announced, the Board of Directors declared a quarterly cash dividend of $0.11 per share and a special cash dividend of $0.02 per share on April 13, 2021, payable on May 11, 2021, to shareholders of record at the close of business on April 27, 2021. These cash dividends follow a quarterly cash dividend of $0.11 per share and a special cash dividend of $0.02 per share distributed in February 2021.

Capital Adequacy

The Corporation and PeoplesBank are subject to various regulatory capital requirements administered by banking regulators that involve quantitative guidelines and qualitative judgments. The regulatory capital measures for the Corporation and PeoplesBank as of March 31, 2021 and the minimum capital ratios established by regulators are set forth in Note 9—Regulatory Matters to the financial statements. We believe that PeoplesBank is well capitalized on March 31, 2021 and had no regulatory dividend restrictions (see Note 9—Regulatory Matters to the financial statements).

RISK MANAGEMENT

Credit Risk Management

Credit risk represents the possibility that a loan client, counterparty or issuer may not perform in accordance with contractual terms, posing one of the most significant risks of loss to the Corporation. Accordingly, the Corporation emphasizes the management of credit risk, and has established a lending policy which management believes is sound given the nature and scope of our operations. The Credit Risk Management section included in Item 7 of the Corporation’s previously filed Annual Report on Form 10-K for the year ended December 31, 2020, provides a more detailed overview of the Corporation’s credit risk management process.

Nonperforming Assets

Nonperforming assets, as shown in the table below, are asset categories that pose the greatest risk of loss. The level of nonperforming assets at March 31, 2021 has increased by approximately $800,000 or 2 percent when compared to year-end 2020. The increase was the result of a slight increase in both nonaccrual loans and accruing loans 90 days or more past due.

The Corporation regularly monitors large and criticized assets in its commercial loan portfolio recognizing that prolonged low economic growth, or a weakening economy, could have negative effects on these commercial borrowers. Nonperforming assets are monitored and managed for collection of these accounts. Collection efforts, including modification of contractual terms for individual accounts based on prevailing market conditions and liquidation of collateral assets, are employed to maximize recovery. A special

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assets committee meets regularly, at a minimum quarterly, to review nonperforming assets. We generally rely on appraisals performed by independent licensed appraisers to determine the value of real estate collateral for impaired collateral-dependent loans. Generally, an appraisal is performed when: an account reaches 90 days past due, unless a certified appraisal was completed within the past twelve months; market values have changed significantly; the condition of the property has changed significantly; or the existing appraisal is outdated based upon regulatory or policy requirements. In instances where the value of the collateral, net of costs to sell, is less than the net carrying amount for impaired commercial related loans, a specific loss allowance is established for the difference. Further provisions for loan losses may be required for nonaccrual loans as additional information becomes available or conditions change. When it is probable that some portion or an entire loan balance will not be collected, that amount is charged off as loss against the allowance.

The paragraphs and table below address significant changes in the nonperforming asset categories as of March 31, 2021 compared to December 31, 2020.

Table 5 - Nonperforming Assets
	March 31,			December 31,
(dollars in thousands)	2021			2020
Nonaccrual loans	$	38,763		$	38,175
Accruing loans 90 days or more past due		1,507			1,295
Total nonperforming loans		40,270			39,470
Total nonperforming assets	$	40,270		$	39,470
Accruing troubled debt restructurings	$	1,344		$	1,395
Total period-end loans, net of deferred fees	$	1,579,151		$	1,544,589
Allowance for loan losses (ALL)	$	22,411		$	21,264
ALL as a % of total period-end loans		1.42	%		1.38	%
Net charge-offs year-to-date, annualized as a % of average total loans		0.02	%		0.93	%
ALL as a % of nonperforming loans		55.65	%		53.87	%
Nonperforming loans as a % of total period-end loans		2.55	%		2.56	%
Nonperforming assets as a % of total period-end
loans and net foreclosed real estate		2.55	%		2.56	%
Nonperforming assets as a % of total period-end assets		1.77	%		1.83	%
Nonperforming assets as a % of total period-end
shareholders' equity		20.26	%		19.94	%

Nonperforming loans

Nonperforming loans consist of nonaccrual loans and accruing loans 90 days or more past due. We generally place a loan on nonaccrual status and cease accruing interest income (i.e., recognize interest income on a cash basis, as long as the loan is sufficiently collateralized) when loan payment performance is unsatisfactory and the loan is past due 90 days or more. A loan is returned to interest accruing status when we determine that circumstances have improved to the extent that all of the principal and interest amounts contractually due are current for at least six consecutive payments and future payments are reasonably assured. Loans past due 90 days or more and still accruing interest represent loans that are contractually past due, but are well collateralized and in the process of collection. As of March 31, 2021, the nonperforming loan portfolio balance totaled $40,270,000, compared to $39,470,000 at year-end 2020. During the first three months of 2021, loans totaling $2,806,000 were transferred to nonaccrual status, offset by the transfer of loans out of nonaccrual status and payments to loans in nonaccrual status totaling approximately $2,218,000. In addition, accruing loans 90 days or more past due increased $212,000 in the first three months of 2021. For both periods, the nonperforming portfolio balance was comprised primarily of collateralized commercial loans.

Foreclosed Real Estate

Foreclosed real estate represents real estate acquired to satisfy debts owed to PeoplesBank and is included in the Other Assets category on the Corporation’s balance sheet. As of March 31, 2021 and December 31, 2020 there was no foreclosed real estate.

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Troubled Debt Restructurings

Troubled debt restructurings pertain to loans whose terms have been modified to include a concession that we would not ordinarily consider due to the debtor’s financial difficulties. Concessions granted under a troubled debt restructuring typically involve a reduction of interest rate lower than the current market rate for new debt with similar risk, the deferral of payments or extension of the stated maturity date. Troubled debt restructurings are evaluated for impairment if they have been restructured during the most recent calendar year, or if they cease to perform in accordance with the modified terms. As of March 31, 2021, the accruing troubled debt restructuring portfolio balance totaled $1,344,000, compared to $1,395,000 at year-end 2020. The $51,000 decrease was the result of principal repayments.

As of March 31, 2021, there are no modifications remaining for consumer loans, 5 mortgage loans totaling approximately $2,060,000 and 38 commercial loans totaling approximately $86,091,000 under the CARES Act, which are not considered TDRs.

Allowance for Loan Losses

Although the Corporation believes that it maintains sound credit policies, certain loans deteriorate and must be charged off as losses. The allowance for loan losses is maintained to absorb losses inherent in the portfolio. The allowance is increased by provisions charged to expense and is reduced by loan charge-offs, net of recoveries. The allowance is based upon management’s continuous evaluation of the loan portfolio coupled with a formal review of adequacy on a quarterly basis, which is subject to review and approval by the Board.

The allowance for loan losses consists primarily of two components: specific allowances for individually impaired commercial loans and allowances calculated for pools of loans. The Corporation uses an internal risk rating system to evaluate individual loans. Loans are segmented into industry groups or pools with similar characteristics, and an allowance for loan losses is allocated to each segment based on quantitative factors such as recent loss history (two-year rolling average of net charge-offs) and qualitative factors, such as the results of internal and external credit reviews, changes in the size and composition of the loan portfolio, adequacy of collateral, and general economic conditions. Determining the level of the allowance for probable loan losses at any given period is subjective, particularly during deteriorating or uncertain economic periods, and requires that we make estimates using assumptions. There is also the potential for adjustment to the allowance as a result of regulatory examinations.

The following table presents an analysis of the activity in the allowance for loan losses for the three months ended March 31, 2021 and 2020:

Table 6 - Analysis of Allowance for Loan Losses
(dollars in thousands)	2021			2020
Balance-January 1,	$	21,264		$	21,066
Provision charged to operating expense		1,231			9,435
Loans charged off:
Commercial, financial and agricultural		92			7,585
Real estate - construction and land development		0			97
Consumer and home equity		12			4
Total loans charged off		104			7,686
Recoveries:
Commercial, financial and agricultural		5			10
Consumer and home equity		15			13
Total recoveries		20			23
Net charge-offs		84			7,663
Balance-March 31,	$	22,411		$	22,838
Ratios:
Annualized net charge-offs as a % of average total loans		0.02	%		2.04	%
Allowance for loan losses as a % of total period-end loans		1.42	%		1.55	%
Allowance for loan losses as a % of nonperforming loans		55.65	%		80.99	%

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The provision for loan losses decreased $8,204,000 from March 31, 2020 to March 31, 2021. The decreased provision expense in the first quarter 2021 was attributed primarily to a partial charge off arising from a single, large commercial lending relationship in the prior period. Changes in the external environment created by COVID-19 continue to impact the qualitative factors for certain loan segments in the allowance for loan loss analysis. Both periods supported adequate allowance for loan loss coverage, however, changing economic conditions associated with the COVID-19 pandemic may require future adjustments.

Net charge-offs for the first three months of 2021 were $84,000 compared to $7,663,000 for the same period in 2020. During the first three months of 2021, there were $104,000 of charge-offs as compared to $7,686,000 during the same period in 2020. The risks and uncertainties associated with the COVID-19 pandemic, weak economic and business conditions, or the erosion of real estate values may adversely affect our borrowers’ ability to service their loans, causing significant fluctuations in the level of charge-offs and provision expense from one period to another. The allowance as a percentage of total loans was 1.42 percent at March 31, 2021, as compared to 1.38 percent at December 31, 2020 and 1.55 percent at March 31, 2020.

Liquidity Risk Management

Maintaining adequate liquidity provides the Corporation with the ability to meet financial obligations to depositors, loan clients, employees, and shareholders on a timely and cost effective basis in the normal course of business. Additionally, adequate liquidity provides funds for growth and business opportunities as they arise. Liquidity is generated from transactions relating to both the Corporation's assets and liabilities. The primary sources of asset liquidity are funds received from client loan payments, investment maturities and cash inflows from mortgage-backed securities, and the net proceeds of asset sales. The primary sources of liability liquidity are deposit growth, and funds obtained from short-term borrowings and long-term debt. The Consolidated Statements of Cash Flows, included in this report, present the changes in cash from operating, investing and financing activities. At March 31, 2021, we believe that liquidity was adequate based upon the potential liquidation of unpledged available-for-sale securities with a fair value totaling approximately $28,383,000 and available credit from the Federal Home Loan Bank of Pittsburgh totaling approximately $499,318,000. The Corporation’s loan-to-deposit ratio was approximately 80 percent as of March 31, 2021, 83 percent as of December 31, 2020 and 90 percent as of March 31, 2020.

Off-Balance Sheet Arrangements

The Corporation’s financial statements do not reflect various commitments that are made in the normal course of business, which may involve some liquidity risk. These commitments consist primarily of commitments to grant new loans, unfunded commitments under existing loan facilities, and letters of credit issued under the same standards as on-balance sheet instruments. Unused commitments on March 31, 2021, totaled $599,083,000 and consisted of $464,529,000 in unfunded commitments under existing loan facilities, $117,276,000 to grant new loans and $17,278,000 in letters of credit. Generally these commitments have fixed expiration dates or termination clauses and are for specific purposes. Accordingly, many of the commitments are expected to expire without being drawn upon and, therefore, generally do not present significant liquidity risk to the Corporation or PeoplesBank.

Recent Legislative Developments

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. Since that time banking regulators, the SEC and FASB have all issued additional guidance and clarification on various sections of the CARES Act. Section 4013 of the CARES Act, “Temporary Relief From Troubled Debt Restructurings,” provides banks the option to temporarily suspend certain requirements under U.S. GAAP related to trouble debt restructurings (TDR) for a limited period of time to account for the effects of COVID-19, provided the loan was not past due as of December 31, 2019. Section 541 of the Consolidated Appropriations Act, 2021 (CAA) was signed into law on December 27, 2020, extending the provisions in Section 4013 of the CARES Act to January 1, 2022. Regulators have encouraged financial institutions to work constructively with borrowers in communities and industries affected by COVID-19 using prudent and proactive actions which are in the best interests of the financial institution, the borrower and the economy. The Corporation’s Board of Directors approved a number of options for loan modifications, including interest deferral, full payment deferral, additional extensions of credit, and SBA loan programs (i.e., Economic Injury Disaster Loans, Paycheck Protection Program). As of March 31, 2021, the Corporation has remaining loan modifications totaling approximately $88 million. The Corporation has been an active participant in the SBA Paycheck Protection Program, with outstanding PPP loans as of March 31, 2021 of approximately $152 million.

At its October 16, 2019 meeting, the FASB approved a deferral of the effective date for several of its recent standards. The proposal creates two new “buckets”: (1) SEC filers other than smaller reporting companies (SRCs, as defined by the SEC) and (2) all other entities. For the Corporation, this would apply to ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”), which has not yet been adopted by the Corporation. The effective date of the CECL standard would be for fiscal years beginning after December 15, 2022. The Corporation will continue to move forward with the project.

On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Regulatory Relief Act”), amended certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as well as certain other statutes

- 46 -

administered by the federal banking agencies Some of the key provisions of the Regulatory Relief Act as it relates to community banks and bank holding companies include: (i) designating mortgages held in portfolio as “qualified mortgages” for banks with less than $10 billion in assets, subject to certain documentation and product limitations; (ii) exempting banks with less than $10 billion in assets (and total trading assets and trading liabilities of 5% or less of total assets) from Volcker Rule requirements relating to proprietary trading; (iii) simplifying capital calculations for banks with less than $10 billion in assets by requiring federal banking agencies to establish a community bank leverage ratio of tangible equity to average consolidated assets of not less than 8% or more than 10%, and provide that banks that maintain tangible equity in excess of such ratio will be deemed to be in compliance with risk-based capital and leverage requirements; (iv) assisting smaller banks with obtaining stable funding by providing an exception for reciprocal deposits from FDIC restrictions on acceptance of brokered deposits; (v) raising the eligibility for use of short-form Call Reports from $1 billion to $5 billion in assets; (vi) clarifying definitions pertaining to high volatility commercial real estate loans (HVCRE), which requires higher capital allocations, so that only loans with increased risk are subject to higher risk weightings; and (vii) changing the eligibility for use of the small bank holding company policy statement from institutions with under $1 billion in assets to institutions with under $3 billion in assets.

Section 201 of the Regulatory Relief Act directed the federal banking agencies to develop a community bank leverage ratio (“CBLR”) of not less than 8% and not more than 10% for qualifying community banks and bank holding companies with total consolidated assets of less than $10 billion. Qualifying community banking organizations that exceed the CBLR level established by the agencies, and that elect to be covered by the CBLR framework, will be considered to have met: (i) the generally applicable leverage and risk-based capital requirements under the banking agencies’ capital rules; (ii) the capital ratio requirements necessary to be considered “well capitalized” under the banking agencies’ prompt corrective action framework in the case of insured depository institutions; and (iii) any other applicable capital or leverage requirements.

On September 17, 2019, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve Board, and the FDIC adopted a rule to implement the provisions of Section 201 of the Regulatory Relief Act. Under the rule, a qualifying community banking organization would be defined as a deposit institution or depository institution holding company with less than $10 billion in assets and specified limited amounts of off-balance sheet exposures, trading assets and liabilities, mortgage servicing assets, and certain temporary difference deferred tax assets. A qualifying community banking organization would be permitted to elect the CBLR framework if its CBLR is greater than 9%. The rule also addresses opting in and opting out of the CBLR framework by a community banking organization, the treatment of a community banking organization that falls below the CBLR requirements, and the effect of various CBLR levels for purposes of the prompt corrective action categories applicable to insured depository institutions. Advanced approaches banking organizations (generally, institutions with $250 billion or more in consolidated assets) are not eligible to use the CBLR framework.

The Corporation continues to analyze the changes implemented by the Regulatory Relief Act, including the CBLR framework included in the recently proposed rulemaking. The Corporation does not believe, however, that such changes will materially impact the Corporation’s business, operations, or financial results.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The most significant market risk to which the Corporation is exposed is interest rate risk. The primary business of the Corporation and the composition of its balance sheet consist of investments in interest earning assets (primarily loans and securities), which are funded by interest bearing liabilities (deposits and borrowings), all of which have varying levels of sensitivity to changes in market interest rates. Changes in rates also have an impact on the Corporation’s liquidity position and could affect its ability to meet obligations and continue to grow.

The Corporation employs various management techniques to minimize its exposure to interest rate risk. An Asset Liability Management Committee, consisting of key financial and senior management personnel, meets on a regular basis. The Committee is responsible for reviewing the interest rate sensitivity and liquidity positions of the Corporation, reviewing projected sources and uses of funds, approving asset and liability management policies, monitoring economic conditions, and overseeing the formulation and implementation of strategies regarding balance sheet positions.

Simulation of net interest income is performed for the next twelve-month period. A variety of interest rate scenarios are used to measure the effects of sudden and gradual movements upward and downward in the yield curve. These results are compared to the results obtained in a flat or unchanged interest rate scenario. Simulation of net interest income is used primarily to measure the Corporation’s short-term earnings exposure to rate movements. A "shock" is an immediate upward or downward movement of interest rates. The shocks do not take into account changes in client behavior that could result in changes to mix and/or volumes in the balance sheet, nor do they account for competitive pricing over the forward 12-month period. The Corporation applies these interest rate “shocks” to its financial instruments up and down 100, 200, 300, and 400 basis points. A 300 and 400 basis point decrease in interest rates cannot be simulated at this time due to the historically low interest rate environment.

- 47 -

The following table summarizes the expected impact of interest rate shocks on net interest income as well as the Corporation’s policy limits at each level. All scenarios were within plolicy limits at March 31, 2021.

Change in Interest Rates	Annual Change in Net		% Change in Net		% Change
(basis points)	Interest Income (in thousands)		Interest Income		Policy Limit
+100	$	5,739	9.18	%	(5.00)	%
-100	$	(3,013)	(4.82)	%	(5.00)	%
+200	$	12,850	20.55	%	(15.00)	%
-200	$	(7,066)	(11.30)	%	(15.00)	%
+300	$	19,847	31.74	%	(25.00)	%
+400	$	26,847	42.93	%	(35.00)	%

‎

- 48 -

Item 4. Controls and Procedures

The Corporation carried out an evaluation, under the supervision and with the participation of the Corporation’s management, including the Corporation’s Chief Executive Officer and Treasurer, of the effectiveness of its disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon the evaluation, the Corporation’s Chief Executive and Chief Financial Officers concluded that, as of March 31, 2021, the Corporation’s disclosure controls and procedures were effective. The Corporation’s disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that information required to be disclosed in the Corporation’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. A control system, no matter how well conceived and operated, must reflect the fact that there are resource constraints and that the benefits of controls must be considered relative to their costs, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

There has been no change in the Corporation’s internal control over financial reporting that occurred during the three months ended March 31, 2021, that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

Part II—OTHER INFORMATION

Item 1. Legal Proceedings

The Corporation and PeoplesBank are involved in routine litigation incidental to their business. In the opinion of management, there are no legal proceedings pending against the Corporation or any of its subsidiaries which are expected to have a material impact upon the consolidated financial position and/or operating results of the Corporation. Management is not aware of any adverse proceedings known or contemplated by government authorities.

Item 1A. Risk Factors

Except for the risk factor described immediately below, there have been no material changes to the risk factors as previously disclosed in Item 1A – Risk Factors – in our Annual Report on Form 10-K for the year ended December 31, 2020.

Coronavirus Outbreak – In December 2019, a coronavirus (COVID-19) was reported in China, and, in March 2020, the World Health Organization declared it a pandemic. Since first being reported in China, the coronavirus has spread to additional countries including the United States. On March 13, 2020, President Trump declared the ongoing COVID-19 pandemic of sufficient severity and magnitude to warrant an emergency declaration for all states, territories, and the District of Columbia.

In response, many state and local governments, including the Commonwealth of Pennsylvania and the State of Maryland, have instituted emergency restrictions that have substantially limited the operation of non-essential businesses and the activities of individuals. It has been widely reported that these restrictions have resulted in significant adverse effects for many different types of businesses, particularly those in the travel, hospitality and food and beverage industries, among many others, and has resulted in a significant number of layoffs and furloughs of employees nationwide and in the regions in which the Corporation operates. The ultimate effect of COVID-19 on the local or broader economy is not known nor is the ultimate length of the restrictions described and any accompanying effects. Moreover, the Federal Reserve has taken action to lower the Federal Funds rate, which may negatively affect interest income and, therefore, earnings. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the coronavirus outbreak, and there is no guarantee that the Corporation's efforts to address the adverse impacts of the coronavirus will be effective. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and actions taken to contain the coronavirus or its impact, among others.

The effect of COVID-19 and related events, including those described above and those not yet known or knowable, could have a negative effect on the Corporation's business prospects, financial condition and results of operations, as a result of quarantines; market volatility; market downturns; changes in consumer behavior; business closures; deterioration in the credit quality of borrowers or the inability of borrowers to satisfy their obligations (and any related forbearances or restructurings that may be implemented); changes in the value of collateral securing outstanding loans; changes in the value of the investment securities portfolio; effects on key employees, including operational management personnel and those charged with preparing, monitoring and evaluating the Corporation's financial reporting and internal controls; declines in the demand for loans and other banking services and products; declines in demand resulting from adverse impacts of the disease on businesses deemed to be "non-essential" by governments; and branch or office closures and business interruptions.

In addition, the adverse economic effects of the coronavirus may lead to an increase in credit risk on the Corporation’s commercial and residential loan portfolios. Likewise, the Corporation is also monitoring the fluctuations in the markets as it pertains to interest rates and fair value of our investments for other than temporary impairment (OTTI). To curtail the spread of the virus, we are currently operating with modified branch access and taking other precautionary measures.

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On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law. Section 4013 of the CARES Act, “Temporary Relief From Troubled Debt Restructurings,” provides banks the option to temporarily suspend certain requirements under U.S. GAAP related to trouble debt restructurings (TDR) for a limited period of time to account for the effects of COVID-19. Section 541 of the Consolidated Appropriations Act, 2021 (CAA) was signed into law on December 27, 2020, extending the provisions in Section 4013 of the CARES Act to January 1, 2022.

While the Corporation continues to evaluate the disruption caused by the pandemic and impact of the CARES Act, these events may have a material adverse impact on the Corporation’s results of future operations, financial position, capital, and liquidity in fiscal year 2021. Further, a decrease in results of future operations may place a strain on the Corporation’s capital reserve ratios.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Corporation relies on its subsidiary PeoplesBank, A Codorus Valley Company, for dividend distributions, which are subject to restrictions as reported in Note 9—Regulatory Matters of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020.

The Corporation’s Board of Directors approved a new Share Repurchase Program (“Program”) in January 2021. Under the newly approved Program, the Corporation is authorized to repurchase up to $5 million of the Corporation’s issued and outstanding common stock. All shares of common stock repurchased pursuant to the Program shall be held as treasury shares and be available for use and reissuance for purposes as and when determined by the Board of Directors including, without limitation, pursuant to the Corporation’s Dividend Reinvestment and Stock Purchase Plan and its equity compensation program. There was no activity under the Program for the quarter ended March 31, 2021.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

This Item 4 is not applicable to the Corporation.

Item 5. Other Information

None

‎

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Item 6. Exhibits

Exhibit Number	Description of Exhibit
3.1	Amended Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q for June 30, 2018, filed with the Commission on August 6, 2018)
3.2	Amended By-laws (Incorporated by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q/A for March 31, 2020, filed with the Commission on May 15, 2020)
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – filed herewith.
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – filed herewith.
32	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – filed herewith.
101	Financial statements from the Quarterly Report on Form 10-Q of Codorus Valley Bancorp, Inc. for the quarter ended March 31, 2021, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income (iii) the Consolidated Statements of Comprehensive Income (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Changes in Shareholder’s Equity, and (vi) the Notes to Consolidated Financial Statements – filed herewith.
104	Cover page interactive data file (formatted as inline XBRL and contained in Exhibit 101)

‎

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Codorus Valley Bancorp, Inc. (Registrant)
May 3, 2021	/s/ Larry J. Miller
Date	Larry J. Miller,
	Chairman,President
	and Chief Executive Officer (Principal Executive Officer)
May 3, 2021	/s/ Larry D. Pickett
Date	Larry D. Pickett, CPA
	Treasurer
	(Principal Financial and Accounting Officer)

- 52 -

EX-31.1

EXHIBIT 31.1

Certification of Principal Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Larry J. Miller, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Codorus Valley Bancorp, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of the internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:   May3, 2021	/s/ Larry J. Miller
	Larry J. Miller, Chairman,
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

Certification of Principal Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Larry D. Pickett, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Codorus Valley Bancorp, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of the internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:   May3, 2021	/s/ Larry D. Pickett
	Larry D. Pickett, CPA
	Treasurer
	(Principal Financial and Accounting Officer)

EX-32

EXHIBIT 32

Certification of Principal Executive Officer and Principal Financial Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The certification set forth below is being submitted in connection with the Quarterly Report of Codorus Valley Bancorp, Inc. (the "Company") on Form 10-Q for the period ended March 31, 2021, as filed with the Securities and Exchange Commission (the "Report"),  for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

Larry J. Miller, the Chief Executive Officer, and Larry D. Pickett, the Principal Financial Officer, of the Company, each certifies that, to the best of his knowledge:

1.  the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act; and

2.  the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:   May 3, 2021	/s/ Larry J. Miller
	Larry J. Miller, Chairman,
	President and Chief Executive Officer
	(Principal Executive Officer)
	/s/ Larry D. Pickett
	Larry D. Pickett, CPA
	Treasurer
	(Principal Financial and Accounting Officer)

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2021	Apr. 23, 2021
Document And Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2021
Document Transition Report	false
Current Fiscal Year End Date	--12-31
Entity File Number	0-15536
Entity Registrant Name	CODORUS VALLEY BANCORP, INC.
Entity Incorporation, State or Country Code	PA
Entity Tax Identification Number	23-2428543
Entity Address, Address Line One	105 Leader Heights Road
Entity Address, Address Line Two	P.O. Box 2887
Entity Address, City or Town	York
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	17405-2287
City Area Code	717
Local Phone Number	747-1519
Title of 12(b) Security	Common Stock, $2.50 par value
Trading Symbol	CVLY
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		9,876,692
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Entity Central Index Key	0000806279
Amendment Flag	false

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Assets
Interest bearing deposits with banks	$ 408,884	$ 313,469
Cash and due from banks	18,020	22,324
Total cash and cash equivalents	426,904	335,793
Securities, available-for-sale	179,550	185,002
Restricted investment in bank stocks, at cost	2,278	2,593
Loans held for sale	13,324	15,981
Loans (net of deferred fees of $4,248 - 2021 and $6,134 - 2020)	1,579,151	1,544,589
Less-allowance for loan losses	(22,411)	(21,264)
Net loans	1,556,740	1,523,325
Premises and equipment, net	24,816	25,206
Operating leases right-of-use assets	2,198	2,386
Goodwill	2,301	2,301
Other assets	70,393	69,612
Total assets	2,278,504	2,162,199
Deposits
Noninterest bearing	483,004	396,947
Interest bearing	1,481,059	1,466,592
Total deposits	1,964,063	1,863,539
Short-term borrowings	7,743	8,540
Long-term debt	46,599	46,606
Subordinated debentures - face amount $31,000 (less unamortized discount and debt issuance cost of $378 at March 31, 2021 and $398 at December 31, 2020)	30,622	30,602
Operating leases liabilities	2,325	2,515
Other liabilities	28,401	12,437
Total liabilities	2,079,753	1,964,239
Shareholders' equity
Preferred stock, par value $2.50 per share; 1,000,000 shares authorized; shares issued and outstanding: 0 at March 31, 2021 and 0 at December 31, 2020	0	0
Common stock, par value $2.50 per share; 30,000,000 shares authorized; shares issued and outstanding: 9,876,692 at March 31, 2021 and 9,820,882 at December 31, 2020	24,692	24,552
Additional paid-in capital	141,583	141,461
Retained earnings	31,002	28,380
Accumulated other comprehensive income	1,474	3,567
Total shareholders' equity	198,751	197,960
Total liabilities and shareholders' equity	$ 2,278,504	$ 2,162,199

XML

Consolidated Balance Sheets (Parenthetical) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Loans, deferred fees	$ 4,248,000	$ 6,134,000
Preferred stock, par value	$ 2.50	$ 2.50
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 2.50	$ 2.50
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	9,876,692	9,820,882
Common stock, shares outstanding	9,876,692	9,820,882
Subordinated Debenture [Member]
Debt instrument face amount	$ 31,000,000	$ 31,000,000
Unamortized discount and debt issuance cost	$ 378,000	$ 398,000

XML

Consolidated Statements Of Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Interest income
Loans, including fees	$ 17,592	$ 18,764
Investment securities:
Taxable	582	820
Tax-exempt	94	141
Dividends	26	72
Other	81	392
Total interest income	18,375	20,189
Interest expense
Deposits	2,220	4,276
Federal funds purchased and other short-term borrowings	8	9
Long-term debt	252	537
Subordinated debentures	418	0
Total interest expense	2,898	4,822
Net interest income	15,477	15,367
Provision for loan losses	1,231	9,435
Net interest income after provision for loan losses	14,246	5,932
Noninterest income
Trust and investment services fees	1,052	994
Income from mutual fund, annuity and insurance sales	300	261
Service charges on deposit accounts	1,221	1,130
Income from bank owned life insurance	270	286
Other income	563	439
Gain on sale of loans held for sale	1,050	298
(Loss) gain on sales of securities	(23)	15
Total noninterest income	4,433	3,423
Noninterest expense
Personnel	8,428	7,805
Occupancy of premises, net	973	926
Furniture and equipment	838	853
Professional and legal	351	205
Marketing	265	325
FDIC insurance	226	167
Debit card processing	280	389
Charitable donations	188	872
External data processing	820	704
Loss on foreclosed real estate, including provision for losses	0	20
Impaired loan carrying costs	100	286
Other	1,237	767
Total noninterest expense	13,706	13,319
Income (loss) before income taxes	4,973	(3,964)
Provision (benefit) for income taxes	1,073	(975)
Net income (loss)	$ 3,900	$ (2,989)
Net income per share, basic	$ 0.40	$ (0.31)
Net income per share, diluted	$ 0.40	$ (0.31)

XML

Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2021	Mar. 31, 2020
Consolidated Statements Of Comprehensive Income [Abstract]
Net income (loss)		$ 3,900	$ (2,989)
Securities available for sale:
Net unrealized holding (losses) gains arising during the period (net of tax (benefit) expense)		(2,111)	2,810
Reclassification adjustment for losses (gains) included in net income (net of tax expense (benefit))	[1],[2]	18	(12)
Net unrealized (losses) gains		(2,093)	2,798
Comprehensive income (loss)		$ 1,807	$ (191)

[1] Amounts are included in net gain (loss) on sales of securities on the Consolidated Statements of Income within noninterest income.

