10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
	FORM 10-Q
x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2013
or
o 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		(I.R.S. Employer
incorporation or organization)		Identification No.)

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

(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.)

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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x

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

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 November 1, 2013, 4,791,194 shares of common stock, par value $2.50, were outstanding, which includes the effect of the 5 percent common stock dividend declared October 8, 2013.

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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	34
Item 3.	Quantitative and qualitative disclosures about market risk	56
Item 4.	Controls and procedures	56
PART II – OTHER INFORMATION
Item 1.	Legal proceedings	56
Item 1A.	Risk factors	56
Item 2.	Unregistered sales of equity securities and use of proceeds	56
Item 3.	Defaults upon senior securities	57
Item 4.	Mine safety disclosures	57
Item 5.	Other information	57
Item 6.	Exhibits	57
SIGNATURES		58

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Codorus Valley Bancorp, Inc.
Consolidated Balance Sheets
Unaudited

(dollars in thousands, except share and per share data)	September 30, 2013			December 31, 2012
Assets
Interest bearing deposits with banks	$	1,294		$	34,866
Cash and due from banks		15,853			14,891
Total cash and cash equivalents		17,147			49,757
Securities, available-for-sale		239,129			234,062
Restricted investment in bank stocks, at cost		3,608			2,863
Loans held for sale		1,826			3,091
Loans (net of deferred fees of $1,808 - 2013 and $1,186 - 2012)		813,661			737,134
Less-allowance for loan losses		(9,449	)		(9,302	)
Net loans		804,212			727,832
Premises and equipment, net		14,289			11,493
Other assets		36,568			30,639
Total assets	$	1,116,779		$	1,059,737
Liabilities
Deposits
Noninterest bearing	$	98,848		$	88,476
Interest bearing		823,467			812,831
Total deposits		922,315			901,307
Short-term borrowings		31,535			19,356
Long-term debt		50,513			30,815
Other liabilities		6,683			6,928
Total liabilities		1,011,046			958,406
Shareholders’ equity
Preferred stock, par value $2.50 per share; $1,000 liquidation preference, 1,000,000 shares authorized; 25,000 Series B shares issued and outstanding - 2013 and 2012		25,000			25,000
Common stock, par value $2.50 per share; 15,000,000 shares authorized; shares issued and outstanding: 4,755,476 at September 30, 2013 and 4,482,319 at December 31, 2012		11,889			11,206
Additional paid-in capital		44,777			40,524
Retained earnings		21,101			18,868
Accumulated other comprehensive income		2,966			5,733
Total shareholders’ equity		105,733			101,331
Total liabilities and shareholders’ equity	$	1,116,779		$	1,059,737

See accompanying notes.

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Codorus Valley Bancorp, Inc.
Consolidated Statements of Income
Unaudited

	Three months ended September 30,				Nine months ended September 30,
(dollars in thousands, except per share data)	2013		2012		2013		2012
Interest income
Loans, including fees	$	10,415	$	10,129	$	30,692	$	30,163
Investment securities:
Taxable		788		834		2,054		2,651
Tax-exempt		590		608		1,830		1,797
Dividends		9		2		18		9
Other		17		35		59		73
Total interest income		11,819		11,608		34,653		34,693
Interest expense
Deposits		1,889		2,444		5,849		7,315
Federal funds purchased and other short-term borrowings		34		36		91		89
Long-term debt		201		197		565		604
Total interest expense		2,124		2,677		6,505		8,008
Net interest income		9,695		8,931		28,148		26,685
Provision for loan losses		150		650		970		1,150
Net interest income after provision for loan losses		9,545		8,281		27,178		25,535
Noninterest income
Trust and investment services fees		510		450		1,447		1,263
Income from mutual fund, annuity and insurance sales		74		227		496		658
Service charges on deposit accounts		688		635		1,992		1,879
Income from bank owned life insurance		192		157		543		487
Other income		157		151		503		483
Net gain on sales of loans held for sale		233		293		874		833
Net gain on sales of securities		0		382		44		431
Total noninterest income		1,854		2,295		5,899		6,034
Noninterest expense
Personnel		4,191		3,806		12,486		11,245
Occupancy of premises, net		496		485		1,519		1,497
Furniture and equipment		538		490		1,543		1,414
Postage, stationery and supplies		131		116		438		384
Professional and legal		187		155		489		464
Marketing and advertising		341		259		741		666
FDIC insurance		154		181		463		589
Debit card processing		204		181		577		536
Charitable donations		32		26		518		507
External data processing		164		149		468		419
Foreclosed real estate including (gains) losses on sales		277		1,498		414		2,302
Impaired loan carrying costs		128		36		243		266
Other		889		812		2,243		2,127
Total noninterest expense		7,732		8,194		22,142		22,416
Income before income taxes		3,667		2,382		10,935		9,153
Provision for income taxes		990		511		2,951		2,213
Net income		2,677		1,871		7,984		6,940
Preferred stock dividends		62		62		187		321
Net income available to common shareholders	$	2,615	$	1,809	$	7,797	$	6,619
Net income per common share, basic	$	0.55	$	0.39	$	1.65	$	1.42
Net income per common share, diluted	$	0.54	$	0.38	$	1.62	$	1.40

See accompanying notes.

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Codorus Valley Bancorp, Inc.
Consolidated Statements of Comprehensive Income
Unaudited

	Three months ended September 30,
(dollars in thousands)	2013			2012
Net income	$	2,677		$	1,871
Other comprehensive (loss) income:
Securities available for sale:
Net unrealized holding gains arising during the period (net of tax expense of $89 and $447, respectively)		173			868
Reclassification adjustment for (gains) losses included in net income (net of tax expense of $0 and $130, respectively) (a) (b)		0			(252	)
Net unrealized gains		173			616
Comprehensive income	$	2,850		$	2,487
	Nine months ended September 30,
(dollars in thousands)	2013			2012
Net income	$	7,984		$	6,940
Other comprehensive (loss) income:
Securities available for sale:
Net unrealized holding (losses) gains arising during the period (net of tax (benefit) expense of $(1,410) and $618, respectively)		(2,738	)		1,199
Reclassification adjustment for (gains) included in net income (net of tax expense of $15 and $147, respectively) (a) (b)		(29	)		(284	)
Net unrealized (losses) gains		(2,767	)		915
Comprehensive income	$	5,217		$	7,855

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

	Nine months ended September 30,
(dollars in thousands)	2013			2012
Cash flows from operating activities
Net income	$	7,984		$	6,940
Adjustments to reconcile net income to net cash provided by operations:
Depreciation/amortization		1,116			1,028
Net amortization of premiums on securities		997			1,049
Amortization of deferred loan origination fees and costs		(404	)		(201	)
Amortization of intangible assets		0			22
Provision for loan losses		970			1,150
Provision for losses on foreclosed real estate		125			2,273
Amortization of investment in real estate partnership		242			258
Increase in cash surrender value and death benefit on bank owned life insurance		(543	)		(487	)
Originations of loans held for sale		(46,719	)		(47,539	)
Proceeds from sales of loans held for sale		48,600			47,388
Net gain on sales of loans held for sale		(874	)		(833	)
Gain on disposal of premises and equipment		0			7
Net gain on sales of securities available-for-sale		(44	)		(431	)
Net (gain) loss on sales of foreclosed real estate		(15	)		167
Stock-based compensation		236			234
Decrease in interest receivable		61			107
Decrease (increase) in other assets		1,270			(229	)
Decrease in interest payable		(94	)		(21	)
Decrease in other liabilities		(143	)		(1,020	)
Net cash provided by operating activities		12,765			9,862
Cash flows from investing activities
Purchases of securities, available-for-sale		(43,348	)		(51,533	)
Maturities, repayments and calls of securities, available-for-sale		32,209			32,272
Sales of securities, available-for-sale		927			15,920
(Purchase) redemption of restricted investment in bank stock		(745	)		655
Net increase in loans made to customers		(77,240	)		(40,218	)
Purchases of premises and equipment		(3,912	)		(798	)
Investment in bank owned life insurance		(5,307	)		(237	)
Proceeds from bank owned life insurance		0			206
Investment in foreclosed real estate		0			(17	)
Proceeds from sales of foreclosed real estate		207			9,967
Net cash used in investing activities		(97,209	)		(33,783	)
Cash flows from financing activities
Net increase in demand and savings deposits		27,664			38,842
Net (decrease) increase in time deposits		(6,656	)		2,213
Net increase in short-term borrowings		12,179			13,936
Proceeds from issuance of long-term debt		20,000			0
Repayment of long-term debt		(302	)		(10,650	)
Tax benefit on vested restricted stock		0			27
Cash dividends paid to preferred shareholders		(187	)		(571	)
Cash dividends paid to common shareholders		(1,531	)		(1,223	)
Issuance of common stock		667			411
Net cash provided by financing activities		51,834			42,985
Net (decrease) increase in cash and cash equivalents		(32,610	)		19,064
Cash and cash equivalents at beginning of year		49,757			32,195
Cash and cash equivalents at end of period	$	17,147		$	51,259

See accompanying notes.

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Codorus Valley Bancorp, Inc.
Consolidated Statements of Changes in Shareholders’ Equity
Unaudited

(dollars in thousands, except per share data)	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income			Total
Balance, January 1, 2013	$	25,000	$	11,206	$	40,524	$	18,868		$	5,733		$	101,331
Net income								7,984						7,984
Other comprehensive loss, net of tax											(2,767	)		(2,767	)
Common stock cash dividends ($0.324 per share, adjusted)								(1,531	)					(1,531	)
5% common stock dividend, 226,451 shares at fair value				566		3,467		(4,033	)					0
Preferred stock cash dividends								(187	)					(187	)
Stock-based compensation						236								236
Issuance of common stock:
15,429 shares under the dividend reinvestment and stock purchase plan				38		229								267
27,031 shares under the stock option plan				68		278								346
4,246 shares under employee stock purchase plan				11		43								54
Balance, September 30, 2013	$	25,000	$	11,889	$	44,777	$	21,101		$	2,966		$	105,733
Balance, January 1, 2012	$	25,000	$	10,507	$	37,253	$	14,558		$	5,924		$	93,242
Net income								6,940						6,940
Other comprehensive income, net of tax											915			915
Common stock cash dividends ($0.264 per share, adjusted)								(1,223	)					(1,223	)
5% common stock dividend, 212,008 shares at fair value				530		2,480		(3,010	)					0
Preferred stock cash dividends								(321	)					(321	)
Stock-based compensation						261								261
Issuance of common stock:
17,339 shares under the dividend reinvestment and stock purchase plan				43		180								223
14,241 shares under the stock option plan				35		110								145
5,966 shares under employee stock purchase plan				15		28								43
Balance, September 30, 2012	$	25,000	$	11,130	$	40,312	$	16,944		$	6,839		$	100,225

See accompanying notes.

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Note 1—Basis of Presentation

The accompanying unaudited consolidated balance sheet at December 31, 2012 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 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.

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, 2012.

The consolidated financial statements include the accounts of Codorus Valley Bancorp, Inc. and its wholly owned bank subsidiary, PeoplesBank, A Codorus Valley Company (PeoplesBank), and its wholly owned nonbank subsidiary, SYC Realty Company, Inc. (collectively referred to as Codorus Valley or the Corporation). PeoplesBank has four wholly-owned subsidiaries, Codorus Valley Financial Advisors, Inc., SYC Settlement Services, Inc. and two subsidiaries whose purpose is to temporarily hold foreclosed properties pending eventual liquidation. All significant intercompany account balances and transactions have been eliminated in consolidation. The combined results of operations of the nonbank subsidiaries are not material to the consolidated financial statements.

The results of operations for the three and nine months ended September 30, 2013 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 September 30, 2013 and through the date these consolidated financial statements were issued, for items of potential recognition or disclosure.

Note 2—Significant Accounting Policies

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 and all other. Consumer loans consist of the following classes: residential mortgage, home equity and all other.

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 is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for loan losses. 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, 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.

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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 uncollectible 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 adequate to provide for losses that can be reasonably anticipated. 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, general and unallocated components. The specific component relates to loans that are classified as impaired, generally substandard and nonaccrual loans. 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 include:

• Changes in national 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

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. An unallocated component is maintained to cover uncertainties that could affect the Corporation’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the loan portfolio.

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As disclosed in Note 5-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 or private equity companies. Commercial related 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. Within the consumer loan segment, junior (i.e., second) liens present a slightly higher risk to the Corporation because economic and housing market conditions can adversely affect the underlying value of the collateral and 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 considered to be a troubled debt restructuring.

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 obviates 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.

Banking regulatory agencies, as an integral part of their examination process, periodically review the Corporation’s allowance for loan losses and may require the Corporation to recognize additions to the allowance based on their judgments about information available to them at the time of their examination, which may not be currently available to the Corporation. Based on a comprehensive analysis of the loan portfolio, the Corporation believes that the level of the allowance for loan losses at September 30, 2013 is adequate.

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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, based upon 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 charge-off. 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 September 30, 2013, foreclosed real estate, net of allowance, was $3,867,000, compared to $3,633,000 for December 31, 2012.

Per Common Share Computations

All per share computations include the effect of stock dividends declared, including a 5% common stock dividend declared October 8, 2013. The computation of net income per common share is provided in the table below.

	Three months ended September 30,				Nine months ended September 30,
(in thousands, except per share data)	2013		2012		2013		2012
Net income available to common shareholders	$	2,615	$	1,809	$	7,797	$	6,619
Weighted average shares outstanding (basic)		4,751		4,671		4,730		4,654
Effect of dilutive stock options		94		77		89		60
Weighted average shares outstanding (diluted)		4,845		4,748		4,819		4,714
Basic earnings per common share	$	0.55	$	0.39	$	1.65	$	1.42
Diluted earnings per common share	$	0.54	$	0.38	$	1.62	$	1.40
Anti-dilutive stock options excluded from the computation of earnings per share		4		81		33		87

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Comprehensive Income

Accounting principles generally accepted in the United States of America 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 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.

	Nine months ended September 30,
(dollars in thousands)	2013		2012
Cash paid during the period for:
Income taxes	$	2,490	$	2,727
Interest	$	6,599	$	8,029
Noncash investing activities:
Transfer of loans to foreclosed real estate	$	551	$	231
Transfer of loans held for sale to the held-to-maturity portfolio	$	258	$	0
Increase in other liabilities for purchase of securities settling after quarter end	$	0	$	2,201
Increase in other assets for purchase of securities settling after quarter end	$	0	$	1,566

Reclassification

Certain amounts in the 2012 consolidated financial statements have been reclassified to conform to the 2013 presentation, which did not impact net income or shareholders’ equity.

Recent Accounting Pronouncements

There were no new accounting pronouncements affecting the Corporation during the reporting period that were not already adopted or that are expected to have a material impact on the Corporation’s consolidated financial position or results of operations.

Note 3-Securities

A summary of securities available-for-sale at September 30, 2013 and December 31, 2012 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. Also included in the portfolio are investments in the obligations of states and municipalities. With the exception of an approximately $8 million portfolio (fair value) of Texas municipal utility district bonds, which has its own criteria for investment (e.g., maximum debt to assessed valuation, minimum assessed valuation and district size, proximity to employment, etc.), the remaining municipal bonds were all rated A or above by a national rating service at September 30, 2013. 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 September 30, 2013, the fair value of the municipal bond portfolio was concentrated in the states of Pennsylvania at 43 percent and Texas at 17 percent.

- 12 -

	Amortized		Gross Unrealized					Fair
(dollars in thousands)	Cost		Gains		Losses			Value
September 30, 2013
Debt securities:
U.S. Treasury notes	$	1,500	$	5	$	0		$	1,505
U.S. agency		52,416		817		(374	)		52,859
U.S. agency mortgage-backed, residential		89,582		1,907		(168	)		91,321
State and municipal		91,136		2,499		(191	)		93,444
Total debt securities	$	234,634	$	5,228	$	(733	)	$	239,129
December 31, 2012
Debt securities:
U.S. Treasury notes	$	5,001	$	31	$	0		$	5,032
U.S. agency		37,000		1,083		(25	)		38,058
U.S. agency mortgage-backed, residential		84,630		3,603		0			88,233
State and municipal		98,744		4,053		(58	)		102,739
Total debt securities	$	225,375	$	8,770	$	(83	)	$	234,062

The amortized cost and estimated fair value of debt securities at September 30, 2013 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
(dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	13,813	$	13,924
Due after one year through five years		176,254		180,152
Due after five years through ten years		40,747		41,103
Due after ten years		3,820		3,950
Total debt securities	$	234,634	$	239,129

- 13 -

Gross realized gains and losses on sales of securities available-for-sale are shown 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 September 30,				Nine months ended September 30,
(dollars in thousands)	2013		2012		2013		2012
Realized gains	$	0	$	382	$	44	$	431
Realized losses		0		0		0		0
Net gains	$	0	$	382	$	44	$	431

Securities, issued by agencies of the federal government, with a carrying value of $142,557,000 and $135,348,000 on September 30, 2013 and December 31, 2012, 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 September 30, 2013 and December 31, 2012.

	Less than 12 months					12 months or more				Total
(dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
September 30, 2013
Debt securities:
U.S. agency	$	29,897	$	(374	)	$	0	$	0	$	29,897	$	(374	)
U.S. agency mortgage-backed, residential		23,140		(168	)		0		0		23,140		(168	)
State and municipal		17,408		(191	)		0		0		17,408		(191	)
Total temporarily impaired debt securities, available for sale	$	70,445	$	(733	)	$	0	$	0	$	70,445	$	(733	)
December 31, 2012
Debt securities:
U.S. agency	$	8,251	$	(25	)	$	0	$	0	$	8,251	$	(25	)
State and municipal		11,565		(58	)		0		0		11,565		(58	)
Total temporarily impaired debt securities, available for sale	$	19,816	$	(83	)	$	0	$	0	$	19,816	$	(83	)

The unrealized losses of $733,000 at September 30, 2013 within the less than 12 months category were attributable to nine U.S. agency securities, eight U.S. agency mortgage-backed securities, and forty-one state and municipal securities, all rated A or above by a national rating service.

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 September 30, 2013 were primarily the result of changes in market interest rates and that it has the ability to hold these investments for a time necessary to recover the amortized cost. Through September 30, 2013 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.

- 14 -

Note 4—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 September 30, 2013 and December 31, 2012, consisted primarily of the common stock of the Federal Home Loan Bank of Pittsburgh (FHLBP) and, to a lesser degree, Atlantic Community Bankers Bank (ACBB). Under the FHLBP’s Capital Plan, PeoplesBank is required to maintain a minimum member stock investment, both as a condition of becoming and remaining a member and as a condition of obtaining borrowings from the FHLBP. 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 September 30, 2013 and 2012 but reported that future dividends will be dependent upon the condition of its private-label residential mortgage-backed securities portfolio, its overall financial performance, retained earnings and other factors. 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 September 30, 2013 and 2012.

- 15 -

Note 5—Loans

Loan Portfolio Composition

The table below provides the composition of the loan portfolio at September 30, 2013 and December 31, 2012. 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 the following industries, including health services, professional services, public administration, restaurant, service, transportation, finance, natural resources, recreation and religious organizations. 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.

(dollars in thousands)	September 30, 2013		December 31, 2012
Builder & developer	$	103,112	$	96,936
Commercial real estate investor		136,481		122,714
Residential real estate investor		72,992		66,419
Hotel/Motel		65,940		64,948
Wholesale & retail		74,479		70,443
Manufacturing		34,150		40,258
Agriculture		35,310		20,928
Other		151,740		124,834
Total commercial related loans		674,204		607,480
Residential mortgages		25,125		23,511
Home equity		75,080		65,858
Other		39,252		40,285
Total consumer related loans		139,457		129,654
Total loans	$	813,661	$	737,134

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 and residential mortgages held for investment are determined by a formal evaluation of risk factors performed by the Corporation’s underwriting staff. For consumer loans, and commercial loans up to $750,000, the Corporation uses third-party credit scoring software models 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 are generally performed by the Special Asset Committee, which includes senior management. The Committee, which meets monthly, 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.

The Corporation uses ten risk ratings to grade loans. The first seven ratings, representing the lowest risk, are combined and given a “pass” rating. 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 net worth or paying capacity of the borrower 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 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. Accordingly, 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 known loan losses.

- 16 -

The table below presents a summary of loan risk ratings by loan class at September 30, 2013 and December 31, 2012.

(dollars in thousands)	Pass		Special Mention		Substandard		Nonaccrual		Total
September 30, 2013
Builder & developer	$	87,864	$	7,386	$	7,615	$	247	$	103,112
Commercial real estate investor		124,882		4,926		3,286		3,387		136,481
Residential real estate investor		70,222		260		50		2,460		72,992
Hotel/Motel		65,940		0		0		0		65,940
Wholesale & retail		71,733		1,407		0		1,339		74,479
Manufacturing		33,474		0		676		0		34,150
Agriculture		32,054		2,798		458		0		35,310
Other		148,788		1,089		380		1,483		151,740
Total commercial related loans		634,957		17,866		12,465		8,916		674,204
Residential mortgage		24,955		19		30		121		25,125
Home equity		74,818		63		0		199		75,080
Other		38,496		171		39		546		39,252
Total consumer related loans		138,269		253		69		866		139,457
Total loans	$	773,226	$	18,119	$	12,534	$	9,782	$	813,661
December 31, 2012
Builder & developer	$	79,101	$	6,567	$	11,013	$	255	$	96,936
Commercial real estate investor		107,415		9,563		2,459		3,277		122,714
Residential real estate investor		62,327		1,361		2,044		687		66,419
Hotel/Motel		64,948		0		0		0		64,948
Wholesale & retail		66,155		1,521		983		1,784		70,443
Manufacturing		39,559		0		699		0		40,258
Agriculture		20,457		0		471		0		20,928
Other		121,223		1,156		612		1,843		124,834
Total commercial related loans		561,185		20,168		18,281		7,846		607,480
Residential mortgage		23,421		5		32		53		23,511
Home equity		65,406		112		188		152		65,858
Other		39,318		325		351		291		40,285
Total consumer related loans		128,145		442		571		496		129,654
Total loans	$	689,330	$	20,610	$	18,852	$	8,342	$	737,134

- 17 -

Impaired Loans

The table below presents a summary of impaired loans at September 30, 2013 and December 31, 2012. Generally, impaired loans are loans risk rated substandard and nonaccrual or classified as troubled debt restructurings. An allowance is established for individual commercial related loans where the Corporation has doubt as to full recovery of the outstanding principal balance. Typically, impaired consumer related loans are partially or fully charged off obviating the need for a specific allowance. The recorded investment represents outstanding unpaid principal loan balances adjusted for charge-offs.