[2] Income tax amounts are included in the provision (benefit) for income taxes on the Consolidated Statements of Income.

XML

Consolidated Statements Of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Securities available for sale:
Net unrealized holding (losses) gains arising during the period, tax (benefit) expense	$ (561)	$ 747
Reclassification adjustment for losses (gains) included in net income, tax expense (benefit)	$ (5)	$ 3

XML

Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash flows from operating activities
Net income (loss)	$ 3,900	$ (2,989)
Adjustments to reconcile net income to net cash provided by operations:
Depreciation/amortization	664	684
Net amortization of premiums on securities	295	151
Amortization of deferred loan origination fees and costs	(2,200)	(403)
Net amortization of operating lease right of use assets	147	178
Net amortization of finance lease right of use assets	12	12
Amortization of subordinated debentures issuance fees	20	0
Net change in operating lease liabilities	(150)	(189)
Provision for loan losses	1,231	9,435
Increase in bank owned life insurance	(270)	(286)
Originations of mortgage loans held for sale	(27,175)	(9,797)
Originations of SBA loans held for sale	(349)	(4,431)
Proceeds from sales of mortgage loans held for sale	31,216	11,625
Proceeds from sales of SBA loans held for sale	0	3,833
Gain on sales of mortgage loans held for sale	(1,050)	(290)
Gain on sales of SBA loans held for sale	0	(9)
Gain on disposal of premises and equipment	(6)	0
Loss (gain) on sales of securities, available-for-sale	23	(15)
Stock-based compensation	101	120
Decrease in interest receivable	262	144
Increase in other assets	(205)	(1,156)
Increase (decrease) in interest payable	349	(55)
Increase (decrease) in other liabilities	7,957	(11)
Net cash provided by operating activities	14,772	6,551
Cash flows from investing activities
Purchases of securities, available-for-sale	(123,921)	(38,070)
Maturities, repayments and calls of securities, available-for-sale	130,260	9,561
Sales of securities, available-for-sale	3,803	19,852
Net decrease in restricted investment in bank stock	315	600
Net (increase) decrease in loans made to customers	(32,445)	21,093
Purchases of premises and equipment	(276)	(1,352)
Investment in foreclosed real estate	0	(121)
Net cash (used in) provided by investing activities	(22,264)	11,563
Cash flows from financing activities
Net increase in demand and savings deposits	106,330	31,479
Net (decrease) increase in time deposits	(5,806)	17,304
Net decrease in short-term borrowings	(797)	(1,729)
Repayment of long-term debt	0	(10,000)
Net change in finance lease liabilities	(7)	0
Cash dividends paid to shareholders	(1,278)	(1,561)
Proceeds from treasury stock reissuance	5	0
Payment of taxes related to stock withheld	(5)	0
Treasury stock repurchased	0	(89)
Proceeds from issuance of stock	161	149
Net cash provided by financing activities	98,603	35,553
Net increase in cash and cash equivalents	91,111	53,667
Cash and cash equivalents at beginning of year	335,793	131,591
Cash and cash equivalents at end of period	$ 426,904	$ 185,258

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Consolidated Statements Of Changes In Shareholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive (Loss) Income [Member]	Treasury Stock [Member]	Total
Balance at Dec. 31, 2019	$ 24,390	$ 140,450	$ 25,019	$ 1,309	$ 0	$ 191,168
Net income (loss)			(2,989)			(2,989)
Other comprehensive income (loss), net of tax				2,798		2,798
Cash dividends			(1,561)			(1,561)
Stock-based compensation		120				120
Repurchased stock					(87)	(87)
Withheld stock					(2)	(2)
Issuance and reissuance of stock:
Issuance of shares under the dividend reinvestment and stock purchase plan	17	132				149
Issuance of shares of stock-based compensation awards	16	(16)				0
Balance at Mar. 31, 2020	24,423	140,686	20,469	4,107	(89)	189,596
Balance at Dec. 31, 2020	24,552	141,461	28,380	3,567	0	197,960
Net income (loss)			3,900			3,900
Other comprehensive income (loss), net of tax				(2,093)		(2,093)
Cash dividends			(1,278)			(1,278)
Stock-based compensation		101				101
Withheld stock					(5)	(5)
Issuance and reissuance of stock:
Issuance of shares under the dividend reinvestment and stock purchase plan	18	98				116
Issuance of shares under the employee stock option plan	14	31			5	50
Issuance of shares of stock-based compensation awards	108	(108)				0
Balance at Mar. 31, 2021	$ 24,692	$ 141,583	$ 31,002	$ 1,474	$ 0	$ 198,751

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Consolidated Statements Of Changes In Shareholders' Equity (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Consolidated Statements Of Changes In Shareholders' Equity [Abstract]
Cash dividends, per share	$ 0.130	$ 0.160
Withheld stock, in shares	279	102
Repurchased stock, in shares		5,335
Issuance and reissuance of stock:
Shares under the dividend reinvestment and stock purchase plan	7,175	6,706
Shares under the employee stock option plan	5,702
Shares of stock-based compensation awards	43,212	6,468

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Summary Of Significant Accounting Policies

3 Months Ended

Mar. 31, 2021

Summary Of Significant Accounting Policies [Abstract]

Summary Of Significant Accounting Policies

Note 1—Summary of Significant Accounting Policies

Nature of Operations and Basis of Presentation

The accompanying consolidated balance sheet at December 31, 2020 has been derived from audited financial statements, and the unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, the instructions to Form 10-Q, and Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 270. Accordingly, the interim financial statements do not include all of the financial information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the interim consolidated financial statements include all adjustments necessary to present fairly the financial condition and results of operations for the reported periods, and all such adjustments are of a normal and recurring nature.

Codorus Valley Bancorp, Inc. (“Corporation” or “Codorus Valley”) is a one-bank holding company headquartered in York, Pennsylvania that provides a full range of banking services through its subsidiary, PeoplesBank, A Codorus Valley Company (“PeoplesBank” or “Bank”). As of March 31, 2021, PeoplesBank operates one wholly-owned subsidiary, Codorus Valley Financial Advisors, Inc. d/b/a PeoplesWealth Advisors, which sells nondeposit investment products. In addition, PeoplesBank may periodically create nonbank subsidiaries for the purpose of temporarily holding foreclosed properties pending the liquidation of these properties. PeoplesBank operates under a state charter and is subject to regulation by the Pennsylvania Department of Banking and Securities, and the Federal Deposit Insurance Corporation. The Corporation is subject to regulation by the Federal Reserve Board and the Pennsylvania Department of Banking and Securities.

The consolidated financial statements include the accounts of Codorus Valley and its wholly-owned bank subsidiary, PeoplesBank, and a wholly-owned nonbank subsidiary, SYC Realty Company, Inc. SYC Realty was inactive during the period ended March 31, 2021. The accounts of CVB Statutory Trust No. 1 and No. 2 are not included in the consolidated financial statements as discussed in Note 7—Short-Term Borrowings and Long-Term Debt. All significant intercompany account balances and transactions have been eliminated in consolidation. The accounting and reporting policies of Codorus Valley and subsidiaries conform to accounting principles generally accepted in the United States of America and have been followed on a consistent basis.

These consolidated statements should be read in conjunction with the notes to the audited consolidated financial statements contained in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020.

The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year.

In accordance with FASB ASC 855, the Corporation evaluated the events and transactions that occurred after the balance sheet date of March 31, 2021 and through the date these consolidated financial statements were issued, for items of potential recognition or disclosure.

In December 2019, a coronavirus (COVID-19) was reported in China, and, in March 2020, the World Health Organization declared it a pandemic. Since first being reported in China, the coronavirus has spread to additional countries including the United States. On March 13, 2020, President Trump declared the ongoing COVID–19 pandemic of sufficient severity and magnitude to warrant an emergency declaration for all states, territories, and the District of Columbia.

In response, many state and local governments, including the Commonwealth of Pennsylvania and the State of Maryland, have instituted emergency restrictions that have substantially limited the operation of non-essential businesses and the activities of individuals. It has been widely reported that these restrictions have resulted in significant adverse effects for many different types of businesses, particularly those in the travel, hospitality and food and beverage industries, among many others, and has resulted in a significant number of layoffs and furloughs of employees nationwide and in the regions in which the Corporation operates. The ultimate effect of COVID-19 on the local or broader economy is not known nor is the ultimate length of the restrictions described and any accompanying effects. Moreover, the Federal Reserve has taken action to lower the Federal Funds rate, which has negatively affected interest income and, therefore, earnings. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the coronavirus outbreak, and there is no guarantee that the Corporation’s efforts to address the adverse impacts of the coronavirus will be effective. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and actions taken to contain the coronavirus or its impact, among others.

The effect of COVID-19 and related events, including those described above and those not yet known or knowable, could have a negative effect on the Corporation's business prospects, financial condition and results of operations, as a result of quarantines; market volatility; market downturns; changes in consumer behavior; business closures; deterioration in the credit quality of borrowers or the inability of borrowers to satisfy their obligations (and any related forbearances or restructurings that may be implemented); changes in the value of collateral securing outstanding loans; changes in the value of the investment securities portfolio; effects on key employees, including operational management personnel and those charged with preparing, monitoring and evaluating the Corporation's financial reporting and internal controls; declines in the demand for loans and other banking services and products;

declines in demand resulting from adverse impacts of the disease on businesses deemed to be "non-essential" by governments; and branch or office closures and business interruptions.

In addition, the adverse economic effects of the coronavirus may lead to an increase in credit risk on the Corporation’s commercial and residential loan portfolios. Likewise, the Corporation is also monitoring the fluctuations in the markets as it pertains to interest rates and fair value of our investments for other than temporary impairment (OTTI).

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law. Section 4013 of the CARES Act, “Temporary Relief From Troubled Debt Restructurings,” provides banks the option to temporarily suspend certain requirements under U.S. GAAP related to trouble debt restructurings (TDR) for a limited period of time to account for the effects of COVID-19. Section 541 of the Consolidated Appropriations Act, 2021 (CAA) was signed into law on December 27, 2020, extending the provisions in Section 4013 of the CARES Act to January 1, 2022.

While the Corporation continues to evaluate the disruption caused by the pandemic and impact of the CARES Act, these events may have a material adverse impact on the Corporation’s results of future operations, financial position, capital, and liquidity in fiscal year 2021. Further, a decrease in results of future operations may place a strain on the Corporation’s capital reserve ratios.

Loans

Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at their outstanding unpaid principal balances less amounts charged off, net of an allowance for loan losses and any deferred fees or costs. Interest income is accrued on the unpaid principal balance. Generally, loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) over the contractual life of the loan. The loans receivable portfolio is segmented into commercial and consumer loans. Commercial loans consist of the following industry classes: builder & developer, commercial real estate investor, residential real estate investor, hotel/motel, wholesale & retail, agriculture, manufacturing, service and all other. Consumer loans consist of the following classes: residential mortgage, home equity and all other.

Generally, for all classes of loans receivable, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan may be currently performing. A past due loan may remain on accrual status if it is in the process of collection and well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income is reversed in the current year. Interest received on nonaccrual loans, including impaired loans, generally is either applied against principal or reported as interest income, according to the Corporation’s judgment as to the collectability of principal. Generally, nonaccrual loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, generally six months, and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments.

Allowance for Loan Losses

The allowance for loan losses represents the Corporation’s estimate of losses inherent in the loan portfolio as of the balance sheet date and is recorded as a reduction to loans. The allowance for loan losses is increased by the provision for loan losses, and decreased by charge-offs, net of recoveries. Loans deemed to be uncollectable are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance. All, or part, of the principal balance of loans receivable are charged off to the allowance as soon as it is determined that the repayment of all, or part, of the principal balance is highly unlikely. While the Corporation attributes a portion of the allowance to individual loans and groups of loans that it evaluates and determines to be impaired, the allowance is available to cover all charge-offs that arise from the loan portfolio.

The allowance for loan losses is maintained at a level considered by management to be adequate to provide for probable incurred losses. The Corporation performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the Corporation’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available.

The allowance consists of specific and general components. The specific component relates to loans that are classified as impaired, generally nonaccrual loans and troubled debt restructurings. For loans that are classified as impaired, an allowance is established when the collateral value (or discounted cash flows or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers pools of loans by loan class, including commercial loans not considered impaired, as well as smaller balance homogeneous loans such as residential real estate, home equity and other consumer loans. These pools of loans are evaluated for loss exposure based upon historical loss rates for each of these classes of loans, adjusted for qualitative (environmental) risk factors. Historical loss rates are based on a two year rolling average of net charge-offs. Qualitative risk factors that supplement

historical losses in the evaluation of loan pools are shown below. Each factor is assigned a value to reflect improving, stable or declining conditions based on the Corporation’s best judgment using relevant information available at the time of the evaluation.

Changes in international, US and local economies and business conditions

Changes in the value of collateral for collateral dependent loans

Changes in the level of concentrations of credit

Changes in the volume and severity of classified and past due loans

Changes in the nature and volume of the portfolio

Changes in collection, charge-off, and recovery procedures

Changes in underwriting standards and loan terms

Changes in the quality of the loan review system

Changes in the experience/ability of lending management and key lending staff

Regulatory and legal regulations that could affect the level of credit losses

Other pertinent environmental factors

Impact of COVID-19 pandemic

As disclosed in Note 4—Loans, the Corporation engages in commercial and consumer lending. Loans are made within the Corporation’s primary market area and surrounding areas, and include the purchase of whole loan or participation interests in loans from other financial institutions. Commercial loans, which pose the greatest risk of loss to the Corporation, whether originated or purchased, are generally secured by real estate. Within the broad commercial loan segment, the builder & developer and commercial real estate investor loan classes generally present a higher level of risk than other commercial loan classifications. This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effect of general economic conditions on income producing properties, unstable real estate prices and the dependency upon successful construction and sale or operation of the real estate project. As a result of the COVID-19 pandemic, the commercial loan segments of hotel/motel and the restaurant and recreation segments included under Other Commercial Loans currently present a higher level of risk than other commercial loan classifications. Within the consumer loan segment, junior (i.e., second) liens present a higher risk to the Corporation because economic and housing market conditions can adversely affect the underlying value of the collateral, which could render the Corporation under-secured or unsecured. In addition, economic and housing market conditions can adversely affect the ability of some borrowers to service their debt.

A loan is considered impaired when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered in determining impairment include payment status and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. The Corporation determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Loans that are deemed impaired are evaluated for impairment loss based on the net realizable value of the collateral, as applicable. Loans that are not collateral dependent will rely on the present value of expected future cash flows discounted at the loan’s effective interest rate to determine impairment loss. Large groups of smaller balance homogeneous loans such as residential mortgage loans, home equity loans and other consumer loans are collectively evaluated for impairment, unless they are classified as impaired.

An allowance for loan losses is established for an impaired commercial loan if its carrying value exceeds its estimated fair value. For commercial loans secured by real estate, estimated fair values are determined primarily through third-party appraisals of the underlying collateral. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the most recent appraisal and the condition of the property. Appraisals are generally discounted to provide for selling costs and other factors to determine an estimate of the net realizable value of the property. For commercial loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrower’s financial statements, inventory reports, accounts receivable aging or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets. In instances when specific consumer related loans become impaired, they may be partially or fully charged off, which eliminates the need for a specific allowance.

Loans whose terms are modified are classified as troubled debt restructurings if the Corporation grants borrowers experiencing financial difficulties concessions that it would not otherwise consider. Concessions granted under a troubled debt restructuring may involve an interest rate that is below the market rate given the associated credit risk of the loan or an extension of a loan’s stated

maturity date. Loans classified as troubled debt restructurings are designated as impaired. Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for a reasonable period of time, generally six consecutive months after modification and future payments are reasonably assured.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. Since that time banking regulators, the SEC and FASB have all issued additional guidance and clarification on various sections of the CARES Act. Section 4013 of the CARES Act provides the option to not apply ASC 310-40 (TDRs) to a loan modification, related specifically to COVID-19 hardships, when the loan was not past due greater than 30 days as of December 31, 2019. Regulators have encouraged financial institutions to work constructively with borrowers in communities and industries affected by COVID-19 using prudent and proactive actions which are in the best interests of the financial institution, the borrower and the economy. The Corporation’s Board of Directors approved a number of options for loan modifications, including interest deferral, full payment deferral, additional extensions of credit, and SBA loan programs (i.e., Economic Injury Disaster Loans, Paycheck Protection Program). As of March 31, 2021, the Corporation has remaining loan modifications totaling approximately $88,000,000. The Corporation has been an active participant in the SBA Paycheck Protection Program (PPP), with outstanding PPP loans as of March 31, 2021 of approximately $152,000,000, which includes $64,000,000 new PPP loans originated in 2021.

Foreclosed Real Estate

Foreclosed real estate, included in other assets, is comprised of property acquired through a foreclosure proceeding or property that is acquired through in-substance foreclosure. Foreclosed real estate is initially recorded at fair value minus estimated costs to sell at the date of foreclosure, establishing a new cost basis. Any difference between the carrying value and the new cost basis is charged against the allowance for loan losses. Appraisals, obtained from an independent third party, are generally used to determine fair value. After foreclosure, management reviews valuations at least quarterly and adjusts the asset to the lower of cost or fair value minus estimated costs to sell through a valuation allowance or a write-down. Costs related to the improvement of foreclosed real estate are generally capitalized until the real estate reaches a saleable condition subject to fair value limitations. Revenue and expense from operations and changes in the valuation allowance are included in noninterest expense. When a foreclosed real estate asset is ultimately sold, any gain or loss on the sale is included in the income statement as a component of noninterest expense. At March 31, 2021 there was no foreclosed real estate. Included within loans receivable as of March 31, 2021 was a recorded investment of $182,000 of consumer mortgage loans secured by residential real estate properties, for which formal foreclosure proceedings were in process according to local requirements of the applicable jurisdiction.

Mortgage Servicing Rights

The mortgage servicing rights (MSRs) associated with the sold loans are included in other assets on the consolidated balance sheets at an amount equal to the estimated fair value of the contractual rights to service the mortgage loans. The MSR asset is amortized as a reduction to servicing income. The MSR asset is evaluated periodically for impairment and carried at the lower of amortized cost or fair value. A third party calculates fair value by discounting the estimated cash flows from servicing income using a rate consistent with the risk associated with these assets and an estimate of future net servicing income of the underlying loans. In the event that the amortized cost of the MSR asset exceeds the fair value of the asset, a valuation allowance would be established through a charge against servicing income. Subsequent fair value evaluations may determine that impairment has been reduced or eliminated, in which case the valuation allowance would be reduced through a credit to earnings. At March 31, 2021, the balance of residential mortgage loans serviced for third parties was $80,609,000 compared to $87,142,000 at December 31, 2020.

		Three months ended
		March 31,
(dollars in thousands)		2021		2020
Amortized cost:
Balance at beginning of period	$	511	$	965
Originations of mortgage servicing rights		16		13
Amortization expense		(91)		(66)
Valuation allowance		88		(173)
Balance at end of period	$	524	$	739

Goodwill and Core Deposit Intangible Assets

Goodwill arising from acquisitions is not amortized, but is subject to an annual impairment test. This test consists of a qualitative analysis. If the Corporation determines events or circumstances indicate that it is more likely than not that goodwill is impaired, a quantitative analysis must be completed. Analyses may also be performed between annual tests. Significant judgment is applied when goodwill is assessed for impairment. This judgment includes developing cash flow projections, selecting appropriate discount rates, identifying relevant market comparables, incorporating general economic and market conditions, and selecting an appropriate control premium. The Corporation completes its annual goodwill impairment test on October 1st of each year. Based upon a qualitative and quantitative analysis of goodwill, the Corporation concluded that the amount of recorded goodwill was not impaired as of October 1, 2020.

Core deposit intangibles represent the value assigned to demand, interest checking, money market, and savings accounts acquired as part of an acquisition. The core deposit intangible value represents the future economic benefit of potential cost savings from acquiring core deposits as part of an acquisition compared to the cost of alternative funding sources and the alternative cost to grow a similar core deposit base. The core deposit intangible asset resulting from the merger with Madison Bancorp, Inc. was determined to have a definite life and is being amortized using the sum of the years’ digits method over ten years. All intangible assets must be evaluated for impairment if certain events or changes in circumstances occur. Any impairment write-downs would be recognized as expense on the consolidated statements of income.

Revenue from Contracts with Customers

Revenue from contracts with customers that are required to be recognized under FASB ASC Topic 606 - Revenue from Contracts with Customers (ASC 606) is measured based on consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Corporation recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer.

The majority of the Corporation’s revenue-generating transactions are not within the scope of ASC 606, including revenue generated from financial instruments, such as our loans, letters of credit, derivatives and investment securities, as well as revenue related to our mortgage servicing activities, as these activities are subject to other U.S. Generally Accepted Accounting Principles (GAAP) discussed elsewhere within our disclosures. Descriptions of our revenue-generating activities that are within the scope of ASC 606, which are presented in our consolidated statements of income as components of non-interest income are as follows:

Trust and investment service fees – The Corporation provides trust, investment management custody and irrevocable life insurance trust services to customers. Such services are rendered in accordance with the underlying contracts for which fees are earned. The Corporation’s performance obligations are generally satisfied, and the related revenue recognized, over the period in which the service is provided. Payment for services rendered is primarily received in the following month.

Income from mutual fund, annuity and insurance sales – The Corporation sells mutual funds, annuity and insurance products to its customers. The Corporation’s performance obligation is met upon the signing of the product agreement and, in certain cases, a time component may exist when the customer has the right to rescind the agreement with or without penalty. The Corporation recognizes revenues upon delivery of the product or service unless there is a time component in which case revenues are recognized utilizing the expected value method. Payment for services rendered is primarily received in the following month.

Service charges on deposits accounts – These represent general service fees for monthly account maintenance and activity- or transaction based fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Other service charges include revenue from processing wire transfers, cashier’s checks and other services. Revenue is recognized when the performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to the customers’ accounts.

Other noninterest income – The Corporation evaluated individual components of other noninterest income, such as credit card merchant fees, credit and gift card fees and ATM fees. Debit card income is primarily comprised of interchange fees earned whenever the Corporation’s debit cards are processed through payment networks, such as Visa. Credit and gift card income is realized through a third party provider who issues cards as private label in the Corporation’s name. ATM fees are primarily generated when a non-Corporation cardholder uses a Corporation ATM. The income is primarily comprised as a percentage of interchange fees earned whenever the issuer’s card is processed through card payment networks, such as Visa or Pulse. Merchant services income is realized through a third party service provider who is contracted by the Corporation under a referral arrangement. Such fees represent fees charged to merchants to process their debit card transactions. The Corporation’s performance obligation for these fees are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received within a one to three day lag or in the following month.

Per Share Data

The computation of net income per share is provided in the table below.

	Three months ended
	March 31,
(in thousands, except per share data)	2021		2020
Net income (loss)	$	3,900	$	(2,989)
Weighted average shares outstanding (basic)		9,842		9,759
Effect of dilutive stock options		25		53
Weighted average shares outstanding (diluted)		9,867		9,812
Basic earnings (loss) per share	$	0.40	$	(0.31)
Diluted earnings (loss) per share	$	0.40	$	(0.31)

Comprehensive Income

Accounting principles generally accepted in the United States require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the shareholders’ equity section of the balance sheet, such items, along with net income, are components of comprehensive income.

Cash Flow Information

For purposes of the consolidated statements of cash flows, the Corporation considers interest bearing deposits with banks, cash and due from banks, and federal funds sold to be cash and cash equivalents.

Supplemental cash flow information is provided in the table below.

		Three months ended
		March 31,
(dollars in thousands)		2021		2020
Cash paid during the period for:
Income taxes	$	0	$	0
Interest	$	2,549	$	4,877
Noncash investing and financing activities:
Transfer of loans to foreclosed real estate	$	0	$	121
Initial recognition of operating lease right-of-use assets	$	0	$	186
Initial recognition of operating lease liabilities	$	0	$	186

Recent Accounting Pronouncements

Pronouncements Adopted in 2021

In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20). The amendments in this update remove disclosures that are no longer considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. The update is effective for fiscal years ending after December 15, 2020. The adoption of this standard did not have a material impact on its consolidated financial statements.

Pronouncements Not Yet Effective

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326). This standard adds a new Topic 326 which requires companies to measure and record impairment on financial instruments at the time of origination using the expected credit loss (CECL) model. The CECL model calculates impairment based on historical experience, current conditions, and reasonable and supportable forecasts, and reflects the organization’s current estimate of all expected credit losses over the contractual term of its financial assets. The new standard was delayed and is now effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Corporation expects the provisions of ASU No. 2016-13 to impact its consolidated financial statements, in particular, the level of the reserve for credit losses. The Corporation is continuing to evaluate the extent of the potential impact and expects that portfolio composition and economic conditions at the time of adoption will be a factor.

 

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Securities

3 Months Ended

Mar. 31, 2021

Securities [Abstract]

Securities

Note 2 – Securities

A summary of securities available-for-sale at March 31, 2021 and December 31, 2020 is provided below. The securities available-for-sale portfolio is generally comprised of high quality debt instruments, principally obligations of the United States government or agencies thereof and investments in the obligations of states and municipalities. The majority of municipal bonds in the portfolio are general obligation bonds, which can draw upon multiple sources of revenue, including taxes, for payment. Only a few bonds are revenue bonds, which are dependent upon a single revenue stream for payment, but they are for critical services such as water and sewer. In many cases, municipal debt issues are insured or, in the case of school districts of selected states, backed by specific loss reserves. At March 31, 2021, 81.2 percent of the fair value of the municipal bond portfolio was concentrated in the Commonwealth of Pennsylvania and 10.3 percent was concentrated in the state of Texas. The portfolio was intentionally distributed to limit exposure with the largest issuer at $2.6 million. At March 31, 2021 and December 31, 2020, there we no holdings of securities of any one issuer, other than the US Government and its agencies, in an amount greater than 10% of shareholders’ equity.

	Amortized		Gross Unrealized				Fair
(dollars in thousands)	Cost		Gains		Losses		Value
March 31, 2021
Debt securities:
U.S. agency	$	14,000	$	0	$	(73)	$	13,927
U.S. agency mortgage-backed, residential		120,786		3,125		(890)		123,021
State and municipal		30,576		253		(660)		30,169
Corporates		12,323		175		(65)		12,433
Total debt securities	$	177,685	$	3,553	$	(1,688)	$	179,550
December 31, 2020
Debt securities:
U.S. agency	$	40,000	$	0	$	0	$	40,000
U.S. agency mortgage-backed, residential		106,792		4,133		(29)		110,896
State and municipal		24,014		311		(25)		24,300
Corporates		9,681		139		(14)		9,806
Total debt securities	$	180,487	$	4,583	$	(68)	$	185,002

The proceeds from sales of securities and the associated gains and losses are listed below. Realized gains and losses are computed on the basis of specific identification of the adjusted cost of each security and are shown net as a separate line item in the income statement.

	Three months ended
	March 31,
(dollars in thousands)	2021		2020
Proceeds	$	3,803	$	19,852
Gross gains		24		74
Gross losses		(47)		(59)

The tax (provision) benefit related to these net realized gain and losses were $5 and $(3) respectively.

The amortized cost and estimated fair value of debt securities at March 31, 2021 by contractual maturity are shown below. Actual maturities may differ from contractual maturities if call options on select debt issues are exercised in the future. Mortgage-backed securities are included in the maturity categories based on average expected life.

	Available-for-sale
	Amortized		Fair
(dollars in thousands)	Cost		Value
Due in one year or less	$	15,432	$	15,468
Due after one year through five years		77,513		79,896
Due after five years through ten years		45,595		45,321
Due after ten years		39,145		38,865
Total debt securities	$	177,685	$	179,550

Investment securities having a carrying value of $149,302,000 and $170,313,000 on March 31, 2021 and December 31, 2020, respectively, were pledged to secure public and trust deposits, repurchase agreements and other short-term borrowings.

The table below shows gross unrealized losses and fair value, aggregated by investment category and length of time, for securities that have been in a continuous unrealized loss position, at March 31, 2021 and December 31, 2020.

	Less than 12 months					12 months or more					Total
	Number of	Fair		Unrealized		Number of	Fair		Unrealized		Number of	Fair		Unrealized
(dollars in thousands)	Securities	Value		Losses		Securities	Value		Losses		Securities	Value		Losses
March 31, 2021
Debt securities:
U.S. agency	2	$	13,927	$	(73)	0	$	0	$	0	2	$	13,927	$	(73)
U.S. agency mortgage-backed, residential	20		36,267		(890)	0		0		0	20		36,267		(890)
State and municipal	21		19,369		(660)	0		0		0	21		19,369		(660)
Corporates	5		3,986		(65)	0		0		0	5		3,986		(65)
Total temporarily impaired debt
securities, available-for-sale	48	$	73,549	$	(1,688)	0	$	0	$	0	48	$	73,549	$	(1,688)
December 31, 2020
Debt securities:
U.S. agency	2	$	40,000	$	0	0	$	0	$	0	2	$	40,000	$	0
U.S. agency mortgage-backed, residential	8		8,706		(29)	0		0		0	8		8,706		(29)
State and municipal	4		3,808		(25)	0		0		0	4		3,808		(25)
Corporates	3		4,075		(14)	0		0		0	3		4,075		(14)
Total temporarily impaired debt
securities, available-for-sale	17	$	56,589	$	(68)	0	$	0	$	0	17	$	56,589	$	(68)

Securities available-for-sale are analyzed quarterly for possible other-than-temporary impairment. The analysis considers, among other factors: 1) whether the Corporation has the intent to sell its securities prior to market recovery or maturity; 2) whether it is more likely than not that the Corporation will be required to sell its securities prior to market recovery or maturity; 3) default rates/history by security type; 4) third-party securities ratings; 5) third-party guarantees; 6) subordination; 7) payment delinquencies; 8) nature of the issuer; and 9) current financial news.

The Corporation believes that unrealized losses at March 31, 2021 were primarily the result of changes in market interest rates and that the Corporation has the ability to hold these investments for a time necessary to recover the amortized cost. Through March 31, 2021 the Corporation has collected all interest and principal on its investment securities as scheduled. The Corporation believes that collection of the contractual principal and interest is probable and, therefore, all impairment is considered to be temporary.

 

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Restricted Investment In Bank Stocks

3 Months Ended

Mar. 31, 2021

Restricted Investment In Bank Stocks [Abstract]

Restricted Investment In Bank Stocks

Note 3—Restricted Investment in Bank Stocks

Restricted stock, which represents required investments in the common stock of correspondent banks, is carried at cost and, as of March 31, 2021 and December 31, 2020, consisted primarily of the common stock of the Federal Home Loan Bank of Pittsburgh (“FHLBP”) and, to a lesser degree, Atlantic Community Bancshares, Inc. (“ACBI”), the parent company of Atlantic Community Bankers Bank (“ACBB”). Under the FHLBP’s Capital Plan member banks, including PeoplesBank, are required to maintain a minimum stock investment. The FHLBP uses a formula to determine the minimum stock investment, which is based on the volume of loans outstanding, unused borrowing capacity and other factors.

The FHLBP paid dividends during the periods ended March 31, 2021 and 2020. The FHLBP restricts the repurchase of the excess capital stock of member banks. The amount of excess capital stock that can be repurchased from any member is currently the lesser of five percent of the member’s total capital stock outstanding or its excess capital stock outstanding.

Management evaluates the restricted stock for impairment in accordance with FASB ASC Topic 942. Management’s determination of whether these investments are impaired is based on their assessment of the ultimate recoverability of their cost rather than by recognizing temporary declines in value. Using the FHLBP as an example, the determination of whether a decline affects the ultimate recoverability of cost is influenced by criteria such as: (1) the significance of the decline in net assets of the FHLBP as compared to the capital stock amount for the FHLBP and the length of time this situation has persisted; (2) commitments by the FHLBP to make

payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLBP; and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the FHLBP. Management believes no impairment charge was necessary related to the restricted stock during the periods ended March 31, 2021 and 2020.

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Loans

3 Months Ended

Mar. 31, 2021

Loans [Abstract]

Loans

Note 4—Loans

Loan Portfolio Composition

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. Since that time banking regulators, the SEC and FASB have all issued additional guidance and clarification on various sections of the CARES Act. Section 4013 of the CARES Act provides the option to not apply ASC 310-40 (TDRs) to a loan modification, related specifically to COVID-19 hardships. Regulators have encouraged financial institutions to work constructively with borrowers in communities and industries affected by COVID-19 using prudent and proactive actions which are in the best interests of the financial institution, the borrower and the economy. The Corporations’s Board of Directors approved a number of options for loan modifications, including interest deferral, full payment deferral, additional extensions of credit, and SBA loan programs (i.e., Economic Injury Disaster Loans, Paycheck Protection Program). As of March 31, 2021, the Corporation has remaining loan modifications totaling approximately $88,000,000. The Corporation has been an active participant in the SBA Paycheck Protection Program (PPP), with outstanding PPP loans as of March 31, 2021 of approximately $152,000,000, which includes $64,000,000 new PPP loans originated in 2021.

The table below provides the composition of the loan portfolio at March 31, 2021 and December 31, 2020. The portfolio is comprised of two segments, commercial and consumer loans. The commercial loan segment is disaggregated by industry class which allows the Corporation to monitor risk and performance.

‎

Those industries representing the largest dollar investment and most risk are listed separately. The “Other” commercial loans category is comprised of various industries. The consumer related segment is comprised of residential mortgages, home equity and other consumer loans. The Corporation has not engaged in sub-prime residential mortgage originations.

	March 31,		% Total		December 31,		% Total
(dollars in thousands)	2021		Loans		2020		Loans
Builder & developer	$	144,777		9.2	$	147,609		9.6
Commercial real estate investor		272,919		17.3		236,924		15.3
Residential real estate investor		233,669		14.8		238,458		15.4
Hotel/Motel		81,045		5.1		79,421		5.2
Wholesale & retail		99,216		6.3		108,425		7.0
Manufacturing		84,082		5.3		79,142		5.1
Agriculture		86,008		5.4		80,450		5.2
Service		87,812		5.6		76,838		5.0
Other		276,108		17.5		280,616		18.2
Total commercial related loans		1,365,636		86.5		1,327,883		86.0
Residential mortgages		95,028		6.0		95,751		6.2
Home equity		94,980		6.0		96,711		6.3
Other		23,507		1.5		24,244		1.5
Total consumer related loans		213,515		13.5		216,706		14.0
Total loans	$	1,579,151		100.0	$	1,544,589		100.0

Loan Risk Ratings

The Corporation’s internal risk rating system follows regulatory guidance as to risk classifications and definitions. Every approved loan is assigned a risk rating. Generally, risk ratings for commercial related loans are determined by a formal evaluation of risk factors performed by the Corporation’s underwriting staff. For consumer and residential mortgage loans, the bank follows the Uniform Retail Credit Classification guidance. Commercial loans up to $500,000 may be scored using a third-party credit scoring software model for risk rating purposes. The loan portfolio is monitored on a continuous basis by loan officers, loan review personnel and senior management. Adjustments of loan risk ratings within the Watch, Criticized and Classified categories are generally performed by the Special Asset Committee, which includes senior management. The Committee, which typically meets at least quarterly, makes changes, as appropriate, to risk ratings when it becomes aware of credit events such as payment delinquency, cessation of a business or project, bankruptcy or death of the borrower, or changes in collateral value. In addition to review by the Committee, existing loans are monitored by the primary loan officer and loan review officer to determine if any changes, upward or downward, in risk ratings are appropriate. An external consultant is also used to review a portion of the existing portfolio and recommends risk rating changes as appropriate. Primary loan officers may recommend a change to a risk rating and internal loan review officers may downgrade existing loans, except to non-accrual status. Only the Committee, Executive Chairman or President/CEO may downgrade a loan to non-accrual status or upgrade a loan that is criticized or classified.

The Corporation uses ten risk ratings to grade commercial loans. The first seven ratings are considered “pass” ratings. A pass rating is a satisfactory credit rating, which applies to a loan that is expected to perform in accordance with the loan agreement and has a low probability of loss. A loan rated “special mention” has a potential weakness which may, if not corrected, weaken the loan or inadequately protect the Corporation’s position at some future date. A loan rated “substandard” is inadequately protected by the current sound worth or paying capacity of the obligor, or of the collateral pledged. A “substandard” loan has a well-defined weakness or weaknesses that could jeopardize liquidation of the loan, which exposes the Corporation to potential loss if the deficiencies are not corrected. When circumstances indicate that collection of the loan is doubtful, the loan is risk-rated “nonaccrual,” the accrual of interest income is discontinued, and any unpaid interest previously credited to income is reversed. The table below does not include the regulatory classification of “doubtful,” nor does it include the regulatory classification of “loss”, because the Corporation promptly charges off loan losses.

‎

The table below presents a summary of loan risk ratings by loan class at March 31, 2021 and December 31, 2020.

			Special
(dollars in thousands)	Pass		Mention		Substandard		Nonaccrual		Total
March 31, 2021
Builder & developer	$	131,672	$	9,318	$	2,965	$	822	$	144,777
Commercial real estate investor		266,920		4,759		1,047		193		272,919
Residential real estate investor		229,636		474		686		2,873		233,669
Hotel/Motel		49,967		537		18,090		12,451		81,045
Wholesale & retail		90,772		6,987		1,457		0		99,216
Manufacturing		72,735		0		3,608		7,739		84,082
Agriculture		78,712		421		3,774		3,101		86,008
Service		81,832		249		4,760		971		87,812
Other		251,358		1,452		13,597		9,701		276,108
Total commercial related loans		1,253,604		24,197		49,984		37,851		1,365,636
Residential mortgage		95,017		0		11		0		95,028
Home equity		94,276		49		0		655		94,980
Other		23,250		0		0		257		23,507
Total consumer related loans		212,543		49		11		912		213,515
Total loans	$	1,466,147	$	24,246	$	49,995	$	38,763	$	1,579,151
December 31, 2020
Builder & developer	$	133,804	$	11,305	$	2,121	$	379	$	147,609
Commercial real estate investor		230,113		6,379		231		201		236,924
Residential real estate investor		234,316		1,215		130		2,797		238,458
Hotel/Motel		48,264		542		18,143		12,472		79,421
Wholesale & retail		99,821		8,591		13		0		108,425
Manufacturing		67,968		0		3,610		7,564		79,142
Agriculture		72,829		416		3,776		3,429		80,450
Service		75,618		249		0		971		76,838
Other		256,040		1,481		13,804		9,291		280,616
Total commercial related loans		1,218,773		30,178		41,828		37,104		1,327,883
Residential mortgage		95,466		123		11		151		95,751
Home equity		96,026		55		0		630		96,711
Other		23,954		0		0		290		24,244
Total consumer related loans		215,446		178		11		1,071		216,706
Total loans	$	1,434,219	$	30,356	$	41,839	$	38,175	$	1,544,589

‎

Impaired Loans

The table below presents a summary of impaired loans at March 31, 2021 and December 31, 2020. Generally, impaired loans are all loans risk rated nonaccrual or classified troubled debt restructuring. An allowance is established for those individual loans that are commercial related where the Corporation has doubt as to the full recovery of the outstanding principal balance. Typically, impaired consumer related loans are partially or fully charged-off eliminating the need for specific allowance. The recorded investment represents outstanding unpaid principal loan balances adjusted for payments collected on a non-cash basis and charge-offs.

	With No Allowance				With A Related Allowance						Total
	Recorded		Unpaid		Recorded		Unpaid		Related		Recorded		Unpaid
(dollars in thousands)	Investment		Principal		Investment		Principal		Allowance		Investment		Principal
March 31, 2021
Builder & developer	$	1,016	$	1,084	$	0	$	0	$	0	$	1,016	$	1,084
Commercial real estate investor		1,108		1,118		0		0		0		1,108		1,118
Residential real estate investor		657		944		2,216		2,216		416		2,873		3,160
Hotel/Motel		12,451		12,453		0		0		0		12,451		12,453
Wholesale & retail		236		236		0		0		0		236		236
Manufacturing		7,739		7,858		0		0		0		7,739		7,858
Agriculture		2,025		2,172		1,078		1,154		570		3,103		3,326
Service		971		1,061		0		0		0		971		1,061
Other commercial		5,550		5,935		4,151		4,523		3,442		9,701		10,458
Total impaired commercial related loans		31,753		32,861		7,445		7,893		4,428		39,198		40,754
Residential mortgage		0		0		0		0		0		0		0
Home equity		655		686		0		0		0		655		686
Other consumer		257		271		0		0		0		257		271
Total impaired consumer related loans		912		957		0		0		0		912		957
Total impaired loans	$	32,665	$	33,818	$	7,445	$	7,893	$	4,428	$	40,110	$	41,711

December 31, 2020
Builder & developer	$	575	$	790	$	0	$	0	$	0	$	575	$	790
Commercial real estate investor		1,163		1,170		0		0		0		1,163		1,170
Residential real estate investor		581		862		2,216		2,216		216		2,797		3,078
Hotel/Motel		12,472		12,472		0		0		0		12,472		12,472
Wholesale & retail		237		237		0		0		0		237		237
Manufacturing		7,564		7,564		0		0		0		7,564		7,564
Agriculture		2,270		2,382		1,159		1,217		615		3,429		3,599
Service		971		1,061		0		0		0		971		1,061
Other commercial		5,739		5,954		3,552		3,888		2,481		9,291		9,842
Total impaired commercial related loans		31,572		32,492		6,927		7,321		3,312		38,499		39,813
Residential mortgage		151		151		0		0		0		151		151
Home equity		630		653		0		0		0		630		653
Other consumer		290		301		0		0		0		290		301
Total impaired consumer related loans		1,071		1,105		0		0		0		1,071		1,105
Total impaired loans	$	32,643	$	33,597	$	6,927	$	7,321	$	3,312	$	39,570	$	40,918

‎

The table below presents a summary of average impaired loans and related interest income that was included in net income for the three months ended March 31, 2021 and 2020. Interest income on loans with no related allowance is the result of interest collected on a cash basis, except accruing TDRs.

	With No Related Allowance				With A Related Allowance				Total
	Average		Total		Average		Total		Average		Total
	Recorded		Interest		Recorded		Interest		Recorded		Interest
(dollars in thousands)	Investment		Income		Investment		Income		Investment		Income
Three months ended March 31, 2021
Builder & developer	$	796	$	0	$	0	$	0	$	796	$	0
Commercial real estate investor		1,136		11		0		0		1,136		11
Residential real estate investor		618		0		2,216		0		2,834		0
Hotel/Motel		12,461		0		0		0		12,461		0
Wholesale & retail		236		1		0		0		236		1
Manufacturing		7,651		0		0		0		7,651		0
Agriculture		2,147		37		1,119		0		3,266		37
Service		971		0		0		0		971		0
Other commercial		6,130		0		3,851		0		9,981		0
Total impaired commercial related loans		32,146		49		7,186		0		39,332		49
Residential mortgage		76		0		0		0		76		0
Home equity		643		0		0		0		643		0
Other consumer		274		3		0		0		274		3
Total impaired consumer related loans		993		3		0		0		993		3
Total impaired loans	$	33,139	$	52	$	7,186	$	0	$	40,325	$	52
Three months ended March 31, 2020
Builder & developer	$	957	$	12	$	308	$	0	$	1,265	$	12
Commercial real estate investor		1,347		22		0		0		1,347		22
Residential real estate investor		844		6		5,020		0		5,864		6
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		272		2		7,127		0		7,399		2
Manufacturing		13		3		1,073		0		1,086		3
Agriculture		2,098		19		1,012		0		3,110		19
Service		704		1		0		0		704		1
Other commercial		2,113		30		3,634		0		5,747		30
Total impaired commercial related loans		8,348		95		18,174		0		26,522		95
Residential mortgage		214		3		0		0		214		3
Home equity		672		21		0		0		672		21
Other consumer		223		3		0		0		223		3
Total impaired consumer related loans		1,109		27		0		0		1,109		27
Total impaired loans	$	9,457	$	122	$	18,174	$	0	$	27,631	$	122

‎

Past Due and Nonaccrual

The performance and credit quality of the loan portfolio is also monitored by using an aging schedule that shows the length of time a loan is past due. The table below presents a summary of past due loans, nonaccrual loans and current loans by loan segment and class at March 31, 2021 and December 31, 2020.

					≥ 90 Days
	30-59		60-89		Past Due				Total Past
	Days		Days		and				Due and				Total
(dollars in thousands)	Past Due		Past Due		Accruing		Nonaccrual		Nonaccrual		Current		Loans
March 31, 2021
Builder & developer	$	0	$	282	$	363	$	822	$	1,467	$	143,310	$	144,777
Commercial real estate investor		819		0		0		193		1,012		271,907		272,919
Residential real estate investor		0		0		0		2,873		2,873		230,796		233,669
Hotel/Motel		0		0		0		12,451		12,451		68,594		81,045
Wholesale & retail		198		38		0		0		236		98,980		99,216
Manufacturing		0		0		0		7,739		7,739		76,343		84,082
Agriculture		0		3,379		0		3,101		6,480		79,528		86,008
Service		0		0		0		971		971		86,841		87,812
Other		64		0		1,035		9,701		10,800		265,308		276,108
Total commercial related loans		1,081		3,699		1,398		37,851		44,029		1,321,607		1,365,636
Residential mortgage		67		153		0		0		220		94,808		95,028
Home equity		0		0		109		655		764		94,216		94,980
Other		1,423		373		0		257		2,053		21,454		23,507
Total consumer related loans		1,490		526		109		912		3,037		210,478		213,515
Total loans	$	2,571	$	4,225	$	1,507	$	38,763	$	47,066	$	1,532,085	$	1,579,151
December 31, 2020
Builder & developer	$	427	$	489	$	322	$	379	$	1,617	$	145,992	$	147,609
Commercial real estate investor		0		0		0		201		201		236,723		236,924
Residential real estate investor		136		0		0		2,797		2,933		235,525		238,458
Hotel/Motel		0		0		0		12,472		12,472		66,949		79,421
Wholesale & retail		29		0		0		0		29		108,396		108,425
Manufacturing		0		0		0		7,564		7,564		71,578		79,142
Agriculture		0		0		0		3,429		3,429		77,021		80,450
Service		0		709		0		971		1,680		75,158		76,838
Other		679		887		0		9,291		10,857		269,759		280,616
Total commercial related loans		1,271		2,085		322		37,104		40,782		1,287,101		1,327,883
Residential mortgage		0		0		937		151		1,088		94,663		95,751
Home equity		206		177		36		630		1,049		95,662		96,711
Other		717		321		0		290		1,328		22,916		24,244
Total consumer related loans		923		498		973		1,071		3,465		213,241		216,706
Total loans	$	2,194	$	2,583	$	1,295	$	38,175	$	44,247	$	1,500,342	$	1,544,589

Troubled Debt Restructurings

Loans classified as troubled debt restructurings (TDRs) are designated impaired and arise when the Corporation grants borrowers experiencing financial difficulties concessions that it would not otherwise consider. Concessions granted with respect to these loans involve an extension of the maturity date or a below market interest rate relative to new debt with similar credit risk. The principal balance of outstanding TDRs was $1,344,000 at March 31, 2021 and $1,395,000 at December 31, 2020. There were no allowances allocated to any TDRs at March 31, 2021 or December 31, 2020. There are no commitments to lend to existing TDRs. A TDR is considered to be in payment default once it is contractually past due pursuant to the terms of the loan documents. Generally, these loans are secured by real estate. If repayment of the loan is determined to be collateral dependent, the loan is evaluated for impairment loss based on the fair value of the collateral. For loans that are not collateral dependent, the present value of expected future cash flows, discounted at the loan’s original effective interest rate, is used to determine any impairment loss. A nonaccrual TDR represents a nonaccrual loan, as previously defined, which includes an economic concession. Nonaccrual TDRs are restored to accrual status if

principal and interest payments, under the modified terms, are current for six consecutive payments after the modification and future principal and interest payments are reasonably assured. In contrast, an accruing TDR represents a loan that, at the time of the modification, has a demonstrated history of payments and with respect to which management believes that future loan payments are reasonably assured under the modified terms.

As of March 31, 2021, there are no modifications for consumer loans, five mortgage loans totaling approximately $2,060,000 and 38 commercial loans totaling approximately $86,091,000 under the CARES Act, which are not considered TDRs.

The table below shows loans whose terms have been modified under TDRs during the three months ended March 31, 2021 and 2020. There were no defaults during the three months ended March 31, 2021 and March 31, 2020 for TDRs entered into during the previous 12 month period.

	Modifications
		Pre-Modification	Post-Modification
	Number	Outstanding	Outstanding	Recorded
	of	Recorded	Recorded	Investment
(dollars in thousands)	Contracts	Investments	Investments	at Period End
Three months ended:
March 31, 2021
None
March 31, 2020
None

 

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Allowance For Loan Losses

3 Months Ended

Mar. 31, 2021

Allowance For Loan Losses [Abstract]

Allowance For Loan Losses

NOTE 5 – Allowance for Loan Losses

The table below shows the activity in and the composition of the allowance for loan losses by loan segment and class detail as of and for the three months ended March 31, 2021 and 2020.

	Allowance for Loan Losses
	January 1, 2021								March 31, 2021
(dollars in thousands)	Balance		Charge-offs		Recoveries		Provision		Balance
Builder & developer	$	2,034	$	0	$	0	$	32	$	2,066
Commercial real estate investor		3,177		0		0		233		3,410
Residential real estate investor		3,944		(50)		4		111		4,009
Hotel/Motel		1,440		0		0		208		1,648
Wholesale & retail		2,416		0		0		(305)		2,111
Manufacturing		840		0		0		(65)		775
Agriculture		1,288		0		0		163		1,451
Service		457		0		0		281		738
Other commercial		5,002		(42)		1		603		5,564
Total commercial related loans		20,598		(92)		5		1,261		21,772
Residential mortgage		256		0		0		0		256
Home equity		287		(5)		2		(2)		282
Other consumer		101		(7)		13		(9)		98
Total consumer related loans		644		(12)		15		(11)		636
Unallocated		22		0		0		(19)		3
Total	$	21,264	$	(104)	$	20	$	1,231	$	22,411

	Allowance for Loan Losses
	January 1, 2020								March 31, 2020
(dollars in thousands)	Balance		Charge-offs		Recoveries		Provision		Balance
Builder & developer	$	2,263	$	(170)	$	0	$	133	$	2,226
Commercial real estate investor		2,565		0		0		117		2,682
Residential real estate investor		4,632		0		3		124		4,759
Hotel/Motel		742		0		0		314		1,056
Wholesale & retail		3,575		0		7		976		4,558
Manufacturing		1,252		0		0		64		1,316
Agriculture		1,304		0		0		(164)		1,140
Service		367		0		0		6		373
Other commercial		3,837		(7,511)		0		7,766		4,092
Total commercial related loans		20,537		(7,681)		10		9,336		22,202
Residential mortgage		158		0		0		77		235
Home equity		203		0		0		101		304
Other consumer		167		(5)		13		(78)		97
Total consumer related loans		528		(5)		13		100		636
Unallocated		1		0		0		(1)		0
Total	$	21,066	$	(7,686)	$	23	$	9,435	$	22,838

The table below shows the allowance amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for March 31, 2021 and December 31, 2020.

	Allowance for Loan Losses						Loans
	Individually		Collectively				Individually		Collectively
	Evaluated For		Evaluated For				Evaluated For		Evaluated For
(dollars in thousands)	Impairment		Impairment		Balance		Impairment		Impairment		Balance
March 31, 2021
Builder & developer	$	0	$	2,066	$	2,066	$	1,016	$	143,761	$	144,777
Commercial real estate investor		0		3,410		3,410		1,108		271,811		272,919
Residential real estate investor		416		3,593		4,009		2,873		230,796		233,669
Hotel/Motel		0		1,648		1,648		12,451		68,594		81,045
Wholesale & retail		0		2,111		2,111		236		98,980		99,216
Manufacturing		0		775		775		7,739		76,343		84,082
Agriculture		570		881		1,451		3,103		82,905		86,008
Service		0		738		738		971		86,841		87,812
Other commercial		3,442		2,122		5,564		9,701		266,407		276,108
Total commercial related		4,428		17,344		21,772		39,198		1,326,438		1,365,636
Residential mortgage		0		256		256		0		95,028		95,028
Home equity		0		282		282		655		94,325		94,980
Other consumer		0		98		98		257		23,250		23,507
Total consumer related		0		636		636		912		212,603		213,515
Unallocated		0		3		3		0		0		0
Total	$	4,428	$	17,983	$	22,411	$	40,110	$	1,539,041	$	1,579,151

December 31, 2020
Builder & developer	$	0	$	2,034	$	2,034	$	575	$	147,034	$	147,609
Commercial real estate investor		0		3,177		3,177		1,163		235,761		236,924
Residential real estate investor		216		3,728		3,944		2,797		235,661		238,458
Hotel/Motel		0		1,440		1,440		12,472		66,949		79,421
Wholesale & retail		0		2,416		2,416		237		108,188		108,425
Manufacturing		0		840		840		7,564		71,578		79,142
Agriculture		615		673		1,288		3,429		77,021		80,450
Service		0		457		457		971		75,867		76,838
Other commercial		2,481		2,521		5,002		9,291		271,325		280,616
Total commercial related		3,312		17,286		20,598		38,499		1,289,384		1,327,883
Residential mortgage		0		256		256		151		95,600		95,751
Home equity		0		287		287		630		96,081		96,711
Other consumer		0		101		101		290		23,954		24,244
Total consumer related		0		644		644		1,071		215,635		216,706
Unallocated		0		22		22		0		0		0
Total	$	3,312	$	17,952	$	21,264	$	39,570	$	1,505,019	$	1,544,589

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Deposits

3 Months Ended

Mar. 31, 2021

Deposits

Deposits

Note 6—Deposits

The composition of deposits as of March 31, 2021 and December 31, 2020 is shown below. The aggregate amount of demand deposit overdrafts that were reclassified as loans is $24,000 at March 31, 2021, compared to $55,000 at December 31, 2020.

	March 31,		December 31,
(dollars in thousands)	2021		2020
Noninterest bearing demand	$	483,004	$	396,947
Interest bearing demand		245,690		224,764
Money market		581,995		598,398
Savings		126,893		111,143
Time deposits less than $100		280,076		283,910
Time deposits $100 to $250		177,307		180,674
Time deposits $250 or more		69,098		67,703
Total deposits	$	1,964,063	$	1,863,539

 

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Short-Term Borrowings And Long-Term Debt

3 Months Ended

Mar. 31, 2021

Short-Term Borrowings And Long-Term Debt [Abstract]

Short-Term Borrowings And Long-Term Debt

Note 7—Short-Term Borrowings and Long-Term Debt

Short-term borrowings consist of securities sold under agreements to repurchase, federal funds purchased and other borrowings. At March 31, 2021, the balance of securities sold under agreements to repurchase was $7,743,000 compared to $8,540,000 at December 31, 2020. At March 31, 2021 and December 31, 2020, there were no other short-term borrowings.

The following table presents a summary of long-term debt as of March 31, 2021 and December 31, 2020. PeoplesBank’s long-term debt obligations to the FHLBP are fixed rate instruments. Under terms of a blanket collateral agreement with the FHLBP, the obligations are secured by FHLBP stock and PeoplesBank qualifying loan receivables, principally real estate secured loans.

	March 31,		December 31,
(dollars in thousands)	2021		2020
PeoplesBank’s obligations:
Federal Home Loan Bank of Pittsburgh (FHLBP)
Due June 2021, 2.81%	$	10,000	$	10,000
Due June 2021, 2.14%		15,000		15,000
Due May 2022, 2.93%		10,000		10,000
Total FHLBP	$	35,000	$	35,000
Codorus Valley Bancorp, Inc. obligations:
Junior subordinated debt
Due 2034, 2.20%, floating rate based on 3 month
LIBOR plus 2.02%, callable quarterly		3,093		3,093
Due 2036, 1.78% floating rate based on 3 month
LIBOR plus 1.54%, callable quarterly		7,217		7,217
Due 2030, 4.50% fixed rate, callable on or after December 2025		30,622		30,602
Total junior subordinated debt	$	40,932	$	40,912
Lease obligations included in long-term debt:
Finance lease liabilities		1,289		1,296
Total long-term debt	$	77,221	$	77,208

At March 31, 2021 there were no municipal deposit letters of credit compared to $42,000,000 at December 31, 2020. These letters of credit are issued by the FHLBP on behalf of PeoplesBank naming applicable municipalities as beneficiaries. The letters of credit took the place of securities pledged to the municipalities for their deposits maintained at PeoplesBank.

In June 2006, Codorus Valley formed CVB Statutory Trust No. 2, a wholly-owned special purpose subsidiary whose sole purpose was to facilitate a pooled trust preferred debt issuance of $7,217,000. In November 2004, Codorus Valley formed CVB Statutory Trust No. 1 to facilitate a pooled trust preferred debt issuance of $3,093,000. The Corporation owns all of the common stock of these nonbank subsidiaries, and the debentures are the sole assets of the Trusts. The accounts of both Trusts are not consolidated for financial reporting purposes in accordance with FASB ASC 810. For regulatory capital purposes, all of the Corporation’s trust preferred securities qualified as Tier 1 capital for all reported periods. Trust preferred securities are subject to capital limitations under the FDIC’s risk-based capital guidelines. The Corporation used the net proceeds from these offerings to fund its operations.

In December 2020, Codorus Valley issued subordinated notes in the amount of $31,000,000. The Corporation may redeem the subordinated notes, in whole or in part, in a principal amount with integral multiples of $10,000, on or after December 9, 2025 and prior to the maturity date at 100% of the principal amount, plus accrued and unpaid interest. The subordinated notes mature on December 9, 2030. The subordinated notes are also redeemable in whole or in part from time to time, upon the occurrence of specific events defined within the Note Purchase Agreements. The subordinated notes may be included in Tier 2 capital (with certain limitations applicable) under current regulatory guidelines and interpretations. The subordinated notes have a fixed rate of interest equal to 4.50% until December 30, 2025. After that term, the variable rate of interest is equal to the then current 90-Day Average SOFR (Secured Oversight Financing Rate) plus 404 basis points.

 

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Leases

3 Months Ended

Mar. 31, 2021

Leases [Abstract]

Leases

Note 8—Leases

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On January 1, 2019, the Corporation adopted ASU 2016-02 “Leases” (Topic 842) and all subsequent ASUs that modified Topic 842. For the Corporation, Topic 842 affected the accounting treatment for operating lease agreements in which the Corporation is the lessee.