	September 30, 2013						December 31, 2012
(dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
Impaired loans with no related allowance:
Builder & developer	$	9,020	$	9,020		—	$	12,211	$	12,211		—
Commercial real estate investor		6,673		6,773		—		5,736		5,836		—
Residential real estate investor		287		512		—		72		72		—
Hotel/Motel		0		0		—		0		0		—
Wholesale & retail		1,616		4,101		—		3,048		5,323		—
Manufacturing		676		676		—		699		699		—
Agriculture		0		0		—		0		0		—
Other commercial		1,536		1,536		—		1,483		1,611		—
Residential mortgage		151		177		—		85		111		—
Home equity		387		412		—		340		340		—
Other consumer		585		585		—		642		718		—
Total impaired loans with no related allowance	$	20,931	$	23,792		—	$	24,316	$	26,921		—
Impaired loans with a related allowance:
Builder & developer	$	0	$	0	$	0	$	256	$	256	$	147
Commercial real estate investor		0		0		0		0		0		0
Residential real estate investor		2,223		2,223		650		2,659		2,659		700
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		0		0		0		0		0		0
Manufacturing		0		0		0		0		0		0
Agriculture		458		458		100		471		471		100
Other commercial		326		326		120		972		972		215
Residential mortgage		0		0		0		0		0		0
Home equity		0		0		0		0		0		0
Other consumer		0		0		0		0		0		0
Total impaired loans with a related allowance	$	3,007	$	3,007	$	870	$	4,358	$	4,358	$	1,162
Total impaired loans:
Builder & developer	$	9,020	$	9,020	$	0	$	12,467	$	12,467	$	147
Commercial real estate investor		6,673		6,773		0		5,736		5,836		0
Residential real estate investor		2,510		2,735		650		2,731		2,731		700
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		1,616		4,101		0		3,048		5,323		0
Manufacturing		676		676		0		699		699		0
Agriculture		458		458		100		471		471		100
Other commercial		1,862		1,862		120		2,455		2,583		215
Residential mortgage		151		177		0		85		111		0
Home equity		387		412		0		340		340		0
Other consumer		585		585		0		642		718		0
Total impaired loans	$	23,938	$	26,799	$	870	$	28,674	$	31,279	$	1,162

- 18 -

The tables below present a summary of average impaired loans and related interest income that was included in net income for the three and nine months ended September 30, 2013 and 2012.

	For the three months ended
	September 30, 2013						September 30, 2012
(dollars in thousands)	Average Recorded Investment		Total Interest Income		Cash Basis Interest Income		Average Recorded Investment		Total Interest Income		Cash Basis Interest Income
Impaired loans with no related allowance:
Builder & developer	$	9,094	$	132	$	0	$	10,771	$	121	$	11
Commercial real estate investor		6,182		61		23		5,146		73		34
Residential real estate investor		305		0		1		268		1		1
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		1,882		65		62		2,299		3		1
Manufacturing		679		11		0		706		10		0
Agriculture		0		0		0		0		0		0
Other commercial		1,563		4		0		3,936		3		1
Residential mortgage		152		3		2		86		1		1
Home equity		392		2		0		268		1		0
Other consumer		626		2		4		473		7		4
Total impaired loans with no related allowance	$	20,875	$	280	$	92	$	23,953	$	220	$	53
Impaired loans with a related allowance:
Builder & developer	$	0	$	0	$	0	$	259	$	2	$	2
Commercial real estate investor		0		0		0		0		0		0
Residential real estate investor		2,236		0		0		2,289		31		0
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		0		0		0		263		0		0
Manufacturing		0		0		0		0		0		0
Agriculture		460		8		0		479		9		0
Other commercial		602		0		0		927		0		0
Residential mortgage		0		0		0		0		0		0
Home equity		0		0		0		0		0		0
Other consumer		0		0		0		0		0		0
Total impaired loans with a related allowance	$	3,298	$	8	$	0	$	4,217	$	42	$	2
Total impaired loans:
Builder & developer	$	9,094	$	132	$	0	$	11,030	$	123	$	13
Commercial real estate investor		6,182		61		23		5,146		73		34
Residential real estate investor		2,541		0		1		2,557		32		1
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		1,882		65		62		2,562		3		1
Manufacturing		679		11		0		706		10		0
Agriculture		460		8		0		479		9		0
Other commercial		2,165		4		0		4,863		3		1
Residential mortgage		152		3		2		86		1		1
Home equity		392		2		0		268		1		0
Other consumer		626		2		4		473		7		4
Total impaired loans	$	24,173	$	288	$	92	$	28,170	$	262	$	55

- 19 -

	For the nine months ended
	September 30, 2013							September 30, 2012
(dollars in thousands)	Average Recorded Investment		Total Interest Income			Cash Basis Interest Income		Average Recorded Investment		Total Interest Income			Cash Basis Interest Income
Impaired loans with no related allowance:
Builder & developer	$	9,913	$	396		$	5	$	8,008	$	355		$	65
Commercial real estate investor		5,953		195			92		4,703		209			108
Residential real estate investor		210		5			4		366		4			4
Hotel/Motel		0		0			0		0		0			0
Wholesale & retail		2,435		108			126		2,627		5			4
Manufacturing		686		33			0		709		31			0
Agriculture		0		0			0		0		0			0
Other commercial		1,589		10			4		4,654		93			138
Residential mortgage		118		7			5		145		5			4
Home equity		351		8			0		257		5			1
Other consumer		628		15			17		384		16			10
Total impaired loans with no related allowance	$	21,883	$	777		$	253	$	21,853	$	723		$	334
Impaired loans with a related allowance:
Builder & developer	$	97	$	0		$	0	$	261	$	4		$	4
Commercial real estate investor		0		0			0		57		0			0
Residential real estate investor		2,447		(9	)		0		1,189		33			0
Hotel/Motel		0		0			0		0		0			0
Wholesale & retail		0		0			0		131		(3	)		0
Manufacturing		0		0			0		0		0			0
Agriculture		465		24			0		484		26			0
Other commercial		786		0			0		926		0			0
Residential mortgage		0		0			0		0		0			0
Home equity		0		0			0		0		0			0
Other consumer		0		0			0		0		0			0
Total impaired loans with a related allowance	$	3,795	$	15		$	0	$	3,048	$	60		$	4
Total impaired loans:
Builder & developer	$	10,010	$	396		$	5	$	8,269	$	359		$	69
Commercial real estate investor		5,953		195			92		4,760		209			108
Residential real estate investor		2,657		(4	)		4		1,555		37			4
Hotel/Motel		0		0			0		0		0			0
Wholesale & retail		2,435		108			126		2,758		2			4
Manufacturing		686		33			0		709		31			0
Agriculture		465		24			0		484		26			0
Other commercial		2,375		10			4		5,580		93			138
Residential mortgage		118		7			5		145		5			4
Home equity		351		8			0		257		5			1
Other consumer		628		15			17		384		16			10
Total impaired loans	$	25,678	$	792		$	253	$	24,901	$	783		$	338

- 20 -

The performance and credit quality of the loan portfolio is also monitored by using an aging schedule which 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 September 30, 2013 and December 31, 2012.

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		≥ 90 Days Past Due and Accruing		Nonaccrual		Total Past Due and Nonaccrual		Current		Total Loans
September 30, 2013
Builder & developer	$	0	$	0	$	0	$	247	$	247	$	102,865	$	103,112
Commercial real estate investor		997		0		0		3,387		4,384		132,097		136,481
Residential real estate investor		0		50		0		2,460		2,510		70,482		72,992
Hotel/Motel		335		0		0		0		335		65,605		65,940
Wholesale & retail		0		0		0		1,339		1,339		73,140		74,479
Manufacturing		0		0		0		0		0		34,150		34,150
Agriculture		0		0		0		0		0		35,310		35,310
Other		130		0		0		1,483		1,613		150,127		151,740
Total commercial related loans		1,462		50		0		8,916		10,428		663,776		674,204
Residential mortgage		0		24		0		121		145		24,980		25,125
Home equity		25		0		0		199		224		74,856		75,080
Other		159		67		0		546		772		38,480		39,252
Total consumer related loans		184		91		0		866		1,141		138,316		139,457
Total loans	$	1,646	$	141	$	0	$	9,782	$	11,569	$	802,092	$	813,661
December 31, 2012
Builder & developer	$	400	$	0	$	0	$	255	$	655	$	96,281	$	96,936
Commercial real estate investor		0		0		0		3,277		3,277		119,437		122,714
Residential real estate investor		2,044		0		0		687		2,731		63,688		66,419
Hotel/Motel		0		0		0		0		0		64,948		64,948
Wholesale & retail		1,067		0		0		1,784		2,851		67,592		70,443
Manufacturing		0		0		0		0		0		40,258		40,258
Agriculture		0		0		0		0		0		20,928		20,928
Other		456		0		0		1,843		2,299		122,535		124,834
Total commercial related loans		3,967		0		0		7,846		11,813		595,667		607,480
Residential mortgage		474		129		0		53		656		22,855		23,511
Home equity		62		0		0		152		214		65,644		65,858
Other		842		195		186		291		1,514		38,771		40,285
Total consumer related loans		1,378		324		186		496		2,384		127,270		129,654
Total loans	$	5,345	$	324	$	186	$	8,342	$	14,197	$	722,937	$	737,134

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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 generally involve an extension of the maturity date or a below market interest rate relative to new debt with similar credit risk. 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 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.

The table below shows loans whose terms have been modified under TDRs during the three and nine months ended September 30, 2013 and 2012. There was no impairment loss recognized on any of these TDRs, and they are all performing under their modified terms. There were no defaults during the three and nine months ended September 30, 2013 and 2012 for TDRs entered into for the last 12 months.

	Modifications
(dollars in thousands)	Number of Contracts		Pre-Modification Outstanding Recorded Investments		Post-Modification Outstanding Recorded Investments
Three months ended:
September 30, 2013
Commercial related loans nonaccrual		1	$	375		375
September 30, 2012
None
Nine months ended:
September 30, 2013
Commercial related loans accruing		1	$	208	$	208
Commercial related loans nonaccrual		1	$	375		375
September 30, 2012
Commercial related loans nonaccrual		1	$	286	$	286

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NOTE 6 – 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 and nine months ended September 30, 2013 and 2012.

(dollars in thousands)	Builder & developer			Commercial real estate investor		Residential real estate investor			Hotel/ Motel			Wholesale & retail			Manufacturing		Agriculture			Other			Total commercial related
Allowance for loan losses:
Balance, July 1, 2013	$	1,576		$	1,213	$	1,181		$	505		$	1,856		$	201	$	253		$	1,151		$	7,936
Charge-offs		0			0		(85	)		0			0			0		0			0			(85	)
Recoveries		0			0		0			0			25			0		0			16			41
Provisions		(400	)		188		265			(13	)		(1,239	)		0		21			30			(1,148	)
Balance, September 30, 2013	$	1,176		$	1,401	$	1,361		$	492		$	642		$	201	$	274		$	1,197		$	6,744
Balance, July 1, 2012	$	1,680		$	1,239	$	900		$	449		$	1,690		$	164	$	194		$	1,062		$	7,378
Charge-offs		(215	)		0		(15	)		0			0			0		0			(46	)		(276	)
Recoveries		0			0		0			0			3			0		0			0			3
Provisions		119			78		140			0			436			58		(3	)		158			986
Balance, September 30, 2012	$	1,584		$	1,317	$	1,025		$	449		$	2,129		$	222	$	191		$	1,174		$	8,091

(dollars in thousands)	Residential mortgage			Home equity			Other			Total consumer related			Unallocated			Total
Allowance for loan losses:
Balance, July 1, 2013	$	77		$	236		$	276		$	589		$	934		$	9,459
Charge-offs		0			(25	)		(106	)		(131	)		0			(216	)
Recoveries		0			2			13			15			0			56
Provisions		(8	)		24			124			140			1,158			150
Balance, September 30, 2013	$	69		$	237		$	307		$	613		$	2,092		$	9,449
Balance, July 1, 2012	$	78		$	152		$	137		$	367		$	945		$	8,690
Charge-offs		(76	)		(42	)		(165	)		(283	)		0			(559	)
Recoveries		0			1			2			3			0			6
Provisions		133			77			236			446			(782	)		650
Balance, September 30, 2012	$	135		$	188		$	210		$	533		$	163		$	8,787

(dollars in thousands)	Builder & developer			Commercial real estate investor			Residential real estate investor			Hotel/ Motel		Wholesale & retail			Manufacturing			Agriculture		Other			Total commercial related
Allowance for loan losses:
Balance, January 1, 2013	$	1,571		$	1,259		$	1,195		$	485	$	1,913		$	237		$	202	$	1,170		$	8,032
Charge-offs		(62	)		0			(310	)		0		(210	)		0			0		0			(582	)
Recoveries		0			0			0			0		47			0			0		17			64
Provisions		(333	)		142			476			7		(1,108	)		(36	)		72		10			(770	)
Balance, September 30, 2013	$	1,176		$	1,401		$	1,361		$	492	$	642		$	201		$	274	$	1,197		$	6,744
Balance, January 1, 2012	$	2,170		$	2,003		$	505		$	394	$	1,806		$	151		$	184	$	907		$	8,120
Charge-offs		(217	)		(68	)		(15	)		0		0			0			0		(309	)		(609	)
Recoveries		0			0			0			0		14			0			0		0			14
Provisions		(369	)		(618	)		535			55		309			71			7		576			566
Balance, September 30, 2012	$	1,584		$	1,317		$	1,025		$	449	$	2,129		$	222		$	191	$	1,174		$	8,091

(dollars in thousands)	Residential mortgage			Home equity			Other			Total consumer related			Unallocated			Total
Allowance for loan losses:
Balance, January 1, 2013	$	124		$	237		$	238		$	599		$	671		$	9,302
Charge-offs		(28	)		(99	)		(239	)		(366	)		0			(948	)
Recoveries		1			8			52			61			0			125
Provisions		(28	)		91			256			319			1,421			970
Balance, September 30, 2013	$	69		$	237		$	307		$	613		$	2,092		$	9,449
Balance, January 1, 2012	$	88		$	86		$	171		$	345		$	237		$	8,702
Charge-offs		(115	)		(170	)		(241	)		(526	)		0			(1,135	)
Recoveries		41			1			14			56			0			70
Provisions		121			271			266			658			(74	)		1,150
Balance, September 30, 2012	$	135		$	188		$	210		$	533		$	163		$	8,787

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The table below shows the allowance amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment at September 30, 2013 and 2012 and December 31, 2012.

(dollars in thousands)	Builder & developer		Commercial real estate investor		Residential real estate investor		Hotel/ Motel		Wholesale & retail		Manufacturing		Agriculture		Other		Total commercial related
Allowance for loan losses:
Individually evaluated for impairment	$	0	$	0	$	650	$	0	$	0	$	0	$	100	$	120	$	870
Collectively evaluated for impairment		1,176		1,401		711		492		642		201		174		1,077		5,874
Balance, September 30, 2013	$	1,176	$	1,401	$	1,361	$	492	$	642	$	201	$	274	$	1,197	$	6,744
Individually evaluated for impairment	$	147	$	0	$	700	$	0	$	0	$	0	$	100	$	215	$	1,162
Collectively evaluated for impairment		1,424		1,259		495		485		1,913		237		102		955		6,870
Balance, December 31, 2012	$	1,571	$	1,259	$	1,195	$	485	$	1,913	$	237	$	202	$	1,170	$	8,032
Individually evaluated for impairment	$	147	$	0	$	550	$	0	$	150	$	0	$	100	$	218	$	1,165
Collectively evaluated for impairment		1,437		1,317		475		449		1,979		222		91		956		6,926
Balance, September 30, 2012	$	1,584	$	1,317	$	1,025	$	449	$	2,129	$	222	$	191	$	1,174	$	8,091
Loans:
Individually evaluated for impairment	$	9,020	$	6,673	$	2,510	$	0	$	1,616	$	676	$	458	$	1,862	$	22,815
Collectively evaluated for impairment		94,092		129,808		70,482		65,940		72,863		33,474		34,852		149,878		651,389
Balance, September 30, 2013	$	103,112	$	136,481	$	72,992	$	65,940	$	74,479	$	34,150	$	35,310	$	151,740	$	674,204
Individually evaluated for impairment	$	12,467	$	5,736	$	2,731	$	0	$	3,048	$	699	$	471	$	2,455	$	27,607
Collectively evaluated for impairment		84,469		116,978		63,688		64,948		67,395		39,559		20,457		122,379		579,873
Balance, December 31, 2012	$	96,936	$	122,714	$	66,419	$	64,948	$	70,443	$	40,258	$	20,928	$	124,834	$	607,480
Individually evaluated for impairment	$	13,526	$	5,755	$	2,510	$	0	$	3,052	$	705	$	478	$	5,086	$	31,112
Collectively evaluated for impairment		85,660		122,313		61,068		60,187		65,099		37,015		18,196		123,739		573,277
Balance, September 30, 2012	$	99,186	$	128,068	$	63,578	$	60,187	$	68,151	$	37,720	$	18,674	$	128,825	$	604,389

(dollars in thousands)	Residential mortgage		Home equity		Other		Total consumer related		Unallocated		Total
Allowance for loan losses:
Individually evaluated for impairment	$	0	$	0	$	0	$	0	$	0	$	870
Collectively evaluated for impairment		69		237		307		613		2,092		8,579
Balance, September 30, 2013	$	69	$	237	$	307	$	613	$	2,092	$	9,449
Individually evaluated for impairment	$	0	$	0	$	0	$	0	$	0	$	1,162
Collectively evaluated for impairment		124		237		238		599		671		8,140
Balance, December 31, 2012	$	124	$	237	$	238	$	599	$	671	$	9,302
Individually evaluated for impairment	$	0	$	0	$	0	$	0	$	0	$	1,165
Collectively evaluated for impairment		135		188		210		533		163		7,622
Balance, September 30, 2012	$	135	$	188	$	210	$	533	$	163	$	8,787
Loans:
Individually evaluated for impairment	$	151	$	387	$	585	$	1,123	$		$	23,938
Collectively evaluated for impairment		24,974		74,693		38,667		138,334				789,723
Balance, September 30, 2013	$	25,125	$	75,080	$	39,252	$	139,457	$		$	813,661
Individually evaluated for impairment	$	85	$	340	$	642	$	1,067	$		$	28,674
Collectively evaluated for impairment		23,426		65,518		39,643		128,587				708,460
Balance, December 31, 2012	$	23,511	$	65,858	$	40,285	$	129,654	$		$	737,134
Individually evaluated for impairment	$	86	$	314	$	485	$	885	$		$	31,997
Collectively evaluated for impairment		21,875		63,284		42,205		127,364				700,641
Balance, September 30, 2012	$	21,961	$	63,598	$	42,690	$	128,249	$		$	732,638

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Note 7—Deposits

The composition of deposits as of September 30, 2013 and December 31, 2012 is shown below.

(dollars in thousands)	September 30, 2013		December 31, 2012
Noninterest bearing demand	$	98,848	$	88,476
NOW		85,409		77,531
Money market		294,665		289,149
Savings		38,270		34,372
Time deposits less than $100,000		231,977		236,683
Time deposits $100,000 or more		173,146		175,096
Total deposits	$	922,315	$	901,307

Note 8—Short Term Borrowings and Long-term Debt

Short-term borrowings consist of securities sold under agreements to repurchase, federal funds purchased and other borrowings. During the second quarter of 2013, the Corporation opened a $3 million line of credit with ACNB Bank to provide a source of liquidity. The line, renewable annually, is secured by a first lien on the Codorus Valley Corporate Center. The interest rate on the ACNB Bank line is Wall Street Journal Prime. No draws have been made on the line and on September 30, 2013, the balance was zero.

A summary of long-term debt as of September 30, 2013 and December 31, 2012 is shown below.

(dollars in thousands)	September 30, 2013		December 31, 2012
PeoplesBank’s obligations:
FHLBP
Due May 2013, 3.46%, amortizing	$	0	$	245
Due July 2015, 1.90%		5,000		5,000
Due July 2016, 2.35%		5,000		5,000
Due September 2016, 1.18%		10,000		0
Due March 2018, 1.17%		10,000		0
Due June 2018, 1.87%		5,000		5,000
Due June 2019, 2.10%		5,000		5,000
Total FHLBP		40,000		20,245
Capital lease obligation		203		260
Codorus Valley Bancorp, Inc. obligations:
Junior subordinated debt
Due 2034, 2.27%, floating rate based on 3 month
LIBOR plus 2.02%, callable quarterly		3,093		3,093
Due 2036, 1.81% floating rate based on 3 month
LIBOR plus 1.54%, callable quarterly		7,217		7,217
Total long-term debt	$	50,513	$	30,815

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PeoplesBank’s long-term debt obligations to the Federal Home Loan Bank of Pittsburgh (FHLBP) are fixed rate instruments. Under terms of a blanket collateral agreement with the FHLBP, the obligations are secured by FHLBP stock and qualifying loan receivables, principally real estate secured loans.

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.

Note 9—Regulatory Matters

Codorus Valley and PeoplesBank are subject to various regulatory capital requirements. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if imposed, could have a material effect on Codorus Valley’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Codorus Valley and PeoplesBank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators.

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Quantitative measures established by regulators to ensure capital adequacy require Codorus Valley and PeoplesBank to maintain minimum ratios, as set forth below, to total and Tier 1 capital as a percentage of risk-weighted assets, and of Tier 1 capital to quarter-to-date average assets (leverage ratio). Management believes that Codorus Valley and PeoplesBank were well capitalized on September 30, 2013 based on regulatory capital guidelines.