Substantially all of the leases in which the Corporation is the lessee are comprised of real estate property, ATM locations, and office space. Substantially all of our leases are classified as operating leases, and therefore, were previously not recognized on the Corporation’s consolidated statements of condition. With the adoption of Topic 842, operating lease agreements are required to be recognized on the consolidated statements of condition as a right-of-use (“ROU”) asset and a corresponding lease liability. The Corporation has one finance lease for one financial center.

Leases with an initial term of 12 months or less are not recorded on the consolidated statement of condition. All other leases have remaining lease terms of 1 year to 25 years, some of which include options to extend. Upon opening a new financial center, we typically install brand-specific leasehold improvements which are depreciated over the shorter of the useful life or length of the lease. To the extent that the initial lease term of the related lease is less than the useful life of the leasehold improvements and, taking into consideration the dollar amount of the improvements, we conclude that it is reasonably certain that a renewal option will be exercised, the renewal period is included in the lease term, and the related payments are reflected in the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Corporation utilizes its incremental borrowing rate at lease inception, on an amortizing and collateralized basis, over a similar term.

All of our leases include fixed rental payments. We commonly enter into leases under which the lease payments increase at pre-determined dates based on the change in the consumer price index. While the majority of our leases are gross leases, we also have a number of leases in which we make separate payments to the lessor based on the lessor’s property and casualty insurance cost and the property taxes assessed on the property, as well as a portion of the common area maintenance associated with the property. We have elected the practical expedient not to separate lease and nonlease components for all of our building leases.

The components of lease expense were as follows:

	Three months ended
	March 31,
(dollars in thousands)	2021		2020
Operating lease cost	$	169	$	203
Finance lease cost:
Amortization of right-of-use assets	$	12	$	12
Interest on lease liability		12		12
Total finance lease cost	$	24	$	24
Total lease cost	$	193	$	227

Supplemental cash flow information related to leases was as follows:

	Three months ended
	March 31,
	2021		2020
Operating cash flows from operating leases	$	173	$	208
Operating cash flows from financing leases		12		12
Financing cash flows from financing leases		7		6
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		0		186
Finance leases		0		0

Amounts recognized as right-of-use assets related to finance leases are included in fixed assets in the accompanying statement of financial position, while related lease liabilities are included in long-term debt. Supplemental balance sheet information related to leases was as follows:

	March 31,		December 31,
	2021		2020
Assets:
Operating leases right-of-use assets	$	2,198	$	2,386
Finance leases assets		1,076		1,087
Total lease assets	$	3,274	$	3,473
Liabilities:
Operating	$	2,325	$	2,515
Financing		1,289		1,296
Total lease liabilities	$	3,614	$	3,811
Weighted Average Remaining Lease Term (years)
Operating leases		4.5		5.2
Finance leases		22.9		23.2
Weighted Average Discount Rate
Operating leases		2.63%		2.68%
Finance leases		3.69%		3.69%

Future minimum payments for financing leases and operating leases as of March 31, 2021 and December 31, 2020 were as follows:

(dollars in thousands:)	March 31, 2021
Year Ending December 31,	Operating Leases		Finance Leases
2021	$	500	$	56
2022		611		75
2023		484		75
2024		397		75
2025		176		79
Thereafter		304		1,588
Total lease payments		2,472		1,948
Less imputed interest		(147)		(659)
Total	$	2,325	$	1,289

(dollars in thousands:)	December 31, 2020
Year Ending December 31,	Operating Leases		Finance Leases
2021	$	667	$	75
2022		604		75
2023		489		75
2024		413		75
2025		192		79
Thereafter		317		1,588
Total lease payments		2,682		1,967
Less imputed interest		(167)		(671)
Total	$	2,515	$	1,296

 

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Regulatory Matters

3 Months Ended

Mar. 31, 2021

Regulatory Matters [Abstract]

Regulatory Matters

Note 9—Regulatory Matters

The Corporation is subject to restrictions on the payment of dividends to its shareholders pursuant to the Pennsylvania Business Corporation Law of 1988, as amended (“BCL”). The BCL prohibits dividend payments if such payment would render the Corporation insolvent or result in negative net worth. Federal and state banking regulations place certain restrictions on dividends paid and loans or advances made by PeoplesBank to the Corporation. The amount of total dividends, which may be paid at any date, is generally limited to the retained earnings of PeoplesBank. Furthermore, dividend payments would be prohibited if the effect thereof would cause PeoplesBank’s capital to be reduced below applicable minimum capital requirements as discussed below. Loans and advances by PeoplesBank to affiliates, including the Corporation, are limited to 10 percent of PeoplesBank’s capital stock and contributed capital on a secured basis.

Banks and bank holding companies 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.  The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital.  Management believes as of March 31, 2021, the Corporation and Bank 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. At March 31,2021 and December 31, 2020, 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 man32

agement believes have changed the institution’s category.

Actual and required capital amounts (in thousands) and ratios are presented below.

					Minimum for Basel III				Well Capitalized
	Actual (1)				Capital Adequacy				Minimum (2)
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Codorus Valley Bancorp, Inc. (consolidated)
at March 31, 2021
Capital ratios:
Common equity Tier 1	$	194,747	13.13	%	$	103,788	7.00	%		n/a	n/a
Tier 1 risk based		204,747	13.81			126,029	8.50			n/a	n/a
Total risk based		253,951	17.13			155,683	10.50			n/a	n/a
Leverage		204,747	9.39			87,203	4.00			n/a	n/a
at December 31, 2020
Capital ratios:
Common equity Tier 1	$	191,863	13.10	%	$	102,504	7.00	%		n/a	n/a
Tier 1 risk based		201,863	13.79			124,469	8.50			n/a	n/a
Total risk based		250,806	17.13			153,756	10.50			n/a	n/a
Leverage		201,863	9.58			84,250	4.00			n/a	n/a
PeoplesBank, A Codorus Valley Company
at March 31, 2021
Capital ratios:
Common equity Tier 1	$	221,272	14.96	%	$	103,570	7.00	%	$	96,172	6.50	%
Tier 1 risk based		221,272	14.96			125,763	8.50			118,365	8.00
Total risk based		239,815	16.21			155,355	10.50			147,957	10.00
Leverage		221,272	10.17			87,070	4.00			108,838	5.00
at December 31, 2020
Capital ratios:
Common equity Tier 1	$	198,184	13.56	%	$	102,274	7.00	%	$	94,968	6.50	%
Tier 1 risk based		198,184	13.56			124,190	8.50			116,884	8.00
Total risk based		216,484	14.82			153,411	10.50			146,105	10.00
Leverage		198,184	9.43			84,109	4.00			105,137	5.00

 (1) Net unrealized gains and losses on securities available-for-sale, net of taxes, are disregarded for capital ratio computation purposes in accordance with federal regulatory banking guidelines.

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

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Shareholders' Equity

3 Months Ended

Mar. 31, 2021

Shareholders' Equity [Abstract]

Shareholders' Equity

Note 10—Shareholders’ Equity

Share Repurchase

The Corporation’s Board of Directors approved a Share Repurchase Program (“Program”) in March 2020. Under the Program, the Corporation is authorized to repurchase up to $5 million of the Corporation’s issued and outstanding common stock. All shares of common stock repurchased pursuant to the Program shall be held as treasury shares and be available for use and reissuance for purposes as and when determined by the Board of Directors including, without limitation, pursuant to the Corporation’s Dividend Reinvestment and Stock Purchase Plan and its equity compensation program. During the first quarter of 2020 the Corporation repurchased 5,335 shares at an average price of $16.37. Shortly after the Program began, and in response to COVID-19, the Corporation suspended the Program. That program expired by its own terms in October, 2020.

The Corporation’s Board of Directors approved a new Share Repurchase Program (“Program”) in January 2021. Under the newly approved Program, the Corporation is authorized to repurchase up to $5 million of the Corporation’s issued and outstanding common stock. All shares of common stock repurchased pursuant to the Program shall be held as treasury shares and be available for use and reissuance for purposes as and when determined by the Board of Directors including, without limitation, pursuant to the Corporation’s Dividend Reinvestment and Stock Purchase Plan and its equity compensation progam.

 

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Contingent Liabilities

3 Months Ended

Mar. 31, 2021

Contingent Liabilities [Abstract]

Contingent Liabilities

Note 11—Contingent Liabilities

There are no legal proceedings pending against Codorus Valley Bancorp, Inc. or any of its subsidiaries which are expected to have a material impact upon the consolidated financial position and/or operating results of the Corporation, other than routine litigation incidental to the business. Management is not aware of any proceedings known or contemplated by government authorities.

 

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Guarantees

3 Months Ended

Mar. 31, 2021

Guarantees [Abstract]

Guarantees

Note 12—Guarantees

Codorus Valley does not issue any guarantees that would require liability recognition or disclosure, other than its standby letters of credit.  Standby letters of credit are written conditional commitments issued by PeoplesBank to guarantee the performance of a client to a third party.  Generally, all letters of credit, when issued, have expiration dates within one year.  The credit risk involved in issuing letters of credit is essentially the same as those that are involved in extending loan facilities to clients.  The Corporation generally holds collateral and/or personal guarantees supporting these commitments.  The Corporation had $17,278,000 of standby letters of credit outstanding on March 31, 2021, compared to $15,206,000 on December 31, 2020. Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding letters of credit. The amount of the liability as of March 31, 2021 and December 31, 2020, for guarantees under standby letters of credit issued, was not material. Many of the commitments are expected to expire without being drawn upon and, therefore, generally do not present significant liquidity risk to the Corporation or PeoplesBank.

 

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Fair Value Of Assets And Liabilities

3 Months Ended

Mar. 31, 2021

Fair Value Of Assets And Liabilities [Abstract]

Fair Value Of Assets And Liabilities

Note 13—Fair Value of Assets and Liabilities

The Corporation uses its best judgment in estimating the fair value of the Corporation’s assets and liabilities; however, there are inherent weaknesses in any estimation technique. The estimated fair value amounts have been measured as of their respective period-ends and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values subsequent to the respective reporting dates may be different than the amounts reported at each period end.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date. GAAP establishes a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:

Level 1: Inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available.

Level 2: Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets; inputs to the valuation methodology include quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs to the valuation methodology that utilize model-based techniques for which all significant assumptions are observable in the market.

Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement; inputs to the valuation methodology that utilize model-based techniques for which significant assumptions are not observable in the

market; or inputs to the valuation methodology that require significant management judgment or estimation, some of which may be internally developed.

Since management maximizes the use of observable inputs and minimizes the use of unobservable inputs when determining fair value, an asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Management reviews and updates the fair value hierarchy classifications on a quarterly basis.

Assets Measured at Fair Value on a Recurring Basis

Securities available-for-sale

The fair values of investment securities were measured using information from a third-party pricing service. The pricing service uses quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique, used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities, but rather, by relying on the securities’ relationship to other benchmark quoted prices.

			Fair Value Measurements
(dollars in thousands)	Total		(Level 1) ‎Quoted Prices in ‎Active Markets for ‎Identical Assets		(Level 2) ‎Significant Other ‎Observable Inputs		(Level 3) ‎Significant Other ‎Unobservable Inputs
March 31, 2021
Securities available-for-sale:
U.S. agency		13,927		0		13,927		0
U.S. agency mortgage-backed, residential		123,021		0		123,021		0
State and municipal		30,169		0		30,169		0
Corporate debt		12,433		0		12,433		0
December 31, 2020
Securities available-for-sale:
U.S. agency		40,000		0		40,000		0
U.S. agency mortgage-backed, residential		110,896		0		110,896		0
State and municipal		24,300		0		24,300		0
Corporates		9,806		0		9,806		0

Assets Measured at Fair Value on a Nonrecurring Basis

Impaired loans

Impaired loans are those that are accounted for under FASB ASC Topic 310, in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral.  Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds.  These loans are generally included as Level 3 fair values, based on the lowest level of input that is significant to the fair value measurements.  At March 31, 2021, the fair value of impaired loans with a valuation allowance or partial charge-off was $3,422,000, net of valuation allowances of $4,428,000 and partial

charge-offs of $373,000.  At December 31, 2020 the fair value of impaired loans with a valuation allowance or charge-off was $4,020,000, net of valuation allowances of $3,312,000 and charge-offs of $373,000. 

Foreclosed Real Estate

Other real estate property acquired through foreclosure is initially recorded at fair value of the property at the transfer date less estimated selling cost. Subsequently, other real estate owned is carried at the lower of its carrying value or the fair value less estimated selling cost.  Fair value is usually determined based on an independent third-party appraisal of the property or occasionally on a recent

sales offer. At March 31, 2021 and December 31, 2020, there were no foreclosed real estate assets with a valuation allowance or write-down.

Mortgage Servicing Rights

Mortgage servicing rights are initially recorded at fair value upon the sale of residential mortgage loans to secondary market investors. The fair value of servicing rights is based on the present value of estimated future cash flows on pools of mortgages stratified by rate and original time to maturity. Mortgage servicing rights are subsequently evaluated for impairment on a quarterly basis. Significant inputs to the valuation include expected cash flow, expected net servicing income, a cash flow discount rate and the expected life of the underlying loans. At March 31, 2021, the fair value of the mortgage servicing rights asset was $524,000. At December 31, 2020, the fair value of the mortgage servicing rights asset was $511,000.

			Fair Value Measurements
(dollars in thousands)		Total	(Level 1) ‎Quoted Prices in ‎Active Markets for ‎Identical Assets		(Level 2) ‎Significant Other ‎Observable Inputs		(Level 3) ‎Significant Other ‎Unobservable Inputs
March 31, 2021
Impaired builder & developer loans	$	196	$	0	$	0	$	196
Impaired residential real estate investor loans		2,009		1,800		0		209
Impaired agriculture loans		508		0		0		508
Impaired other loans		709		0		0		709
Mortgage servicing rights		147		0		0		147
December 31, 2020
Impaired builder & developer loans	$	196	$	0	$	0	$	196
Impaired residential real estate investor loans		2,209		2,000		0		209
Impaired agriculture loans		544		0		0		544
Impaired other loans		1,071		0		0		1,071
Mortgage servicing rights		511		0		0		511

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Corporation has utilized Level 3 inputs to determine fair value:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value		Valuation	Unobservable		Weighted
(dollars in thousands)	Estimate		Techniques	Input	Range	Average
March 31, 2021
Impaired builder & developer loans	$	196	Appraisal (1)	Appraisal adjustments (2)	15% -15%	15%
Impaired residential real estate investor loans		209	Appraisal (1)	Appraisal adjustments (2)	15%-15%	15%
Impaired agriculture loans		508	Appraisal (1)	Appraisal adjustments (2)	22% -25%	23%
Impaired other loans		441	Appraisal (1)	Appraisal adjustments (2)	15% - 25%	20%
Impaired other loans		268	Business asset valuation (3)	Business asset valuation adjustments (4)	50% - 50%	50%
Mortgage Servicing Rights		147	Multiple of annual service fee	Estimated prepayment speed based on rate and term	13.8% - 13.8%	13.8%
December 31, 2020
Impaired builder & developer loans	$	196	Appraisal (1)	Appraisal adjustments (2)	15% - 15%	15%
Impaired residential real estate investor loans		209	Appraisal (1)	Appraisal adjustments (2)	15% - 15%	15
Impaired agriculture loans		544	Appraisal (1)	Appraisal adjustments (2)	25% - 25%	25%
Impaired other loans		89	Appraisal (1)	Appraisal adjustments (2)	15% - 15%	15%
Impaired other loans		982	Business asset valuation (3)	Business asset valuation adjustments (4)	40% - 50%	44%
Mortgage servicing rights		511	Multiple of annual service fee	Estimated prepayment speed based on rate and term	18.5% - 18.5%	18.5%

(1)Fair value is generally determined through independent appraisals, which generally include various level 3 inputs that are not identifiable.

(2)Appraisal amounts may be adjusted downward by the Corporation's management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expense adjustments are presented as a percent of the appraisal.

(3)Fair value is generally determined through customer-provided financial statements and bankruptcy court documents.

(4)Business asset valuation may be adjusted downward by the corporation's management qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses adjustments are presented as a percent of the financial statement book value.

The following presents the carrying amounts and estimated fair values of the Corporation’s financial instruments as of March 31, 2021 and December 31, 2020.

						Fair Value Estimates
					(Level 1)		(Level 2)		(Level 3)
					Quoted Prices		Significant		Significant
					in Active		Other		Other
	Carrying		Estimated		Markets for		Observable		Unobservable
(dollars in thousands)	Amount		Fair Value		Identical Assets		Inputs		Inputs
March 31, 2021
Financial assets
Cash and cash equivalents	$	426,904	$	426,904	$	426,904	$	0	$	0
Securities available-for-sale		179,550		179,550		0		179,550		0
Restricted investment in bank stocks		2,278		N/A		N/A		N/A		N/A
Loans held for sale		13,324		14,592		0		14,592		0
Loans, net		1,556,740		1,550,508		0		0		1,550,508
Interest receivable		8,089		8,089		0		8,089		0
Financial liabilities
Deposits	$	1,964,063	$	1,967,314	$	0	$	1,967,314	$	0
Short-term borrowings		7,743		7,743		0		7,743		0
Long-term debt (1)		45,310		43,275		0		35,387		7,888
Subordinated debentures		30,622		32,408		0		32,408		0
Interest payable		881		881		0		881		0
Off-balance sheet instruments		0		0		0		0		0
December 31, 2020
Financial assets
Cash and cash equivalents	$	335,793	$	335,793	$	335,793	$	0	$	0
Securities available-for-sale		185,002		185,002		0		185,002		0
Restricted investment in bank stocks		2,593		N/A		N/A		N/A		N/A
Loans held for sale		15,981		17,228		0		17,228		0
Loans, net		1,523,325		1,527,295		0		0		1,527,295
Interest receivable		8,352		8,352		0		8,352		0
Financial liabilities
Deposits	$	1,863,539	$	1,868,203	$	0	$	1,868,203	$	0
Short-term borrowings		8,540		8,540		0		8,540		0
Long-term debt (1)		45,310		43,005		0		35,571		7,434
Subordinated debentures		30,602		31,159		0		31,159		0
Interest payable		532		532				532		0
Off-balance sheet instruments		0		0		0		0		0
(1) Exclude leases included in Long-term debt

XML

Assets And Liabilities Subject To Offsetting

3 Months Ended

Mar. 31, 2021

Assets And Liabilities Subject To Offsetting [Abstract]

Assets And Liabilities Subject To Offsetting

Note 14—Assets and Liabilities Subject to Offsetting

Securities Sold Under Agreements to Repurchase

PeoplesBank enters into agreements with clients in which it sells securities subject to an obligation to repurchase the same securities (“repurchase agreements”). The contractual maturity of the repurchase agreement is overnight and continues until either party terminates the agreement. These repurchase agreements are accounted for as a collateralized financing arrangement (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as a liability (short-term borrowings) in the Corporation’s consolidated financial statements of condition, while the securities underlying the repurchase agreements are appropriately segregated for safekeeping purposes and remain in the respective securities asset accounts. Thus, there is no offsetting or netting of the securities with the repurchase agreement liabilities.

							Gross amounts Not Offset in
							the Statements of Condition
							Financial Instruments
(dollars in thousands)	Gross ‎Amounts of ‎Recognized ‎Liabilities		Gross ‎Amounts ‎Offset in the ‎Statements ‎of Condition		Net Amounts ‎of Liabilities ‎Presented in ‎the Statements ‎of Condition		U.S. agency ‎mortgage-backed, ‎residential		U.S. agency		Cash ‎Collateral ‎Pledged		Net ‎Amount
March 31, 2021
Repurchase Agreements	$	7,743	$	0	$	7,743	$	(8,673)	$	0	$	0	$	(930)
December 31, 2020
Repurchase Agreements	$	8,540	$	0	$	8,540	$	(10,255)	$	0	$	0	$	(1,715)

‎

XML

Summary Of Significant Accounting Policies (Policy)

3 Months Ended

Mar. 31, 2021

Summary Of Significant Accounting Policies [Abstract]

Nature of Operations and Basis of Presentation

Nature of Operations and Basis of Presentation

The accompanying consolidated balance sheet at December 31, 2020 has been derived from audited financial statements, and the unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, the instructions to Form 10-Q, and Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 270. Accordingly, the interim financial statements do not include all of the financial information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the interim consolidated financial statements include all adjustments necessary to present fairly the financial condition and results of operations for the reported periods, and all such adjustments are of a normal and recurring nature.

Codorus Valley Bancorp, Inc. (“Corporation” or “Codorus Valley”) is a one-bank holding company headquartered in York, Pennsylvania that provides a full range of banking services through its subsidiary, PeoplesBank, A Codorus Valley Company (“PeoplesBank” or “Bank”). As of March 31, 2021, PeoplesBank operates one wholly-owned subsidiary, Codorus Valley Financial Advisors, Inc. d/b/a PeoplesWealth Advisors, which sells nondeposit investment products. In addition, PeoplesBank may periodically create nonbank subsidiaries for the purpose of temporarily holding foreclosed properties pending the liquidation of these properties. PeoplesBank operates under a state charter and is subject to regulation by the Pennsylvania Department of Banking and Securities, and the Federal Deposit Insurance Corporation. The Corporation is subject to regulation by the Federal Reserve Board and the Pennsylvania Department of Banking and Securities.

The consolidated financial statements include the accounts of Codorus Valley and its wholly-owned bank subsidiary, PeoplesBank, and a wholly-owned nonbank subsidiary, SYC Realty Company, Inc. SYC Realty was inactive during the period ended March 31, 2021. The accounts of CVB Statutory Trust No. 1 and No. 2 are not included in the consolidated financial statements as discussed in Note 7—Short-Term Borrowings and Long-Term Debt. All significant intercompany account balances and transactions have been eliminated in consolidation. The accounting and reporting policies of Codorus Valley and subsidiaries conform to accounting principles generally accepted in the United States of America and have been followed on a consistent basis.

These consolidated statements should be read in conjunction with the notes to the audited consolidated financial statements contained in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020.

The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year.

In accordance with FASB ASC 855, the Corporation evaluated the events and transactions that occurred after the balance sheet date of March 31, 2021 and through the date these consolidated financial statements were issued, for items of potential recognition or disclosure.

In December 2019, a coronavirus (COVID-19) was reported in China, and, in March 2020, the World Health Organization declared it a pandemic. Since first being reported in China, the coronavirus has spread to additional countries including the United States. On March 13, 2020, President Trump declared the ongoing COVID–19 pandemic of sufficient severity and magnitude to warrant an emergency declaration for all states, territories, and the District of Columbia.

In response, many state and local governments, including the Commonwealth of Pennsylvania and the State of Maryland, have instituted emergency restrictions that have substantially limited the operation of non-essential businesses and the activities of individuals. It has been widely reported that these restrictions have resulted in significant adverse effects for many different types of businesses, particularly those in the travel, hospitality and food and beverage industries, among many others, and has resulted in a significant number of layoffs and furloughs of employees nationwide and in the regions in which the Corporation operates. The ultimate effect of COVID-19 on the local or broader economy is not known nor is the ultimate length of the restrictions described and any accompanying effects. Moreover, the Federal Reserve has taken action to lower the Federal Funds rate, which has negatively affected interest income and, therefore, earnings. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the coronavirus outbreak, and there is no guarantee that the Corporation’s efforts to address the adverse impacts of the coronavirus will be effective. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and actions taken to contain the coronavirus or its impact, among others.

The effect of COVID-19 and related events, including those described above and those not yet known or knowable, could have a negative effect on the Corporation's business prospects, financial condition and results of operations, as a result of quarantines; market volatility; market downturns; changes in consumer behavior; business closures; deterioration in the credit quality of borrowers or the inability of borrowers to satisfy their obligations (and any related forbearances or restructurings that may be implemented); changes in the value of collateral securing outstanding loans; changes in the value of the investment securities portfolio; effects on key employees, including operational management personnel and those charged with preparing, monitoring and evaluating the Corporation's financial reporting and internal controls; declines in the demand for loans and other banking services and products;

declines in demand resulting from adverse impacts of the disease on businesses deemed to be "non-essential" by governments; and branch or office closures and business interruptions.

In addition, the adverse economic effects of the coronavirus may lead to an increase in credit risk on the Corporation’s commercial and residential loan portfolios. Likewise, the Corporation is also monitoring the fluctuations in the markets as it pertains to interest rates and fair value of our investments for other than temporary impairment (OTTI).

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law. Section 4013 of the CARES Act, “Temporary Relief From Troubled Debt Restructurings,” provides banks the option to temporarily suspend certain requirements under U.S. GAAP related to trouble debt restructurings (TDR) for a limited period of time to account for the effects of COVID-19. Section 541 of the Consolidated Appropriations Act, 2021 (CAA) was signed into law on December 27, 2020, extending the provisions in Section 4013 of the CARES Act to January 1, 2022.

While the Corporation continues to evaluate the disruption caused by the pandemic and impact of the CARES Act, these events may have a material adverse impact on the Corporation’s results of future operations, financial position, capital, and liquidity in fiscal year 2021. Further, a decrease in results of future operations may place a strain on the Corporation’s capital reserve ratios.

Loans

Loans

Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at their outstanding unpaid principal balances less amounts charged off, net of an allowance for loan losses and any deferred fees or costs. Interest income is accrued on the unpaid principal balance. Generally, loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) over the contractual life of the loan. The loans receivable portfolio is segmented into commercial and consumer loans. Commercial loans consist of the following industry classes: builder & developer, commercial real estate investor, residential real estate investor, hotel/motel, wholesale & retail, agriculture, manufacturing, service and all other. Consumer loans consist of the following classes: residential mortgage, home equity and all other.

Generally, for all classes of loans receivable, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan may be currently performing. A past due loan may remain on accrual status if it is in the process of collection and well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income is reversed in the current year. Interest received on nonaccrual loans, including impaired loans, generally is either applied against principal or reported as interest income, according to the Corporation’s judgment as to the collectability of principal. Generally, nonaccrual loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, generally six months, and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments.

Allowance for Loan Losses

Allowance for Loan Losses

The allowance for loan losses represents the Corporation’s estimate of losses inherent in the loan portfolio as of the balance sheet date and is recorded as a reduction to loans. The allowance for loan losses is increased by the provision for loan losses, and decreased by charge-offs, net of recoveries. Loans deemed to be uncollectable are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance. All, or part, of the principal balance of loans receivable are charged off to the allowance as soon as it is determined that the repayment of all, or part, of the principal balance is highly unlikely. While the Corporation attributes a portion of the allowance to individual loans and groups of loans that it evaluates and determines to be impaired, the allowance is available to cover all charge-offs that arise from the loan portfolio.

The allowance for loan losses is maintained at a level considered by management to be adequate to provide for probable incurred losses. The Corporation performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the Corporation’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available.

The allowance consists of specific and general components. The specific component relates to loans that are classified as impaired, generally nonaccrual loans and troubled debt restructurings. For loans that are classified as impaired, an allowance is established when the collateral value (or discounted cash flows or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers pools of loans by loan class, including commercial loans not considered impaired, as well as smaller balance homogeneous loans such as residential real estate, home equity and other consumer loans. These pools of loans are evaluated for loss exposure based upon historical loss rates for each of these classes of loans, adjusted for qualitative (environmental) risk factors. Historical loss rates are based on a two year rolling average of net charge-offs. Qualitative risk factors that supplement

historical losses in the evaluation of loan pools are shown below. Each factor is assigned a value to reflect improving, stable or declining conditions based on the Corporation’s best judgment using relevant information available at the time of the evaluation.

Changes in international, US and local economies and business conditions

Changes in the value of collateral for collateral dependent loans

Changes in the level of concentrations of credit

Changes in the volume and severity of classified and past due loans

Changes in the nature and volume of the portfolio

Changes in collection, charge-off, and recovery procedures

Changes in underwriting standards and loan terms

Changes in the quality of the loan review system

Changes in the experience/ability of lending management and key lending staff

Regulatory and legal regulations that could affect the level of credit losses

Other pertinent environmental factors

Impact of COVID-19 pandemic

As disclosed in Note 4—Loans, the Corporation engages in commercial and consumer lending. Loans are made within the Corporation’s primary market area and surrounding areas, and include the purchase of whole loan or participation interests in loans from other financial institutions. Commercial loans, which pose the greatest risk of loss to the Corporation, whether originated or purchased, are generally secured by real estate. Within the broad commercial loan segment, the builder & developer and commercial real estate investor loan classes generally present a higher level of risk than other commercial loan classifications. This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effect of general economic conditions on income producing properties, unstable real estate prices and the dependency upon successful construction and sale or operation of the real estate project. As a result of the COVID-19 pandemic, the commercial loan segments of hotel/motel and the restaurant and recreation segments included under Other Commercial Loans currently present a higher level of risk than other commercial loan classifications. Within the consumer loan segment, junior (i.e., second) liens present a higher risk to the Corporation because economic and housing market conditions can adversely affect the underlying value of the collateral, which could render the Corporation under-secured or unsecured. In addition, economic and housing market conditions can adversely affect the ability of some borrowers to service their debt.

A loan is considered impaired when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered in determining impairment include payment status and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. The Corporation determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Loans that are deemed impaired are evaluated for impairment loss based on the net realizable value of the collateral, as applicable. Loans that are not collateral dependent will rely on the present value of expected future cash flows discounted at the loan’s effective interest rate to determine impairment loss. Large groups of smaller balance homogeneous loans such as residential mortgage loans, home equity loans and other consumer loans are collectively evaluated for impairment, unless they are classified as impaired.

An allowance for loan losses is established for an impaired commercial loan if its carrying value exceeds its estimated fair value. For commercial loans secured by real estate, estimated fair values are determined primarily through third-party appraisals of the underlying collateral. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the most recent appraisal and the condition of the property. Appraisals are generally discounted to provide for selling costs and other factors to determine an estimate of the net realizable value of the property. For commercial loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrower’s financial statements, inventory reports, accounts receivable aging or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets. In instances when specific consumer related loans become impaired, they may be partially or fully charged off, which eliminates the need for a specific allowance.

Loans whose terms are modified are classified as troubled debt restructurings if the Corporation grants borrowers experiencing financial difficulties concessions that it would not otherwise consider. Concessions granted under a troubled debt restructuring may involve an interest rate that is below the market rate given the associated credit risk of the loan or an extension of a loan’s stated

maturity date. Loans classified as troubled debt restructurings are designated as impaired. Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for a reasonable period of time, generally six consecutive months after modification and future payments are reasonably assured.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. Since that time banking regulators, the SEC and FASB have all issued additional guidance and clarification on various sections of the CARES Act. Section 4013 of the CARES Act provides the option to not apply ASC 310-40 (TDRs) to a loan modification, related specifically to COVID-19 hardships, when the loan was not past due greater than 30 days as of December 31, 2019. Regulators have encouraged financial institutions to work constructively with borrowers in communities and industries affected by COVID-19 using prudent and proactive actions which are in the best interests of the financial institution, the borrower and the economy. The Corporation’s Board of Directors approved a number of options for loan modifications, including interest deferral, full payment deferral, additional extensions of credit, and SBA loan programs (i.e., Economic Injury Disaster Loans, Paycheck Protection Program). As of March 31, 2021, the Corporation has remaining loan modifications totaling approximately $88,000,000. The Corporation has been an active participant in the SBA Paycheck Protection Program (PPP), with outstanding PPP loans as of March 31, 2021 of approximately $152,000,000, which includes $64,000,000 new PPP loans originated in 2021.

Foreclosed Real Estate

Foreclosed Real EstateForeclosed real estate, included in other assets, is comprised of property acquired through a foreclosure proceeding or property that is acquired through in-substance foreclosure. Foreclosed real estate is initially recorded at fair value minus estimated costs to sell at the date of foreclosure, establishing a new cost basis. Any difference between the carrying value and the new cost basis is charged against the allowance for loan losses. Appraisals, obtained from an independent third party, are generally used to determine fair value. After foreclosure, management reviews valuations at least quarterly and adjusts the asset to the lower of cost or fair value minus estimated costs to sell through a valuation allowance or a write-down. Costs related to the improvement of foreclosed real estate are generally capitalized until the real estate reaches a saleable condition subject to fair value limitations. Revenue and expense from operations and changes in the valuation allowance are included in noninterest expense. When a foreclosed real estate asset is ultimately sold, any gain or loss on the sale is included in the income statement as a component of noninterest expense. At March 31, 2021 there was no foreclosed real estate. Included within loans receivable as of March 31, 2021 was a recorded investment of $182,000 of consumer mortgage loans secured by residential real estate properties, for which formal foreclosure proceedings were in process according to local requirements of the applicable jurisdiction.

Mortgage Servicing Rights

Mortgage Servicing Rights

The mortgage servicing rights (MSRs) associated with the sold loans are included in other assets on the consolidated balance sheets at an amount equal to the estimated fair value of the contractual rights to service the mortgage loans. The MSR asset is amortized as a reduction to servicing income. The MSR asset is evaluated periodically for impairment and carried at the lower of amortized cost or fair value. A third party calculates fair value by discounting the estimated cash flows from servicing income using a rate consistent with the risk associated with these assets and an estimate of future net servicing income of the underlying loans. In the event that the amortized cost of the MSR asset exceeds the fair value of the asset, a valuation allowance would be established through a charge against servicing income. Subsequent fair value evaluations may determine that impairment has been reduced or eliminated, in which case the valuation allowance would be reduced through a credit to earnings. At March 31, 2021, the balance of residential mortgage loans serviced for third parties was $80,609,000 compared to $87,142,000 at December 31, 2020.

		Three months ended
		March 31,
(dollars in thousands)		2021		2020
Amortized cost:
Balance at beginning of period	$	511	$	965
Originations of mortgage servicing rights		16		13
Amortization expense		(91)		(66)
Valuation allowance		88		(173)
Balance at end of period	$	524	$	739

Goodwill and Core Deposit Intangible Assets

Goodwill and Core Deposit Intangible Assets

Goodwill arising from acquisitions is not amortized, but is subject to an annual impairment test. This test consists of a qualitative analysis. If the Corporation determines events or circumstances indicate that it is more likely than not that goodwill is impaired, a quantitative analysis must be completed. Analyses may also be performed between annual tests. Significant judgment is applied when goodwill is assessed for impairment. This judgment includes developing cash flow projections, selecting appropriate discount rates, identifying relevant market comparables, incorporating general economic and market conditions, and selecting an appropriate control premium. The Corporation completes its annual goodwill impairment test on October 1st of each year. Based upon a qualitative and quantitative analysis of goodwill, the Corporation concluded that the amount of recorded goodwill was not impaired as of October 1, 2020.

Core deposit intangibles represent the value assigned to demand, interest checking, money market, and savings accounts acquired as part of an acquisition. The core deposit intangible value represents the future economic benefit of potential cost savings from acquiring core deposits as part of an acquisition compared to the cost of alternative funding sources and the alternative cost to grow a similar core deposit base. The core deposit intangible asset resulting from the merger with Madison Bancorp, Inc. was determined to have a definite life and is being amortized using the sum of the years’ digits method over ten years. All intangible assets must be evaluated for impairment if certain events or changes in circumstances occur. Any impairment write-downs would be recognized as expense on the consolidated statements of income.

Revenue from Contracts with Customers

Revenue from Contracts with Customers

Revenue from contracts with customers that are required to be recognized under FASB ASC Topic 606 - Revenue from Contracts with Customers (ASC 606) is measured based on consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Corporation recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer.

The majority of the Corporation’s revenue-generating transactions are not within the scope of ASC 606, including revenue generated from financial instruments, such as our loans, letters of credit, derivatives and investment securities, as well as revenue related to our mortgage servicing activities, as these activities are subject to other U.S. Generally Accepted Accounting Principles (GAAP) discussed elsewhere within our disclosures. Descriptions of our revenue-generating activities that are within the scope of ASC 606, which are presented in our consolidated statements of income as components of non-interest income are as follows:

Trust and investment service fees – The Corporation provides trust, investment management custody and irrevocable life insurance trust services to customers. Such services are rendered in accordance with the underlying contracts for which fees are earned. The Corporation’s performance obligations are generally satisfied, and the related revenue recognized, over the period in which the service is provided. Payment for services rendered is primarily received in the following month.

Income from mutual fund, annuity and insurance sales – The Corporation sells mutual funds, annuity and insurance products to its customers. The Corporation’s performance obligation is met upon the signing of the product agreement and, in certain cases, a time component may exist when the customer has the right to rescind the agreement with or without penalty. The Corporation recognizes revenues upon delivery of the product or service unless there is a time component in which case revenues are recognized utilizing the expected value method. Payment for services rendered is primarily received in the following month.

Service charges on deposits accounts – These represent general service fees for monthly account maintenance and activity- or transaction based fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Other service charges include revenue from processing wire transfers, cashier’s checks and other services. Revenue is recognized when the performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to the customers’ accounts.

Other noninterest income – The Corporation evaluated individual components of other noninterest income, such as credit card merchant fees, credit and gift card fees and ATM fees. Debit card income is primarily comprised of interchange fees earned whenever the Corporation’s debit cards are processed through payment networks, such as Visa. Credit and gift card income is realized through a third party provider who issues cards as private label in the Corporation’s name. ATM fees are primarily generated when a non-Corporation cardholder uses a Corporation ATM. The income is primarily comprised as a percentage of interchange fees earned whenever the issuer’s card is processed through card payment networks, such as Visa or Pulse. Merchant services income is realized through a third party service provider who is contracted by the Corporation under a referral arrangement. Such fees represent fees charged to merchants to process their debit card transactions. The Corporation’s performance obligation for these fees are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received within a one to three day lag or in the following month.

Per Share Data

Per Share Data

The computation of net income per share is provided in the table below.

	Three months ended
	March 31,
(in thousands, except per share data)	2021		2020
Net income (loss)	$	3,900	$	(2,989)
Weighted average shares outstanding (basic)		9,842		9,759
Effect of dilutive stock options		25		53
Weighted average shares outstanding (diluted)		9,867		9,812
Basic earnings (loss) per share	$	0.40	$	(0.31)
Diluted earnings (loss) per share	$	0.40	$	(0.31)

Comprehensive Income

Comprehensive IncomeAccounting principles generally accepted in the United States require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the shareholders’ equity section of the balance sheet, such items, along with net income, are components of comprehensive income.

Cash Flow Information

Cash Flow Information

For purposes of the consolidated statements of cash flows, the Corporation considers interest bearing deposits with banks, cash and due from banks, and federal funds sold to be cash and cash equivalents.

Supplemental cash flow information is provided in the table below.

		Three months ended
		March 31,
(dollars in thousands)		2021		2020
Cash paid during the period for:
Income taxes	$	0	$	0
Interest	$	2,549	$	4,877
Noncash investing and financing activities:
Transfer of loans to foreclosed real estate	$	0	$	121
Initial recognition of operating lease right-of-use assets	$	0	$	186
Initial recognition of operating lease liabilities	$	0	$	186

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Pronouncements Adopted in 2021

In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20). The amendments in this update remove disclosures that are no longer considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. The update is effective for fiscal years ending after December 15, 2020. The adoption of this standard did not have a material impact on its consolidated financial statements.

Pronouncements Not Yet Effective

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326). This standard adds a new Topic 326 which requires companies to measure and record impairment on financial instruments at the time of origination using the expected credit loss (CECL) model. The CECL model calculates impairment based on historical experience, current conditions, and reasonable and supportable forecasts, and reflects the organization’s current estimate of all expected credit losses over the contractual term of its financial assets. The new standard was delayed and is now effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Corporation expects the provisions of ASU No. 2016-13 to impact its consolidated financial statements, in particular, the level of the reserve for credit losses. The Corporation is continuing to evaluate the extent of the potential impact and expects that portfolio composition and economic conditions at the time of adoption will be a factor.

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Summary Of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2021

Summary Of Significant Accounting Policies [Abstract]

Summary Of Changes In Mortgage Service Rights

		Three months ended
		March 31,
(dollars in thousands)		2021		2020
Amortized cost:
Balance at beginning of period	$	511	$	965
Originations of mortgage servicing rights		16		13
Amortization expense		(91)		(66)
Valuation allowance		88		(173)
Balance at end of period	$	524	$	739

Schedule Of Computation Of Net Income Per Share

	Three months ended
	March 31,
(in thousands, except per share data)	2021		2020
Net income (loss)	$	3,900	$	(2,989)
Weighted average shares outstanding (basic)		9,842		9,759
Effect of dilutive stock options		25		53
Weighted average shares outstanding (diluted)		9,867		9,812
Basic earnings (loss) per share	$	0.40	$	(0.31)
Diluted earnings (loss) per share	$	0.40	$	(0.31)

Schedule Of Supplemental Cash Flow Information

		Three months ended
		March 31,
(dollars in thousands)		2021		2020
Cash paid during the period for:
Income taxes	$	0	$	0
Interest	$	2,549	$	4,877
Noncash investing and financing activities:
Transfer of loans to foreclosed real estate	$	0	$	121
Initial recognition of operating lease right-of-use assets	$	0	$	186
Initial recognition of operating lease liabilities	$	0	$	186

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Securities (Tables)

3 Months Ended

Mar. 31, 2021

Securities [Abstract]

Summary Of Securities Available-For-Sale

	Amortized		Gross Unrealized				Fair
(dollars in thousands)	Cost		Gains		Losses		Value
March 31, 2021
Debt securities:
U.S. agency	$	14,000	$	0	$	(73)	$	13,927
U.S. agency mortgage-backed, residential		120,786		3,125		(890)		123,021
State and municipal		30,576		253		(660)		30,169
Corporates		12,323		175		(65)		12,433
Total debt securities	$	177,685	$	3,553	$	(1,688)	$	179,550
December 31, 2020
Debt securities:
U.S. agency	$	40,000	$	0	$	0	$	40,000
U.S. agency mortgage-backed, residential		106,792		4,133		(29)		110,896
State and municipal		24,014		311		(25)		24,300
Corporates		9,681		139		(14)		9,806
Total debt securities	$	180,487	$	4,583	$	(68)	$	185,002

Schedule Of Gross Realized Gains And Losses On Sales Of Securities Available-For-Sale

	Three months ended
	March 31,
(dollars in thousands)	2021		2020
Proceeds	$	3,803	$	19,852
Gross gains		24		74
Gross losses		(47)		(59)

Schedule Of Amortized Cost And Estimated Fair Value Of Debt Securities

	Available-for-sale
	Amortized		Fair
(dollars in thousands)	Cost		Value
Due in one year or less	$	15,432	$	15,468
Due after one year through five years		77,513		79,896
Due after five years through ten years		45,595		45,321
Due after ten years		39,145		38,865
Total debt securities	$	177,685	$	179,550

Schedule Of Gross Unrealized Losses And Fair Value, Aggregated By Investment Category And Length Of Time

	Less than 12 months					12 months or more					Total
	Number of	Fair		Unrealized		Number of	Fair		Unrealized		Number of	Fair		Unrealized
(dollars in thousands)	Securities	Value		Losses		Securities	Value		Losses		Securities	Value		Losses
March 31, 2021
Debt securities:
U.S. agency	2	$	13,927	$	(73)	0	$	0	$	0	2	$	13,927	$	(73)
U.S. agency mortgage-backed, residential	20		36,267		(890)	0		0		0	20		36,267		(890)
State and municipal	21		19,369		(660)	0		0		0	21		19,369		(660)
Corporates	5		3,986		(65)	0		0		0	5		3,986		(65)
Total temporarily impaired debt
securities, available-for-sale	48	$	73,549	$	(1,688)	0	$	0	$	0	48	$	73,549	$	(1,688)
December 31, 2020
Debt securities:
U.S. agency	2	$	40,000	$	0	0	$	0	$	0	2	$	40,000	$	0
U.S. agency mortgage-backed, residential	8		8,706		(29)	0		0		0	8		8,706		(29)
State and municipal	4		3,808		(25)	0		0		0	4		3,808		(25)
Corporates	3		4,075		(14)	0		0		0	3		4,075		(14)
Total temporarily impaired debt
securities, available-for-sale	17	$	56,589	$	(68)	0	$	0	$	0	17	$	56,589	$	(68)

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Loans (Tables)

3 Months Ended

Mar. 31, 2021

Loans [Abstract]

Schedule Of Loan Portfolio Composition

	March 31,		% Total		December 31,		% Total
(dollars in thousands)	2021		Loans		2020		Loans
Builder & developer	$	144,777		9.2	$	147,609		9.6
Commercial real estate investor		272,919		17.3		236,924		15.3
Residential real estate investor		233,669		14.8		238,458		15.4
Hotel/Motel		81,045		5.1		79,421		5.2
Wholesale & retail		99,216		6.3		108,425		7.0
Manufacturing		84,082		5.3		79,142		5.1
Agriculture		86,008		5.4		80,450		5.2
Service		87,812		5.6		76,838		5.0
Other		276,108		17.5		280,616		18.2
Total commercial related loans		1,365,636		86.5		1,327,883		86.0
Residential mortgages		95,028		6.0		95,751		6.2
Home equity		94,980		6.0		96,711		6.3
Other		23,507		1.5		24,244		1.5
Total consumer related loans		213,515		13.5		216,706		14.0
Total loans	$	1,579,151		100.0	$	1,544,589		100.0

Summary Of Loan Risk Ratings By Loan Class

			Special
(dollars in thousands)	Pass		Mention		Substandard		Nonaccrual		Total
March 31, 2021
Builder & developer	$	131,672	$	9,318	$	2,965	$	822	$	144,777
Commercial real estate investor		266,920		4,759		1,047		193		272,919
Residential real estate investor		229,636		474		686		2,873		233,669
Hotel/Motel		49,967		537		18,090		12,451		81,045
Wholesale & retail		90,772		6,987		1,457		0		99,216
Manufacturing		72,735		0		3,608		7,739		84,082
Agriculture		78,712		421		3,774		3,101		86,008
Service		81,832		249		4,760		971		87,812
Other		251,358		1,452		13,597		9,701		276,108
Total commercial related loans		1,253,604		24,197		49,984		37,851		1,365,636
Residential mortgage		95,017		0		11		0		95,028
Home equity		94,276		49		0		655		94,980
Other		23,250		0		0		257		23,507
Total consumer related loans		212,543		49		11		912		213,515
Total loans	$	1,466,147	$	24,246	$	49,995	$	38,763	$	1,579,151
December 31, 2020
Builder & developer	$	133,804	$	11,305	$	2,121	$	379	$	147,609
Commercial real estate investor		230,113		6,379		231		201		236,924
Residential real estate investor		234,316		1,215		130		2,797		238,458
Hotel/Motel		48,264		542		18,143		12,472		79,421
Wholesale & retail		99,821		8,591		13		0		108,425
Manufacturing		67,968		0		3,610		7,564		79,142
Agriculture		72,829		416		3,776		3,429		80,450
Service		75,618		249		0		971		76,838
Other		256,040		1,481		13,804		9,291		280,616
Total commercial related loans		1,218,773		30,178		41,828		37,104		1,327,883
Residential mortgage		95,466		123		11		151		95,751
Home equity		96,026		55		0		630		96,711
Other		23,954		0		0		290		24,244
Total consumer related loans		215,446		178		11		1,071		216,706
Total loans	$	1,434,219	$	30,356	$	41,839	$	38,175	$	1,544,589

Summary Of Impaired Loans

	With No Allowance				With A Related Allowance						Total
	Recorded		Unpaid		Recorded		Unpaid		Related		Recorded		Unpaid
(dollars in thousands)	Investment		Principal		Investment		Principal		Allowance		Investment		Principal
March 31, 2021
Builder & developer	$	1,016	$	1,084	$	0	$	0	$	0	$	1,016	$	1,084
Commercial real estate investor		1,108		1,118		0		0		0		1,108		1,118
Residential real estate investor		657		944		2,216		2,216		416		2,873		3,160
Hotel/Motel		12,451		12,453		0		0		0		12,451		12,453
Wholesale & retail		236		236		0		0		0		236		236
Manufacturing		7,739		7,858		0		0		0		7,739		7,858
Agriculture		2,025		2,172		1,078		1,154		570		3,103		3,326
Service		971		1,061		0		0		0		971		1,061
Other commercial		5,550		5,935		4,151		4,523		3,442		9,701		10,458
Total impaired commercial related loans		31,753		32,861		7,445		7,893		4,428		39,198		40,754
Residential mortgage		0		0		0		0		0		0		0
Home equity		655		686		0		0		0		655		686
Other consumer		257		271		0		0		0		257		271
Total impaired consumer related loans		912		957		0		0		0		912		957
Total impaired loans	$	32,665	$	33,818	$	7,445	$	7,893	$	4,428	$	40,110	$	41,711

December 31, 2020
Builder & developer	$	575	$	790	$	0	$	0	$	0	$	575	$	790
Commercial real estate investor		1,163		1,170		0		0		0		1,163		1,170
Residential real estate investor		581		862		2,216		2,216		216		2,797		3,078
Hotel/Motel		12,472		12,472		0		0		0		12,472		12,472
Wholesale & retail		237		237		0		0		0		237		237
Manufacturing		7,564		7,564		0		0		0		7,564		7,564
Agriculture		2,270		2,382		1,159		1,217		615		3,429		3,599
Service		971		1,061		0		0		0		971		1,061
Other commercial		5,739		5,954		3,552		3,888		2,481		9,291		9,842
Total impaired commercial related loans		31,572		32,492		6,927		7,321		3,312		38,499		39,813
Residential mortgage		151		151		0		0		0		151		151
Home equity		630		653		0		0		0		630		653
Other consumer		290		301		0		0		0		290		301
Total impaired consumer related loans		1,071		1,105		0		0		0		1,071		1,105
Total impaired loans	$	32,643	$	33,597	$	6,927	$	7,321	$	3,312	$	39,570	$	40,918

‎

The table below presents a summary of average impaired loans and related interest income that was included in net income for the three months ended March 31, 2021 and 2020. Interest income on loans with no related allowance is the result of interest collected on a cash basis, except accruing TDRs.

	With No Related Allowance				With A Related Allowance				Total
	Average		Total		Average		Total		Average		Total
	Recorded		Interest		Recorded		Interest		Recorded		Interest
(dollars in thousands)	Investment		Income		Investment		Income		Investment		Income
Three months ended March 31, 2021
Builder & developer	$	796	$	0	$	0	$	0	$	796	$	0
Commercial real estate investor		1,136		11		0		0		1,136		11
Residential real estate investor		618		0		2,216		0		2,834		0
Hotel/Motel		12,461		0		0		0		12,461		0
Wholesale & retail		236		1		0		0		236		1
Manufacturing		7,651		0		0		0		7,651		0
Agriculture		2,147		37		1,119		0		3,266		37
Service		971		0		0		0		971		0
Other commercial		6,130		0		3,851		0		9,981		0
Total impaired commercial related loans		32,146		49		7,186		0		39,332		49
Residential mortgage		76		0		0		0		76		0
Home equity		643		0		0		0		643		0
Other consumer		274		3		0		0		274		3
Total impaired consumer related loans		993		3		0		0		993		3
Total impaired loans	$	33,139	$	52	$	7,186	$	0	$	40,325	$	52
Three months ended March 31, 2020
Builder & developer	$	957	$	12	$	308	$	0	$	1,265	$	12
Commercial real estate investor		1,347		22		0		0		1,347		22
Residential real estate investor		844		6		5,020		0		5,864		6
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		272		2		7,127		0		7,399		2
Manufacturing		13		3		1,073		0		1,086		3
Agriculture		2,098		19		1,012		0		3,110		19
Service		704		1		0		0		704		1
Other commercial		2,113		30		3,634		0		5,747		30
Total impaired commercial related loans		8,348		95		18,174		0		26,522		95
Residential mortgage		214		3		0		0		214		3
Home equity		672		21		0		0		672		21
Other consumer		223		3		0		0		223		3
Total impaired consumer related loans		1,109		27		0		0		1,109		27
Total impaired loans	$	9,457	$	122	$	18,174	$	0	$	27,631	$	122

Summary Of Past Due Loans, Nonaccrual Loans And Current Loans By Loan Segment And Class

					≥ 90 Days
	30-59		60-89		Past Due				Total Past
	Days		Days		and				Due and				Total
(dollars in thousands)	Past Due		Past Due		Accruing		Nonaccrual		Nonaccrual		Current		Loans
March 31, 2021
Builder & developer	$	0	$	282	$	363	$	822	$	1,467	$	143,310	$	144,777
Commercial real estate investor		819		0		0		193		1,012		271,907		272,919
Residential real estate investor		0		0		0		2,873		2,873		230,796		233,669
Hotel/Motel		0		0		0		12,451		12,451		68,594		81,045
Wholesale & retail		198		38		0		0		236		98,980		99,216
Manufacturing		0		0		0		7,739		7,739		76,343		84,082
Agriculture		0		3,379		0		3,101		6,480		79,528		86,008
Service		0		0		0		971		971		86,841		87,812
Other		64		0		1,035		9,701		10,800		265,308		276,108
Total commercial related loans		1,081		3,699		1,398		37,851		44,029		1,321,607		1,365,636
Residential mortgage		67		153		0		0		220		94,808		95,028
Home equity		0		0		109		655		764		94,216		94,980
Other		1,423		373		0		257		2,053		21,454		23,507
Total consumer related loans		1,490		526		109		912		3,037		210,478		213,515
Total loans	$	2,571	$	4,225	$	1,507	$	38,763	$	47,066	$	1,532,085	$	1,579,151
December 31, 2020
Builder & developer	$	427	$	489	$	322	$	379	$	1,617	$	145,992	$	147,609
Commercial real estate investor		0		0		0		201		201		236,723		236,924
Residential real estate investor		136		0		0		2,797		2,933		235,525		238,458
Hotel/Motel		0		0		0		12,472		12,472		66,949		79,421
Wholesale & retail		29		0		0		0		29		108,396		108,425
Manufacturing		0		0		0		7,564		7,564		71,578		79,142
Agriculture		0		0		0		3,429		3,429		77,021		80,450
Service		0		709		0		971		1,680		75,158		76,838
Other		679		887		0		9,291		10,857		269,759		280,616
Total commercial related loans		1,271		2,085		322		37,104		40,782		1,287,101		1,327,883
Residential mortgage		0		0		937		151		1,088		94,663		95,751
Home equity		206		177		36		630		1,049		95,662		96,711
Other		717		321		0		290		1,328		22,916		24,244
Total consumer related loans		923		498		973		1,071		3,465		213,241		216,706
Total loans	$	2,194	$	2,583	$	1,295	$	38,175	$	44,247	$	1,500,342	$	1,544,589

Summary Of Loans Modified Under TDRs

	Modifications
		Pre-Modification	Post-Modification
	Number	Outstanding	Outstanding	Recorded
	of	Recorded	Recorded	Investment
(dollars in thousands)	Contracts	Investments	Investments	at Period End
Three months ended:
March 31, 2021
None
March 31, 2020
None

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Allowance For Loan Losses (Tables)

3 Months Ended

Mar. 31, 2021

Allowance For Loan Losses [Abstract]

Summary Of Allowance For Loan Losses By Loan Segment And Class

	Allowance for Loan Losses
	January 1, 2021								March 31, 2021
(dollars in thousands)	Balance		Charge-offs		Recoveries		Provision		Balance
Builder & developer	$	2,034	$	0	$	0	$	32	$	2,066
Commercial real estate investor		3,177		0		0		233		3,410
Residential real estate investor		3,944		(50)		4		111		4,009
Hotel/Motel		1,440		0		0		208		1,648
Wholesale & retail		2,416		0		0		(305)		2,111
Manufacturing		840		0		0		(65)		775
Agriculture		1,288		0		0		163		1,451
Service		457		0		0		281		738
Other commercial		5,002		(42)		1		603		5,564
Total commercial related loans		20,598		(92)		5		1,261		21,772
Residential mortgage		256		0		0		0		256
Home equity		287		(5)		2		(2)		282
Other consumer		101		(7)		13		(9)		98
Total consumer related loans		644		(12)		15		(11)		636
Unallocated		22		0		0		(19)		3
Total	$	21,264	$	(104)	$	20	$	1,231	$	22,411

	Allowance for Loan Losses
	January 1, 2020								March 31, 2020
(dollars in thousands)	Balance		Charge-offs		Recoveries		Provision		Balance
Builder & developer	$	2,263	$	(170)	$	0	$	133	$	2,226
Commercial real estate investor		2,565		0		0		117		2,682
Residential real estate investor		4,632		0		3		124		4,759
Hotel/Motel		742		0		0		314		1,056
Wholesale & retail		3,575		0		7		976		4,558
Manufacturing		1,252		0		0		64		1,316
Agriculture		1,304		0		0		(164)		1,140
Service		367		0		0		6		373
Other commercial		3,837		(7,511)		0		7,766		4,092
Total commercial related loans		20,537		(7,681)		10		9,336		22,202
Residential mortgage		158		0		0		77		235
Home equity		203		0		0		101		304
Other consumer		167		(5)		13		(78)		97
Total consumer related loans		528		(5)		13		100		636
Unallocated		1		0		0		(1)		0
Total	$	21,066	$	(7,686)	$	23	$	9,435	$	22,838

Summary Of Allowance Amount For Loans Individually And Collectively Evaluated For Impairment

	Allowance for Loan Losses						Loans
	Individually		Collectively				Individually		Collectively
	Evaluated For		Evaluated For				Evaluated For		Evaluated For
(dollars in thousands)	Impairment		Impairment		Balance		Impairment		Impairment		Balance
March 31, 2021
Builder & developer	$	0	$	2,066	$	2,066	$	1,016	$	143,761	$	144,777
Commercial real estate investor		0		3,410		3,410		1,108		271,811		272,919
Residential real estate investor		416		3,593		4,009		2,873		230,796		233,669
Hotel/Motel		0		1,648		1,648		12,451		68,594		81,045
Wholesale & retail		0		2,111		2,111		236		98,980		99,216
Manufacturing		0		775		775		7,739		76,343		84,082
Agriculture		570		881		1,451		3,103		82,905		86,008
Service		0		738		738		971		86,841		87,812
Other commercial		3,442		2,122		5,564		9,701		266,407		276,108
Total commercial related		4,428		17,344		21,772		39,198		1,326,438		1,365,636
Residential mortgage		0		256		256		0		95,028		95,028
Home equity		0		282		282		655		94,325		94,980
Other consumer		0		98		98		257		23,250		23,507
Total consumer related		0		636		636		912		212,603		213,515
Unallocated		0		3		3		0		0		0
Total	$	4,428	$	17,983	$	22,411	$	40,110	$	1,539,041	$	1,579,151

December 31, 2020
Builder & developer	$	0	$	2,034	$	2,034	$	575	$	147,034	$	147,609
Commercial real estate investor		0		3,177		3,177		1,163		235,761		236,924
Residential real estate investor		216		3,728		3,944		2,797		235,661		238,458
Hotel/Motel		0		1,440		1,440		12,472		66,949		79,421
Wholesale & retail		0		2,416		2,416		237		108,188		108,425
Manufacturing		0		840		840		7,564		71,578		79,142
Agriculture		615		673		1,288		3,429		77,021		80,450
Service		0		457		457		971		75,867		76,838
Other commercial		2,481		2,521		5,002		9,291		271,325		280,616
Total commercial related		3,312		17,286		20,598		38,499		1,289,384		1,327,883
Residential mortgage		0		256		256		151		95,600		95,751
Home equity		0		287		287		630		96,081		96,711
Other consumer		0		101		101		290		23,954		24,244
Total consumer related		0		644		644		1,071		215,635		216,706
Unallocated		0		22		22		0		0		0
Total	$	3,312	$	17,952	$	21,264	$	39,570	$	1,505,019	$	1,544,589