	Actual					Minimum for Capital Adequacy					Well Capitalized Minimum*
(dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
Codorus Valley Bancorp, Inc. (consolidated)
at September 30, 2013
Capital ratios:
Tier 1 risk based	$	112,766		12.99	%	$	34,726		4.00	%		n/a		n/a
Total risk based		122,215		14.08			69,452		8.00			n/a		n/a
Leverage		112,766		10.19			44,252		4.00			n/a		n/a
at December 31, 2012
Capital ratios:
Tier 1 risk based	$	105,597		13.59	%	$	31,074		4.00	%		n/a		n/a
Total risk based		114,899		14.79			62,147		8.00			n/a		n/a
Leverage		105,597		10.02			42,143		4.00			n/a		n/a
PeoplesBank, A Codorus Valley Company
at September 30, 2013
Capital ratios:
Tier 1 risk based	$	109,063		12.61	%	$	34,602		4.00	%	$	51,903		6.00	%
Total risk based		118,512		13.70			69,203		8.00			86,504		10.00
Leverage		109,063		9.89			44,124		4.00			55,155		5.00
at December 31, 2012
Capital ratios:
Tier 1 risk based	$	102,120		13.20	%	$	30,951		4.00	%	$	46,427		6.00	%
Total risk based		111,422		14.40			61,902		8.00			77,378		10.00
Leverage		102,120		9.72			42,020		4.00			52,526		5.00

*To be well capitalized under prompt corrective action provisions.

Note 10—Shareholders’ Equity

Preferred stock issued under the US Treasury’s Small Business Lending Fund Program

The annualized dividend rate on the $25 million of preferred stock issued under the U.S. Treasury’s Small Business Lending Fund Program (SBLF Program) was 1 percent for the quarters ended September 30, 2013, December 31, 2012 and September 30, 2012. For the nine-month period ended September 30, 2013, the annualized dividend rate was 1 percent, compared to 1.71 percent for the same period of 2012. Based on the increase in the qualified small business lending portfolio balance over the baseline level at September 30, 2013, the dividend rate will remain at 1 percent through February 18, 2016. Thereafter, under the provisions of the SBLF Program the dividend rate will increase to 9% (including a quarterly lending incentive fee of 0.5%). Additional information about SBLF preferred stock is disclosed in Note 10—Shareholders’ Equity in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2012.

Common stock dividend

Periodically, the Corporation distributes stock dividends on its common stock. On October 8, 2013, the Corporation declared a 5 percent common stock dividend payable on December 10, 2013, to shareholders of record at the close of business on October 22, 2013. Distribution of this stock dividend will result in the issuance of approximately 226,451 additional common shares. The Corporation distributed a 5 percent common stock dividend on December 11, 2012 which resulted in the issuance of 211,564 additional common shares.

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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 customer 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 customers. The Corporation generally holds collateral and/or personal guarantees supporting these commitments. The Corporation had $27,063,000 of standby letters of credit outstanding on September 30, 2013, compared to $17,064,000 on December 31, 2012. 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 September 30, 2013 and December 31, 2012, 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. Therefore, the fair value estimates herein are not necessarily indicative of the amounts that could be realized in sales transactions on the dates indicated. 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.

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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. At least annually, the Corporation reviews a random sample of the pricing information received from the third-party pricing service by comparing it to price quotes from third-party brokers. Historically, price deviations have been immaterial.

			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
September 30, 2013
Securities available-for-sale:
U.S. Treasury notes	$	1,505	$	1,505	$	0	$	0
U.S. agency		52,859		0		52,859		0
U.S. agency mortgage-backed, residential		91,321		0		91,321		0
State and municipal		93,444		0		93,444		0
December 31, 2012
Securities available-for-sale:
U.S. Treasury notes	$	5,032	$	5,032	$	0	$	0
U.S. agency		38,058		0		38,058		0
U.S. agency mortgage-backed, residential		88,233		0		88,233		0
State and municipal		102,739		0		102,739		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 included as Level 3 fair values, based on the lowest level of input that is significant to the fair value measurements. At September 30, 2013, the fair value of impaired loans with a valuation allowance or charge-off was of $2,702,000, which is net of valuation allowances of $870,000 and charge-offs of $2,861,000. At December 31, 2012 the fair value of impaired loans with a valuation allowance or charge-off was $4,493,000, which is net of valuation allowances of $1,162,000 and charge-offs of $2,605,000.

- 29 -

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 upon an independent third-party appraisal of the property or occasionally upon a recent sales offer. At September 30, 2013, the fair value of foreclosed real estate with a valuation allowance or charge-off was $2,536,000, which is net of valuation allowances of $3,736,000 and charge-offs of $100,000. At December 31, 2012, the carrying value of foreclosed real estate with a valuation allowance or charge-off was $2,779,000, which is net of valuation allowances of $3,712,000 and no charge-offs.

			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
September 30, 2013
Impaired loans	$	2,702	$	0	$	0	$	2,702
Foreclosed real estate		2,536		0		0		2,536
December 31, 2012
Impaired loans	$	4,493	$	0	$	0	$	4,493
Foreclosed real estate		2,779		0		0		2,779

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
(dollars in thousands)	Fair Value Estimate		Valuation Techniques		Unobservable Input		Range			Weighted Average
September 30, 2013
Impaired loans	$	2,702		Appraisal (1)		Appraisal adjustments (2)		20% - 30	%		26	%
Foreclosed real estate		2,536		Appraisal (1)		Appraisal adjustments (2)		8% - 67	%		49	%
December 31, 2012
Impaired loans	$	4,493		Appraisal (1)		Appraisal adjustments (2)		10% - 100	%		27	%
Foreclosed real estate		2,779		Appraisal (1)		Appraisal adjustments (2)		5% - 100	%		12	%

(1)	Fair value is generally determined through independent appraisals, which generally include various level 3 inputs that are not identifiable.
(2)	Appraisals may be adjusted downward by the Corporation’s management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

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Disclosures about Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of the Corporation’s financial instruments as of September 30, 2013 and December 31, 2012:

Cash and cash equivalents

The carrying amount is a reasonable estimate of fair value.

Securities available for sale

The fair value of securities available for sale is determined in accordance with the methods described under FASB ASC Topic 820 as described above.

Restricted investment in bank stocks

The carrying amount of restricted investment in bank stocks is a reasonable estimate of fair value. The Corporation is required to maintain minimum investment balances in these stocks, which are not actively traded and therefore have no readily determinable market value.

Loans held for sale

The fair value of loans held for sale is determined, when possible, using quoted secondary-market prices. If no such quoted prices exist, the fair value of a loan is determined using quoted prices for a similar loan or loans, adjusted for the specific attributes of that loan.

Loans, net

The fair value of loans, excluding all impaired loans, is estimated using discounted cash flow analyses using the current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans were first segregated by type such as commercial, real estate, and consumer, and were then further segmented into fixed and variable rate. Projected future cash flows are calculated based upon contractual maturity or call dates. Generally, variable rate loans that reprice frequently have no significant change in credit risk; fair value is based on carrying value.

Interest receivable

The carrying value of interest receivable is a reasonable estimate of fair value.

Deposits

The fair value of demand deposits, savings accounts and money market deposits is the amount payable on demand at the reporting date. The fair values of time deposits are estimated using a discounted cash flow analyses. The discount rates used are based on rates currently offered for deposits with similar remaining maturities. The fair values of variable rate time deposits that reprice frequently are based on carrying value. The fair values of time deposit liabilities do not take into consideration the value of the Corporation’s long-term relationships with depositors, which may have significant value.

Short-term borrowings

For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

Long-term debt

Long-term debt includes FHLB advances (Level 2) and junior subordinated debt (Level 3). The fair value of FHLB advances are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity. These prices are obtained from this active market and represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party. The fair value of junior subordinated debt is estimated using discounted cash flow analysis, based on market rates and spread characteristics of similar debt with similar credit risk characteristics, terms and remaining maturity.

- 31 -

Interest payable

The carrying value of interest payable is a reasonable estimate of fair value.

Off-balance sheet instruments

Off-balance sheet instruments consist of lending commitments and letters of credit are based on fees currently charged in the market to enter into similar arrangements, taking into account the remaining terms of the agreements and counterparties’ credit standing. These amounts were not considered material.

The following presents the carrying amounts and estimated fair values of the Corporation’s financial instruments as of September 30, 2013 and December 31, 2012.

					Fair Value Estimates
(dollars in thousands)	Carrying Amount		Estimated Fair Value		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Other Unobservable Inputs
September 30, 2013
Financial assets
Cash and cash equivalents	$	17,147	$	17,147	$	17,147	$	0	$	0
Securities available-for-sale		239,129		239,129		1,505		237,624		0
Restricted investment in bank stocks		3,608		3,608		0		3,608		0
Loans held for sale		1,826		1,862		0		1,862		0
Loans, net		804,212		827,862		0		0		827,862
Interest receivable		3,518		3,518		0		3,518		0
Financial liabilities
Deposits	$	922,315	$	924,503	$	0	$	924,503	$	0
Short-term borrowings		31,535		31,535		0		31,535		0
Long-term debt		50,513		46,346		0		40,243		6,103
Interest payable		376		376		0		376		0
Off-balance sheet instruments		0		0		0		0		0
December 31, 2012
Financial assets
Cash and cash equivalents	$	49,757	$	49,757	$	49,757	$	0	$	0
Securities available-for-sale		234,062		234,062		5,032		229,030		0
Restricted investment in bank stocks		2,863		2,863		0		2,863		0
Loans held for sale		3,091		3,151		0		3,151		0
Loans, net		727,832		753,299		0		0		753,299
Interest receivable		3,579		3,579		0		3,579		0
Financial liabilities
Deposits	$	901,307	$	907,439	$	0	$	907,439	$	0
Short-term borrowings		19,356		19,356		0		19,356		0
Long-term debt		30,815		26,568		0		21,289		5,279
Interest payable		470		470		0		470		0
Off-balance sheet instruments		0		0		0		0		0

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Note 14—Assets and Liabilities Subject to Offsetting

Securities Sold Under Agreements to Repurchase (“Repurchase Agreements”)

PeoplesBank enters into agreements under which it sells securities subject to an obligation to repurchase the same securities the next business day. 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 remain in the respective securities asset accounts. In other words, there is no offsetting or netting of the securities with the repurchase agreement liabilities.

		Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statements of Condition		Net Amounts of Liabilities Presented in the Statements of Condition
								Gross amounts Not Offset in the Statements of Condition
(dollars in thousands)								Financial Instruments			Cash Collateral Pledged		Net Amount
September 30, 2013
Repurchase Agreements	(1)	$	25,702	$	0	$	25,702	$	(25,702	)	$	0	$	0
December 31, 2012
Repurchase Agreements	(1)	$	19,356	$	0	$	19,356	$	(19,356	)	$	0	$	0

(1) As of September 30, 2013 and December 31, 2012, the fair value of securities pledged in connection with repurchase agreements was $27,708,000 and $25,876,000, respectively.

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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 are 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;

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

• a prolonged economic downturn;

• an increase in nonperforming assets requiring loss provisions and the incurrence of carrying costs related to nonperforming assets;

• declines in the market value of investment securities considered to be other-than-temporary;

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

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

• future legislative or administrative changes to U.S. governmental capital programs;

• unavailability of capital when needed or availability at less than favorable terms;

• political and competitive forces affecting banking, securities, asset management and credit services businesses;

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

• the risk that management’s analysis of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful.

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.

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Critical accounting policies

We have identified critical accounting policies for the Corporation to include allowance for loan losses, valuation of foreclosed real estate and evaluation of other-than-temporary impairment losses of securities. There were no material changes made to the critical accounting policies disclosed in the 2012 Annual Report on Form 10-K in regards to application or related judgments and estimates used. A detailed disclosure pertaining to critical accounting estimates is provided in Item 7 of the Corporation’s 2012 Annual Report on Form 10-K.

Three months ended September 30, 2013,
compared to three months ended September 30, 2012

FINANCIAL HIGHLIGHTS

The Corporation earned net income available to common shareholders (earnings) totaling $2,615,000 for the quarter ended September 30, 2013, compared to $1,809,000 for the quarter ended September 30, 2012. The $806,000 or 45 percent increase in earnings for the third quarter of 2013, compared to the third quarter of 2012, was primarily the result of an increase in net interest income and a decrease in the provision for loan losses, as described below.

The $764,000 or 9 percent increase in net interest income for the third quarter of 2013, compared to the same quarter of 2012, was due primarily to a decrease in funding costs resulting from a larger proportion of low cost core deposits to total deposits and lower rates generally paid on all deposit products, which reflected unusually low market interest rates. An increase in the average volume of earning assets contributed to the increase in net interest income as well. The average balance of interest earning assets, principally commercial loans, increased approximately $54 million or 5 percent for the third quarter of 2013, compared to the same quarter of 2012. While the volume of earning assets increased, its effect on interest income was partially offset by lower yields, a reflection of the low interest rate environment.

The $500,000 or 77 percent decrease in the provision for loan losses for the third quarter of 2013, compared to the same quarter of 2012, resulted from a higher level of net charge-offs in the prior year.

The $441,000 or 19 percent decrease in total noninterest income for the third quarter of 2013, compared to the same quarter of 2012, was primarily the result of decreases in income from mutual fund, annuity and insurance sales and gains on sales of securities.

Total noninterest expense for the third quarter of 2013 was $7,732,000, a decrease of $462,000 or 6 percent, compared to the same quarter of 2012 due primarily to a $1,221,000 decrease in impairment charges associated with foreclosed real estate. The decrease in impairment charges more than offset the $385,000 or 10 percent increase in personnel expense, which resulted from expanding the bank franchise and normal business growth. An increase in employee benefit expenses also contributed to the increase in personnel expense, inc1uding increases in medical insurance, due to a greater level of claims, and employer paid 401K Plan costs.

The provision for income taxes for the third quarter of 2013 was $990,000, which was $479,000 or 94 percent above the $511,000 recorded for the third quarter of 2012 due primarily to the 54 percent increase in income before income taxes.

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The schedule below presents selected performance metrics for the third quarter of 2013 and 2012. Earnings per common share were adjusted for the 5% common stock dividend declared by the Corporation on October 8, 2013.

	Three months ended September 30,
	2013			2012
Basic earnings per common share	$	0.55		$	0.39
Diluted earnings per common share	$	0.54		$	0.38
Cash dividend payout ratio		20.7	%		25.7	%
Return on average assets		0.97	%		0.71	%
Return on average equity		10.26	%		7.50	%
Net interest margin (tax equivalent basis)		3.78	%		3.70	%
Net overhead ratio		2.12	%		2.38	%
Efficiency ratio		64.39	%		72.48	%
Average equity to average assets		9.42	%		9.44	%

A more detailed analysis of the factors and trends affecting corporate earnings follows.

INCOME STATEMENT ANALYSIS

Net interest income

Net interest income for the three month period ended September 30, 2013, was $9,695,000, an increase of $764,000 or 9 percent above the third quarter of 2012. The increase in net interest income was due primarily to a decrease in funding costs resulting from a larger proportion of low cost core deposits to total deposits and lower rates generally paid on all deposit products, which reflected unusually low market interest rates. Net interest income (tax equivalent basis) annualized as a percentage of average interest earning assets, i.e., net interest margin, was 3.78 percent for the third quarter of 2013, compared to 3.70 percent for the third quarter of 2012.

The $211,000 or 2 percent increase in total interest income for the current quarter, compared to the third quarter of 2012, was due primarily to an increase in the average volume of earning assets. Interest earning assets averaged $1.05 billion and yielded 4.58 percent (tax equivalent basis) for the current quarter, compared to $998 million and 4.77 percent, respectively, for the third quarter of 2012. The average balance of interest earning assets, principally commercial loans, increased approximately $54 million or 5 percent for the third quarter of 2013, compared to the same quarter of 2012. While the volume of earning assets increased, its effect on interest income was largely offset by lower yields, a reflection of the low interest rate environment.

The $553,000 or 21 percent decrease in total interest expense for the current quarter, compared to the third quarter of 2012 resulted from a larger proportion of low cost core deposits to total deposits and lower rates generally paid on all deposit products, which reflected historically low market interest rates. Total interest bearing liabilities averaged $897 million at an average rate of 0.94 percent for the current quarter, compared to $865 million and 1.23 percent, respectively, for the third quarter of 2012. The $32 million or 4 percent increase in the average volume of interest bearing liabilities reflected growth in core deposits, principally demand and money market deposits and, to a lesser degree, savings deposits. The growth of core deposits is a particular focus of the Corporation because the rates are relatively low, are a source of fee income and provide the opportunity to cross-sell other financial products and services. The Corporation excludes time deposits in its definition of core deposits.

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Table 1-Average Balances and Interest Rates (tax equivalent basis)

	Three months ended September 30,
	2013								2012
(dollars in thousands)	Average Balance		Interest			Yield/ Rate			Average Balance		Interest			Yield/ Rate
Assets
Interest bearing deposits with banks	$	27,250	$	17			0.25	%	$	54,940	$	35			0.25	%
Investment securities:
Taxable		144,238		797			2.19			145,974		836			2.28
Tax-exempt		89,713		876			3.87			85,500		900			4.19
Total investment securities		233,951		1,673			2.84			231,474		1,736			2.98
Loans:
Taxable (1)		778,944		10,308			5.25			698,606		10,000			5.69
Tax-exempt		12,001		161			5.32			13,257		193			5.79
Total loans		790,945		10,469			5.25			711,863		10,193			5.70
Total earning assets		1,052,146		12,159			4.58			998,277		11,964			4.77
Other assets (2)		56,668		58,406
Total assets	$	1,108,814							$	1,056,683
Liabilities and Shareholders’ Equity
Deposits:
Interest bearing demand	$	378,997	$	361			0.38	%	$	338,046	$	340			0.40	%
Savings		38,728		24			0.25			34,188		21			0.24
Time		411,419		1,504			1.45			431,089		2,083			1.92
Total interest bearing deposits		829,144		1,889			0.90			803,323		2,444			1.21
Short-term borrowings		24,519		34			0.55			25,438		36			0.56
Long-term debt		43,568		201			1.83			36,050		197			2.17
Total interest bearing liabilities		897,231		2,124			0.94			864,811		2,677			1.23
Noninterest bearing deposits		100,505								84,527
Other liabilities		6,642								7,565
Shareholders’ equity		104,436								99,780
Total liabilities and shareholders’ equity	$	1,108,814							$	1,056,683
Net interest income (tax equivalent basis)			$	10,035							$	9,287
Net interest margin (3)							3.78	%							3.70	%
Tax equivalent adjustment				(340	)							(356	)
Net interest income			$	9,695							$	8,931

(1)	Average balance includes average nonaccrual loans of $10,667,000 for 2013 and $10,948,000 for 2012. Interest includes net loan fees of $328,000 for 2013 and $275,000 for 2012.
(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 interest earning assets.

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Table 2-Rate/Volume Analysis of Changes in Net Interest Income (tax equivalent basis)

	Three months ended September 30, 2013 vs. 2012
	Increase (decrease) due to change in
(dollars in thousands)	Volume			Rate			Net
Interest Income
Interest bearing deposits with banks	$	(18	)	$	0		$	(18	)
Investment securities:
Taxable		3			(42	)		(39	)
Tax-exempt		44			(68	)		(24	)
Loans:
Taxable		1,245			(937	)		308
Tax-exempt		(19	)		(13	)		(32	)
Total interest income		1,255			(1,060	)		195
Interest Expense
Deposits:
Interest bearing demand		38			(17	)		21
Savings		3			0			3
Time		(95	)		(484	)		(579	)
Short-term borrowings		(2	)		0			(2	)
Long-term debt		41			(37	)		4
Total interest expense		(15	)		(538	)		(553	)
Net interest income	$	1,270		$	(522	)	$	748

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

For the three month period ended September 30, 2013, the provision for loan losses was $150,000, which was the level needed to support loan growth and to maintain the adequacy of the allowance for loan losses. Comparatively, the provision was $650,000 for the third quarter of 2012, which replenished the allowance for net charge-offs totaling $553,000 in that quarter. More information about the allowance for loan losses can be found in this report under the caption Allowance for Loan Losses on page 54.

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Noninterest income

The following table presents the components of total noninterest income for the third quarter of 2013, compared to the third quarter of 2012.

Table 3 - Noninterest income

	Three months ended September 30,				Change Increase (Decrease)
(dollars in thousands)	2013		2012		$			%
Trust and investment services fees	$	510	$	450	$	60			13	%
Income from mutual fund, annuity and insurance sales		74		227		(153	)		(67	)
Service charges on deposit accounts		688		635		53			8
Income from bank owned life insurance		192		157		35			22
Other income		157		151		6			4
Net gain on sales of loans held for sale		233		293		(60	)		(20	)
Net gain on sales of securities		0		382		(382	)		nm
Total noninterest income	$	1,854	$	2,295	$	(441	)		(19	)%

nm – not meaningful

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

Trust and investment services fees—The $60,000 or 13 percent increase in trust and investment services fees was due to appreciation in the market value of managed accounts, upon which some fees are based, growth in traditional trust business and an increase in estate fees.

Income from mutual fund, annuity and insurance sales—The $153,000 or 67 percent decrease in income from the sale of mutual fund, annuity and insurance products by Codorus Valley Financial Advisors (CVFA), a subsidiary of PeoplesBank, was a result of the resignation of three registered representatives who left CVFA in April 2013.

Service charges on deposit accounts—The $53,000 or 8 percent increase in service charge income was due primarily to an increase in debit card revenue as a result of normal business growth.

Income from bank owned life insurance (BOLI)—The $35,000 or 22 percent increase in income from BOLI was due to an additional investment totaling $5.3 million in February 2013. More information about this transaction is provided under the year-to-date section of Noninterest Income.

Net gain on sales of loans held for sale—The $60,000 or 20 percent decrease in gains from the sale of residential mortgage loans resulted from a decrease in production, which was demand driven. Refinancing demand and gains therefrom have declined as a consequence of saturation and the higher level of market interest rates.

Net gain on sales of securities—The third quarter of 2013 had no sales of investment securities. Comparatively, for the third quarter of 2012, PeoplesBank recognized $382,000 in gains from the sale of approximately $9 million of U.S. agency mortgage-backed securities (MBS) that were selectively sold to remove relatively low yielding instruments that were prepaying principal faster than anticipated from the MBS portfolio.

- 39 -

Noninterest expense

The following table presents the components of total noninterest expense for the third quarter of 2013, compared to the third quarter of 2012.