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Deposits (Tables)

3 Months Ended

Mar. 31, 2021

Deposits

Schedule Of Composition Of Deposits

	March 31,		December 31,
(dollars in thousands)	2021		2020
Noninterest bearing demand	$	483,004	$	396,947
Interest bearing demand		245,690		224,764
Money market		581,995		598,398
Savings		126,893		111,143
Time deposits less than $100		280,076		283,910
Time deposits $100 to $250		177,307		180,674
Time deposits $250 or more		69,098		67,703
Total deposits	$	1,964,063	$	1,863,539

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Short-Term Borrowings And Long-Term Debt (Tables)

3 Months Ended

Mar. 31, 2021

Short-Term Borrowings And Long-Term Debt [Abstract]

Summary Of Long-Term Debt

	March 31,		December 31,
(dollars in thousands)	2021		2020
PeoplesBank’s obligations:
Federal Home Loan Bank of Pittsburgh (FHLBP)
Due June 2021, 2.81%	$	10,000	$	10,000
Due June 2021, 2.14%		15,000		15,000
Due May 2022, 2.93%		10,000		10,000
Total FHLBP	$	35,000	$	35,000
Codorus Valley Bancorp, Inc. obligations:
Junior subordinated debt
Due 2034, 2.20%, floating rate based on 3 month
LIBOR plus 2.02%, callable quarterly		3,093		3,093
Due 2036, 1.78% floating rate based on 3 month
LIBOR plus 1.54%, callable quarterly		7,217		7,217
Due 2030, 4.50% fixed rate, callable on or after December 2025		30,622		30,602
Total junior subordinated debt	$	40,932	$	40,912
Lease obligations included in long-term debt:
Finance lease liabilities		1,289		1,296
Total long-term debt	$	77,221	$	77,208

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Leases (Tables)

3 Months Ended

Mar. 31, 2021

Leases [Abstract]

Components of Lease Expense

	Three months ended
	March 31,
(dollars in thousands)	2021		2020
Operating lease cost	$	169	$	203
Finance lease cost:
Amortization of right-of-use assets	$	12	$	12
Interest on lease liability		12		12
Total finance lease cost	$	24	$	24
Total lease cost	$	193	$	227

Supplemental Cash Flow Information Related to Leases

	Three months ended
	March 31,
	2021		2020
Operating cash flows from operating leases	$	173	$	208
Operating cash flows from financing leases		12		12
Financing cash flows from financing leases		7		6
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		0		186
Finance leases		0		0

Supplemental Balance Sheet Information Related to Leases

	March 31,		December 31,
	2021		2020
Assets:
Operating leases right-of-use assets	$	2,198	$	2,386
Finance leases assets		1,076		1,087
Total lease assets	$	3,274	$	3,473
Liabilities:
Operating	$	2,325	$	2,515
Financing		1,289		1,296
Total lease liabilities	$	3,614	$	3,811
Weighted Average Remaining Lease Term (years)
Operating leases		4.5		5.2
Finance leases		22.9		23.2
Weighted Average Discount Rate
Operating leases		2.63%		2.68%
Finance leases		3.69%		3.69%

Future Minimum Payments for Financing Leases and Operating Leases

(dollars in thousands:)	March 31, 2021
Year Ending December 31,	Operating Leases		Finance Leases
2021	$	500	$	56
2022		611		75
2023		484		75
2024		397		75
2025		176		79
Thereafter		304		1,588
Total lease payments		2,472		1,948
Less imputed interest		(147)		(659)
Total	$	2,325	$	1,289

(dollars in thousands:)	December 31, 2020
Year Ending December 31,	Operating Leases		Finance Leases
2021	$	667	$	75
2022		604		75
2023		489		75
2024		413		75
2025		192		79
Thereafter		317		1,588
Total lease payments		2,682		1,967
Less imputed interest		(167)		(671)
Total	$	2,515	$	1,296

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Regulatory Matters (Tables)

3 Months Ended

Mar. 31, 2021

Regulatory Matters [Abstract]

Schedule Of Risk-Based Capital Ratios And Leverage Ratios

					Minimum for Basel III				Well Capitalized
	Actual (1)				Capital Adequacy				Minimum (2)
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Codorus Valley Bancorp, Inc. (consolidated)
at March 31, 2021
Capital ratios:
Common equity Tier 1	$	194,747	13.13	%	$	103,788	7.00	%		n/a	n/a
Tier 1 risk based		204,747	13.81			126,029	8.50			n/a	n/a
Total risk based		253,951	17.13			155,683	10.50			n/a	n/a
Leverage		204,747	9.39			87,203	4.00			n/a	n/a
at December 31, 2020
Capital ratios:
Common equity Tier 1	$	191,863	13.10	%	$	102,504	7.00	%		n/a	n/a
Tier 1 risk based		201,863	13.79			124,469	8.50			n/a	n/a
Total risk based		250,806	17.13			153,756	10.50			n/a	n/a
Leverage		201,863	9.58			84,250	4.00			n/a	n/a
PeoplesBank, A Codorus Valley Company
at March 31, 2021
Capital ratios:
Common equity Tier 1	$	221,272	14.96	%	$	103,570	7.00	%	$	96,172	6.50	%
Tier 1 risk based		221,272	14.96			125,763	8.50			118,365	8.00
Total risk based		239,815	16.21			155,355	10.50			147,957	10.00
Leverage		221,272	10.17			87,070	4.00			108,838	5.00
at December 31, 2020
Capital ratios:
Common equity Tier 1	$	198,184	13.56	%	$	102,274	7.00	%	$	94,968	6.50	%
Tier 1 risk based		198,184	13.56			124,190	8.50			116,884	8.00
Total risk based		216,484	14.82			153,411	10.50			146,105	10.00
Leverage		198,184	9.43			84,109	4.00			105,137	5.00

 (1) Net unrealized gains and losses on securities available-for-sale, net of taxes, are disregarded for capital ratio computation purposes in accordance with federal regulatory banking guidelines.

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

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Fair Value Of Assets And Liabilities (Tables)

3 Months Ended

Mar. 31, 2021

Fair Value Of Assets And Liabilities [Abstract]

Schedule Of Assets Measured At Fair Value On Recurring Basis

			Fair Value Measurements
(dollars in thousands)	Total		(Level 1) ‎Quoted Prices in ‎Active Markets for ‎Identical Assets		(Level 2) ‎Significant Other ‎Observable Inputs		(Level 3) ‎Significant Other ‎Unobservable Inputs
March 31, 2021
Securities available-for-sale:
U.S. agency		13,927		0		13,927		0
U.S. agency mortgage-backed, residential		123,021		0		123,021		0
State and municipal		30,169		0		30,169		0
Corporate debt		12,433		0		12,433		0
December 31, 2020
Securities available-for-sale:
U.S. agency		40,000		0		40,000		0
U.S. agency mortgage-backed, residential		110,896		0		110,896		0
State and municipal		24,300		0		24,300		0
Corporates		9,806		0		9,806		0

Schedule Of Assets Measured At Fair Value On Nonrecurring Basis

			Fair Value Measurements
(dollars in thousands)		Total	(Level 1) ‎Quoted Prices in ‎Active Markets for ‎Identical Assets		(Level 2) ‎Significant Other ‎Observable Inputs		(Level 3) ‎Significant Other ‎Unobservable Inputs
March 31, 2021
Impaired builder & developer loans	$	196	$	0	$	0	$	196
Impaired residential real estate investor loans		2,009		1,800		0		209
Impaired agriculture loans		508		0		0		508
Impaired other loans		709		0		0		709
Mortgage servicing rights		147		0		0		147
December 31, 2020
Impaired builder & developer loans	$	196	$	0	$	0	$	196
Impaired residential real estate investor loans		2,209		2,000		0		209
Impaired agriculture loans		544		0		0		544
Impaired other loans		1,071		0		0		1,071
Mortgage servicing rights		511		0		0		511

Schedule Of Level 3 Assets Measured At Fair Value On Nonrecurring Basis

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value		Valuation	Unobservable		Weighted
(dollars in thousands)	Estimate		Techniques	Input	Range	Average
March 31, 2021
Impaired builder & developer loans	$	196	Appraisal (1)	Appraisal adjustments (2)	15% -15%	15%
Impaired residential real estate investor loans		209	Appraisal (1)	Appraisal adjustments (2)	15%-15%	15%
Impaired agriculture loans		508	Appraisal (1)	Appraisal adjustments (2)	22% -25%	23%
Impaired other loans		441	Appraisal (1)	Appraisal adjustments (2)	15% - 25%	20%
Impaired other loans		268	Business asset valuation (3)	Business asset valuation adjustments (4)	50% - 50%	50%
Mortgage Servicing Rights		147	Multiple of annual service fee	Estimated prepayment speed based on rate and term	13.8% - 13.8%	13.8%
December 31, 2020
Impaired builder & developer loans	$	196	Appraisal (1)	Appraisal adjustments (2)	15% - 15%	15%
Impaired residential real estate investor loans		209	Appraisal (1)	Appraisal adjustments (2)	15% - 15%	15
Impaired agriculture loans		544	Appraisal (1)	Appraisal adjustments (2)	25% - 25%	25%
Impaired other loans		89	Appraisal (1)	Appraisal adjustments (2)	15% - 15%	15%
Impaired other loans		982	Business asset valuation (3)	Business asset valuation adjustments (4)	40% - 50%	44%
Mortgage servicing rights		511	Multiple of annual service fee	Estimated prepayment speed based on rate and term	18.5% - 18.5%	18.5%

(1)Fair value is generally determined through independent appraisals, which generally include various level 3 inputs that are not identifiable.

(2)Appraisal amounts may be adjusted downward by the Corporation's management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expense adjustments are presented as a percent of the appraisal.

(3)Fair value is generally determined through customer-provided financial statements and bankruptcy court documents.

(4)Business asset valuation may be adjusted downward by the corporation's management qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses adjustments are presented as a percent of the financial statement book value.

Schedule Of Carrying Amounts And Estimated Fair Values Of Financial Instruments

						Fair Value Estimates
					(Level 1)		(Level 2)		(Level 3)
					Quoted Prices		Significant		Significant
					in Active		Other		Other
	Carrying		Estimated		Markets for		Observable		Unobservable
(dollars in thousands)	Amount		Fair Value		Identical Assets		Inputs		Inputs
March 31, 2021
Financial assets
Cash and cash equivalents	$	426,904	$	426,904	$	426,904	$	0	$	0
Securities available-for-sale		179,550		179,550		0		179,550		0
Restricted investment in bank stocks		2,278		N/A		N/A		N/A		N/A
Loans held for sale		13,324		14,592		0		14,592		0
Loans, net		1,556,740		1,550,508		0		0		1,550,508
Interest receivable		8,089		8,089		0		8,089		0
Financial liabilities
Deposits	$	1,964,063	$	1,967,314	$	0	$	1,967,314	$	0
Short-term borrowings		7,743		7,743		0		7,743		0
Long-term debt (1)		45,310		43,275		0		35,387		7,888
Subordinated debentures		30,622		32,408		0		32,408		0
Interest payable		881		881		0		881		0
Off-balance sheet instruments		0		0		0		0		0
December 31, 2020
Financial assets
Cash and cash equivalents	$	335,793	$	335,793	$	335,793	$	0	$	0
Securities available-for-sale		185,002		185,002		0		185,002		0
Restricted investment in bank stocks		2,593		N/A		N/A		N/A		N/A
Loans held for sale		15,981		17,228		0		17,228		0
Loans, net		1,523,325		1,527,295		0		0		1,527,295
Interest receivable		8,352		8,352		0		8,352		0
Financial liabilities
Deposits	$	1,863,539	$	1,868,203	$	0	$	1,868,203	$	0
Short-term borrowings		8,540		8,540		0		8,540		0
Long-term debt (1)		45,310		43,005		0		35,571		7,434
Subordinated debentures		30,602		31,159		0		31,159		0
Interest payable		532		532				532		0
Off-balance sheet instruments		0		0		0		0		0
(1) Exclude leases included in Long-term debt

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Assets And Liabilities Subject To Offsetting (Tables)

3 Months Ended

Mar. 31, 2021

Assets And Liabilities Subject To Offsetting [Abstract]

Schedule Of Securities Sold Under Agreements To Repurchase

							Gross amounts Not Offset in
							the Statements of Condition
							Financial Instruments
(dollars in thousands)	Gross ‎Amounts of ‎Recognized ‎Liabilities		Gross ‎Amounts ‎Offset in the ‎Statements ‎of Condition		Net Amounts ‎of Liabilities ‎Presented in ‎the Statements ‎of Condition		U.S. agency ‎mortgage-backed, ‎residential		U.S. agency		Cash ‎Collateral ‎Pledged		Net ‎Amount
March 31, 2021
Repurchase Agreements	$	7,743	$	0	$	7,743	$	(8,673)	$	0	$	0	$	(930)
December 31, 2020
Repurchase Agreements	$	8,540	$	0	$	8,540	$	(10,255)	$	0	$	0	$	(1,715)

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Summary Of Significant Accounting Policies (Narrative) (Details)	3 Months Ended
	Mar. 31, 2021 USD ($) item	Dec. 31, 2020 USD ($)
Summary of Significant Accounting Policies [Line Items]
Number of subsidiaries | item	1
Number of days for accrual of interest on the payment of principal or interest	90 days
CARES Act [Member]
Summary of Significant Accounting Policies [Line Items]
Recorded investment modified under CARES Act	$ 88,000,000
PPP outstanding loans	152,000,000
New PPP loans originated amount	64,000,000
Residential Mortgage Loans [Member]
Summary of Significant Accounting Policies [Line Items]
Foreclosed real estate, net of allowance	0
Mortgage Servicing Rights [Member] | Residential Mortgage Loans [Member]
Summary of Significant Accounting Policies [Line Items]
Mortgage loans serviced for third parties	80,609,000	$ 87,142,000
Total Consumer Related Loans [Member] | Residential Mortgage Loans [Member]
Summary of Significant Accounting Policies [Line Items]
Loans in process of foreclosure amount	$ 182,000
Core Deposits Intangible Assets [Member]
Summary of Significant Accounting Policies [Line Items]
Intangible assets, amortization period	10 years

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Summary Of Significant Accounting Policies (Summary Of Changes In Mortgage Service Rights) (Details) - Residential Mortgage Loans [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Balance at beginning of period	$ 511	$ 965
Originations of mortgage servicing rights	16	13
Amortization expense	(91)	(66)
Valuation allowance	88	(173)
Balance at end of period	$ 524	$ 739

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Summary Of Significant Accounting Policies (Schedule Of Computation Of Net Income Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Summary Of Significant Accounting Policies [Abstract]
Net income (loss)	$ 3,900	$ (2,989)
Weighted average shares outstanding (basic)	9,842	9,759
Effect of dilutive stock options	25	53
Weighted average shares outstanding (diluted)	9,867	9,812
Basic earnings (loss) per share	$ 0.40	$ (0.31)
Diluted earnings (loss) per share	$ 0.40	$ (0.31)

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Summary Of Significant Accounting Policies (Schedule Of Supplemental Cash Flow Information) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Summary Of Significant Accounting Policies [Abstract]
Cash paid during the period for: Income taxes	$ 0	$ 0
Cash paid during the period for: Interest	2,549	4,877
Noncash investing activities:
Transfer of loans to foreclosed real estate	0	121
Initial recognition of operating lease right-of-use assets	0	186
Initial recognition of operating lease liabilities	$ 0	$ 186

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Securities (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Schedule of Available-for-sale Securities [Line Items]
Tax (provision) benefit related to these net realized gain and losses	$ (5)	$ 3
Carrying Amount [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities pledged as collateral	$ 149,302		$ 170,313
Geographic Concentration Risk [Member] | PENNSYLVANIA
Schedule of Available-for-sale Securities [Line Items]
Fair value municipal bond portfolio concentration percentage	81.20%
Geographic Concentration Risk [Member] | TEXAS
Schedule of Available-for-sale Securities [Line Items]
Fair value municipal bond portfolio concentration percentage	10.30%
Municipal Bonds [Member] | Geographic Concentration Risk [Member] | PENNSYLVANIA
Schedule of Available-for-sale Securities [Line Items]
Portfolio intentionally distributed to limit exposure largest issuer amount	$ 2,600

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Securities (Summary Of Securities Available-For-Sale) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Schedule of Available-for-sale Securities [Line Items]
Total debt securities, Amortized Cost	$ 177,685	$ 180,487
Total debt securities, Gross Unrealized Gains	3,553	4,583
Total debt securities, Gross Unrealized Losses	(1,688)	(68)
Total debt securities, Fair Value	179,550	185,002
U.S. Agency [Member]
Schedule of Available-for-sale Securities [Line Items]
Total debt securities, Amortized Cost	14,000	40,000
Total debt securities, Gross Unrealized Gains	0	0
Total debt securities, Gross Unrealized Losses	(73)	0
Total debt securities, Fair Value	13,927	40,000
U.S. Agency Mortgage-Backed, Residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Total debt securities, Amortized Cost	120,786	106,792
Total debt securities, Gross Unrealized Gains	3,125	4,133
Total debt securities, Gross Unrealized Losses	(890)	(29)
Total debt securities, Fair Value	123,021	110,896
State And Municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Total debt securities, Amortized Cost	30,576	24,014
Total debt securities, Gross Unrealized Gains	253	311
Total debt securities, Gross Unrealized Losses	(660)	(25)
Total debt securities, Fair Value	30,169	24,300
Corporates [Member]
Schedule of Available-for-sale Securities [Line Items]
Total debt securities, Amortized Cost	12,323	9,681
Total debt securities, Gross Unrealized Gains	175	139
Total debt securities, Gross Unrealized Losses	(65)	(14)
Total debt securities, Fair Value	$ 12,433	$ 9,806

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Securities (Schedule Of Gross Realized Gains And Losses On Sales Of Securities Available-For-Sale) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Securities [Abstract]
Proceeds	$ 3,803	$ 19,852
Gross gains	24	74
Gross losses	$ (47)	$ (59)

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Securities (Schedule Of Amortized Cost And Estimated Fair Value Of Debt Securities) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Securities [Abstract]
Due in one year or less, Available-for-sale, Amortized Cost	$ 15,432
Due after one year through five years, Available-for-sale, Amortized Cost	77,513
Due after five years through ten years, Available-for-sale, Amortized Cost	45,595
Due after ten years, Available-for-sale, Amortized Cost	39,145
Total debt securities, Amortized Cost	177,685	$ 180,487
Due in one year or less, Available-for-sale, Fair Value	15,468
Due after one year through five years, Available-for-sale, Fair Value	79,896
Due after five years through ten years, Available-for-sale, Fair Value	45,321
Due after ten years, Available-for-sale, Fair Value	38,865
Total debt securities, Fair Value	$ 179,550	$ 185,002

XML

Securities (Schedule Of Gross Unrealized Losses And Fair Value, Aggregated By Investment Category And Length Of Time) (Details) $ in Thousands	Mar. 31, 2021 USD ($) security	Dec. 31, 2020 USD ($) security
Schedule of Available-for-sale Securities [Line Items]
Total temporarily impaired debt securities, available-for-sale, Less than 12 months, Number of Securities | security	48	17
Total temporarily impaired debt securities, available-for-sale, Less than 12 months, Fair Value	$ 73,549	$ 56,589
Total temporarily impaired debt securities, available-for-sale, Less than 12 months, Unrealized Losses	$ (1,688)	$ (68)
Total temporarily impaired debt securities, available-for-sale, 12 months or more, Number of Securities | security	0	0
Total temporarily impaired debt securities, available-for-sale, 12 months or more, Fair Value	$ 0	$ 0
Total temporarily impaired debt securities, available-for-sale, 12 months or more, Unrealized Losses	$ 0	$ 0
Total temporarily impaired debt securities, available-for-sale, Total, Number of Securities | security	48	17
Total temporarily impaired debt securities, available-for-sale, Total, Fair Value	$ 73,549	$ 56,589
Total temporarily impaired debt securities, available-for-sale, Total, Unrealized Losses	$ (1,688)	$ (68)
U.S. Agency [Member]
Schedule of Available-for-sale Securities [Line Items]
Total temporarily impaired debt securities, available-for-sale, Less than 12 months, Number of Securities | security	2	2
Total temporarily impaired debt securities, available-for-sale, Less than 12 months, Fair Value	$ 13,927	$ 40,000
Total temporarily impaired debt securities, available-for-sale, Less than 12 months, Unrealized Losses	$ (73)	$ 0
Total temporarily impaired debt securities, available-for-sale, 12 months or more, Number of Securities | security	0	0
Total temporarily impaired debt securities, available-for-sale, 12 months or more, Fair Value	$ 0	$ 0
Total temporarily impaired debt securities, available-for-sale, 12 months or more, Unrealized Losses	$ 0	$ 0
Total temporarily impaired debt securities, available-for-sale, Total, Number of Securities | security	2	2
Total temporarily impaired debt securities, available-for-sale, Total, Fair Value	$ 13,927	$ 40,000
Total temporarily impaired debt securities, available-for-sale, Total, Unrealized Losses	$ (73)	$ 0
U.S. Agency Mortgage-Backed, Residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Total temporarily impaired debt securities, available-for-sale, Less than 12 months, Number of Securities | security	20	8
Total temporarily impaired debt securities, available-for-sale, Less than 12 months, Fair Value	$ 36,267	$ 8,706
Total temporarily impaired debt securities, available-for-sale, Less than 12 months, Unrealized Losses	$ (890)	$ (29)
Total temporarily impaired debt securities, available-for-sale, 12 months or more, Number of Securities | security	0	0
Total temporarily impaired debt securities, available-for-sale, 12 months or more, Fair Value	$ 0	$ 0
Total temporarily impaired debt securities, available-for-sale, 12 months or more, Unrealized Losses	$ 0	$ 0
Total temporarily impaired debt securities, available-for-sale, Total, Number of Securities | security	20	8
Total temporarily impaired debt securities, available-for-sale, Total, Fair Value	$ 36,267	$ 8,706
Total temporarily impaired debt securities, available-for-sale, Total, Unrealized Losses	$ (890)	$ (29)
State And Municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Total temporarily impaired debt securities, available-for-sale, Less than 12 months, Number of Securities | security	21	4
Total temporarily impaired debt securities, available-for-sale, Less than 12 months, Fair Value	$ 19,369	$ 3,808
Total temporarily impaired debt securities, available-for-sale, Less than 12 months, Unrealized Losses	$ (660)	$ (25)
Total temporarily impaired debt securities, available-for-sale, 12 months or more, Number of Securities | security	0	0
Total temporarily impaired debt securities, available-for-sale, 12 months or more, Fair Value	$ 0	$ 0
Total temporarily impaired debt securities, available-for-sale, 12 months or more, Unrealized Losses	$ 0	$ 0
Total temporarily impaired debt securities, available-for-sale, Total, Number of Securities | security	21	4
Total temporarily impaired debt securities, available-for-sale, Total, Fair Value	$ 19,369	$ 3,808
Total temporarily impaired debt securities, available-for-sale, Total, Unrealized Losses	$ (660)	$ (25)
Corporates [Member]
Schedule of Available-for-sale Securities [Line Items]
Total temporarily impaired debt securities, available-for-sale, Less than 12 months, Number of Securities | security	5	3
Total temporarily impaired debt securities, available-for-sale, Less than 12 months, Fair Value	$ 3,986	$ 4,075
Total temporarily impaired debt securities, available-for-sale, Less than 12 months, Unrealized Losses	$ (65)	$ (14)
Total temporarily impaired debt securities, available-for-sale, 12 months or more, Number of Securities | security	0	0
Total temporarily impaired debt securities, available-for-sale, 12 months or more, Fair Value	$ 0	$ 0
Total temporarily impaired debt securities, available-for-sale, 12 months or more, Unrealized Losses	$ 0	$ 0
Total temporarily impaired debt securities, available-for-sale, Total, Number of Securities | security	5	3
Total temporarily impaired debt securities, available-for-sale, Total, Fair Value	$ 3,986	$ 4,075
Total temporarily impaired debt securities, available-for-sale, Total, Unrealized Losses	$ (65)	$ (14)

XML

Restricted Investment In Bank Stocks (Details) - FHLBP [Member] - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Maximum percent of member's total capital stock outstanding available for repurchase	5.00%
Impairment on restricted investment in bank stocks	$ 0	$ 0

XML

Loans (Narrative) (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2021 USD ($) contract loan segment	Mar. 31, 2020 USD ($) loan	Dec. 31, 2020 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Maximum amount of commercial loans that use third-party credit scoring software models for risk rating purposes	$ 500,000
Number of loan portfolio segments | segment	2
Number of defaults | loan	0	0
Principal balance of outstanding TDRs
CARES Act [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded investment modified under CARES Act	88,000,000
PPP outstanding loans	152,000,000
New PPP loans originated amount	64,000,000
Residential Mortgage [Member] | CARES Act [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded investment modified under CARES Act	$ 2,060,000
Number of contracts modified under the CARES Act | contract	5
Troubled Debt Restructurings [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Principal balance of outstanding TDRs	$ 1,344,000		$ 1,395,000
Allowances allocated to TDRs	0		$ 0
Commercial Related Loans [Member] | CARES Act [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded investment modified under CARES Act	$ 86,091,000
Number of contracts modified under the CARES Act | contract	38
Total Consumer Related Loans [Member] | CARES Act [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of contracts modified under the CARES Act | contract	0

XML

Loans (Schedule Of Loan Portfolio Composition) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 1,579,151	$ 1,544,589
Commercial Related Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,365,636	1,327,883
Commercial Related Loans [Member] | Builder & Developer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	144,777	147,609
Commercial Related Loans [Member] | Commercial Real Estate Investor [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	272,919	236,924
Commercial Related Loans [Member] | Residential Real Estate Investor [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	233,669	238,458
Commercial Related Loans [Member] | Hotel/Motel [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	81,045	79,421
Commercial Related Loans [Member] | Wholesale & Retail [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	99,216	108,425
Commercial Related Loans [Member] | Manufacturing [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	84,082	79,142
Commercial Related Loans [Member] | Agriculture [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	86,008	80,450
Commercial Related Loans [Member] | Service [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	87,812	76,838
Commercial Related Loans [Member] | Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	276,108	280,616
Total Consumer Related Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	213,515	216,706
Total Consumer Related Loans [Member] | Residential Mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	95,028	95,751
Total Consumer Related Loans [Member] | Home Equity [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	94,980	96,711
Total Consumer Related Loans [Member] | Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 23,507	$ 24,244
Credit Concentration Risk [Member] | Loan and Loan Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
% Total Loans	100.00%	100.00%
Credit Concentration Risk [Member] | Loan and Loan Receivable [Member] | Commercial Related Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
% Total Loans	86.50%	86.00%
Credit Concentration Risk [Member] | Loan and Loan Receivable [Member] | Commercial Related Loans [Member] | Builder & Developer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
% Total Loans	9.20%	9.60%
Credit Concentration Risk [Member] | Loan and Loan Receivable [Member] | Commercial Related Loans [Member] | Commercial Real Estate Investor [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
% Total Loans	17.30%	15.30%
Credit Concentration Risk [Member] | Loan and Loan Receivable [Member] | Commercial Related Loans [Member] | Residential Real Estate Investor [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
% Total Loans	14.80%	15.40%
Credit Concentration Risk [Member] | Loan and Loan Receivable [Member] | Commercial Related Loans [Member] | Hotel/Motel [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
% Total Loans	5.10%	5.20%
Credit Concentration Risk [Member] | Loan and Loan Receivable [Member] | Commercial Related Loans [Member] | Wholesale & Retail [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
% Total Loans	6.30%	7.00%
Credit Concentration Risk [Member] | Loan and Loan Receivable [Member] | Commercial Related Loans [Member] | Manufacturing [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
% Total Loans	5.30%	5.10%
Credit Concentration Risk [Member] | Loan and Loan Receivable [Member] | Commercial Related Loans [Member] | Agriculture [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
% Total Loans	5.40%	5.20%
Credit Concentration Risk [Member] | Loan and Loan Receivable [Member] | Commercial Related Loans [Member] | Service [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
% Total Loans	5.60%	5.00%
Credit Concentration Risk [Member] | Loan and Loan Receivable [Member] | Commercial Related Loans [Member] | Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
% Total Loans	17.50%	18.20%
Credit Concentration Risk [Member] | Loan and Loan Receivable [Member] | Total Consumer Related Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
% Total Loans	13.50%	14.00%
Credit Concentration Risk [Member] | Loan and Loan Receivable [Member] | Total Consumer Related Loans [Member] | Residential Mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
% Total Loans	6.00%	6.20%
Credit Concentration Risk [Member] | Loan and Loan Receivable [Member] | Total Consumer Related Loans [Member] | Home Equity [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
% Total Loans	6.00%	6.30%
Credit Concentration Risk [Member] | Loan and Loan Receivable [Member] | Total Consumer Related Loans [Member] | Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
% Total Loans	1.50%	1.50%