Table 4 - Noninterest expense

	Three months ended September 30,				Change Increase (Decrease)
(dollars in thousands)	2013		2012		$			%
Personnel	$	4,191	$	3,806	$	385			10	%
Occupancy of premises, net		496		485		11			2
Furniture and equipment		538		490		48			10
Postage, stationery and supplies		131		116		15			13
Professional and legal		187		155		32			21
Marketing and advertising		341		259		82			32
FDIC insurance		154		181		(27	)		(15	)
Debit card processing		204		181		23			13
Charitable donations		32		26		6			23
External data processing		164		149		15			10
Foreclosed real estate including (gains) losses on sales		277		1,498		(1,221	)		(82	)
Impaired loan carrying costs		128		36		92			256
Other		889		812		77			9
Total noninterest expense	$	7,732	$	8,194	$	(462	)		6	%

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

Personnel—The $385,000 or 10 percent increase in personnel expense was due largely to an increase in wage expense resulting from planned staff additions, which included staffing the newest banking office located in Dover, PA that opened for business in September 2013, and normal business growth. An increase in employee benefit expenses also contributed, inc1uding increases in medical insurance, due to a greater level of claims, and employer paid 401K Plan costs.

Furniture and equipment—The $48,000 or 10 percent increase in furniture and equipment was due primarily normal business growth, which included increases in depreciation expense on computer hardware and software.

Professional and legal—The $32,000 or 21 percent increase in professional and legal expense was due to an increase in legal costs primarily from normal business growth.

Marketing and advertising—The $82,000 or 32 percent increase in marketing expense was due to normal business growth and increased corporate initiatives such as branding, product advertising, internal promotions and advertising the new banking office as previously described.

FDIC insurance—The $27,000 or 15 percent decrease in FDIC insurance premiums was due to a lower assessment rate, which resulted from improved financial performance by PeoplesBank. The FDIC uses various performance and risk metrics to classify financial institutions below $10 billion in total assets into four risk categories (1-4) with progressively higher assessments.

- 40 -

Foreclosed real estate including (gains) losses on sales—The $1,221,000 or 82 percent decrease in foreclosed real estate costs for the current quarter reflected a decrease in provisioning for impairment losses compared to the third quarter of 2012, which included a $1,027,000 provision associated with one property, as previously reported on Form 8-K dated August 30, 2012, and filed with the SEC.

Impaired loan carrying costs—The $92,000 or 256 percent increase in impaired loan carrying costs is an example of the variability of this line item expense, which is affected by variables such as economic and business conditions, the number and size of the loans in the impaired loan portfolio, financial capacity of the borrower or guarantor, and the value and liquidity of underlying collateral, among other factors.

Provision for income taxes

The provision for income tax for the third quarter of 2013 was $990,000, which was $479,000 or 94 percent above the $511,000 recorded for the third quarter of 2012 due primarily to the 54 percent increase in income before income taxes. For both periods, the Corporation’s statutory federal income tax rate was 34 percent. The Corporation’s effective income tax rate was 27 percent for the third quarter of 2013, compared to 22 percent for the third quarter of 2012. The effective tax rate differs from the statutory tax rate due to the impact of low-income housing credits and tax-exempt income, including income from bank owned life insurance.

Preferred stock dividends

Preferred stock dividends for the third quarter of 2013 and 2012 totaled $62,000, which equated to an annualized dividend rate of 1 percent. The Corporation is currently paying the lowest permissible dividend rate under the U.S. Treasury’s Small Business Lending Fund Program (SBLF Program) as a result of adding loans that qualify for the SBLF Program in excess of a pre-determined loan portfolio baseline balance. Information about the SBLF Program is provided in this report at Note 10-Shareholders’ Equity.

Nine months ended September 30, 2013,
compared to nine months ended September 30, 2012

FINANCIAL HIGHLIGHTS

The Corporation earned net income available to common shareholders (earnings) totaling $7,797,000 for the first nine months of 2013, compared to $6,619,000 for the same period of 2012. The $1,178,000 or 18 percent increase in earnings was due primarily to an increase net interest income and, to a lesser degree, decreases in the provision for loan losses, noninterest expense and preferred stock dividends, which more than offset a decrease in noninterest income and an increase in the provision for income taxes, as described below.

The $1,463,000 or 5 percent increase in net interest income for the first nine months of 2013, compared to the same period of 2012, was due primarily to a decrease in funding costs resulting from a larger proportion of low cost core deposits to total deposits and lower rates generally paid on all deposit products, which reflected unusually low market interest rates. The average balance of interest earning assets, principally commercial loans, increased approximately $51 million or 5 percent for the first nine months of 2013, compared to the same period of 2012. While the volume of earning assets increased, its effect on interest income was largely offset by lower yields, a reflection of the low interest rate environment.

The $180,000 or 16 percent decrease in the provision for loan losses for the first nine months of 2013, compared to the same period of 2012, was due primarily to improving credit quality, including a decrease in net loan charge-offs, and adequacy of the allowance for loan losses.

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The $135,000 or 2 percent decrease in total noninterest income for the first nine months of 2013, compared to the same period of 2012, was primarily the result of a $387,000 or 90 percent decrease in gains from the sale of investment securities. Gains from the sale of U.S. agency mortgage-back securities were greater in the prior period as selected instruments that no longer met the Corporation’s investment standards were liquidated. A decrease in income from the sale of mutual fund, annuity and insurance products, due to staff resignations, also contributed to the decrease in noninterest income. Core noninterest income, which excludes gains or losses from the sale of securities increased $252,000 or 4 percent, representing normal business growth. Mortgage loan refinancing, and income therefrom, is expected to decrease as demand has largely been satisfied and the cost to borrow has increased due to higher market interest rates.

The $274,000 or 1 percent decrease in total noninterest expense for the first nine months of 2013, compared to the same period of 2012, was primarily the result of a 1,888,000 or 82 percent decrease in impairment charges associated with foreclosed real estate. The decrease in impairment charges more than offset the $1,241,000 or 11 percent increase in personnel expense, which resulted from expanding the bank franchise and normal business growth. An increase in employee benefit expenses also contributed to the increase in personnel expense, inc1uding increases in medical insurance, due to a greater level of claims, and employer paid 401K Plan costs.

The $738,000 or 33 percent increase in the provision for income taxes for the first nine months of 2013, compared to the same period of 2012, was primarily the result of the 19 percent increase in income before income taxes.

The $134,000 or 42 percent decrease in preferred stock dividends was the result of a decrease in the dividend rate caused by the addition of loans that qualified for the U.S. Treasury’s Small Business Lending Fund Program (SBLF Program). Dividends under the SBLF Program are expected to average 1 percent this year, compared to approximately 1.5 percent for the year 2012.

The schedule below presents selected performance metrics for the nine month periods ended September 30, 2013 and 2012. Earnings per common share were adjusted for the 5% common stock dividend declared by the Corporation on October 8, 2013.

	Nine months ended September 30,
	2013			2012
Basic earnings per common share	$	1.65		$	1.42
Diluted earnings per common share	$	1.62		$	1.40
Cash dividend payout ratio		19.6	%		18.5	%
Return on average assets		0.98	%		0.89	%
Return on average equity		10.26	%		9.50	%
Net interest margin (tax equivalent basis)		3.81	%		3.81	%
Net overhead ratio		2.01	%		2.17	%
Efficiency ratio		62.57	%		66.57	%
Average equity to average assets		9.60	%		9.41	%

A more detailed analysis of the factors and trends affecting corporate earnings follows.

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INCOME STATEMENT ANALYSIS

Net interest income

Net interest income for the nine month period ended September 30, 2013, was $28,148,000, an increase of $1,463,000 or 5 percent above the nine month period ended September 30, 2012. The increase in net interest income was due primarily to a decrease in funding costs resulting from a larger proportion of low cost core deposits to total deposits and lower rates generally paid on all deposit products, which reflected unusually low market interest rates. Net interest income (tax equivalent basis) annualized as a percentage of average interest earning assets, i.e., net interest margin, was 3.81 percent on an annualized basis for both nine month periods.

The $40,000 or 0.1 percent decrease in total interest income for the current nine month period, compared to the first nine months of 2012, was due primarily to a decrease in yields on earning assets, which was reflective of the long duration of historically low market interest rates. Interest earning assets averaged $1.02 billion and yielded 4.66 percent (tax equivalent basis) for the current period, compared to $973 million and 4.91 percent (tax equivalent basis), respectively, for the first nine months of 2012. The average balance of interest earning assets, principally commercial loans, increased approximately $51 million or 5 percent for the first nine months of 2013, compared to the same period for 2012. While the average volume of earning assets increased, its effect on interest income was offset by lower yields, a reflection of the low interest rate environment. The $555,000 or 12 percent decrease in interest income from investment securities was attributable to lower reinvestment yields and a decrease in the average volume invested.

The $1,503,000 or 19 percent decrease in total interest expense for the current nine month period, compared to the first nine months of 2012 resulted from a larger proportion of low cost core deposits to total deposits and lower rates generally paid on time deposits, which reflected historically low market interest rates. Total interest bearing liabilities averaged $878 million at an average rate of 0.99 percent for the current period, compared to $850 million and 1.26 percent, respectively, for the first nine months of 2012. The $27 million or 3 percent increase in the average volume of interest bearing liabilities reflected growth in core deposits, principally money market and demand deposits. The growth of core deposits is a particular focus of the Corporation because the interest rates are relatively low, are a source of fee income and provide the opportunity to cross-sell other financial products and services. The Corporation excludes time deposits in its definition of core deposits. The average volume of time deposits decreased approximately $20 million or 5 percent during the current nine month period, compared to the same period of 2012, due most likely to depositor preference for liquidity given the small interest rate spread between core and time deposits.

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Table 5-Average Balances and Interest Rates (tax equivalent basis)

	Nine months ended September 30,
	2013								2012
(dollars in thousands)	Average Balance		Interest			Yield/ Rate			Average Balance		Interest			Yield/ Rate
Assets
Interest bearing deposits with banks	$	31,422	$	59			0.25	%	$	38,579	$	73			0.25	%
Investment securities:
Taxable		131,037		2,072			2.11			147,011		2,660			2.42
Tax-exempt		92,495		2,717			3.93			81,470		2,659			4.36
Total investment securities		223,532		4,789			2.86			228,481		5,319			3.11
Loans:
Taxable (1)		757,499		30,379			5.36			692,203		29,760			5.74
Tax-exempt		11,254		468			5.56			13,616		600			5.89
Total loans		768,753		30,847			5.36			705,819		30,360			5.75
Total earning assets		1,023,707		35,695			4.66			972,879		35,752			4.91
Other assets (2)		57,289								62,176
Total assets	$	1,080,996							$	1,035,055
Liabilities and Shareholders’ Equity Deposits:
Interest bearing demand	$	369,193	$	1,032			0.37	%	$	330,645	$	991			0.40	%
Savings		37,560		70			0.25			33,352		62			0.25
Time		409,470		4,747			1.55			429,258		6,262			1.95
Total interest bearing deposits		816,223		5,849			0.96			793,255		7,315			1.23
Short-term borrowings		21,914		91			0.56			20,034		89			0.59
Long-term debt		39,470		565			1.91			36,850		604			2.19
Total interest bearing liabilities		877,607		6,505			0.99			850,139		8,008			1.26
Noninterest bearing deposits		92,455								80,676
Other liabilities		7,133								6,792
Shareholders’ equity		103,801								97,448
Total liabilities and shareholders’ equity	$	1,080,996							$	1,035,055
Net interest income (tax equivalent basis)			$	29,190							$	27,744
Net interest margin (3)							3.81	%							3.81	%
Tax equivalent adjustment				(1,042	)							(1,059	)
Net interest income			$	28,148							$	26,685

(1)	Average balance includes average nonaccrual loans of $10,388,000 for 2013 and $12,157,000 for 2012. Interest includes net loan fees of $1,049,000 for 2013 and $694,000 for 2012.
(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 interest earning assets.

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Table 6-Rate/Volume Analysis of Changes in Net Interest Income (tax equivalent basis)

	Nine months ended September 30, 2013 vs. 2012
	Increase (decrease) due to change in
(dollars in thousands)	Volume			Rate			Net
Interest Income
Interest bearing deposits with banks	$	(14	)	$	0		$	(14	)
Investment securities:
Taxable		(241	)		(347	)		(588	)
Tax-exempt		360			(302	)		58
Loans:
Taxable		3,237			(2,618	)		619
Tax-exempt		(104	)		(28	)		(132	)
Total interest income		3,238			(3,295	)		(57	)
Interest Expense
Deposits:
Interest bearing demand		121			(81	)		40
Savings		8			0			8
Time		(289	)		(1,226	)		(1,515	)
Short-term borrowings		8			(5	)		3
Long-term debt		43			(82	)		(39	)
Total interest expense		(109	)		(1,394	)		(1,503	)
Net interest income	$	3,347		$	(1,901	)	$	1,446

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

For the nine month period ended September 30, 2013, the provision for loan losses was $970,000, which was the level needed to support a larger loan portfolio, replenish approximately $823,000 in net charge-offs and to maintain the adequacy of the allowance for loan losses. Comparatively, the provision was $1,150,000 for the first nine months of 2012, which largely replenished the allowance for $1,065,000 in net charge-offs during that period. More information about the allowance for loan losses can be found in this report under the caption Allowance for Loan Losses on page 54.

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Noninterest income

The following table presents the components of total noninterest income for the nine month periods ended September 30, 2013 and 2012.

Table 7 - Noninterest income

	Nine months ended September 30,				Change Increase (Decrease)
(dollars in thousands)	2013		2012		$			%
Trust and investment services fees	$	1,447	$	1,263	$	184			15	%
Income from mutual fund, annuity and insurance sales		496		658		(162	)		(25	)
Service charges on deposit accounts		1,992		1,879		113			6
Income from bank owned life insurance		543		487		56			11
Other income		503		483		20			4
Net gain on sales of loans held for sale		874		833		41			5
Net gain on sales of securities		44		431		(387	)		(90	)
Total noninterest income	$	5,899	$	6,034	$	(135	)		(2	)%

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

Trust and investment services fees—The $184,000 or 15 percent increase in trust and investment services fees was due in part to a $66,000 increase in the periodic recognition of estate fees, appreciation in the market value of managed accounts, upon which some fees are based, and growth in traditional trust business.

Income from mutual fund, annuity and insurance sales—The $162,000 or 25 percent decrease in income from the sale of mutual fund, annuity and insurance products by Codorus Valley Financial Advisors (CVFA), a subsidiary of PeoplesBank, was a result of the resignation of three registered representatives who left CVFA in April 2013.

Service charges on deposit accounts—The $113,000 or 6 percent increase in service charge income was due primarily to an increase in debit card revenue as a result of normal business growth.

Income from bank owned life insurance (BOLI)—The $56,000 or 11 percent increase in income from BOLI was due to an additional investment totaling $5.3 million in February 2013. Of this total $4.7 million was invested with Massachusetts Mutual Life Insurance Company and $0.6 million was invested with Midland National Life Insurance Company. The initial tax-exempt yield on this investment was approximately 3.77 percent or 5.71 percent on a tax equivalent basis.

Net gain on sales of loans held for sale—The $41,000 or 5 percent increase in gains from the sale of residential mortgage loans resulted from an increase in loan origination volumes due to increased refinancing activity, which occurred in the earlier part of 2013. Since that time, refinancing demand and gains therefrom have trended downward as a consequence of saturation and the higher level of market interest rates.

Net gain on sales of securities—The $387,000 or 90 percent decrease in gains from the sale of investment securities reflected a higher level of sales in the prior year. During the year 2012, PeoplesBank selectively sold U.S. agency mortgage-backed securities (MBS) to remove relatively low yielding instruments that were prepaying principal faster than anticipated from the MBS portfolio.

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Noninterest expense

The following table presents the components of total noninterest expense for the nine month periods ended September 30, 2013 and 2012.

Table 8 - Noninterest expense

	Nine months ended September 30,				Change Increase (Decrease)
(dollars in thousands)	2013		2012		$			%
Personnel	$	12,486	$	11,245	$	1,241			11	%
Occupancy of premises, net		1,519		1,497		22			1
Furniture and equipment		1,543		1,414		129			9
Postage, stationery and supplies		438		384		54			14
Professional and legal		489		464		25			5
Marketing and advertising		741		666		75			11
FDIC insurance		463		589		(126	)		(21	)
Debit card processing		577		536		41			8
Charitable donations		518		507		11			2
External data processing		468		419		49			12
Foreclosed real estate including (gains) losses on sales		414		2,302		(1,888	)		(82	)
Impaired loan carrying costs		243		266		(23	)		(9	)
Other		2,243		2,127		116			5
Total noninterest expense	$	22,142	$	22,416	$	(274	)		(1	)%

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

Personnel—The $1,241,000 or 11 percent increase in personnel expense was due largely to an increase in wage expense resulting from planned staff additions, which included staffing the newest banking office located in Dover, PA that opened for business in September 2013, and normal business growth. An increase in employee benefit expenses also contributed to personnel expense, including increases in medical insurance, due to a greater level of claims, and employer paid 401K Plan costs. Effective January 1, 2013, PeoplesBank increased 401K Plan matching contributions to 100 percent up to the first 4 percent of an employee’s compensation contributed to the Plan, compared to a 50 percent match up to the first 6 percent contributed, for 2012.

Furniture and equipment—The $129,000 or 9 percent increase in furniture and equipment was due primarily normal business growth, which included increases in software license fees, maintenance and depreciation expense on computer hardware and software and small equipment purchases.

FDIC insurance—The $126,000 or 21 percent decrease in FDIC insurance premiums was due to a lower assessment rate, which resulted from improved financial performance by PeoplesBank. The FDIC uses various performance and risk metrics to classify financial institutions below $10 billion in total assets into four risk categories (1-4) with progressively higher assessments.

Foreclosed real estate including (gains) losses on sales—The $1,888,000 or 82 percent decrease in foreclosed real estate costs for the current period reflected a decrease in provisioning for impairment losses compared to the first nine months of 2012, which included a $1,027,000 provision associated with one property, as previously reported on Form 8-K dated August 30, 2012, and filed with the SEC.

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Other—Other expense, comprised of many underlying expenses, increased $116,000 or 5 percent due primarily to increases in Pennsylvania shares tax, third-party data processing expense and ATM and Visa network costs, which was reflective of normal business growth.

Provision for income taxes

The provision for income tax for the first nine months of 2013 was $2,951,000, compared to $2,213,000 for the first nine months of 2012. The $738,000 increase in the provision for income taxes was primarily the result of the increase in taxable income as evidenced by the 19 percent increase in income before income taxes. For both periods, the Corporation’s statutory federal income tax rate was 34 percent. The Corporation’s effective income tax rate was 27 percent for the first nine months of 2013, compared to 24 percent for the first nine months of 2012. The effective tax rate differs from the statutory tax rate due to the impact of low-income housing credits and tax-exempt income, including income from bank owned life insurance.

Preferred stock dividends

Preferred stock dividends for the first nine months of 2013 were $187,000, compared to $321,000 for the same period of 2012. The $134,000 or 42 percent decrease was the result of a decrease in the dividend rate caused by the addition of loans that qualified for the U.S. Treasury’s Small Business Lending Fund Program (SBLF Program). The annualized dividend rate in effect for the nine month period ended September 30, 2013 was 1 percent, compared to approximately 1.71 percent for the same period in 2012. Information about the SBLF Program is provided in this report at Note 10-Shareholders’ Equity.

BALANCE SHEET REVIEW

Securities available-for-sale

At September 30, 2013, the fair value of securities available-for-sale totaled $239 million, which represented a 2 percent increase compared to the $234 million value at year-end 2012. During the current period, a portion of investable funds were invested primarily in U.S. agency mortgage-backed securities to take advantage of improved yield opportunities and to provide cash flow, which could be re-priced at higher yields should market interest rates trend upward in the future. The composition of the Corporation’s investment securities portfolio is provided in Note 3-Securities.

On January 1, 2013, provision 939(a) of the Dodd-Frank Act became effective changing the definition of investment grade by removing reliance on credit ratings by national statistical rating organizations. Investment grade under the revised definition requires an active review (i.e., pre-purchase and post-purchase credit risk analysis) of the obligor to determine that the obligor has an adequate capacity to meet its financial commitments and more specifically that the risk of default is low and that full and timely repayment of principal and interest is expected. Obligations of the U.S. government and U.S. government sponsored enterprises are not subject to the due diligence requirement; however, municipal and corporate obligations are subject to the new requirement.

Loans

On September 30, 2013, total loans, net of deferred fees, totaled $814 million, which was $77 million or 10 percent higher than the year-end 2012 level. The increase in volume was due primarily to an increase in commercial related loans, particularly within the commercial real estate investor, agricultural and other (e.g. professional services, recreational) sectors. An increase in home equity loans also contributed to the overall increase in loans. The composition of the Corporation’s loan portfolio at September 30, 2013, compared to December 31, 2012, is provided in Note 5—Loans.

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Other assets

On September 30, 2013, other assets totaled $37 million, which was $6 million or 19 percent higher than the year-end 2012 level as a result of an investment in bank owned life insurance (BOLI). As a revenue raising strategy, PeoplesBank purchased $5.3 million of BOLI in February 2013. Of this total, $4.7 million was invested with Massachusetts Mutual Life Insurance Company and $0.6 million was invested with Midland National Life Insurance Company. The selection of these insurers was based on their high credit rating and reputation, competitive tax-exempt yield and to accomplish diversification among insurers for the BOLI portfolio. The level of BOLI investment, including the $5.3 million addition, is estimated at 19 percent of PeoplesBank’s Tier 1 capital at September 30, 2013, which is well within PeoplesBank’s investment limitation of 25 percent of Tier 1 capital.

Deposits

On September 30, 2013, deposits totaled $922 million, which represented a $21 million or 2 percent increase compared to the level at year-end 2012. The increase in total deposits occurred primarily within the demand (both interest and non-interest bearing), money market and savings categories, while higher rate time deposits (i.e., CDs) decreased slightly. The composition of the Corporation’s deposit portfolio at September 30, 2013, is provided in Note 7—Deposits.

Long-term debt

On September 30, 2013, long-term debt totaled approximately $51 million, which was $20 million or 64 percent above the year-end 2012 level. The increase was the result of two $10 million advances from the Federal Home Loan Bank of Pittsburgh that provides liquidity and acts as a hedge against rising market interest rates. Both advances are 3-year bullet maturities that have low fixed interest rates. A listing of outstanding long-term debt obligations is provided in Note 8—Short Term Borrowing and Long-term Debt.