XML

Loans (Summary Of Loan Risk Ratings By Loan Class) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 1,579,151	$ 1,544,589
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,466,147	1,434,219
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	24,246	30,356
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	49,995	41,839
Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	38,763	38,175
Commercial Related Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,365,636	1,327,883
Commercial Related Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,253,604	1,218,773
Commercial Related Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	24,197	30,178
Commercial Related Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	49,984	41,828
Commercial Related Loans [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	37,851	37,104
Commercial Related Loans [Member] | Builder & Developer [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	144,777	147,609
Commercial Related Loans [Member] | Builder & Developer [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	131,672	133,804
Commercial Related Loans [Member] | Builder & Developer [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	9,318	11,305
Commercial Related Loans [Member] | Builder & Developer [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	2,965	2,121
Commercial Related Loans [Member] | Builder & Developer [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	822	379
Commercial Related Loans [Member] | Commercial Real Estate Investor [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	272,919	236,924
Commercial Related Loans [Member] | Commercial Real Estate Investor [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	266,920	230,113
Commercial Related Loans [Member] | Commercial Real Estate Investor [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	4,759	6,379
Commercial Related Loans [Member] | Commercial Real Estate Investor [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,047	231
Commercial Related Loans [Member] | Commercial Real Estate Investor [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	193	201
Commercial Related Loans [Member] | Residential Real Estate Investor [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	233,669	238,458
Commercial Related Loans [Member] | Residential Real Estate Investor [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	229,636	234,316
Commercial Related Loans [Member] | Residential Real Estate Investor [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	474	1,215
Commercial Related Loans [Member] | Residential Real Estate Investor [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	686	130
Commercial Related Loans [Member] | Residential Real Estate Investor [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	2,873	2,797
Commercial Related Loans [Member] | Hotel/Motel [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	81,045	79,421
Commercial Related Loans [Member] | Hotel/Motel [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	49,967	48,264
Commercial Related Loans [Member] | Hotel/Motel [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	537	542
Commercial Related Loans [Member] | Hotel/Motel [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	18,090	18,143
Commercial Related Loans [Member] | Hotel/Motel [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	12,451	12,472
Commercial Related Loans [Member] | Wholesale & Retail [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	99,216	108,425
Commercial Related Loans [Member] | Wholesale & Retail [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	90,772	99,821
Commercial Related Loans [Member] | Wholesale & Retail [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	6,987	8,591
Commercial Related Loans [Member] | Wholesale & Retail [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,457	13
Commercial Related Loans [Member] | Wholesale & Retail [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Commercial Related Loans [Member] | Manufacturing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	84,082	79,142
Commercial Related Loans [Member] | Manufacturing [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	72,735	67,968
Commercial Related Loans [Member] | Manufacturing [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Commercial Related Loans [Member] | Manufacturing [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	3,608	3,610
Commercial Related Loans [Member] | Manufacturing [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	7,739	7,564
Commercial Related Loans [Member] | Agriculture [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	86,008	80,450
Commercial Related Loans [Member] | Agriculture [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	78,712	72,829
Commercial Related Loans [Member] | Agriculture [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	421	416
Commercial Related Loans [Member] | Agriculture [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	3,774	3,776
Commercial Related Loans [Member] | Agriculture [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	3,101	3,429
Commercial Related Loans [Member] | Service [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	87,812	76,838
Commercial Related Loans [Member] | Service [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	81,832	75,618
Commercial Related Loans [Member] | Service [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	249	249
Commercial Related Loans [Member] | Service [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	4,760	0
Commercial Related Loans [Member] | Service [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	971	971
Commercial Related Loans [Member] | Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	276,108	280,616
Commercial Related Loans [Member] | Other [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	251,358	256,040
Commercial Related Loans [Member] | Other [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,452	1,481
Commercial Related Loans [Member] | Other [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	13,597	13,804
Commercial Related Loans [Member] | Other [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	9,701	9,291
Total Consumer Related Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	213,515	216,706
Total Consumer Related Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	212,543	215,446
Total Consumer Related Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	49	178
Total Consumer Related Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	11	11
Total Consumer Related Loans [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	912	1,071
Total Consumer Related Loans [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	95,028	95,751
Total Consumer Related Loans [Member] | Residential Mortgage [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	95,017	95,466
Total Consumer Related Loans [Member] | Residential Mortgage [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	123
Total Consumer Related Loans [Member] | Residential Mortgage [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	11	11
Total Consumer Related Loans [Member] | Residential Mortgage [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	151
Total Consumer Related Loans [Member] | Home Equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	94,980	96,711
Total Consumer Related Loans [Member] | Home Equity [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	94,276	96,026
Total Consumer Related Loans [Member] | Home Equity [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	49	55
Total Consumer Related Loans [Member] | Home Equity [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Total Consumer Related Loans [Member] | Home Equity [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	655	630
Total Consumer Related Loans [Member] | Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	23,507	24,244
Total Consumer Related Loans [Member] | Other [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	23,250	23,954
Total Consumer Related Loans [Member] | Other [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Total Consumer Related Loans [Member] | Other [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Total Consumer Related Loans [Member] | Other [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 257	$ 290

XML

Loans (Summary Of Impaired Loans) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Allowance, Recorded Investment	$ 32,665	$ 32,643
Impaired Loans, With No Allowance, Unpaid Principal	33,818	33,597
Impaired Loans, With A Related Allowance, Recorded Investment	7,445	6,927
Impaired Loans, With A Related Allowance, Unpaid Principal	7,893	7,321
Impaired Loans, With A Related Allowance, Related Allowance	4,428	3,312
Impaired Loans, Total, Recorded Investment	40,110	39,570
Impaired Loans, Total, Unpaid Principal	41,711	40,918
Commercial Related Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Allowance, Recorded Investment	31,753	31,572
Impaired Loans, With No Allowance, Unpaid Principal	32,861	32,492
Impaired Loans, With A Related Allowance, Recorded Investment	7,445	6,927
Impaired Loans, With A Related Allowance, Unpaid Principal	7,893	7,321
Impaired Loans, With A Related Allowance, Related Allowance	4,428	3,312
Impaired Loans, Total, Recorded Investment	39,198	38,499
Impaired Loans, Total, Unpaid Principal	40,754	39,813
Commercial Related Loans [Member] | Builder & Developer [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Allowance, Recorded Investment	1,016	575
Impaired Loans, With No Allowance, Unpaid Principal	1,084	790
Impaired Loans, With A Related Allowance, Recorded Investment	0	0
Impaired Loans, With A Related Allowance, Unpaid Principal	0	0
Impaired Loans, With A Related Allowance, Related Allowance	0	0
Impaired Loans, Total, Recorded Investment	1,016	575
Impaired Loans, Total, Unpaid Principal	1,084	790
Commercial Related Loans [Member] | Commercial Real Estate Investor [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Allowance, Recorded Investment	1,108	1,163
Impaired Loans, With No Allowance, Unpaid Principal	1,118	1,170
Impaired Loans, With A Related Allowance, Recorded Investment	0	0
Impaired Loans, With A Related Allowance, Unpaid Principal	0	0
Impaired Loans, With A Related Allowance, Related Allowance	0	0
Impaired Loans, Total, Recorded Investment	1,108	1,163
Impaired Loans, Total, Unpaid Principal	1,118	1,170
Commercial Related Loans [Member] | Residential Real Estate Investor [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Allowance, Recorded Investment	657	581
Impaired Loans, With No Allowance, Unpaid Principal	944	862
Impaired Loans, With A Related Allowance, Recorded Investment	2,216	2,216
Impaired Loans, With A Related Allowance, Unpaid Principal	2,216	2,216
Impaired Loans, With A Related Allowance, Related Allowance	416	216
Impaired Loans, Total, Recorded Investment	2,873	2,797
Impaired Loans, Total, Unpaid Principal	3,160	3,078
Commercial Related Loans [Member] | Hotel/Motel [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Allowance, Recorded Investment	12,451	12,472
Impaired Loans, With No Allowance, Unpaid Principal	12,453	12,472
Impaired Loans, With A Related Allowance, Recorded Investment	0	0
Impaired Loans, With A Related Allowance, Unpaid Principal	0	0
Impaired Loans, With A Related Allowance, Related Allowance	0	0
Impaired Loans, Total, Recorded Investment	12,451	12,472
Impaired Loans, Total, Unpaid Principal	12,453	12,472
Commercial Related Loans [Member] | Wholesale & Retail [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Allowance, Recorded Investment	236	237
Impaired Loans, With No Allowance, Unpaid Principal	236	237
Impaired Loans, With A Related Allowance, Recorded Investment	0	0
Impaired Loans, With A Related Allowance, Unpaid Principal	0	0
Impaired Loans, With A Related Allowance, Related Allowance	0	0
Impaired Loans, Total, Recorded Investment	236	237
Impaired Loans, Total, Unpaid Principal	236	237
Commercial Related Loans [Member] | Manufacturing [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Allowance, Recorded Investment	7,739	7,564
Impaired Loans, With No Allowance, Unpaid Principal	7,858	7,564
Impaired Loans, With A Related Allowance, Recorded Investment	0	0
Impaired Loans, With A Related Allowance, Unpaid Principal	0	0
Impaired Loans, With A Related Allowance, Related Allowance	0	0
Impaired Loans, Total, Recorded Investment	7,739	7,564
Impaired Loans, Total, Unpaid Principal	7,858	7,564
Commercial Related Loans [Member] | Agriculture [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Allowance, Recorded Investment	2,025	2,270
Impaired Loans, With No Allowance, Unpaid Principal	2,172	2,382
Impaired Loans, With A Related Allowance, Recorded Investment	1,078	1,159
Impaired Loans, With A Related Allowance, Unpaid Principal	1,154	1,217
Impaired Loans, With A Related Allowance, Related Allowance	570	615
Impaired Loans, Total, Recorded Investment	3,103	3,429
Impaired Loans, Total, Unpaid Principal	3,326	3,599
Commercial Related Loans [Member] | Service [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Allowance, Recorded Investment	971	971
Impaired Loans, With No Allowance, Unpaid Principal	1,061	1,061
Impaired Loans, With A Related Allowance, Recorded Investment	0	0
Impaired Loans, With A Related Allowance, Unpaid Principal	0	0
Impaired Loans, With A Related Allowance, Related Allowance	0	0
Impaired Loans, Total, Recorded Investment	971	971
Impaired Loans, Total, Unpaid Principal	1,061	1,061
Commercial Related Loans [Member] | Other [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Allowance, Recorded Investment	5,550	5,739
Impaired Loans, With No Allowance, Unpaid Principal	5,935	5,954
Impaired Loans, With A Related Allowance, Recorded Investment	4,151	3,552
Impaired Loans, With A Related Allowance, Unpaid Principal	4,523	3,888
Impaired Loans, With A Related Allowance, Related Allowance	3,442	2,481
Impaired Loans, Total, Recorded Investment	9,701	9,291
Impaired Loans, Total, Unpaid Principal	10,458	9,842
Total Consumer Related Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Allowance, Recorded Investment	912	1,071
Impaired Loans, With No Allowance, Unpaid Principal	957	1,105
Impaired Loans, With A Related Allowance, Recorded Investment	0	0
Impaired Loans, With A Related Allowance, Unpaid Principal	0	0
Impaired Loans, With A Related Allowance, Related Allowance	0	0
Impaired Loans, Total, Recorded Investment	912	1,071
Impaired Loans, Total, Unpaid Principal	957	1,105
Total Consumer Related Loans [Member] | Residential Mortgage [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Allowance, Recorded Investment	0	151
Impaired Loans, With No Allowance, Unpaid Principal	0	151
Impaired Loans, With A Related Allowance, Recorded Investment	0	0
Impaired Loans, With A Related Allowance, Unpaid Principal	0	0
Impaired Loans, With A Related Allowance, Related Allowance	0	0
Impaired Loans, Total, Recorded Investment	0	151
Impaired Loans, Total, Unpaid Principal	0	151
Total Consumer Related Loans [Member] | Home Equity [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Allowance, Recorded Investment	655	630
Impaired Loans, With No Allowance, Unpaid Principal	686	653
Impaired Loans, With A Related Allowance, Recorded Investment	0	0
Impaired Loans, With A Related Allowance, Unpaid Principal	0	0
Impaired Loans, With A Related Allowance, Related Allowance	0	0
Impaired Loans, Total, Recorded Investment	655	630
Impaired Loans, Total, Unpaid Principal	686	653
Total Consumer Related Loans [Member] | Other [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Allowance, Recorded Investment	257	290
Impaired Loans, With No Allowance, Unpaid Principal	271	301
Impaired Loans, With A Related Allowance, Recorded Investment	0	0
Impaired Loans, With A Related Allowance, Unpaid Principal	0	0
Impaired Loans, With A Related Allowance, Related Allowance	0	0
Impaired Loans, Total, Recorded Investment	257	290
Impaired Loans, Total, Unpaid Principal	$ 271	$ 301

XML

Loans (Summary Of Average Impaired Loans And Related Interest Income) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Related Allowance, Average Recorded Investment	$ 33,139	$ 9,457
Impaired Loans, With No Related Allowance, Total Interest Income	52	122
Impaired Loans, With A Related Allowance, Average Recorded Investment	7,186	18,174
Impaired Loans, With A Related Allowance, Total Interest Income	0	0
Impaired Loans, Total, Average Recorded Investment	40,325	27,631
Impaired Loans, Total, Total Interest Income	52	122
Commercial Related Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Related Allowance, Average Recorded Investment	32,146	8,348
Impaired Loans, With No Related Allowance, Total Interest Income	49	95
Impaired Loans, With A Related Allowance, Average Recorded Investment	7,186	18,174
Impaired Loans, With A Related Allowance, Total Interest Income	0	0
Impaired Loans, Total, Average Recorded Investment	39,332	26,522
Impaired Loans, Total, Total Interest Income	49	95
Total Consumer Related Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Related Allowance, Average Recorded Investment	993	1,109
Impaired Loans, With No Related Allowance, Total Interest Income	3	27
Impaired Loans, With A Related Allowance, Average Recorded Investment	0	0
Impaired Loans, With A Related Allowance, Total Interest Income	0	0
Impaired Loans, Total, Average Recorded Investment	993	1,109
Impaired Loans, Total, Total Interest Income	3	27
Builder & Developer [Member] | Commercial Related Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Related Allowance, Average Recorded Investment	796	957
Impaired Loans, With No Related Allowance, Total Interest Income	0	12
Impaired Loans, With A Related Allowance, Average Recorded Investment	0	308
Impaired Loans, With A Related Allowance, Total Interest Income	0	0
Impaired Loans, Total, Average Recorded Investment	796	1,265
Impaired Loans, Total, Total Interest Income	0	12
Commercial Real Estate Investor [Member] | Commercial Related Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Related Allowance, Average Recorded Investment	1,136	1,347
Impaired Loans, With No Related Allowance, Total Interest Income	11	22
Impaired Loans, With A Related Allowance, Average Recorded Investment	0	0
Impaired Loans, With A Related Allowance, Total Interest Income	0	0
Impaired Loans, Total, Average Recorded Investment	1,136	1,347
Impaired Loans, Total, Total Interest Income	11	22
Residential Real Estate Investor [Member] | Commercial Related Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Related Allowance, Average Recorded Investment	618	844
Impaired Loans, With No Related Allowance, Total Interest Income	0	6
Impaired Loans, With A Related Allowance, Average Recorded Investment	2,216	5,020
Impaired Loans, With A Related Allowance, Total Interest Income	0	0
Impaired Loans, Total, Average Recorded Investment	2,834	5,864
Impaired Loans, Total, Total Interest Income	0	6
Hotel/Motel [Member] | Commercial Related Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Related Allowance, Average Recorded Investment	12,461	0
Impaired Loans, With No Related Allowance, Total Interest Income	0	0
Impaired Loans, With A Related Allowance, Average Recorded Investment	0	0
Impaired Loans, With A Related Allowance, Total Interest Income	0	0
Impaired Loans, Total, Average Recorded Investment	12,461	0
Impaired Loans, Total, Total Interest Income	0	0
Wholesale & Retail [Member] | Commercial Related Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Related Allowance, Average Recorded Investment	236	272
Impaired Loans, With No Related Allowance, Total Interest Income	1	2
Impaired Loans, With A Related Allowance, Average Recorded Investment	0	7,127
Impaired Loans, With A Related Allowance, Total Interest Income	0	0
Impaired Loans, Total, Average Recorded Investment	236	7,399
Impaired Loans, Total, Total Interest Income	1	2
Manufacturing [Member] | Commercial Related Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Related Allowance, Average Recorded Investment	7,651	13
Impaired Loans, With No Related Allowance, Total Interest Income	0	3
Impaired Loans, With A Related Allowance, Average Recorded Investment	0	1,073
Impaired Loans, With A Related Allowance, Total Interest Income	0	0
Impaired Loans, Total, Average Recorded Investment	7,651	1,086
Impaired Loans, Total, Total Interest Income	0	3
Agriculture [Member] | Commercial Related Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Related Allowance, Average Recorded Investment	2,147	2,098
Impaired Loans, With No Related Allowance, Total Interest Income	37	19
Impaired Loans, With A Related Allowance, Average Recorded Investment	1,119	1,012
Impaired Loans, With A Related Allowance, Total Interest Income	0	0
Impaired Loans, Total, Average Recorded Investment	3,266	3,110
Impaired Loans, Total, Total Interest Income	37	19
Service [Member] | Commercial Related Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Related Allowance, Average Recorded Investment	971	704
Impaired Loans, With No Related Allowance, Total Interest Income	0	1
Impaired Loans, With A Related Allowance, Average Recorded Investment	0	0
Impaired Loans, With A Related Allowance, Total Interest Income	0	0
Impaired Loans, Total, Average Recorded Investment	971	704
Impaired Loans, Total, Total Interest Income	0	1
Residential Mortgage [Member] | Total Consumer Related Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Related Allowance, Average Recorded Investment	76	214
Impaired Loans, With No Related Allowance, Total Interest Income	0	3
Impaired Loans, With A Related Allowance, Average Recorded Investment	0	0
Impaired Loans, With A Related Allowance, Total Interest Income	0	0
Impaired Loans, Total, Average Recorded Investment	76	214
Impaired Loans, Total, Total Interest Income	0	3
Home Equity [Member] | Total Consumer Related Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Related Allowance, Average Recorded Investment	643	672
Impaired Loans, With No Related Allowance, Total Interest Income	0	21
Impaired Loans, With A Related Allowance, Average Recorded Investment	0	0
Impaired Loans, With A Related Allowance, Total Interest Income	0	0
Impaired Loans, Total, Average Recorded Investment	643	672
Impaired Loans, Total, Total Interest Income	0	21
Other [Member] | Commercial Related Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Related Allowance, Average Recorded Investment	6,130	2,113
Impaired Loans, With No Related Allowance, Total Interest Income	0	30
Impaired Loans, With A Related Allowance, Average Recorded Investment	3,851	3,634
Impaired Loans, With A Related Allowance, Total Interest Income	0	0
Impaired Loans, Total, Average Recorded Investment	9,981	5,747
Impaired Loans, Total, Total Interest Income	0	30
Other [Member] | Total Consumer Related Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, With No Related Allowance, Average Recorded Investment	274	223
Impaired Loans, With No Related Allowance, Total Interest Income	3	3
Impaired Loans, With A Related Allowance, Average Recorded Investment	0	0
Impaired Loans, With A Related Allowance, Total Interest Income	0	0
Impaired Loans, Total, Average Recorded Investment	274	223
Impaired Loans, Total, Total Interest Income	$ 3	$ 3

XML

Loans (Summary Of Past Due Loans, Nonaccrual Loans And Current Loans By Loan Segment And Class) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	$ 38,763	$ 38,175
Total Past Due and Nonaccrual	47,066	44,247
Current	1,532,085	1,500,342
Total Loans	1,579,151	1,544,589
30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	2,571	2,194
60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	4,225	2,583
Greater Than Or Equal To 90 Days Past Due And Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	1,507	1,295
Commercial Related Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	37,851	37,104
Total Past Due and Nonaccrual	44,029	40,782
Current	1,321,607	1,287,101
Total Loans	1,365,636	1,327,883
Commercial Related Loans [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	1,081	1,271
Commercial Related Loans [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	3,699	2,085
Commercial Related Loans [Member] | Greater Than Or Equal To 90 Days Past Due And Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	1,398	322
Total Consumer Related Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	912	1,071
Total Past Due and Nonaccrual	3,037	3,465
Current	210,478	213,241
Total Loans	213,515	216,706
Total Consumer Related Loans [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	1,490	923
Total Consumer Related Loans [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	526	498
Total Consumer Related Loans [Member] | Greater Than Or Equal To 90 Days Past Due And Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	109	973
Builder & Developer [Member] | Commercial Related Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	822	379
Total Past Due and Nonaccrual	1,467	1,617
Current	143,310	145,992
Total Loans	144,777	147,609
Builder & Developer [Member] | Commercial Related Loans [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	427
Builder & Developer [Member] | Commercial Related Loans [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	282	489
Builder & Developer [Member] | Commercial Related Loans [Member] | Greater Than Or Equal To 90 Days Past Due And Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	363	322
Commercial Real Estate Investor [Member] | Commercial Related Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	193	201
Total Past Due and Nonaccrual	1,012	201
Current	271,907	236,723
Total Loans	272,919	236,924
Commercial Real Estate Investor [Member] | Commercial Related Loans [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	819	0
Commercial Real Estate Investor [Member] | Commercial Related Loans [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Commercial Real Estate Investor [Member] | Commercial Related Loans [Member] | Greater Than Or Equal To 90 Days Past Due And Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Residential Real Estate Investor [Member] | Commercial Related Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	2,873	2,797
Total Past Due and Nonaccrual	2,873	2,933
Current	230,796	235,525
Total Loans	233,669	238,458
Residential Real Estate Investor [Member] | Commercial Related Loans [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	136
Residential Real Estate Investor [Member] | Commercial Related Loans [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Residential Real Estate Investor [Member] | Commercial Related Loans [Member] | Greater Than Or Equal To 90 Days Past Due And Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Hotel/Motel [Member] | Commercial Related Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	12,451	12,472
Total Past Due and Nonaccrual	12,451	12,472
Current	68,594	66,949
Total Loans	81,045	79,421
Hotel/Motel [Member] | Commercial Related Loans [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Hotel/Motel [Member] | Commercial Related Loans [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Hotel/Motel [Member] | Commercial Related Loans [Member] | Greater Than Or Equal To 90 Days Past Due And Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Wholesale & Retail [Member] | Commercial Related Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	0	0
Total Past Due and Nonaccrual	236	29
Current	98,980	108,396
Total Loans	99,216	108,425
Wholesale & Retail [Member] | Commercial Related Loans [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	198	29
Wholesale & Retail [Member] | Commercial Related Loans [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	38	0
Wholesale & Retail [Member] | Commercial Related Loans [Member] | Greater Than Or Equal To 90 Days Past Due And Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Manufacturing [Member] | Commercial Related Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	7,739	7,564
Total Past Due and Nonaccrual	7,739	7,564
Current	76,343	71,578
Total Loans	84,082	79,142
Manufacturing [Member] | Commercial Related Loans [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Manufacturing [Member] | Commercial Related Loans [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Manufacturing [Member] | Commercial Related Loans [Member] | Greater Than Or Equal To 90 Days Past Due And Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Agriculture [Member] | Commercial Related Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	3,101	3,429
Total Past Due and Nonaccrual	6,480	3,429
Current	79,528	77,021
Total Loans	86,008	80,450
Agriculture [Member] | Commercial Related Loans [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Agriculture [Member] | Commercial Related Loans [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	3,379	0
Agriculture [Member] | Commercial Related Loans [Member] | Greater Than Or Equal To 90 Days Past Due And Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Service [Member] | Commercial Related Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	971	971
Total Past Due and Nonaccrual	971	1,680
Current	86,841	75,158
Total Loans	87,812	76,838
Service [Member] | Commercial Related Loans [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Service [Member] | Commercial Related Loans [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	709
Service [Member] | Commercial Related Loans [Member] | Greater Than Or Equal To 90 Days Past Due And Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Residential Mortgage [Member] | Total Consumer Related Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	0	151
Total Past Due and Nonaccrual	220	1,088
Current	94,808	94,663
Total Loans	95,028	95,751
Residential Mortgage [Member] | Total Consumer Related Loans [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	67	0
Residential Mortgage [Member] | Total Consumer Related Loans [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	153	0
Residential Mortgage [Member] | Total Consumer Related Loans [Member] | Greater Than Or Equal To 90 Days Past Due And Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	937
Home Equity [Member] | Total Consumer Related Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	655	630
Total Past Due and Nonaccrual	764	1,049
Current	94,216	95,662
Total Loans	94,980	96,711
Home Equity [Member] | Total Consumer Related Loans [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	206
Home Equity [Member] | Total Consumer Related Loans [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	177
Home Equity [Member] | Total Consumer Related Loans [Member] | Greater Than Or Equal To 90 Days Past Due And Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	109	36
Other [Member] | Commercial Related Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	9,701	9,291
Total Past Due and Nonaccrual	10,800	10,857
Current	265,308	269,759
Total Loans	276,108	280,616
Other [Member] | Commercial Related Loans [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	64	679
Other [Member] | Commercial Related Loans [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	887
Other [Member] | Commercial Related Loans [Member] | Greater Than Or Equal To 90 Days Past Due And Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	1,035	0
Other [Member] | Total Consumer Related Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	257	290
Total Past Due and Nonaccrual	2,053	1,328
Current	21,454	22,916
Total Loans	23,507	24,244
Other [Member] | Total Consumer Related Loans [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	1,423	717
Other [Member] | Total Consumer Related Loans [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	373	321
Other [Member] | Total Consumer Related Loans [Member] | Greater Than Or Equal To 90 Days Past Due And Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	$ 0	$ 0

XML

Loans (Summary Of Loans Modified Under TDRs) (Details)	3 Months Ended
	Mar. 31, 2021 USD ($) contract	Mar. 31, 2020 USD ($) contract
Loans [Abstract]
Number of Contracts | contract
Pre-Modification Outstanding Recorded Investment
Post-Modification Outstanding Recorded Investment
Recorded Investment at Period End

XML

Allowance For Loan Losses (Summary Of Allowance For Loan Losses By Loan Segment And Class) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	$ 21,264	$ 21,066
Charge-offs	(104)	(7,686)
Recoveries	20	23
Provision	1,231	9,435
Ending Balance	22,411	22,838
Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	20,598	20,537
Charge-offs	(92)	(7,681)
Recoveries	5	10
Provision	1,261	9,336
Ending Balance	21,772	22,202
Total Consumer Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	644	528
Charge-offs	(12)	(5)
Recoveries	15	13
Provision	(11)	100
Ending Balance	636	636
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	22	1
Charge-offs	0	0
Recoveries	0	0
Provision	(19)	(1)
Ending Balance	3	0
Builder & Developer [Member] | Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	2,034	2,263
Charge-offs	0	(170)
Recoveries	0	0
Provision	32	133
Ending Balance	2,066	2,226
Commercial Real Estate Investor [Member] | Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	3,177	2,565
Charge-offs	0	0
Recoveries	0	0
Provision	233	117
Ending Balance	3,410	2,682
Residential Real Estate Investor [Member] | Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	3,944	4,632
Charge-offs	(50)	0
Recoveries	4	3
Provision	111	124
Ending Balance	4,009	4,759
Hotel/Motel [Member] | Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	1,440	742
Charge-offs	0	0
Recoveries	0	0
Provision	208	314
Ending Balance	1,648	1,056
Wholesale & Retail [Member] | Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	2,416	3,575
Charge-offs	0	0
Recoveries	0	7
Provision	(305)	976
Ending Balance	2,111	4,558
Manufacturing [Member] | Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	840	1,252
Charge-offs	0	0
Recoveries	0	0
Provision	(65)	64
Ending Balance	775	1,316
Agriculture [Member] | Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	1,288	1,304
Charge-offs	0	0
Recoveries	0	0
Provision	163	(164)
Ending Balance	1,451	1,140
Service [Member] | Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	457	367
Charge-offs	0	0
Recoveries	0	0
Provision	281	6
Ending Balance	738	373
Residential Mortgage [Member] | Total Consumer Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	256	158
Charge-offs	0	0
Recoveries	0	0
Provision	0	77
Ending Balance	256	235
Home Equity [Member] | Total Consumer Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	287	203
Charge-offs	(5)	0
Recoveries	2	0
Provision	(2)	101
Ending Balance	282	304
Other [Member] | Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	5,002	3,837
Charge-offs	(42)	(7,511)
Recoveries	1	0
Provision	603	7,766
Ending Balance	5,564	4,092
Other [Member] | Total Consumer Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	101	167
Charge-offs	(7)	(5)
Recoveries	13	13
Provision	(9)	(78)
Ending Balance	$ 98	$ 97