Shareholders’ equity and capital adequacy

Shareholders’ equity, or capital, enables Codorus Valley to maintain asset growth and absorb losses. Total shareholders’ equity was approximately $106 million on September 30, 2013, an increase of approximately $4 million or 4 percent, compared to the level at December 31, 2012. The increase was primarily the result of an increase in retained earnings from profitable operations, which more than offset the decrease in accumulated other comprehensive income (AOCI). The decrease in AOCI reflected a decline in unrealized gains from the investment securities portfolio caused by an increase in market interest rates.

Dividends on preferred stock

As previously disclosed, the Corporation participates in the U.S. Department of the Treasury’s Small Business Lending Fund Program (SBLF Program). Information about the SBLF Program can be found in this report at Note 10—Shareholders’ Equity. For the quarter ended September 30 2013, accrued dividends equated to an annualized dividend rate of 1 percent on the $25 million of preferred stock outstanding. Comparatively, for the quarters ended December 31 and September 30 of 2012, the annualized dividend rates were also 1 percent.

Dividends on common stock

The Corporation typically pays cash dividends on its common 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 factors. On October 8, 2013, the Board of Directors declared a quarterly cash dividend of $0.12 per common share payable on November 12, 2013, to shareholders of record at the close of business on October 22, 2013. This dividend follows a $0.12 per common share cash dividend paid in August and a $0.11 per common share cash dividend paid in May and February. Including the dividend that was just declared, cash dividends for 2013 will total $0.46 per share, representing an increase of $0.06 or 15 percent above the 2012 level. As adjusted for the 5 percent common stock dividend that was recently declared (described below), cash dividends per share will total $0.44 for 2013, compared to $0.38 for 2012.

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Periodically, the Corporation distributes stock dividends on its common stock. On October 8, 2013, the Corporation declared a 5 percent common stock dividend payable on December 10, 2013, to shareholders of record at the close of business on October 22, 2013.

Capital adequacy

Codorus Valley and PeoplesBank are subject to various regulatory capital requirements administered by banking regulators that involve quantitative guidelines and qualitative judgments. Quantitative measures established by regulators pertain to minimum capital ratios, as set forth in Note 9—Regulatory Matters, to the financial statements. We believe that Codorus Valley and PeoplesBank were well capitalized on September 30, 2013, based on regulatory capital guidelines.

On July 2, 2013, the Board of Governors of the Federal Reserve System finalized its rule implementing the Basel III regulatory capital framework, which the FDIC adopted on July 9, 2013. Under the rule, minimum requirements will increase both the quantity and quality of capital held by banking organizations. Consistent with the international Basel framework, the rule includes a new minimum ratio of common equity tier 1 capital to risk-weighted assets of 4.5 percent and a common equity tier 1 conservation buffer of 2.5 percent of risk-weighted assets that will apply to all supervised financial institutions. The rule also raises the minimum ratio of tier 1 capital to risk-weighted assets from 4 percent to 6 percent and includes a minimum leverage ratio of 4 percent for all banking organizations. The new rule increases the risk weights for past-due loans, certain commercial real estate loans and some equity exposures, and makes selected other changes in risk weights and credit conversion factors. The rule for smaller, less complex institutions, which includes the Corporation, takes effect January 1, 2015.

The new rule provides that, in order to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, a banking organization must hold the 2.5 percent capital conservation buffer, which is to be phased in over a four year period beginning January 1, 2016, with the full 2.5 percent required as of January 1, 2019. The transition schedule for new ratios, including the capital conservation buffer, is as follows:

	As of January 1:
	2015			2016			2017			2018			2019
Minimum common equity tier 1 capital ratio		4.5	%		4.5	%		4.5	%		4.5	%		4.5	%
Common equity tier 1 capital conservation buffer		N/A			0.625	%		1.25	%		1.875	%		2.5	%
Minimum common equity tier 1 capital ratio plus capital conservation buffer		4.5	%		5.125	%		5.75	%		6.375	%		7.0	%
Phase-in of most deductions from common equity tier 1 capital		40	%		60	%		80	%		100	%		100	%
Minimum tier 1 capital ratio		6.0	%		6.0	%		6.0	%		6.0	%		6.0	%
Minimum tier 1 capital ratio plus capital conservation buffer		N/A			6.625	%		7.25	%		7.875	%		8.5	%
Minimum total capital ratio		8.0	%		8.0	%		8.0	%		8.0	%		8.0	%
Minimum total capital ratio plus capital conservation buffer		N/A			8.625	%		9.25	%		9.875	%		10.5	%

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As fully phased in, a banking organization with a buffer greater than 2.5% would not be subject to limits on dividend payments or discretionary bonus payments; however, a banking organization with a buffer less than 2.5% would be subject to increasingly stringent limitations as the buffer approaches zero. The new rule also prohibits a banking organization from making dividend payments or discretionary bonus payments if its eligible retained income is negative in that quarter and its capital conservation buffer ratio was less than 2.5% as of the beginning of that quarter. Eligible net income is defined as net income for the 4 calendar quarters preceding the current calendar quarter, net of any distributions and associated tax effects not already reflected in net income. A summary of payout restrictions based on the capital conservation buffer is as follows:

Capital Conservation Buffer (as a % of risk-weighted assets)	Maximum Payout (as a % of eligible retained income)
Greater than 2.5%	No payout limitation applies
≤2.5% and >1.875%	60%
≤1.875% and >1.25%	40%
≤1.25% and >0.625%	20%
≤0.625%	0%

The Corporation plans to manage its capital to ensure compliance with the Basel III capital rules.

RISK MANAGEMENT

Credit risk management

The Credit Risk Management section included in the Corporation’s Form 10-K for year-end 2012 provides a general overview of the Corporation’s credit risk management process and loan concentrations. 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 to the Corporation.

Nonperforming assets

The following table presents asset categories posing the greatest risk of loss and related ratios. 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. 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. Foreclosed real estate represents real estate acquired to satisfy debts owed to PeoplesBank. The final category, troubled debt restructurings, pertains 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. The paragraphs below explain significant changes in the aforementioned categories as of September 30, 2013, compared to December 31, 2012. Nonperforming assets are under the purview of in-house counsel who continuously monitors and manages the collection of these accounts. Additionally, an internal asset quality control committee meets monthly to review nonperforming assets. We generally rely on appraisals performed by independent licensed appraisers to determine the value of collateral for impaired collateral-dependent loans. Generally, an appraisal is performed when: an account reaches 60 days past due, unless a certified appraisal was completed within the past six months; market values have changed significantly; the condition of the property has changed significantly; or the existing appraisal is outdated. 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 by recording a loss provision to the income statement. 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.

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Table 9-Nonperforming Assets

(dollars in thousands)	September 30, 2013			December 31, 2012
Nonaccrual loans	$	7,364		$	6,232
Nonaccrual loans, troubled debt restructurings		2,418			2,110
Accruing loans 90 days or more past due		0			186
Total nonperforming loans		9,782			8,528
Foreclosed real estate, net of allowance		3,867			3,633
Total nonperforming assets	$	13,649		$	12,161
Accruing troubled debt restructurings	$	3,553		$	3,550
Total period-end loans, net of deferred fees	$	813,661		$	737,134
Allowance for loan losses (ALL)	$	9,449		$	9,302
ALL as a% of total period-end loans		1.16	%		1.26	%
Annualized net charge-offs as a% of average total loans		0.14	%		0.16	%
ALL as a% of nonperforming loans		96.61	%		109.08	%
Nonperforming loans as a% of total period-end loans		1.20	%		1.16	%
Nonperforming assets as a% of total period-end
loans and net foreclosed real estate		1.67	%		1.64	%
Nonperforming assets as a% of total period-end assets		1.22	%		1.15	%
Nonperforming assets as a% of total period-end
shareholders’ equity		12.91	%		12.00	%

The current level of nonperforming assets has increased by approximately $1.5 million or 12 percent when compared to year-end 2012, primarily as a result of the addition of two unrelated commercial loans to nonaccrual status. Generally, we remain concerned about prolonged weak economic conditions and the corresponding effects it has on our commercial borrowers.

Nonaccrual loans

We evaluate the adequacy of the allowance for loan losses at least quarterly and have established a loss allowance for selected loan relationships where the net realizable value of the collateral is insufficient to repay the loan. In this regard, allowances, if applicable, are noted below within the description of the loan. Collection efforts, including modification of contractual terms for individual accounts based on prevailing market conditions and liquidation of collateral assets, are being employed to maximize recovery. Further provisions for loan losses may be required for nonaccrual loans as additional information becomes available or conditions change. There is also the potential for adjustment to the allowance as a result of regulatory examinations. 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.

On September 30, 2013, the nonperforming loan portfolio balance totaled $9,782,000 and was comprised primarily of collateralized commercial loans. Comparatively, nonperforming loans totaled $8,528,000 at year-end 2012. During the quarter ended March 31, 2013, two unrelated commercial loans experiencing deteriorating financial condition were reclassified to nonaccrual status described as loan no. 2 and loan no. 4, below. On September 30, 2013, the nonaccrual loan portfolio was comprised of twenty-seven unrelated loan relationships with outstanding principal balances ranging in size from $1,000 to $2,061,000. Six unrelated commercial relationships, which represent 77 percent of the nonperforming loan portfolio balance, are described below.

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Loan no. 1—At September 30, 2013, the outstanding principal balance of the loan relationship was $2,061,000, collateralized by commercial rental properties whose rents are assigned to PeoplesBank. Based on a recent appraisal of the primary real estate collateralizing the relationship, we believe that the loans are adequately collateralized. The borrower is presently operating under a troubled debt restructuring agreement.

Loan no. 2—At September 30, 2013, the outstanding principal balance of the loan relationship was $1,999,000, collateralized by a portfolio of investment properties. A $500,000 allowance for loan losses has been established for this relationship. Of the total allowance, $100,000 was established in the third quarter of 2013 and the remaining $400,000 established in the year 2012. The Bank is presently pursuing its legal remedies to recover the amount due and the borrower is attempting to liquidate selected properties.

Loan no. 3—At September 30, 2013, the outstanding principal balance of the loan relationship was $1,349,000, collateralized by two commercial properties. Based on an independent appraisal of the real estate collateralizing the relationship, we believe that the loans are adequately collateralized. The Bank is presently pursuing its legal remedies to recover the amount due.

Loan no. 4—At September 30, 2013, the outstanding principal balance of the loan relationship was $1,195,000, collateralized by both residential and commercial properties. We believe that the loan is adequately collateralized and are pursuing legal remedies to recover the amount due. During the third quarter of 2013, a commercial property was sold and the Bank was paid approximately $322,000, which was applied to the principal balance.

Loan no. 5—At September 30, 2013, the outstanding principal balance of the loan relationship was $729,000, which represents three commercial loans with a U.S. Department of Agriculture guarantee of 70 percent to 80 percent, depending upon the specific loan. A $120,000 allowance for loan losses was established in a prior period for this relationship. Two parcels of improved real estate, presently listed for sale, provide collateral for the loans. During the third quarter of 2013, the Bank acquired a third parcel of real estate with a net realizable value of $551,000 in partial satisfaction of one of the loans, which is presently listed for sale.

Loan no. 6— PeoplesBank owns a 62.5 percent participation interest in this loan relationship. The carrying value of the Bank’s principal at September 30, 2013, was $200,000, which reflects a $210,000 charge-off recognized in the second quarter of 2013 and payments totaling approximately $446,000 from the guarantors since year-end 2012. The Bank anticipates collection in full of the outstanding balance based on a recent agreement with the guarantors. The borrower is presently operating under a troubled debt restructuring agreement.

Foreclosed real estate

On September 30, 2013, foreclosed real estate, net of allowance, totaled $3,867,000, compared to $3,633,000 at December 31, 2012. On September 30, 2013, the portfolio was comprised of five unrelated accounts ranging in size from $259,000 to $1,314,000 (net of allowance and charge-offs), which, with the exception of property no. 1, we are actively attempting to liquidate. If a valuation allowance for probable loss has been established for a particular property it is so noted in the property description below. Further valuation allowances may be required on any foreclosed property as additional information becomes available or conditions change. Foreclosed real estate is included in the other assets category on the Corporation’s balance sheet. Three unrelated foreclosed real estate properties, which represent the majority of the foreclosed real estate portfolio balance, are described below.

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Property no. 1— The carrying amount of this property at September 30, 2013 was $1,314,000, which is net of a $1,984,000 allowance for probable loss based on an independent appraisal less estimated selling costs. This account is collateralized by 266 acres of unimproved land that is zoned for residential development. Based on information obtained in 2012, plans to obtain a formal development plan were suspended with the intent to temporarily retain the property and investigate other development, disposition or income generating options at some future date.

Property no. 2— The carrying amount of this property at September 30, 2013 was $1,088,000, which is net of a $1,627,000 allowance for probable loss. This account is primarily collateralized by 134 approved residential building lots. Of this total, 28 lots are improved. Management is evaluating its disposition options with regard to this property.

Property no. 3—The carrying amount of this property at September 30, 2013 was $780,000, which represents the value of the borrower’s personal residence presently listed for sale less estimated selling costs.

Allowance for loan losses

Although the Corporation 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 three components: specific allowances for individually impaired commercial loans; allowances calculated for pools of loans; and an unallocated component, which reflects the margin of imprecision inherent in the assumptions that underlie the evaluation of the adequacy of the allowance. 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, general economic conditions and the local business outlook. Determining the level of the allowance for probable loan losses at any given period is difficult, particularly during deteriorating or uncertain economic periods. We must make estimates using assumptions and information which are often subjective and fluid. There is also the potential for adjustment to the allowance as a result of regulatory examinations.

While the level of the allowance at September 30, 2013, was consistent with the previous two quarters, the unallocated component increased from approximately 10 percent to 22 percent of the total allowance during the third quarter. This occurred because two large charge-offs that were recognized in prior years rolled off of the two-year rolling average loss schedule used to compute historical loss factors, which are applied to pools of unimpaired commercial loans grouped by industry. We believe that the current level of the allowance is appropriate and that a release of reserves at this time would be premature because in our opinion the economy has not fundamentally changed as evidenced by sluggish growth, continued high unemployment, erosion of real estate values and uncertainty and unease in the business community caused by bipartisan friction in the federal government. To avoid a distortion of earnings as a consequence of a release of reserves, we believe it prudent to gradually lower the reserve, in concert with the banking community, to coincide with improvement in the economy and credit quality.

The following table presents an analysis of the activity in the allowance for loan losses for the nine months ended September 30, 2013 and 2012. The increase in the allowance generally supported the increase in the balance of the loan portfolio. The $180,000 decrease in the provision thus far for 2013 reflected a decrease in net charge-offs compared to the first nine months of 2012. If year-to-date net charge-offs are annualized they appear relatively consistent with the level reported for the year 2012, but well below the level of net charge-offs for the years 2011 and 2010. However, prolonged weakness in economic and business conditions, a relatively high level of unemployment and erosion of real estate values, which adversely affect our borrowers’ ability to service their loans, remain and can cause significant fluctuations in the level of charge-offs and provision expense from one period to another. Based on a comprehensive analysis of the loan portfolio, we believe that the allowance for loan losses was adequate at September 30, 2013.

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Table 10 -Analysis of Allowance for Loan Losses

(dollars in thousands)	2013			2012
Balance-January 1,	$	9,302		$	8,702
Provision charged to operating expense		970			1,150
Loans charged off:
Commercial, financial and agricultural		582			607
Real estate - construction and land development		0			2
Real estate - residential mortgages		28			115
Consumer and home equity		338			411
Total loans charged off		948			1,135
Recoveries:
Commercial, financial and agricultural		64			14
Real estate - residential mortgages		1			41
Consumer and home equity		60			15
Total recoveries		125			70
Net charge-offs		823			1,065
Balance-September 30,	$	9,449		$	8,787
Ratios:
Allowance for loan losses as a % of total period-end loans		1.16	%		1.20	%
Annualized net charge-offs as a % of average total loans		0.14	%		0.20	%
Allowance for loan losses as a % of nonperforming loans		96.61	%		75.46	%

Liquidity risk management

Maintaining adequate liquidity provides the Corporation with the ability to meet financial obligations to depositors, loan customers, employees, and shareholders on a timely and cost effective basis in the normal course of business. Additionally, it 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 scheduled investment security maturities and cash inflows, funds received from customer loan payments, and asset sales. The primary sources of liability liquidity are deposit growth, 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 September 30, 2013, we believe that liquidity was adequate based upon the potential liquidation of unpledged available-for-sale securities with a fair value totaling approximately $94 million and available credit from the Federal Home Loan Bank of Pittsburgh totaling approximately $210 million. The Corporation’s loan-to-deposit ratio was 88 percent at September 30, 2013, compared to 82 percent at year-end 2012.

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 September 30, 2013, totaled $281 million and consisted of $187 million in unfunded commitments under existing loan facilities, $67 million to grant new loans and $27 million in letters of credit. Normally 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.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable to smaller reporting companies.

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 Chief Financial Officer, 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 Officer and Chief Financial Officer concluded that, as of September 30, 2013, the Corporation’s disclosure controls and procedures are 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, that the benefits of controls must be considered relative to their costs, and inherent limitations that may not prevent fraud, particularly by collusion of two or more people or by management override of a control.

There has been no change in the Corporation’s internal control over financial reporting that occurred during the quarter ended September 30, 2013, 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. 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 proceedings known or contemplated by government authorities.

Item 1A. Risk factors

This Item 1A is not applicable to smaller reporting companies.

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, 2012.

The Corporation has a Share Repurchase Program (Program), which was authorized in 1995, and periodically amended, to permit the purchase of up to a maximum of 4.9 percent of the outstanding shares of the Corporation’s common stock at a price per share no greater than 200 percent of the latest quarterly published book value. For the nine month period ended September 30, 2013 and the year ended December 31, 2012, the Corporation had not acquired any of its common stock under the Program. The U.S, Treasury’s Small Business Lending Fund (SBLF) agreement imposes limits on the ability of the Corporation to repurchase shares of common stock if it fails to declare and pay quarterly dividends on the SBLF preferred stock.

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Item 3. Defaults upon senior securities

The Corporation has nothing to report under this Item 3.

Item 4. Mine safety disclosures

This Item 4 is not applicable to the Corporation.

Item 5. Other information

The Corporation has nothing to report under this Item 5.

Item 6. Exhibits

Exhibit Number	Description of Exhibit
3.1	Amended Articles of Incorporation (Incorporated by reference to Exhibit 3(i) to the Registrant’s Quarterly Report on Form 10-Q for September 30, 2012, filed with the Commission on November 13, 2012)
3.2	Amended By-laws (Incorporated by reference to Exhibit 3(ii) to the Registrant’s Current Report on Form 8-K, filed with the Commission on February 17, 2012)
3.3	Certificate of Designations for the Series A Preferred Stock – filed herein
3.4	Certificate of Designation of Senior Non-Cumulative Perpetual Preferred Stock, Series B (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on August 24, 2011)
4	Rights Agreement dated as of November 4, 2005 (Incorporated by reference to Exhibit 4 to the Registrant’s Quarterly Report on Form 10-Q for September 30, 2010, filed with Commission on November 15, 2010), as amended January 9, 2009 (Incorporated by reference to Exhibit 4.1 to the Registrant’s Quarterly Report on Form 10-Q for September 30, 2010, filed with the Commission on November 15, 2010), as further amended August 18, 2011 (Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on August 24, 2011)
4.1	Small Business Lending Fund- Securities Purchase Agreement, dated August 18, 2011, between Codorus Valley Bancorp, Inc. and the Secretary of the Treasury, with respect to the issuance and sale of the SBLF Preferred Stock (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on August 24, 2011)
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	Financial statements from the Quarterly Report on Form 10-Q of Codorus Valley Bancorp, Inc. for the quarter ended September 30, 2013, 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.

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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 there unto duly authorized.

	Codorus Valley Bancorp, Inc.
	(Registrant)
November 12, 2013	/s/ Larry J. Miller
Date	Larry J. Miller
	President & CEO
	(Principal Executive Officer)
November 12, 2013	/s/ Jann A. Weaver
Date	Jann A. Weaver
	Treasurer & Assistant Secretary
	(Principal Financial and Accounting Officer)

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EX-3.3

Exhibit 3.3

CERTIFICATE OF DESIGNATIONS

OF

FIXED RATE CUMULATIVE PERPETUAL PREFERRED STOCK, SERIES A

OF

CODORUS VALLEY BANCORP, INC.

Codorus Valley Bancorp, Inc. a corporation organized and existing under the laws of the Commonwealth of Pennsylvania (the “Corporation”), in accordance with the provisions of Section 1522 of the Pennsylvania Business Corporation Law, does hereby certify:

The board of directors of the Corporation (the “Board of Directors”) or an applicable committee of the Board of Directors, in accordance with the articles of incorporation and bylaws of the Corporation and applicable law, adopted the following resolution on November 11, 2008, creating a series of 16,500 shares of Preferred Stock of the Corporation designated as “Fixed Rate Cumulative Perpetual Preferred Stock, Series A”.

RESOLVED, that pursuant to the provisions of the articles of incorporation and the bylaws of the Corporation and applicable law, a series of Preferred Stock, par value $2.50 per share, of the Corporation be and hereby is created, and that the designation and number of shares of such series, and the voting and other powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof, of the shares of such series, are as follows:

Part 1. Designation and Number of Shares. There is hereby created out of the authorized and unissued shares of preferred stock of the Corporation a series of preferred stock designated as the “Fixed Rate Cumulative Perpetual Preferred Stock, Series A” (the “Designated Preferred Stock”). The authorized number of shares of Designated Preferred Stock shall be 16,500.

Part 2. Standard Provisions. The Standard Provisions contained in Annex A attached hereto are incorporated herein by reference in their entirety and shall be deemed to be a part of this Certificate of Designations to the same extent as if such provisions had been set forth in full herein.

Part. 3. Definitions. The following terms are used in this Certificate of Designations (including the Standard Provisions in Annex A hereto) as defined below:

(a) “Common Stock” means the common stock, par value $2.50 per share, of the Corporation.

(b) “Dividend Payment Date” means February 15, May 15, August 15 and November 15 of each year.

(c) “Junior Stock” means the Common Stock, and any other class or series of stock of the Corporation the terms of which expressly provide that it ranks junior to Designated Preferred Stock as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the Corporation.

1

(d) “Liquidation Amount” means $1,000 per share of Designated Preferred Stock.

(e) “Minimum Amount” means $4,125,000.

(f) “Parity Stock” means any class or series of stock of the Corporation (other than Designated Preferred Stock) the terms of which do not expressly provide that such class or series will rank senior or junior to Designated Preferred Stock as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the Corporation (in each case without regard to whether dividends accrue cumulatively or non-cumulatively).

(g) “Signing Date” means the Original Issue Date.

Part. 4. Certain Voting Matters.Holders of shares of Designated Preferred Stock will be entitled to one vote for each such share on any matter on which holders of Designated Preferred Stock are entitled to vote, including any action by written consent.

[Remainder of Page Intentionally Left Blank]

2

IN WITNESS WHEREOF, Codorus Valley, Inc. Bancorp has caused this Certificate of Designations to be signed by Harry R. Swift, its Vice President and Secretary, this __day of ______________, 200__

CODORUS VALLEY BANCORP, INC.
By:
Name:	Harry R. Swift
Title:	Vice President and Secretary

3

ANNEX A

STANDARD PROVISIONS

Section 1. General Matters. Each share of Designated Preferred Stock shall be identical in all respects to every other share of Designated Preferred Stock. The Designated Preferred Stock shall be perpetual, subject to the provisions of Section 5 of these Standard Provisions that form a part of the Certificate of Designations. The Designated Preferred Stock shall rank equally with Parity Stock and shall rank senior to Junior Stock with respect to the payment of dividends and the distribution of assets in the event of any dissolution, liquidation or winding up of the Corporation.

Section 2. Standard Definitions. As used herein with respect to Designated Preferred Stock:

(a) “Applicable Dividend Rate” means (i) during the period from the Original Issue Date to, but excluding, the first day of the first Dividend Period commencing on or after the fifth anniversary of the Original Issue Date, 5% per annum and (ii) from and after the first day of the first Dividend Period commencing on or after the fifth anniversary of the Original Issue Date, 9% per annum.

(b) “Appropriate Federal Banking Agency” means the “appropriate Federal banking agency” with respect to the Corporation as defined in Section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. Section 1813(q)), or any successor provision.

(c) “Business Combination” means a merger, consolidation, statutory share exchange or similar transaction that requires the approval of the Corporation’s stockholders.

(d) “Business Day” means any day except Saturday, Sunday and any day on which banking institutions in the State of New York generally are authorized or required by law or other governmental actions to close.

(e) “Bylaws” means the bylaws of the Corporation, as they may be amended from time to time.

(f) “Certificate of Designations” means the Certificate of Designations or comparable instrument relating to the Designated Preferred Stock, of which these Standard Provisions form a part, as it may be amended from time to time.

(g) “Charter” means the Corporation’s certificate or articles of incorporation, articles of association, or similar organizational document.

(h) “Dividend Period” has the meaning set forth in Section 3(a).

(i) “Dividend Record Date” has the meaning set forth in Section 3(a).

4

(j) “Liquidation Preference” has the meaning set forth in Section 4(a).

(k) “Original Issue Date” means the date on which shares of Designated Preferred Stock are first issued.

(l) “Preferred Director” has the meaning set forth in Section 7(b).

(m) “Preferred Stock” means any and all series of preferred stock of the Corporation, including the Designated Preferred Stock.

(n) “Qualified Equity Offering” means the sale and issuance for cash by the Corporation to persons other than the Corporation or any of its subsidiaries after the Original Issue Date of shares of perpetual Preferred Stock, Common Stock or any combination of such stock, that, in each case, qualify as and may be included in Tier 1 capital of the Corporation at the time of issuance under the applicable risk-based capital guidelines of the Corporation’s Appropriate Federal Banking Agency (other than any such sales and issuances made pursuant to agreements or arrangements entered into, or pursuant to financing plans which were publicly announced, on or prior to October 13, 2008).

(o) “Share Dilution Amount” has the meaning set forth in Section 3(b).

(p) “Standard Provisions” mean these Standard Provisions that form a part of the Certificate of Designations relating to the Designated Preferred Stock.

(q) “Successor Preferred Stock” has the meaning set forth in Section 5(a).

(r) “Voting Parity Stock” means, with regard to any matter as to which the holders of Designated Preferred Stock are entitled to vote as specified in Sections 7(a) and 7(b) of these Standard Provisions that form a part of the Certificate of Designations, any and all series of Parity Stock upon which like voting rights have been conferred and are exercisable with respect to such matter.

Section 3. Dividends.

(a) Rate. Holders of Designated Preferred Stock shall be entitled to receive, on each share of Designated Preferred Stock if, as and when declared by the Board of Directors or any duly authorized committee of the Board of Directors, but only out of assets legally available therefor, cumulative cash dividends with respect to each Dividend Period (as defined below) at a rate per annum equal to the Applicable Dividend Rate on (i) the Liquidation Amount per share of Designated Preferred Stock and (ii) the amount of accrued and unpaid dividends for any prior Dividend Period on such share of Designated Preferred Stock, if any. Such dividends shall begin to accrue and be cumulative from the Original Issue Date, shall compound on each subsequent Dividend Payment Date (i.e., no dividends shall accrue on other dividends unless and until the first Dividend Payment Date for such other dividends has passed without such other dividends having been paid on such date) and shall be payable quarterly in arrears on each Dividend Payment Date, commencing with the first such Dividend Payment Date to occur at least 20 calendar days after the Original Issue Date. In the event that any Dividend Payment Date would otherwise fall on a day that is not a Business Day, the dividend payment due on that date will be postponed to the next day that is a Business Day and no additional dividends will accrue as a result of that postponement. The period from and including any Dividend Payment Date to, but excluding, the next Dividend Payment Date is a “Dividend Period”, provided that the initial Dividend Period shall be the period from and including the Original Issue Date to, but excluding, the next Dividend Payment Date.

5

Dividends that are payable on Designated Preferred Stock in respect of any Dividend Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months. The amount of dividends payable on Designated Preferred Stock on any date prior to the end of a Dividend Period, and for the initial Dividend Period, shall be computed on the basis of a 360-day year consisting of twelve 30-day months, and actual days elapsed over a 30-day month. Dividends that are payable on Designated Preferred Stock on any Dividend Payment Date will be payable to holders of record of Designated Preferred Stock as they appear on the stock register of the Corporation on the applicable record date, which shall be the 15th calendar day immediately preceding such Dividend Payment Date or such other record date fixed by the Board of Directors or any duly authorized committee of the Board of Directors that is not more than 60 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.

Holders of Designated Preferred Stock shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends (if any) declared and payable on Designated Preferred Stock as specified in this Section 3 (subject to the other provisions of the Certificate of Designations).

(b) Priority of Dividends. So long as any share of Designated Preferred Stock remains outstanding, no dividend or distribution shall be declared or paid on the Common Stock or any other shares of Junior Stock (other than dividends payable solely in shares of Common Stock) or Parity Stock, subject to the immediately following paragraph in the case of Parity Stock, and no Common Stock, Junior Stock or Parity Stock shall be, directly or indirectly, purchased, redeemed or otherwise acquired for consideration by the Corporation or any of its subsidiaries unless all accrued and unpaid dividends for all past Dividend Periods, including the latest completed Dividend Period (including, if applicable as provided in Section 3(a) above, dividends on such amount), on all outstanding shares of Designated Preferred Stock have been or are contemporaneously declared and paid in full (or have been declared and a sum sufficient for the payment thereof has been set aside for the benefit of the holders of shares of Designated Preferred Stock on the applicable record date). The foregoing limitation shall not apply to (i) redemptions, purchases or other acquisitions of shares of Common Stock or other Junior Stock in connection with the administration of any employee benefit plan in the ordinary course of business (including purchases to offset the Share Dilution Amount (as defined below) pursuant to a publicly announced repurchase plan) and consistent with past practice, provided that any purchases to offset the Share Dilution Amount shall in no event exceed the Share Dilution Amount; (ii) purchases or other acquisitions by a broker-dealer subsidiary of the Corporation solely for the purpose of market-making, stabilization or customer facilitation transactions in Junior Stock or Parity Stock in the ordinary course of its business; (iii) purchases by a broker dealer subsidiary of the Corporation of capital stock of the Corporation for resale pursuant to an offering by the Corporation of such capital stock underwritten by such broker-dealer subsidiary; (iv) any dividends or distributions of rights or Junior Stock in connection with a stockholders’ rights plan or any redemption or repurchase of rights pursuant to any stockholders’ rights plan; (v) the acquisition by the Corporation or any of its subsidiaries of record ownership in Junior Stock or Parity Stock for the beneficial ownership of any other persons (other than the Corporation or any of its subsidiaries), including as trustees or custodians; and (vi) the exchange or conversion of Junior Stock for or into other Junior Stock or of Parity Stock for or into other Parity Stock (with the same or lesser aggregate liquidation amount) or Junior Stock, in each case, solely to the extent required pursuant to binding contractual agreements entered into prior to the Signing Date or any subsequent agreement for the accelerated exercise, settlement or exchange thereof for Common Stock. “Share Dilution Amount” means the increase in the number of diluted shares outstanding (determined in accordance with generally accepted accounting principles in the United States, and as measured from the date of the Corporation’s consolidated financial statements most recently filed with the Securities and Exchange Commission prior to the Original Issue Date) resulting from the grant, vesting or exercise of equity-based compensation to employees and equitably adjusted for any stock split, stock dividend, reverse stock split, reclassification or similar transaction.

When dividends are not paid (or declared and a sum sufficient for payment thereof set aside for the benefit of the holders thereof on the applicable record date) on any Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within a Dividend Period related to such Dividend Payment Date) in full upon Designated Preferred Stock and any shares of Parity Stock, all dividends declared on Designated Preferred Stock and all such Parity Stock and payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) shall be declared pro rata so that the respective amounts of such dividends declared shall bear the same ratio to each other as all accrued and unpaid dividends per share on the shares of Designated Preferred Stock (including, if applicable as provided in Section 3(a) above, dividends on such amount) and all Parity Stock payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) (subject to their having been declared by the Board of Directors or a duly authorized committee of the Board of Directors out of legally available funds and including, in the case of Parity Stock that bears cumulative dividends, all accrued but unpaid dividends) bear to each other. If the Board of Directors or a duly authorized committee of the Board of Directors determines not to pay any dividend or a full dividend on a Dividend Payment Date, the Corporation will provide written notice to the holders of Designated Preferred Stock prior to such Dividend Payment Date. Subject to the foregoing, and not otherwise, such dividends (payable in cash, securities or other property) as may be determined by the Board of Directors or any duly authorized committee of the Board of Directors may be declared and paid on any securities, including Common Stock and other Junior Stock, from time to time out of any funds legally available for such payment, and holders of Designated Preferred Stock shall not be entitled to participate in any such dividends.

6

Section 4. Liquidation Rights.

(a) Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Designated Preferred Stock shall be entitled to receive for each share of Designated Preferred Stock, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to stockholders of the Corporation, subject to the rights of any creditors of the Corporation, before any distribution of such assets or proceeds is made to or set aside for the holders of Common Stock and any other stock of the Corporation ranking junior to Designated Preferred Stock as to such distribution, payment in full in an amount equal to the sum of (i) the Liquidation Amount per share and (ii) the amount of any accrued and unpaid dividends (including, if applicable as provided in Section 3(a) above, dividends on such amount), whether or not declared, to the date of payment (such amounts collectively, the “Liquidation Preference”).

(b) Partial Payment. If in any distribution described in Section 4(a) above the assets of the Corporation or proceeds thereof are not sufficient to pay in full the amounts payable with respect to all outstanding shares of Designated Preferred Stock and the corresponding amounts payable with respect of any other stock of the Corporation ranking equally with Designated Preferred Stock as to such distribution, holders of Designated Preferred Stock and the holders of such other stock shall share ratably in any such distribution in proportion to the full respective distributions to which they are entitled.

(c) Residual Distributions. If the Liquidation Preference has been paid in full to all holders of Designated Preferred Stock and the corresponding amounts payable with respect of any other stock of the Corporation ranking equally with Designated Preferred Stock as to such distribution has been paid in full, the holders of other stock of the Corporation shall be entitled to receive all remaining assets of the Corporation (or proceeds thereof) according to their respective rights and preferences.

(d) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 4, the merger or consolidation of the Corporation with any other corporation or other entity, including a merger or consolidation in which the holders of Designated Preferred Stock receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash, securities or other property) of all or substantially all of the assets of the Corporation, shall not constitute a liquidation, dissolution or winding up of the Corporation.

Section 5. Redemption.

(a) Optional Redemption. Except as provided below, the Designated Preferred Stock may not be redeemed prior to the first Dividend Payment Date falling on or after the third anniversary of the Original Issue Date. On or after the first Dividend Payment Date falling on or after the third anniversary of the Original Issue Date, the Corporation, at its option, subject to the approval of the Appropriate Federal Banking Agency, may redeem, in whole or in part, at any time and from time to time, out of funds legally available therefor, the shares of Designated Preferred Stock at the time outstanding, upon notice given as provided in Section 5(c) below, at a redemption price equal to the sum of (i) the Liquidation Amount per share and (ii) except as otherwise provided below, any accrued and unpaid dividends (including, if applicable as provided in Section 3(a) above, dividends on such amount) (regardless of whether any dividends are actually declared) to, but excluding, the date fixed for redemption.

7

Notwithstanding the foregoing, prior to the first Dividend Payment Date falling on or after the third anniversary of the Original Issue Date, the Corporation, at its option, subject to the approval of the Appropriate Federal Banking Agency, may redeem, in whole or in part, at any time and from time to time, the shares of Designated Preferred Stock at the time outstanding, upon notice given as provided in Section 5(c) below, at a redemption price equal to the sum of (i) the Liquidation Amount per share and (ii) except as otherwise provided below, any accrued and unpaid dividends (including, if applicable as provided in Section 3(a) above, dividends on such amount) (regardless of whether any dividends are actually declared) to, but excluding, the date fixed for redemption; provided that (x) the Corporation (or any successor by Business Combination) has received aggregate gross proceeds of not less than the Minimum Amount (plus the “Minimum Amount” as defined in the relevant certificate of designations for each other outstanding series of preferred stock of such successor that was originally issued to the United States Department of the Treasury (the “Successor Preferred Stock”) in connection with the Troubled Asset Relief Program Capital Purchase Program) from one or more Qualified Equity Offerings (including Qualified Equity Offerings of such successor), and (y) the aggregate redemption price of the Designated Preferred Stock (and any Successor Preferred Stock) redeemed pursuant to this paragraph may not exceed the aggregate net cash proceeds received by the Corporation (or any successor by Business Combination) from such Qualified Equity Offerings (including Qualified Equity Offerings of such successor).

The redemption price for any shares of Designated Preferred Stock shall be payable on the redemption date to the holder of such shares against surrender of the certificate(s) evidencing such shares to the Corporation or its agent. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to the holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the Dividend Payment Date as provided in Section 3 above.

(b) No Sinking Fund. The Designated Preferred Stock will not be subject to any mandatory redemption, sinking fund or other similar provisions. Holders of Designated Preferred Stock will have no right to require redemption or repurchase of any shares of Designated Preferred Stock.

(c) Notice of Redemption. Notice of every redemption of shares of Designated Preferred Stock shall be given by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the Corporation. Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Any notice mailed as provided in this Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Designated Preferred Stock designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Designated Preferred Stock.

8

Notwithstanding the foregoing, if shares of Designated Preferred Stock are issued in book-entry form through The Depository Trust Corporation or any other similar facility, notice of redemption may be given to the holders of Designated Preferred Stock at such time and in any manner permitted by such facility. Each notice of redemption given to a holder shall state: (1) the redemption date; (2) the number of shares of Designated Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price; and (4) the place or places where certificates for such shares are to be surrendered for payment of the redemption price.

(d) Partial Redemption. In case of any redemption of part of the shares of Designated Preferred Stock at the time outstanding, the shares to be redeemed shall be selected either pro rata or in such other manner as the Board of Directors or a duly authorized committee thereof may determine to be fair and equitable. Subject to the provisions hereof, the Board of Directors or a duly authorized committee thereof shall have full power and authority to prescribe the terms and conditions upon which shares of Designated Preferred Stock shall be redeemed from time to time. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.

(e) Effectiveness of Redemption. If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds necessary for the redemption have been deposited by the Corporation, in trust for the pro rata benefit of the holders of the shares called for redemption, with a bank or trust company doing business in the Borough of Manhattan, The City of New York, and having a capital and surplus of at least $500 million and selected by the Board of Directors, so as to be and continue to be available solely therefor, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption from such bank or trust company, without interest. Any funds unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released to the Corporation, after which time the holders of the shares so called for redemption shall look only to the Corporation for payment of the redemption price of such shares.

(f) Status of Redeemed Shares. Shares of Designated Preferred Stock that are redeemed, repurchased or otherwise acquired by the Corporation shall revert to authorized but unissued shares of Preferred Stock (provided that any such cancelled shares of Designated Preferred Stock may be reissued only as shares of any series of Preferred Stock other than Designated Preferred Stock).

Section 6. Conversion. Holders of Designated Preferred Stock shares shall have no right to exchange or convert such shares into any other securities.

9

Section 7. Voting Rights.

(a) General. The holders of Designated Preferred Stock shall not have any voting rights except as set forth below or as otherwise from time to time required by law.

(b) Preferred Stock Directors. Whenever, at any time or times, dividends payable on the shares of Designated Preferred Stock have not been paid for an aggregate of six quarterly Dividend Periods or more, whether or not consecutive, the authorized number of directors of the Corporation shall automatically be increased by two and the holders of the Designated Preferred Stock shall have the right, with holders of shares of any one or more other classes or series of Voting Parity Stock outstanding at the time, voting together as a class, to elect two directors (hereinafter the “Preferred Directors” and each a “Preferred Director”) to fill such newly created directorships at the Corporation’s next annual meeting of stockholders (or at a special meeting called for that purpose prior to such next annual meeting) and at each subsequent annual meeting of stockholders until all accrued and unpaid dividends for all past Dividend Periods, including the latest completed Dividend Period (including, if applicable as provided in Section 3(a) above, dividends on such amount), on all outstanding shares of Designated Preferred Stock have been declared and paid in full at which time such right shall terminate with respect to the Designated Preferred Stock, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of the character above mentioned; provided that it shall be a qualification for election for any Preferred Director that the election of such Preferred Director shall not cause the Corporation to violate any corporate governance requirements of any securities exchange or other trading facility on which securities of the Corporation may then be listed or traded that listed or traded companies must have a majority of independent directors. Upon any termination of the right of the holders of shares of Designated Preferred Stock and Voting Parity Stock as a class to vote for directors as provided above, the Preferred Directors shall cease to be qualified as directors, the term of office of all Preferred Directors then in office shall terminate immediately and the authorized number of directors shall be reduced by the number of Preferred Directors elected pursuant hereto. Any Preferred Director may be removed at any time, with or without cause, and any vacancy created thereby may be filled, only by the affirmative vote of the holders a majority of the shares of Designated Preferred Stock at the time outstanding voting separately as a class together with the holders of shares of Voting Parity Stock, to the extent the voting rights of such holders described above are then exercisable. If the office of any Preferred Director becomes vacant for any reason other than removal from office as aforesaid, the remaining Preferred Director may choose a successor who shall hold office for the unexpired term in respect of which such vacancy occurred.

(c) Class Voting Rights as to Particular Matters. So long as any shares of Designated Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter, the vote or consent of the holders of at least 66 2/3% of the shares of Designated Preferred Stock at the time outstanding, voting as a separate class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:

(i) Authorization of Senior Stock. Any amendment or alteration of the Certificate of Designations for the Designated Preferred Stock or the Charter to authorize or create or increase the authorized amount of, or any issuance of, any shares of, or any securities convertible into or exchangeable or exercisable for shares of, any class or series of  capital stock of the Corporation ranking senior to Designated Preferred Stock with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of the Corporation;

10

(ii) Amendment of Designated Preferred Stock. Any amendment, alteration or repeal of any provision of the Certificate of Designations for the Designated Preferred Stock or the Charter (including, unless no vote on such merger or consolidation is required by Section 7(c)(iii) below, any amendment, alteration or repeal by means of a merger, consolidation or otherwise) so as to adversely affect the rights, preferences, privileges or voting powers of the Designated Preferred Stock; or

(iii) Share Exchanges, Reclassifications, Mergers and Consolidations. Any consummation of a binding share exchange or reclassification involving the Designated Preferred Stock, or of a merger or consolidation of the Corporation with another corporation or other entity, unless in each case (x) the shares of Designated Preferred Stock remain outstanding or, in the case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting entity, are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, and (y) such shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of Designated Preferred Stock immediately prior to such consummation, taken as a whole; provided, however, that for all purposes of this Section 7(c), any increase in the amount of the authorized Preferred Stock, including any increase in the authorized amount of Designated Preferred Stock necessary to satisfy preemptive or similar rights granted by the Corporation to other persons prior to the Signing Date, or the creation and issuance, or an increase in the authorized or issued amount, whether pursuant to preemptive or similar rights or otherwise, of any other series of Preferred Stock, or any securities convertible into or exchangeable or exercisable for any other series of Preferred Stock, ranking equally with and/or junior to Designated Preferred Stock with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and the distribution of assets upon liquidation, dissolution or winding up of the Corporation will not be deemed to adversely affect the rights, preferences, privileges or voting powers, and shall not require the affirmative vote or consent of, the holders of outstanding shares of the Designated Preferred Stock.

(d) Changes after Provision for Redemption. No vote or consent of the holders of Designated Preferred Stock shall be required pursuant to Section 7(c) above if, at or prior to the time when any such vote or consent would otherwise be required pursuant to such Section, all outstanding shares of the Designated Preferred Stock shall have been redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been deposited in trust for such redemption, in each case pursuant to Section 5 above.

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(e) Procedures for Voting and Consents. The rules and procedures for calling and conducting any meeting of the holders of Designated Preferred Stock (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules of the Board of Directors or any duly authorized committee of the Board of Directors, in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Charter, the Bylaws, and applicable law and the rules of any national securities exchange or other trading facility on which Designated Preferred Stock is listed or traded at the time.