XML

Allowance For Loan Losses (Summary Of Allowance Amount For Loans Individually And Collectively Evaluated For Impairment) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020	Dec. 31, 2019
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Individually Evaluated For Impairment	$ 4,428	$ 3,312
Allowance for Loan Losses, Collectively Evaluated For Impairment	17,983	17,952
Allowance for Loan Losses, Balance	22,411	21,264	$ 22,838	$ 21,066
Loans, Individually Evaluated For Impairment	40,110	39,570
Loans, Collectively Evaluated For Impairment	1,539,041	1,505,019
Loans, Balance	1,579,151	1,544,589
Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Individually Evaluated For Impairment	4,428	3,312
Allowance for Loan Losses, Collectively Evaluated For Impairment	17,344	17,286
Allowance for Loan Losses, Balance	21,772	20,598	22,202	20,537
Loans, Individually Evaluated For Impairment	39,198	38,499
Loans, Collectively Evaluated For Impairment	1,326,438	1,289,384
Loans, Balance	1,365,636	1,327,883
Total Consumer Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Individually Evaluated For Impairment	0	0
Allowance for Loan Losses, Collectively Evaluated For Impairment	636	644
Allowance for Loan Losses, Balance	636	644	636	528
Loans, Individually Evaluated For Impairment	912	1,071
Loans, Collectively Evaluated For Impairment	212,603	215,635
Loans, Balance	213,515	216,706
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Individually Evaluated For Impairment	0	0
Allowance for Loan Losses, Collectively Evaluated For Impairment	3	22
Allowance for Loan Losses, Balance	3	22	0	1
Loans, Individually Evaluated For Impairment	0	0
Loans, Collectively Evaluated For Impairment	0	0
Loans, Balance	0	0
Builder & Developer [Member] | Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Individually Evaluated For Impairment	0	0
Allowance for Loan Losses, Collectively Evaluated For Impairment	2,066	2,034
Allowance for Loan Losses, Balance	2,066	2,034	2,226	2,263
Loans, Individually Evaluated For Impairment	1,016	575
Loans, Collectively Evaluated For Impairment	143,761	147,034
Loans, Balance	144,777	147,609
Commercial Real Estate Investor [Member] | Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Individually Evaluated For Impairment	0	0
Allowance for Loan Losses, Collectively Evaluated For Impairment	3,410	3,177
Allowance for Loan Losses, Balance	3,410	3,177	2,682	2,565
Loans, Individually Evaluated For Impairment	1,108	1,163
Loans, Collectively Evaluated For Impairment	271,811	235,761
Loans, Balance	272,919	236,924
Residential Real Estate Investor [Member] | Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Individually Evaluated For Impairment	416	216
Allowance for Loan Losses, Collectively Evaluated For Impairment	3,593	3,728
Allowance for Loan Losses, Balance	4,009	3,944	4,759	4,632
Loans, Individually Evaluated For Impairment	2,873	2,797
Loans, Collectively Evaluated For Impairment	230,796	235,661
Loans, Balance	233,669	238,458
Hotel/Motel [Member] | Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Individually Evaluated For Impairment	0	0
Allowance for Loan Losses, Collectively Evaluated For Impairment	1,648	1,440
Allowance for Loan Losses, Balance	1,648	1,440	1,056	742
Loans, Individually Evaluated For Impairment	12,451	12,472
Loans, Collectively Evaluated For Impairment	68,594	66,949
Loans, Balance	81,045	79,421
Wholesale & Retail [Member] | Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Individually Evaluated For Impairment	0	0
Allowance for Loan Losses, Collectively Evaluated For Impairment	2,111	2,416
Allowance for Loan Losses, Balance	2,111	2,416	4,558	3,575
Loans, Individually Evaluated For Impairment	236	237
Loans, Collectively Evaluated For Impairment	98,980	108,188
Loans, Balance	99,216	108,425
Manufacturing [Member] | Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Individually Evaluated For Impairment	0	0
Allowance for Loan Losses, Collectively Evaluated For Impairment	775	840
Allowance for Loan Losses, Balance	775	840	1,316	1,252
Loans, Individually Evaluated For Impairment	7,739	7,564
Loans, Collectively Evaluated For Impairment	76,343	71,578
Loans, Balance	84,082	79,142
Agriculture [Member] | Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Individually Evaluated For Impairment	570	615
Allowance for Loan Losses, Collectively Evaluated For Impairment	881	673
Allowance for Loan Losses, Balance	1,451	1,288	1,140	1,304
Loans, Individually Evaluated For Impairment	3,103	3,429
Loans, Collectively Evaluated For Impairment	82,905	77,021
Loans, Balance	86,008	80,450
Service [Member] | Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Individually Evaluated For Impairment	0	0
Allowance for Loan Losses, Collectively Evaluated For Impairment	738	457
Allowance for Loan Losses, Balance	738	457	373	367
Loans, Individually Evaluated For Impairment	971	971
Loans, Collectively Evaluated For Impairment	86,841	75,867
Loans, Balance	87,812	76,838
Residential Mortgage [Member] | Total Consumer Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Individually Evaluated For Impairment	0	0
Allowance for Loan Losses, Collectively Evaluated For Impairment	256	256
Allowance for Loan Losses, Balance	256	256	235	158
Loans, Individually Evaluated For Impairment	0	151
Loans, Collectively Evaluated For Impairment	95,028	95,600
Loans, Balance	95,028	95,751
Home Equity [Member] | Total Consumer Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Individually Evaluated For Impairment	0	0
Allowance for Loan Losses, Collectively Evaluated For Impairment	282	287
Allowance for Loan Losses, Balance	282	287	304	203
Loans, Individually Evaluated For Impairment	655	630
Loans, Collectively Evaluated For Impairment	94,325	96,081
Loans, Balance	94,980	96,711
Other [Member] | Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Individually Evaluated For Impairment	3,442	2,481
Allowance for Loan Losses, Collectively Evaluated For Impairment	2,122	2,521
Allowance for Loan Losses, Balance	5,564	5,002	4,092	3,837
Loans, Individually Evaluated For Impairment	9,701	9,291
Loans, Collectively Evaluated For Impairment	266,407	271,325
Loans, Balance	276,108	280,616
Other [Member] | Total Consumer Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Individually Evaluated For Impairment	0	0
Allowance for Loan Losses, Collectively Evaluated For Impairment	98	101
Allowance for Loan Losses, Balance	98	101	$ 97	$ 167
Loans, Individually Evaluated For Impairment	257	290
Loans, Collectively Evaluated For Impairment	23,250	23,954
Loans, Balance	$ 23,507	$ 24,244

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Deposits (Narrative) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Deposits
Demand deposit overdrafts reclassified as loans	$ 24	$ 55

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Deposits (Schedule Of Composition Of Deposits) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Deposits
Noninterest bearing demand	$ 483,004	$ 396,947
Interest bearing demand	245,690	224,764
Money market	581,995	598,398
Savings	126,893	111,143
Time deposits less than $100	280,076	283,910
Time deposits $100 to $250	177,307	180,674
Time deposits $250 or more	69,098	67,703
Total deposits	$ 1,964,063	$ 1,863,539

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Short-Term Borrowings And Long-Term Debt (Narrative) (Details) - USD ($)	1 Months Ended		12 Months Ended
	Jun. 30, 2006	Nov. 30, 2004	Dec. 31, 2020	Mar. 31, 2021
Securities sold under agreements to repurchase			$ 8,540,000	$ 7,743,000
Other short-term borrowings			0	0
CVB Statutory Trust No. 2 [Member]
Pooled trust preferred debt issuance	$ 7,217,000
CVB Statutory Trust No. 1 [Member]
Pooled trust preferred debt issuance		$ 3,093,000
Subordinated Debenture [Member]
Debt instrument face amount			31,000,000	31,000,000
Debt instrument redemption integral multiples amount			$ 10,000
Debt instrument redemption start date			Dec. 09, 2025
Debt instrument maturity date			Dec. 09, 2030
Debt instrument interest rate			4.50%
Debt instrument redemption percentage prior to maturity date			100.00%
Subordinated Debenture [Member] | 90-Day Average SOFR [Member]
Debt instrument variable interest rate			4.04%
FHLBP [Member] | Federal Home Loan Bank [Member] | Municipal Deposit Letter Of Credits [Member] | PeoplesBank, A Codorus Valley Company [Member]
Municipal deposit letters of credit			$ 42,000,000	$ 0

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Short-Term Borrowings And Long-Term Debt (Summary Of Long-Term Debt) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Total long-term debt	$ 77,221	$ 77,208
Finance lease liabilities	1,289	1,296
Junior Subordinated Debt [Member]
Debt Instrument [Line Items]
Total long-term debt	40,932	40,912
FHLBP [Member] | Federal Home Loan Bank [Member] | PeoplesBank, A Codorus Valley Company [Member]
Debt Instrument [Line Items]
Total long-term debt	35,000	35,000
Due June 2021, 2.81% [Member] | FHLBP [Member] | Federal Home Loan Bank [Member] | PeoplesBank, A Codorus Valley Company [Member]
Debt Instrument [Line Items]
Total long-term debt	$ 10,000	$ 10,000
FHLBP due date	2021-06
Interest rate	2.81%	2.81%
Due June 2021, 2.14% [Member] | FHLBP [Member] | Federal Home Loan Bank [Member] | PeoplesBank, A Codorus Valley Company [Member]
Debt Instrument [Line Items]
Total long-term debt	$ 15,000	$ 15,000
FHLBP due date	2021-06
Interest rate	2.14%	2.14%
Due May 2022, 2.93% [Member] | FHLBP [Member] | Federal Home Loan Bank [Member] | PeoplesBank, A Codorus Valley Company [Member]
Debt Instrument [Line Items]
Total long-term debt	$ 10,000	$ 10,000
FHLBP due date	2022-05
Interest rate	2.93%	2.93%
Due 2034, 2.20%, floating rate based on 3 month LIBOR plus 2.02%, callable quarterly [Member] | Junior Subordinated Debt [Member]
Debt Instrument [Line Items]
Total long-term debt	$ 3,093	$ 3,093
Interest rate	2.20%
Long-term debt year due	2034
Due 2034, 2.20%, floating rate based on 3 month LIBOR plus 2.02%, callable quarterly [Member] | 3 Month LIBOR [Member] | Junior Subordinated Debt [Member]
Debt Instrument [Line Items]
Debt instrument variable interest rate	2.02%
Due 2036, 1.78% floating rate based on 3 month LIBOR plus 1.54%, callable quarterly [Member] | Junior Subordinated Debt [Member]
Debt Instrument [Line Items]
Total long-term debt	$ 7,217	7,217
Interest rate	1.78%
Long-term debt year due	2036
Due 2036, 1.78% floating rate based on 3 month LIBOR plus 1.54%, callable quarterly [Member] | 3 Month LIBOR [Member] | Junior Subordinated Debt [Member]
Debt Instrument [Line Items]
Debt instrument variable interest rate	1.54%
Due 2030, 4.50%, fixed rate, callable on or after December 2025 [Member] | Junior Subordinated Debt [Member]
Debt Instrument [Line Items]
Total long-term debt	$ 30,622	$ 30,602
Interest rate	4.50%

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Leases (Narrative) (Details)	3 Months Ended
	Mar. 31, 2021 contract property
Number of finance leases | contract	1
Number of financial centers under finance leases | property	1
Operating Lease [Member] | Minimum [Member]
Lessee operating leases remaining lease terms	1 year
Operating Lease [Member] | Maximum [Member]
Lessee operating leases remaining lease terms	25 years

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Leases (Components of Lease Expense) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Components of Lease Expense [Abstract]
Operating lease cost	$ 169	$ 203
Finance lease cost:
Amortization of right-of-use assets	12	12
Interest on lease liability	12	12
Total finance lease cost	24	24
Total lease cost	$ 193	$ 227

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Leases (Supplemental Cash Flow Information Related to Leases) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Leases [Abstract]
Operating cash flows from operating leases	$ 173	$ 208
Operating cash flows from financing leases	12	12
Financing cash flows from financing leases	7	6
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	0	186
Finance leases	$ 0	$ 0

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Leases (Supplemental Balance Sheet Information Related to Leases) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Assets:
Operating leases right-of-use assets	$ 2,198	$ 2,386
Finance leases assets	1,076	1,087
Total lease assets	3,274	3,473
Liabilities:
Operating	2,325	2,515
Financing	1,289	1,296
Total lease liabilities	$ 3,614	$ 3,811
Weighted Average Remaining Lease Term (years)
Operating leases	4 years 6 months	5 years 2 months 12 days
Finance leases	22 years 10 months 24 days	23 years 2 months 12 days
Weighted Average Discount Rate
Operating leases	2.63%	2.68%
Finance leases	3.69%	3.69%

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Leases (Future Minimum Payments for Financing Leases and Operating Leases) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Operating Leases
Future minimum payments, remainder of fiscal year	$ 500
Future minimum payments, year one	611	$ 667
Future minimum payments, year Two	484	604
Future minimum payments, year Three	397	489
Future minimum payments, year Four	176	413
Future minimum payments, year Five		192
Future minimum payments, Thereafter	304	317
Total lease payments	2,472	2,682
Less imputed interest	(147)	(167)
Total	2,325	2,515
Finance Leases
Future minimum payments, remainder of fiscal year	56
Future minimum payments, year one	75	75
Future minimum payments, year Two	75	75
Future minimum payments, year Three	75	75
Future minimum payments, year Four	79	75
Future minimum payments, year Five		79
Future minimum payments, Thereafter	1,588	1,588
Total lease payments	1,948	1,967
Less imputed interest	(659)	(671)
Total	$ 1,289	$ 1,296

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Regulatory Matters (Schedule Of Risk-Based Capital Ratios And Leverage Ratios) (Details) $ in Thousands		3 Months Ended
		Mar. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Loans and advances by PeoplesBank to affiliates threshold		10.00%
Common equity Tier 1, Actual, Amount	[1]	$ 194,747	$ 191,863
Common equity Tier 1, Minimum for Basel III Capital Adequacy, Amount		$ 103,788	$ 102,504
Common equity Tier 1, Actual, Ratio	[1]	0.1313	0.1310
Common equity Tier 1, Minimum for Basel III Capital Adequacy, Ratio		0.0700	0.0700
Tier 1 risk based, Actual, Amount	[1]	$ 204,747	$ 201,863
Tier 1 risk based, Minimum for Basel III Capital Adequacy, Amount		$ 126,029	$ 124,469
Tier 1 risk based, Actual, Ratio	[1]	0.1381	0.1379
Tier 1 risk based, Minimum for Basel III Capital Adequacy, Ratio		0.0850	0.0850
Total risk based, Actual, Amount	[1]	$ 253,951	$ 250,806
Total risk based, Minimum for Basel III Capital Adequacy, Amount		$ 155,683	$ 153,756
Total risk based, Actual, Ratio	[1]	0.1713	0.1713
Total risk based, Minimum for Basel III Capital Adequacy, Ratio		0.1050	0.1050
Leverage, Actual, Amount	[1]	$ 204,747	$ 201,863
Leverage, Minimum for Basel III Capital Adequacy, Amount		$ 87,203	$ 84,250
Leverage, Actual, Ratio	[1]	0.0939	0.0958
Leverage, Minimum for Basel III Capital Adequacy, Ratio		0.0400	0.0400
PeoplesBank, A Codorus Valley Company [Member]
Common equity Tier 1, Actual, Amount	[1]	$ 221,272	$ 198,184
Common equity Tier 1, Minimum for Basel III Capital Adequacy, Amount		103,570	102,274
Common equity Tier 1, Well Capitalized Minimum, Amount	[2]	$ 96,172	$ 94,968
Common equity Tier 1, Actual, Ratio	[1]	0.1496	0.1356
Common equity Tier 1, Minimum for Basel III Capital Adequacy, Ratio		0.0700	0.0700
Common equity Tier 1, Well Capitalized Minimum, Ratio	[2]	0.0650	0.0650
Tier 1 risk based, Actual, Amount	[1]	$ 221,272	$ 198,184
Tier 1 risk based, Minimum for Basel III Capital Adequacy, Amount		125,763	124,190
Tier 1 risk based, Well Capitalized Minimum, Amount	[2]	$ 118,365	$ 116,884
Tier 1 risk based, Actual, Ratio	[1]	0.1496	0.1356
Tier 1 risk based, Minimum for Basel III Capital Adequacy, Ratio		0.0850	0.0850
Tier 1 risk based, Well Capitalized Minimum, Ratio	[2]	0.0800	0.0800
Total risk based, Actual, Amount	[1]	$ 239,815	$ 216,484
Total risk based, Minimum for Basel III Capital Adequacy, Amount		155,355	153,411
Total risk based, Well Capitalized Minimum, Amount	[2]	$ 147,957	$ 146,105
Total risk based, Actual, Ratio	[1]	0.1621	0.1482
Total risk based, Minimum for Basel III Capital Adequacy, Ratio		0.1050	0.1050
Total risk based, Well Capitalized Minimum, Ratio	[2]	0.1000	0.1000
Leverage, Actual, Amount	[1]	$ 221,272	$ 198,184
Leverage, Minimum for Basel III Capital Adequacy, Amount		87,070	84,109
Leverage, Well Capitalized Minimum, Amount	[2]	$ 108,838	$ 105,137
Leverage, Actual, Ratio	[1]	0.1017	0.0943
Leverage, Minimum for Basel III Capital Adequacy, Ratio		0.0400	0.0400
Leverage, Well Capitalized Minimum, Ratio	[2]	0.0500	0.0500

[1] Net unrealized gains and losses on securities available-for-sale, net of taxes, are disregarded for capital ratio computation purposes in accordance with federal regulatory banking guidelines.

[2] To be “well capitalized” under the prompt corrective action provisions in the Basel III framework. “Well capitalized” applies to PeoplesBank only.

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Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2021
Class of Stock [Line Items]
Shares repurchased during the period	5,335
2020 Share Repurchase Program [Member]
Class of Stock [Line Items]
Shares repurchased during the period	5,335
Shares repurchased average price per share	$ 16.37
Maximum [Member] | 2020 Share Repurchase Program [Member]
Class of Stock [Line Items]
Share repurchase program approved amount	$ 5
Maximum [Member] | 2021 Share Repurchase Program [Member]
Class of Stock [Line Items]
Share repurchase program approved amount		$ 5

XML

Contingent Liabilities (Details)	Mar. 31, 2021 claim
Pending [Member]
Loss Contingencies [Line Items]
Number of legal proceedings pending	0

XML

Guarantees (Details) - Standby Letters Of Credit [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Loss Contingencies [Line Items]
Standby letters of credit outstanding	$ 17,278	$ 15,206
Maximum [Member]
Loss Contingencies [Line Items]
Standby letters of credit expiration period	1 year

XML

Fair Value Of Assets And Liabilities (Narrative) (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Impaired loans, valuation allowances	$ 4,428,000	$ 3,312,000
Foreclosed Real Estate [Member]
Fair value of foreclosed real estate	0	0
Residential Mortgage Loans [Member]
Mortgage servicing rights	524,000	511,000
(Level 3) Significant Other Unobservable Inputs [Member]
Impaired loans	3,422,000	4,020,000
Impaired loans, valuation allowances	4,428,000	3,312,000
Impaired loans charge-offs	$ 373,000	$ 373,000

XML

Fair Value Of Assets And Liabilities (Schedule Of Assets Measured At Fair Value On Recurring Basis) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	$ 179,550	$ 185,002
Recurring [Member] | U.S. Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	13,927	40,000
Recurring [Member] | U.S. Agency Mortgage-Backed, Residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	123,021	110,896
Recurring [Member] | State And Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	30,169	24,300
Recurring [Member] | Corporates [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	12,433	9,806
(Level 1) Quoted Prices In Active Markets For Identical Assets [Member] | Recurring [Member] | U.S. Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	0	0
(Level 1) Quoted Prices In Active Markets For Identical Assets [Member] | Recurring [Member] | U.S. Agency Mortgage-Backed, Residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	0	0
(Level 1) Quoted Prices In Active Markets For Identical Assets [Member] | Recurring [Member] | State And Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	0	0
(Level 1) Quoted Prices In Active Markets For Identical Assets [Member] | Recurring [Member] | Corporates [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	0	0
(Level 2) Significant Other Observable Inputs [Member] | Recurring [Member] | U.S. Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	13,927	40,000
(Level 2) Significant Other Observable Inputs [Member] | Recurring [Member] | U.S. Agency Mortgage-Backed, Residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	123,021	110,896
(Level 2) Significant Other Observable Inputs [Member] | Recurring [Member] | State And Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	30,169	24,300
(Level 2) Significant Other Observable Inputs [Member] | Recurring [Member] | Corporates [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	12,433	9,806
(Level 3) Significant Other Unobservable Inputs [Member] | Recurring [Member] | U.S. Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	0	0
(Level 3) Significant Other Unobservable Inputs [Member] | Recurring [Member] | U.S. Agency Mortgage-Backed, Residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	0	0
(Level 3) Significant Other Unobservable Inputs [Member] | Recurring [Member] | State And Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	0	0
(Level 3) Significant Other Unobservable Inputs [Member] | Recurring [Member] | Corporates [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	$ 0	$ 0

XML

Fair Value Of Assets And Liabilities (Schedule Of Assets Measured At Fair Value On Nonrecurring Basis) (Details) - Nonrecurring [Member] - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	$ 147
Impaired Builder And Developer Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	196	$ 196
Impaired Residential Real Estate Investor Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	2,009	2,209
Impaired Agriculture Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	508	544
Impaired Other Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	709	1,071
Mortgage Servicing Rights [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value		511
(Level 1) Quoted Prices In Active Markets For Identical Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0
(Level 1) Quoted Prices In Active Markets For Identical Assets [Member] | Impaired Builder And Developer Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0	0
(Level 1) Quoted Prices In Active Markets For Identical Assets [Member] | Impaired Residential Real Estate Investor Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	1,800	2,000
(Level 1) Quoted Prices In Active Markets For Identical Assets [Member] | Impaired Agriculture Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0	0
(Level 1) Quoted Prices In Active Markets For Identical Assets [Member] | Impaired Other Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0	0
(Level 1) Quoted Prices In Active Markets For Identical Assets [Member] | Mortgage Servicing Rights [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value		0
(Level 2) Significant Other Observable Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0
(Level 2) Significant Other Observable Inputs [Member] | Impaired Builder And Developer Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0	0
(Level 2) Significant Other Observable Inputs [Member] | Impaired Residential Real Estate Investor Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0	0
(Level 2) Significant Other Observable Inputs [Member] | Impaired Agriculture Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0	0
(Level 2) Significant Other Observable Inputs [Member] | Impaired Other Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0	0
(Level 2) Significant Other Observable Inputs [Member] | Mortgage Servicing Rights [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value		0
(Level 3) Significant Other Unobservable Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	147
(Level 3) Significant Other Unobservable Inputs [Member] | Impaired Builder And Developer Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	196	196
(Level 3) Significant Other Unobservable Inputs [Member] | Impaired Residential Real Estate Investor Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	209	209
(Level 3) Significant Other Unobservable Inputs [Member] | Impaired Agriculture Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	508	544
(Level 3) Significant Other Unobservable Inputs [Member] | Impaired Other Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	$ 709	1,071
(Level 3) Significant Other Unobservable Inputs [Member] | Mortgage Servicing Rights [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value		$ 511

XML

Fair Value Of Assets And Liabilities (Schedule Of Level 3 Assets Measured At Fair Value On Nonrecurring Basis) (Details) - Nonrecurring [Member] - USD ($) $ in Thousands		Mar. 31, 2021		Dec. 31, 2020
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assets measured at fair value		$ 147
(Level 3) Significant Other Unobservable Inputs [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assets measured at fair value		147
Impaired Builder And Developer Loans [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assets measured at fair value		196		$ 196
Impaired Builder And Developer Loans [Member] | (Level 3) Significant Other Unobservable Inputs [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assets measured at fair value		196		196
Impaired Builder And Developer Loans [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Appraisal Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assets measured at fair value	[1],[2]	$ 196		$ 196
Impaired Builder And Developer Loans [Member] | Minimum [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Appraisal Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range	[1],[2]	15.00%		15.00%
Impaired Builder And Developer Loans [Member] | Maximum [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Appraisal Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range		15.00%		15.00%	[1],[2]
Impaired Builder And Developer Loans [Member] | Weighted Average [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Appraisal Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range	[1],[2]	15.00%		15.00%
Impaired Residential Real Estate Investor Loans [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assets measured at fair value		$ 2,009		$ 2,209
Impaired Residential Real Estate Investor Loans [Member] | (Level 3) Significant Other Unobservable Inputs [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assets measured at fair value		209		209
Impaired Residential Real Estate Investor Loans [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Appraisal Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assets measured at fair value		$ 209		$ 209
Impaired Residential Real Estate Investor Loans [Member] | Minimum [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Appraisal Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range		15.00%		15.00%
Impaired Residential Real Estate Investor Loans [Member] | Maximum [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Appraisal Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range		15.00%		15.00%
Impaired Residential Real Estate Investor Loans [Member] | Weighted Average [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Appraisal Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range		15.00%		15.00%
Impaired Agriculture Loans [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assets measured at fair value		$ 508		$ 544
Impaired Agriculture Loans [Member] | (Level 3) Significant Other Unobservable Inputs [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assets measured at fair value		508		544
Impaired Agriculture Loans [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Business Asset Valuation Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assets measured at fair value		$ 508		$ 544	[3],[4]
Impaired Agriculture Loans [Member] | Minimum [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Business Asset Valuation Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range		22.00%		25.00%	[3],[4]
Impaired Agriculture Loans [Member] | Maximum [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Appraisal Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range		25.00%
Impaired Agriculture Loans [Member] | Maximum [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Business Asset Valuation Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range	[3],[4]			25.00%
Impaired Agriculture Loans [Member] | Weighted Average [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Business Asset Valuation Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range		23.00%		25.00%	[3],[4]
Impaired Other Loans [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assets measured at fair value		$ 709		$ 1,071
Impaired Other Loans [Member] | (Level 3) Significant Other Unobservable Inputs [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assets measured at fair value		709		1,071
Impaired Other Loans [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Appraisal Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assets measured at fair value		441		89	[1],[2]
Impaired Other Loans [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Business Asset Valuation Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assets measured at fair value		$ 268		$ 982
Impaired Other Loans [Member] | Minimum [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Appraisal Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range		15.00%		15.00%	[1],[2]
Impaired Other Loans [Member] | Minimum [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Business Asset Valuation Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range		50.00%		40.00%
Impaired Other Loans [Member] | Maximum [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Appraisal Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range		25.00%		15.00%	[1],[2]
Impaired Other Loans [Member] | Maximum [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Business Asset Valuation Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range		50.00%		50.00%
Impaired Other Loans [Member] | Weighted Average [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Appraisal Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range		20.00%		15.00%	[1],[2]
Impaired Other Loans [Member] | Weighted Average [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Business Asset Valuation Adjustments [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range		50.00%		44.00%
Mortgage Servicing Rights [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assets measured at fair value				$ 511
Mortgage Servicing Rights [Member] | (Level 3) Significant Other Unobservable Inputs [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assets measured at fair value				511
Mortgage Servicing Rights [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Multiple Of Annual Service Fee [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assets measured at fair value		$ 147	[1],[2]	$ 511
Mortgage Servicing Rights [Member] | Minimum [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Multiple Of Annual Service Fee [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range		13.80%	[1],[2]	18.50%
Mortgage Servicing Rights [Member] | Maximum [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Multiple Of Annual Service Fee [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range		13.80%	[1],[2]	18.50%
Mortgage Servicing Rights [Member] | Weighted Average [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Multiple Of Annual Service Fee [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Range		13.80%	[1],[2]	18.50%

[1] Appraisal amounts may be adjusted downward by the Corporation's management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expense adjustments are presented as a percent of the appraisal.

[2] Fair value is generally determined through independent appraisals, which generally include various level 3 inputs that are not identifiable.

[3] Business asset valuation may be adjusted downward by the corporation's management qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses adjustments are presented as a percent of the financial statement book value.

[4] Fair value is generally determined through customer-provided financial statements and bankruptcy court documents.

XML

Fair Value Of Assets And Liabilities (Schedule Of Carrying Amounts And Estimated Fair Values Of Financial Instruments) (Details) - USD ($) $ in Thousands		Mar. 31, 2021	Dec. 31, 2020
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale		$ 179,550	$ 185,002
Subordinated debentures		30,622	30,602
Carrying Amount [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents		426,904	335,793
Securities available-for-sale		179,550	185,002
Restricted investment in bank stocks		2,278	2,593
Loans held for sale		13,324	15,981
Loans, net		1,556,740	1,523,325
Interest receivable		8,089	8,352
Deposits		1,964,063	1,863,539
Short-term borrowings		7,743	8,540
Long-term debt	[1]	45,310	45,310
Subordinated debentures		30,622	30,602
Interest payable		881	532
Off-balance sheet instruments		0	0
Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents		426,904	335,793
Securities available-for-sale		179,550	185,002
Loans held for sale		14,592	17,228
Loans, net		1,550,508	1,527,295
Interest receivable		8,089	8,352
Deposits		1,967,314	1,868,203
Short-term borrowings		7,743	8,540
Long-term debt	[1]	43,275	43,005
Subordinated debentures		32,408	31,159
Interest payable		881	532
Off-balance sheet instruments		0	0
(Level 1) Quoted Prices In Active Markets For Identical Assets [Member] | Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents		426,904	335,793
Securities available-for-sale		0	0
Loans held for sale		0	0
Loans, net		0	0
Interest receivable		0	0
Deposits		0	0
Short-term borrowings		0	0
Long-term debt	[1]	0	0
Subordinated debentures		0	0
Interest payable		0
Off-balance sheet instruments		0	0
(Level 2) Significant Other Observable Inputs [Member] | Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents		0	0
Securities available-for-sale		179,550	185,002
Loans held for sale		14,592	17,228
Loans, net		0	0
Interest receivable		8,089	8,352
Deposits		1,967,314	1,868,203
Short-term borrowings		7,743	8,540
Long-term debt	[1]	35,387	35,571
Subordinated debentures		32,408	31,159
Interest payable		881	532
Off-balance sheet instruments		0	0
(Level 3) Significant Other Unobservable Inputs [Member] | Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents		0	0
Securities available-for-sale		0	0
Loans held for sale		0	0
Loans, net		1,550,508	1,527,295
Interest receivable		0	0
Deposits		0	0
Short-term borrowings		0	0
Long-term debt	[1]	7,888	7,434
Subordinated debentures		0	0
Interest payable		0	0
Off-balance sheet instruments		$ 0	$ 0

[1] Exclude leases included in Long-term debt

XML

Assets And Liabilities Subject To Offsetting (Schedule Of Securities Sold Under Agreements To Repurchase) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Offsetting Liabilities [Line Items]
Repurchase Agreements, Gross Amounts of Recognized Liabilities	$ 7,743	$ 8,540
Repurchase Agreements, Gross Amounts Offset in the Statements of Condition	0	0
Repurchase Agreements, Net Amounts of Liabilities Presented in the Statements of Condition	7,743	8,540
Repurchase Agreements, Gross amounts Not Offset in the Statements of Condition, Cash Collateral Pledged	0	0
Repurchase Agreements, Net Amount	(930)	(1,715)
U.S. Agency Mortgage-Backed, Residential [Member]
Offsetting Liabilities [Line Items]
Repurchase Agreements, Gross amounts Not Offset in the Statements of Condition, Financial Instruments	(8,673)	(10,255)
U.S. Agency [Member]
Offsetting Liabilities [Line Items]
Repurchase Agreements, Gross amounts Not Offset in the Statements of Condition, Financial Instruments	$ 0	$ 0