Section 8. Record Holders. To the fullest extent permitted by applicable law, the Corporation and the transfer agent for Designated Preferred Stock may deem and treat the record holder of any share of Designated Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor such transfer agent shall be affected by any notice to the contrary.

Section 9. Notices. All notices or communications in respect of Designated Preferred Stock shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Charter or Bylaws or by applicable law. Notwithstanding the foregoing, if shares of Designated Preferred Stock are issued in book-entry form through The Depository Trust Corporation or any similar facility, such notices may be given to the holders of Designated Preferred Stock in any manner permitted by such facility.

Section 10. No Preemptive Rights. No share of Designated Preferred Stock shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted.

Section 11. Replacement Certificates. The Corporation shall replace any mutilated certificate at the holder’s expense upon surrender of that certificate to the Corporation. The Corporation shall replace certificates that become destroyed, stolen or lost at the holder’s expense upon delivery to the Corporation of reasonably satisfactory evidence that the certificate has been destroyed, stolen or lost, together with any indemnity that may be reasonably required by the Corporation.

Section 12. Other Rights. The shares of Designated Preferred Stock shall not have any rights, preferences, privileges or voting powers or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Charter or as provided by applicable law.

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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: November 12, 2013	/s/ Larry J. Miller
	Larry J. Miller, President and CEO
	(Principal Executive Officer)

- 59 -

EX-31.2

EXHIBIT 31.2
Certification of Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

          I, Jann A. Weaver, 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: November 12, 2013	/s/ Jann A. Weaver
	Jann A. Weaver,
	Treasurer and Assistant Secretary
	(Principal Financial and Accounting Officer)

- 60 -

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 ending September 30, 2013, 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 Jann A. Weaver, 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

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

Date: November 12, 2013	/s/ Larry J. Miller
	Larry J. Miller
	President and CEO
	(Principal Executive Officer)
	/s/ Jann A. Weaver
	Jann A. Weaver
	Treasurer and Assistant Secretary
	(Principal Financial and Accounting Officer)

- 61 -

XML

Short Term Borrowings And Long-Term Debt

9 Months Ended

Sep. 30, 2013

Short Term Borrowings And Long-Term Debt [Abstract]

Short Term Borrowings and Long-Term Debt

Note 8—Short Term Borrowings and Long-term Debt

Short-term borrowings consist of securities sold under agreements to repurchase, federal funds purchased and other borrowings.  During the second quarter of 2013, the Corporation opened a $3 million line of credit with ACNB Bank to provide a source of liquidity.  The line, renewable annually, is secured by a first lien on the Codorus Valley Corporate Center.  The interest rate on the ACNB Bank line is Wall Street Journal Prime.  No draws have been made on the line and on September 30, 2013, the balance was zero.

A summary of long-term debt as of September 30, 2013 and December 31, 2012 is shown below.

	September 30,		December 31,
(dollars in thousands)	2013		2012
PeoplesBank’s obligations:
FHLBP
Due May 2013,  3.46%, amortizing	$	0	$	245
Due July 2015,  1.90%		5,000		5,000
Due July 2016,  2.35%		5,000		5,000
Due September 2016,  1.18%		10,000		0
Due March 2018,  1.17%		10,000		0
Due June 2018,  1.87%		5,000		5,000
Due June 2019,  2.10%		5,000		5,000
Total FHLBP		40,000		20,245
Capital lease obligation		203		260
Codorus Valley Bancorp, Inc. obligations:
Junior subordinated debt
Due 2034,  2.27%, floating rate based on 3 month
LIBOR plus 2.02%, callable quarterly		3,093		3,093
Due 2036,  1.81% floating rate based on 3 month
LIBOR plus 1.54%, callable quarterly		7,217		7,217
Total long-term debt	$	50,513	$	30,815

PeoplesBank’s long-term debt obligations to the Federal Home Loan Bank of Pittsburgh (FHLBP) are fixed rate instruments.  Under terms of a blanket collateral agreement with the FHLBP, the obligations are secured by FHLBP stock and qualifying loan receivables, principally real estate secured loans.

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.

XML

Short Term Borrowings And Long-Term Debt (Narrative) (Details) (USD $)	9 Months Ended
	Sep. 30, 2013
ACNB Bank [Member]
Debt Instrument [Line Items]
Line of credit	$ 3,000,000
Line of credit, balance	0
CVB Statutory Trust No. 2 [Member]
Debt Instrument [Line Items]
Pooled trust preferred debt issuance	7,217,000
CVB Statutory Trust No. 1 [Member]
Debt Instrument [Line Items]
Pooled trust preferred debt issuance	$ 3,093,000

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Consolidated Statements Of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Interest income
Loans, including fees	$ 10,415	$ 10,129	$ 30,692	$ 30,163
Investment securities:
Taxable	788	834	2,054	2,651
Tax-exempt	590	608	1,830	1,797
Dividends	9	2	18	9
Other	17	35	59	73
Total interest income	11,819	11,608	34,653	34,693
Interest expense
Deposits	1,889	2,444	5,849	7,315
Federal funds purchased and other short-term borrowings	34	36	91	89
Long-term debt	201	197	565	604
Total interest expense	2,124	2,677	6,505	8,008
Net interest income	9,695	8,931	28,148	26,685
Provision for loan losses	150	650	970	1,150
Net interest income after provision for loan losses	9,545	8,281	27,178	25,535
Noninterest income
Trust and investment services fees	510	450	1,447	1,263
Income from mutual fund, annuity and insurance sales	74	227	496	658
Service charges on deposit accounts	688	635	1,992	1,879
Income from bank owned life insurance	192	157	543	487
Other income	157	151	503	483
Net gain on sales of loans held for sale	233	293	874	833
Net gain on sales of securities	0	382	44	431
Total noninterest income	1,854	2,295	5,899	6,034
Noninterest expense
Personnel	4,191	3,806	12,486	11,245
Occupancy of premises, net	496	485	1,519	1,497
Furniture and equipment	538	490	1,543	1,414
Postage, stationery and supplies	131	116	438	384
Professional and legal	187	155	489	464
Marketing and advertising	341	259	741	666
FDIC insurance	154	181	463	589
Debit card processing	204	181	577	536
Charitable donations	32	26	518	507
External data processing	164	149	468	419
Foreclosed real estate including (gains) losses on sales	277	1,498	414	2,302
Impaired loan carrying costs	128	36	243	266
Other	889	812	2,243	2,127
Total noninterest expense	7,732	8,194	22,142	22,416
Income before income taxes	3,667	2,382	10,935	9,153
Provision for income taxes	990	511	2,951	2,213
Net income	2,677	1,871	7,984	6,940
Preferred stock dividends	62	62	187	321
Net income available to common shareholders	$ 2,615	$ 1,809	$ 7,797	$ 6,619
Net income per common share, basic	$ 0.55	$ 0.39	$ 1.65	$ 1.42
Net income per common share, diluted	$ 0.54	$ 0.38	$ 1.62	$ 1.40

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Basis Of Presentation

9 Months Ended

Sep. 30, 2013

Basis Of Presentation [Abstract]

Basis Of Presentation

Note 1—Basis of Presentation

The accompanying unaudited consolidated balance sheet at December 31, 2012 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 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.

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, 2012.  

The consolidated financial statements include the accounts of Codorus Valley Bancorp, Inc. and its wholly owned bank subsidiary, PeoplesBank, A Codorus Valley Company (PeoplesBank), and its wholly owned nonbank subsidiary, SYC Realty Company, Inc. (collectively referred to as Codorus Valley or the Corporation).  PeoplesBank has four wholly-owned subsidiaries, Codorus Valley Financial Advisors, Inc., SYC Settlement Services, Inc. and two subsidiaries whose purpose is to temporarily hold foreclosed properties pending eventual liquidation.   All significant intercompany account balances and transactions have been eliminated in consolidation.  The combined results of operations of the nonbank subsidiaries are not material to the consolidated financial statements.

The results of operations for the three and nine months ended September 30, 2013are 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 September 30, 2013 and through the date these consolidated financial statements were issued, for items of potential recognition or disclosure.

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Significant Accounting Policies (Policy)

9 Months Ended

Sep. 30, 2013

Significant Accounting Policies [Abstract]

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 and all other.  Consumer loans consist of the following classes: residential mortgage, home equity and all other.

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 is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for loan losses. 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, 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 uncollectible 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 adequate to provide for losses that can be reasonably anticipated. 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, general and unallocated components. The specific component relates to loans that are classified as impaired, generally substandard and nonaccrual loans.  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 include:

· Changes in national 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

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. An unallocated component is maintained to cover uncertainties that could affect the Corporation’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the loan portfolio. 

As disclosed in Note 5-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 or private equity companies.   Commercial related 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.  Within the consumer loan segment, junior (i.e., second) liens present a slightly higher risk to the Corporation because economic and housing market conditions can adversely affect the underlying value of the collateral and 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 considered to be a troubled debt restructuring. 

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 obviates 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. 

Banking regulatory agencies, as an integral part of their examination process, periodically review the Corporation’s allowance for loan losses and may require the Corporation to recognize additions to the allowance based on their judgments about information available to them at the time of their examination, which may not be currently available to the Corporation.  Based on a comprehensive analysis of the loan portfolio, the Corporation believes that the level of the allowance for loan losses at September 30, 2013 is adequate.

Foreclosed Real Estate

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, based upon 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 charge-off.  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 September 30, 2013, foreclosed real estate, net of allowance, was $3,867,000, compared to $3,633,000 for December 31, 2012.  

Per Common Share Computations

Per Common Share Computations

All per share computations include the effect of stock dividends declared, including a 5% common stock dividend declared October 8, 2013.  The computation of net income per common share is provided in the table below.

	Three months ended				Nine months ended
	September 30,				September 30,
(in thousands, except per share data)	2013		2012		2013		2012
Net income available to common shareholders	$	2,615	$	1,809	$	7,797	$	6,619
Weighted average shares outstanding (basic)		4,751		4,671		4,730		4,654
Effect of dilutive stock options		94		77		89		60
Weighted average shares outstanding (diluted)		4,845		4,748		4,819		4,714
Basic earnings per common share	$	0.55	$	0.39	$	1.65	$	1.42
Diluted earnings per common share	$	0.54	$	0.38	$	1.62	$	1.40
Anti-dilutive stock options excluded from the
computation of earnings per share		4		81		33		87

Comprehensive Income

Comprehensive Income

Accounting principles generally accepted in the United States of America 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 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.

		Nine months ended
		September 30,
(dollars in thousands)		2013		2012
Cash paid during the period for:
Income taxes	$	2,490	$	2,727
Interest	$	6,599	$	8,029
Noncash investing activities:
Transfer of loans to foreclosed real estate	$	551	$	231
Transfer of loans held for sale to the held-to-maturity portfolio	$	258	$	0
Increase in other liabilities for purchase of securities settling after quarter end	$	0	$	2,201
Increase in other assets for purchase of securities settling after quarter end	$	0	$	1,566

Reclassification

Reclassification

Certain amounts in the 2012 consolidated financial statements have been reclassified to conform to the 2013 presentation, which did not impact net income or shareholders’ equity.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

There were no new accounting pronouncements affecting the Corporation during the reporting period that were not already adopted or that are expected to have a material impact on the Corporation’s consolidated financial position or results of operations.

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Shareholders' Equity (Details) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended	9 Months Ended			3 Months Ended			9 Months Ended
	Dec. 11, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Sep. 30, 2013 Series B Preferred Stock [Member]	Dec. 31, 2012 Series B Preferred Stock [Member]	Sep. 30, 2012 Series B Preferred Stock [Member]	Sep. 30, 2013 Series B Preferred Stock [Member]	Sep. 30, 2012 Series B Preferred Stock [Member]	Sep. 30, 2013 More Than Four And One Half Years After Issuance [Member]
Class of Stock [Line Items]
Aggregate purchase price of preferred stock sold to treasury		$ 25,000		$ 25,000
Preferred stock, dividend rate (fixed)										9.00%
Quarterly lending incentive fee										0.50%
Annual dividend rate					1.00%	1.00%	1.00%	1.00%	1.71%
Dividends Payable, Date Declared		Oct. 08, 2013
Common stock dividend distribution date	Dec. 11, 2012	Dec. 10, 2013
Common stock dividends, shares percentage	5.00%	5.00%
Common stock stock dividend, shares	211,564	226,451	212,008

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Regulatory Matters

9 Months Ended

Sep. 30, 2013

Regulatory Matters [Abstract]

Regulatory Matters

Note 9—Regulatory Matters

Codorus Valley and PeoplesBank are subject to various regulatory capital requirements.  Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if imposed, could have a material effect on Codorus Valley’s financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Codorus Valley and PeoplesBank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices.  The capital amounts and classifications are also subject to qualitative judgments by the regulators.

Quantitative measures established by regulators to ensure capital adequacy require Codorus Valley and PeoplesBank to maintain minimum ratios, as set forth below, to total and Tier 1 capital as a percentage of risk-weighted assets, and of Tier 1 capital to quarter-to-date average assets (leverage ratio).  Management believes that Codorus Valley and PeoplesBank were well capitalized on September 30, 2013 based on regulatory capital guidelines.

						Minimum for				Well Capitalized
		Actual				Capital Adequacy				Minimum*
(dollars in thousands)		Amount	Ratio			Amount	Ratio			Amount	Ratio
Codorus Valley Bancorp, Inc. (consolidated)
at September 30, 2013
Capital ratios:
Tier 1 risk based	$	112,766	12.99	%	$	34,726	4.00	%		n/a	n/a
Total risk based		122,215	14.08			69,452	8.00			n/a	n/a
Leverage		112,766	10.19			44,252	4.00			n/a	n/a
at December 31, 2012
Capital ratios:
Tier 1 risk based	$	105,597	13.59	%	$	31,074	4.00	%		n/a	n/a
Total risk based		114,899	14.79			62,147	8.00			n/a	n/a
Leverage		105,597	10.02			42,143	4.00			n/a	n/a
PeoplesBank, A Codorus Valley Company
at September 30, 2013
Capital ratios:
Tier 1 risk based	$	109,063	12.61	%	$	34,602	4.00	%	$	51,903	6.00	%
Total risk based		118,512	13.70			69,203	8.00			86,504	10.00
Leverage		109,063	9.89			44,124	4.00			55,155	5.00
at December 31, 2012
Capital ratios:
Tier 1 risk based	$	102,120	13.20	%	$	30,951	4.00	%	$	46,427	6.00	%
Total risk based		111,422	14.40			61,902	8.00			77,378	10.00
Leverage		102,120	9.72			42,020	4.00			52,526	5.00

*To be well capitalized under prompt corrective action provisions.

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Loans (Summary Of Past Due Accruing Loans, Nonaccrual Loans And Current Loans By Loan Segment And Class) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2012
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	$ 1,646	$ 5,345
60-89 Days Past Due	141	324
90 Days and Greater Past Due	0	186
Nonaccrual	9,782	8,342
Total Past Due Accruing	11,569	14,197
Current	802,092	722,937
Total loans	813,661	737,134	732,638
Commercial Related Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	1,462	3,967
60-89 Days Past Due	50	0
90 Days and Greater Past Due	0	0
Nonaccrual	8,916	7,846
Total Past Due Accruing	10,428	11,813
Current	663,776	595,667
Total loans	674,204	607,480	604,389
Builder & Developer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	0	400
60-89 Days Past Due	0	0
90 Days and Greater Past Due	0	0
Nonaccrual	247	255
Total Past Due Accruing	247	655
Current	102,865	96,281
Total loans	103,112	96,936	99,186
Commercial Real Estate Investor [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	997	0
60-89 Days Past Due	0	0
90 Days and Greater Past Due	0	0
Nonaccrual	3,387	3,277
Total Past Due Accruing	4,384	3,277
Current	132,097	119,437
Total loans	136,481	122,714	128,068
Residential Real Estate Investor [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	0	2,044
60-89 Days Past Due	50	0
90 Days and Greater Past Due	0	0
Nonaccrual	2,460	687
Total Past Due Accruing	2,510	2,731
Current	70,482	63,688
Total loans	72,992	66,419	63,578
Hotel/Motel [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	335	0
60-89 Days Past Due	0	0
90 Days and Greater Past Due	0	0
Nonaccrual	0	0
Total Past Due Accruing	335	0
Current	65,605	64,948
Total loans	65,940	64,948	60,187
Wholesale & Retail [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	0	1,067
60-89 Days Past Due	0	0
90 Days and Greater Past Due	0	0
Nonaccrual	1,339	1,784
Total Past Due Accruing	1,339	2,851
Current	73,140	67,592
Total loans	74,479	70,443	68,151
Manufacturing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	0	0
60-89 Days Past Due	0	0
90 Days and Greater Past Due	0	0
Nonaccrual	0	0
Total Past Due Accruing	0	0
Current	34,150	40,258
Total loans	34,150	40,258	37,720
Agriculture [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	0	0
60-89 Days Past Due	0	0
90 Days and Greater Past Due	0	0
Nonaccrual	0	0
Total Past Due Accruing	0	0
Current	35,310	20,928
Total loans	35,310	20,928	18,674
Other Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	130	456
60-89 Days Past Due	0	0
90 Days and Greater Past Due	0	0
Nonaccrual	1,483	1,843
Total Past Due Accruing	1,613	2,299
Current	150,127	122,535
Total loans	151,740	124,834	128,825
Consumer Related Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	184	1,378
60-89 Days Past Due	91	324
90 Days and Greater Past Due	0	186
Nonaccrual	866	496
Total Past Due Accruing	1,141	2,384
Current	138,316	127,270
Total loans	139,457	129,654	128,249
Residential Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	0	474
60-89 Days Past Due	24	129
90 Days and Greater Past Due	0	0
Nonaccrual	121	53
Total Past Due Accruing	145	656
Current	24,980	22,855
Total loans	25,125	23,511	21,961
Home Equity [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	25	62
60-89 Days Past Due	0	0
90 Days and Greater Past Due	0	0
Nonaccrual	199	152
Total Past Due Accruing	224	214
Current	74,856	65,644
Total loans	75,080	65,858	63,598
Consumer Related Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	159	842
60-89 Days Past Due	67	195
90 Days and Greater Past Due	0	186
Nonaccrual	546	291
Total Past Due Accruing	772	1,514
Current	38,480	38,771
Total loans	$ 39,252	$ 40,285	$ 42,690

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Guarantees (Details) (USD $)	9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Guarantees [Abstract]
Standby letters of credit outstanding	$ 27,063,000	$ 17,064,000
Letters of credit maximum expiration period, Years	1 year

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Securities (Summary Of Securities, Available-For-Sale) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Total debt securities, Amortized Cost	$ 234,634	$ 225,375
Total debt securities, Gross Unrealized Gains	5,228	8,770
Total debt securities, Gross Unrealized Losses	(733)	(83)
Total debt securities, Fair Value	239,129	234,062
U.S. Treasury Notes [Member]
Schedule of Available-for-sale Securities [Line Items]
Total debt securities, Amortized Cost	1,500	5,001
Total debt securities, Gross Unrealized Gains	5	31
Total debt securities, Gross Unrealized Losses	0	0
Total debt securities, Fair Value	1,505	5,032
U.S. Agency [Member]
Schedule of Available-for-sale Securities [Line Items]
Total debt securities, Amortized Cost	52,416	37,000
Total debt securities, Gross Unrealized Gains	817	1,083
Total debt securities, Gross Unrealized Losses	(374)	(25)
Total debt securities, Fair Value	52,859	38,058
U.S. Agency Mortgage-Backed, Residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Total debt securities, Amortized Cost	89,582	84,630
Total debt securities, Gross Unrealized Gains	1,907	3,603
Total debt securities, Gross Unrealized Losses	(168)	0
Total debt securities, Fair Value	91,321	88,233
State And Municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Total debt securities, Amortized Cost	91,136	98,744
Total debt securities, Gross Unrealized Gains	2,499	4,053
Total debt securities, Gross Unrealized Losses	(191)	(58)
Total debt securities, Fair Value	$ 93,444	$ 102,739

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Loans (Tables)

9 Months Ended

Sep. 30, 2013

Loans [Abstract]

Composition Of Loan Portfolio

		September 30,		December 31,
(dollars in thousands)		2013		2012
Builder & developer	$	103,112	$	96,936
Commercial real estate investor		136,481		122,714
Residential real estate investor		72,992		66,419
Hotel/Motel		65,940		64,948
Wholesale & retail		74,479		70,443
Manufacturing		34,150		40,258
Agriculture		35,310		20,928
Other		151,740		124,834
Total commercial related loans		674,204		607,480
Residential mortgages		25,125		23,511
Home equity		75,080		65,858
Other		39,252		40,285
Total consumer related loans		139,457		129,654
Total loans	$	813,661	$	737,134

Summary Of Loan Risk Ratings By Loan Class

				Special
(dollars in thousands)		Pass		Mention		Substandard		Nonaccrual		Total
September 30, 2013
Builder & developer	$	87,864	$	7,386	$	7,615	$	247	$	103,112
Commercial real estate investor		124,882		4,926		3,286		3,387		136,481
Residential real estate investor		70,222		260		50		2,460		72,992
Hotel/Motel		65,940		0		0		0		65,940
Wholesale & retail		71,733		1,407		0		1,339		74,479
Manufacturing		33,474		0		676		0		34,150
Agriculture		32,054		2,798		458		0		35,310
Other		148,788		1,089		380		1,483		151,740
Total commercial related loans		634,957		17,866		12,465		8,916		674,204
Residential mortgage		24,955		19		30		121		25,125
Home equity		74,818		63		0		199		75,080
Other		38,496		171		39		546		39,252
Total consumer related loans		138,269		253		69		866		139,457
Total loans	$	773,226	$	18,119	$	12,534	$	9,782	$	813,661
December 31, 2012
Builder & developer	$	79,101	$	6,567	$	11,013	$	255	$	96,936
Commercial real estate investor		107,415		9,563		2,459		3,277		122,714
Residential real estate investor		62,327		1,361		2,044		687		66,419
Hotel/Motel		64,948		0		0		0		64,948
Wholesale & retail		66,155		1,521		983		1,784		70,443
Manufacturing		39,559		0		699		0		40,258
Agriculture		20,457		0		471		0		20,928
Other		121,223		1,156		612		1,843		124,834
Total commercial related loans		561,185		20,168		18,281		7,846		607,480
Residential mortgage		23,421		5		32		53		23,511
Home equity		65,406		112		188		152		65,858
Other		39,318		325		351		291		40,285
Total consumer related loans		128,145		442		571		496		129,654
Total loans	$	689,330	$	20,610	$	18,852	$	8,342	$	737,134

Summary Of Impaired Loans

		September 30, 2013						December 31, 2012
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
(dollars in thousands)	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans with no related allowance:
Builder & developer	$	9,020	$	9,020		-	$	12,211	$	12,211		-
Commercial real estate investor		6,673		6,773		-		5,736		5,836		-
Residential real estate investor		287		512		-		72		72		-
Hotel/Motel		0		0		-		0		0		-
Wholesale & retail		1,616		4,101		-		3,048		5,323		-
Manufacturing		676		676		-		699		699		-
Agriculture		0		0		-		0		0		-
Other commercial		1,536		1,536		-		1,483		1,611		-
Residential mortgage		151		177		-		85		111		-
Home equity		387		412		-		340		340		-
Other consumer		585		585		-		642		718		-
Total impaired loans with no related allowance	$	20,931	$	23,792		-	$	24,316	$	26,921		-
Impaired loans with a related allowance:
Builder & developer	$	0	$	0	$	0	$	256	$	256	$	147
Commercial real estate investor		0		0		0		0		0		0
Residential real estate investor		2,223		2,223		650		2,659		2,659		700
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		0		0		0		0		0		0
Manufacturing		0		0		0		0		0		0
Agriculture		458		458		100		471		471		100
Other commercial		326		326		120		972		972		215
Residential mortgage		0		0		0		0		0		0
Home equity		0		0		0		0		0		0
Other consumer		0		0		0		0		0		0
Total impaired loans with a related allowance	$	3,007	$	3,007	$	870	$	4,358	$	4,358	$	1,162
Total impaired loans:
Builder & developer	$	9,020	$	9,020	$	0	$	12,467	$	12,467	$	147
Commercial real estate investor		6,673		6,773		0		5,736		5,836		0
Residential real estate investor		2,510		2,735		650		2,731		2,731		700
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		1,616		4,101		0		3,048		5,323		0
Manufacturing		676		676		0		699		699		0
Agriculture		458		458		100		471		471		100
Other commercial		1,862		1,862		120		2,455		2,583		215
Residential mortgage		151		177		0		85		111		0
Home equity		387		412		0		340		340		0
Other consumer		585		585		0		642		718		0
Total impaired loans	$	23,938	$	26,799	$	870	$	28,674	$	31,279	$	1,162

Summary Of Average Impaired Loans And Related Interest Income

		For the three months ended
		September 30, 2013						September 30, 2012
	Average		Total		Cash Basis		Average		Total		Cash Basis
	Recorded		Interest		Interest		Recorded		Interest		Interest
(dollars in thousands)	Investment		Income		Income		Investment		Income		Income
Impaired loans with no related allowance:
Builder & developer	$	9,094	$	132	$	0	$	10,771	$	121	$	11
Commercial real estate investor		6,182		61		23		5,146		73		34
Residential real estate investor		305		0		1		268		1		1
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		1,882		65		62		2,299		3		1
Manufacturing		679		11		0		706		10		0
Agriculture		0		0		0		0		0		0
Other commercial		1,563		4		0		3,936		3		1
Residential mortgage		152		3		2		86		1		1
Home equity		392		2		0		268		1		0
Other consumer		626		2		4		473		7		4
Total impaired loans with no related allowance	$	20,875	$	280	$	92	$	23,953	$	220	$	53
Impaired loans with a related allowance:
Builder & developer	$	0	$	0	$	0	$	259	$	2	$	2
Commercial real estate investor		0		0		0		0		0		0
Residential real estate investor		2,236		0		0		2,289		31		0
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		0		0		0		263		0		0
Manufacturing		0		0		0		0		0		0
Agriculture		460		8		0		479		9		0
Other commercial		602		0		0		927		0		0
Residential mortgage		0		0		0		0		0		0
Home equity		0		0		0		0		0		0
Other consumer		0		0		0		0		0		0
Total impaired loans with a related allowance	$	3,298	$	8	$	0	$	4,217	$	42	$	2
Total impaired loans:
Builder & developer	$	9,094	$	132	$	0	$	11,030	$	123	$	13
Commercial real estate investor		6,182		61		23		5,146		73		34
Residential real estate investor		2,541		0		1		2,557		32		1
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		1,882		65		62		2,562		3		1
Manufacturing		679		11		0		706		10		0
Agriculture		460		8		0		479		9		0
Other commercial		2,165		4		0		4,863		3		1
Residential mortgage		152		3		2		86		1		1
Home equity		392		2		0		268		1		0
Other consumer		626		2		4		473		7		4
Total impaired loans	$	24,173	$	288	$	92	$	28,170	$	262	$	55

		For the nine months ended
		September 30, 2013						September 30, 2012
	Average		Total		Cash Basis		Average		Total		Cash Basis
	Recorded		Interest		Interest		Recorded		Interest		Interest
(dollars in thousands)	Investment		Income		Income		Investment		Income		Income
Impaired loans with no related allowance:
Builder & developer	$	9,913	$	396	$	5	$	8,008	$	355	$	65
Commercial real estate investor		5,953		195		92		4,703		209		108
Residential real estate investor		210		5		4		366		4		4
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		2,435		108		126		2,627		5		4
Manufacturing		686		33		0		709		31		0
Agriculture		0		0		0		0		0		0
Other commercial		1,589		10		4		4,654		93		138
Residential mortgage		118		7		5		145		5		4
Home equity		351		8		0		257		5		1
Other consumer		628		15		17		384		16		10
Total impaired loans with no related allowance	$	21,883	$	777	$	253	$	21,853	$	723	$	334
Impaired loans with a related allowance:
Builder & developer	$	97	$	0	$	0	$	261	$	4	$	4
Commercial real estate investor		0		0		0		57		0		0
Residential real estate investor		2,447		(9)		0		1,189		33		0
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		0		0		0		131		(3)		0
Manufacturing		0		0		0		0		0		0
Agriculture		465		24		0		484		26		0
Other commercial		786		0		0		926		0		0
Residential mortgage		0		0		0		0		0		0
Home equity		0		0		0		0		0		0
Other consumer		0		0		0		0		0		0
Total impaired loans with a related allowance	$	3,795	$	15	$	0	$	3,048	$	60	$	4
Total impaired loans:
Builder & developer	$	10,010	$	396	$	5	$	8,269	$	359	$	69
Commercial real estate investor		5,953		195		92		4,760		209		108
Residential real estate investor		2,657		(4)		4		1,555		37		4
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		2,435		108		126		2,758		2		4
Manufacturing		686		33		0		709		31		0
Agriculture		465		24		0		484		26		0
Other commercial		2,375		10		4		5,580		93		138
Residential mortgage		118		7		5		145		5		4
Home equity		351		8		0		257		5		1
Other consumer		628		15		17		384		16		10
Total impaired loans	$	25,678	$	792	$	253	$	24,901	$	783	$	338

Summary Of Past Due Accruing 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
September 30, 2013
Builder & developer	$	0	$	0	$	0	$	247	$	247	$	102,865	$	103,112
Commercial real estate investor		997		0		0		3,387		4,384		132,097		136,481
Residential real estate investor		0		50		0		2,460		2,510		70,482		72,992
Hotel/Motel		335		0		0		0		335		65,605		65,940
Wholesale & retail		0		0		0		1,339		1,339		73,140		74,479
Manufacturing		0		0		0		0		0		34,150		34,150
Agriculture		0		0		0		0		0		35,310		35,310
Other		130		0		0		1,483		1,613		150,127		151,740
Total commercial related loans		1,462		50		0		8,916		10,428		663,776		674,204
Residential mortgage		0		24		0		121		145		24,980		25,125
Home equity		25		0		0		199		224		74,856		75,080
Other		159		67		0		546		772		38,480		39,252
Total consumer related loans		184		91		0		866		1,141		138,316		139,457
Total loans	$	1,646	$	141	$	0	$	9,782	$	11,569	$	802,092	$	813,661
December 31, 2012
Builder & developer	$	400	$	0	$	0	$	255	$	655	$	96,281	$	96,936
Commercial real estate investor		0		0		0		3,277		3,277		119,437		122,714
Residential real estate investor		2,044		0		0		687		2,731		63,688		66,419
Hotel/Motel		0		0		0		0		0		64,948		64,948
Wholesale & retail		1,067		0		0		1,784		2,851		67,592		70,443
Manufacturing		0		0		0		0		0		40,258		40,258
Agriculture		0		0		0		0		0		20,928		20,928
Other		456		0		0		1,843		2,299		122,535		124,834
Total commercial related loans		3,967		0		0		7,846		11,813		595,667		607,480
Residential mortgage		474		129		0		53		656		22,855		23,511
Home equity		62		0		0		152		214		65,644		65,858
Other		842		195		186		291		1,514		38,771		40,285
Total consumer related loans		1,378		324		186		496		2,384		127,270		129,654
Total loans	$	5,345	$	324	$	186	$	8,342	$	14,197	$	722,937	$	737,134

Schedule Of Troubled Debt Restructurings

	Modifications
		Pre-Modification		Post-Modification
	Number	Outstanding		Outstanding
	of	Recorded		Recorded
(dollars in thousands)	Contracts	Investments		Investments
Three months ended:
September 30, 2013
Commercial related loans nonaccrual	1	$	375		375
September 30, 2012
None
Nine months ended:
September 30, 2013
Commercial related loans accruing	1	$	208	$	208
Commercial related loans nonaccrual	1	$	375		375
September 30, 2012
Commercial related loans nonaccrual	1	$	286	$	286

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Securities (Tables)

9 Months Ended

Sep. 30, 2013

Securities [Abstract]

Summary Of Securities, Available-For-Sale

		Amortized		Gross Unrealized				Fair
(dollars in thousands)		Cost		Gains		Losses		Value
September 30, 2013
Debt securities:
U.S. Treasury notes	$	1,500	$	5	$	0	$	1,505
U.S. agency		52,416		817		(374)		52,859
U.S. agency mortgage-backed, residential		89,582		1,907		(168)		91,321
State and municipal		91,136		2,499		(191)		93,444
Total debt securities	$	234,634	$	5,228	$	(733)	$	239,129
December 31, 2012
Debt securities:
U.S. Treasury notes	$	5,001	$	31	$	0	$	5,032
U.S. agency		37,000		1,083		(25)		38,058
U.S. agency mortgage-backed, residential		84,630		3,603		0		88,233
State and municipal		98,744		4,053		(58)		102,739
Total debt securities	$	225,375	$	8,770	$	(83)	$	234,062

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	$	13,813	$	13,924
Due after one year through five years		176,254		180,152
Due after five years through ten years		40,747		41,103
Due after ten years		3,820		3,950
Total debt securities	$	234,634	$	239,129

Schedule Of Gross Realized Gains And Losses On Sales Of Securities

		Three months ended				Nine months ended
		September 30,				September 30,
(dollars in thousands)		2013		2012		2013		2012
Realized gains	$	0	$	382	$	44	$	431
Realized losses		0		0		0		0
Net gains	$	0	$	382	$	44	$	431

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
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
September 30, 2013
Debt securities:
U.S. agency	$	29,897	$	(374)	$	0	$	0	$	29,897	$	(374)
U.S. agency mortgage-backed, residential		23,140		(168)		0		0		23,140		(168)
State and municipal		17,408		(191)		0		0		17,408		(191)
Total temporarily impaired debt
securities, available for sale	$	70,445	$	(733)	$	0	$	0	$	70,445	$	(733)
December 31, 2012
Debt securities:
U.S. agency	$	8,251	$	(25)	$	0	$	0	$	8,251	$	(25)
State and municipal		11,565		(58)		0		0		11,565		(58)
Total temporarily impaired debt
securities, available for sale	$	19,816	$	(83)	$	0	$	0	$	19,816	$	(83)

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Loans (Summary Of Impaired Loans) (Details) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Recorded Investment	$ 20,931,000	$ 24,316,000
Impaired loans with no related allowance, Unpaid Principal Balance	23,792,000	26,921,000
Impaired loans with related allowance, Recorded Investment	3,007,000	4,358,000
Impaired loans with related allowance, Unpaid Principal Balance	3,007,000	4,358,000
Total impaired loans, Recorded Investment	23,938,000	28,674,000
Total impaired loans, Unpaid Principal Balance	26,799,000	31,279,000
Total impaired loans, Related Allowance	870,000	1,162,000
Builder & Developer [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Recorded Investment	9,020,000	12,211,000
Impaired loans with no related allowance, Unpaid Principal Balance	9,020,000	12,211,000
Impaired loans with related allowance, Recorded Investment	0	256,000
Impaired loans with related allowance, Unpaid Principal Balance	0	256,000
Total impaired loans, Recorded Investment	9,020,000	12,467,000
Total impaired loans, Unpaid Principal Balance	9,020,000	12,467,000
Total impaired loans, Related Allowance	0	147,000
Commercial Real Estate Investor [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Recorded Investment	6,673,000	5,736,000
Impaired loans with no related allowance, Unpaid Principal Balance	6,773,000	5,836,000
Impaired loans with related allowance, Recorded Investment	0	0
Impaired loans with related allowance, Unpaid Principal Balance	0	0
Total impaired loans, Recorded Investment	6,673,000	5,736,000
Total impaired loans, Unpaid Principal Balance	6,773,000	5,836,000
Total impaired loans, Related Allowance	0	0
Residential Real Estate Investor [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Recorded Investment	287,000	72,000
Impaired loans with no related allowance, Unpaid Principal Balance	512,000	72,000
Impaired loans with related allowance, Recorded Investment	2,223,000	2,659,000
Impaired loans with related allowance, Unpaid Principal Balance	2,223,000	2,659,000
Total impaired loans, Recorded Investment	2,510,000	2,731,000
Total impaired loans, Unpaid Principal Balance	2,735,000	2,731,000
Total impaired loans, Related Allowance	650,000	700,000
Hotel/Motel [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Recorded Investment	0	0
Impaired loans with no related allowance, Unpaid Principal Balance	0	0
Impaired loans with related allowance, Recorded Investment	0	0
Impaired loans with related allowance, Unpaid Principal Balance	0	0
Total impaired loans, Recorded Investment	0	0
Total impaired loans, Unpaid Principal Balance	0	0
Total impaired loans, Related Allowance	0	0
Wholesale & Retail [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Recorded Investment	1,616,000	3,048,000
Impaired loans with no related allowance, Unpaid Principal Balance	4,101,000	5,323,000
Impaired loans with related allowance, Recorded Investment	0	0
Impaired loans with related allowance, Unpaid Principal Balance	0	0
Total impaired loans, Recorded Investment	1,616,000	3,048,000
Total impaired loans, Unpaid Principal Balance	4,101,000	5,323,000
Total impaired loans, Related Allowance	0	0
Manufacturing [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Recorded Investment	676,000	699,000
Impaired loans with no related allowance, Unpaid Principal Balance	676,000	699,000
Impaired loans with related allowance, Recorded Investment	0	0
Impaired loans with related allowance, Unpaid Principal Balance	0	0
Total impaired loans, Recorded Investment	676,000	699,000
Total impaired loans, Unpaid Principal Balance	676,000	699,000
Total impaired loans, Related Allowance	0	0
Agriculture [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Recorded Investment	0	0
Impaired loans with no related allowance, Unpaid Principal Balance	0	0
Impaired loans with related allowance, Recorded Investment	458,000	471,000
Impaired loans with related allowance, Unpaid Principal Balance	458,000	471,000
Total impaired loans, Recorded Investment	458,000	471,000
Total impaired loans, Unpaid Principal Balance	458,000	471,000
Total impaired loans, Related Allowance	100,000	100,000
Other Commercial [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Recorded Investment	1,536,000	1,483,000
Impaired loans with no related allowance, Unpaid Principal Balance	1,536,000	1,611,000
Impaired loans with related allowance, Recorded Investment	326,000	972,000
Impaired loans with related allowance, Unpaid Principal Balance	326,000	972,000
Total impaired loans, Recorded Investment	1,862,000	2,455,000
Total impaired loans, Unpaid Principal Balance	1,862,000	2,583,000
Total impaired loans, Related Allowance	120,000	215,000
Residential Mortgage [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Recorded Investment	151,000	85,000
Impaired loans with no related allowance, Unpaid Principal Balance	177,000	111,000
Impaired loans with related allowance, Recorded Investment	0	0
Impaired loans with related allowance, Unpaid Principal Balance	0	0
Total impaired loans, Recorded Investment	151,000	85,000
Total impaired loans, Unpaid Principal Balance	177,000	111,000
Total impaired loans, Related Allowance	0	0
Home Equity [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Recorded Investment	387,000	340,000
Impaired loans with no related allowance, Unpaid Principal Balance	412,000	340,000
Impaired loans with related allowance, Recorded Investment	0	0
Impaired loans with related allowance, Unpaid Principal Balance	0	0
Total impaired loans, Recorded Investment	387,000	340,000
Total impaired loans, Unpaid Principal Balance	412,000	340,000
Total impaired loans, Related Allowance	0	0
Consumer Related Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Recorded Investment	585,000	642,000
Impaired loans with no related allowance, Unpaid Principal Balance	585,000	718,000
Impaired loans with related allowance, Recorded Investment	0	0
Impaired loans with related allowance, Unpaid Principal Balance	0	0
Total impaired loans, Recorded Investment	585,000	642,000
Total impaired loans, Unpaid Principal Balance	585,000	718,000
Total impaired loans, Related Allowance	$ 0	$ 0

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Significant Accounting Policies (Narrative) (Details) (USD $)	0 Months Ended	9 Months Ended
	Dec. 11, 2012	Sep. 30, 2013	Dec. 31, 2012
Significant Accounting Policies [Abstract]
Number of days for accrual of interest on the payment of principal or interest		90 days
Foreclosed real estate, net of allowance		$ 3,867,000	$ 3,633,000
Common stock dividends, shares percentage	5.00%	5.00%
Dividends Payable, Date Declared		Oct. 08, 2013

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Securities (Schedule Of Gross Realized Gains And Losses On Sales Of Securities) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Securities [Abstract]
Realized gains	$ 0	$ 382	$ 44	$ 431
Realized losses	0	0	0	0
Net gains (losses)	$ 0	$ 382	$ 44	$ 431

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Loans (Schedule Of Troubled Debt Restructurings) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2013 Commercial Related Loans Accruing [Member] contract	Sep. 30, 2013 Commercial Related Loans Accruing [Member] contract	Sep. 30, 2013 Commercial Related Loans Nonaccrual [Member] contract	Sep. 30, 2012 Commercial Related Loans Nonaccrual [Member] contract
Financing Receivable, Modifications [Line Items]
Number of Contracts	1	1	1	1
Pre-Modification Outstanding Recorded Investments	$ 375	$ 208	$ 375	$ 286
Post-Modification Outstanding Recorded Investments	$ 375	$ 208	$ 375	$ 286

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Regulatory Matters (Tables)

9 Months Ended

Sep. 30, 2013

Regulatory Matters [Abstract]

Schedule Of Capitalized Ratios

						Minimum for				Well Capitalized
		Actual				Capital Adequacy				Minimum*
(dollars in thousands)		Amount	Ratio			Amount	Ratio			Amount	Ratio
Codorus Valley Bancorp, Inc. (consolidated)
at September 30, 2013
Capital ratios:
Tier 1 risk based	$	112,766	12.99	%	$	34,726	4.00	%		n/a	n/a
Total risk based		122,215	14.08			69,452	8.00			n/a	n/a
Leverage		112,766	10.19			44,252	4.00			n/a	n/a
at December 31, 2012
Capital ratios:
Tier 1 risk based	$	105,597	13.59	%	$	31,074	4.00	%		n/a	n/a
Total risk based		114,899	14.79			62,147	8.00			n/a	n/a
Leverage		105,597	10.02			42,143	4.00			n/a	n/a
PeoplesBank, A Codorus Valley Company
at September 30, 2013
Capital ratios:
Tier 1 risk based	$	109,063	12.61	%	$	34,602	4.00	%	$	51,903	6.00	%
Total risk based		118,512	13.70			69,203	8.00			86,504	10.00
Leverage		109,063	9.89			44,124	4.00			55,155	5.00
at December 31, 2012
Capital ratios:
Tier 1 risk based	$	102,120	13.20	%	$	30,951	4.00	%	$	46,427	6.00	%
Total risk based		111,422	14.40			61,902	8.00			77,378	10.00
Leverage		102,120	9.72			42,020	4.00			52,526	5.00

*To be well capitalized under prompt corrective action provisions.

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Assets And Liabilities Subject To Offsetting (Securities Sold Under Agreements To Repurchase Offsetting) (Details) (USD $)	Sep. 30, 2013		Dec. 31, 2012
Assets And Liabilities Subject To Offsetting [Abstract]
Repurchase Agreements, Gross Amounts of Recognized Liabilities	$ 25,702,000	[1]	$ 19,356,000	[1]
Repurchase Agreements, Gross Amounts Offset in the Statements of Condition	0	[1]	0	[1]
Repurchase Agreements, Net Amounts of Liabilities Presented in the Statements of Condition	25,702,000	[1]	19,356,000	[1]
Repurchase Agreements, Gross amounts Not Offset in the Statements of Condition, Financial Instruments	(25,702,000)	[1]	(19,356,000)	[1]
Repurchase Agreements, Gross amounts Not Offset in the Statements of Condition, Cash Collateral Pledged	0	[1]	0	[1]
Repurchase Agreements, Net Amount	0	[1]	0	[1]
Fair value of securities pledged	$ 27,708,000		$ 25,876,000

[1] As of September 30, 2013 and December 31, 2012, the fair value of securities pledged in connection with repurchase agreements was $27,708,000 and $25,876,000, respectively.

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Loans (Narrative) (Details) (USD $)	Sep. 30, 2013 item segment
Loans [Abstract]
Number of segments in loan portfolio	2
Maximum amount of commercial loans that use third-party credit scoring software models for risk rating purposes	$ 750,000
Number of risk ratings used to grade loans	10
Number of lowest risk ratings combined given a "pass" rating	7

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Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2013

Significant Accounting Policies [Abstract]

Schedule Of Weighted Average Number Of Shares Of Common Stock Outstanding Used For Basic And Diluted Calculations

	Three months ended				Nine months ended
	September 30,				September 30,
(in thousands, except per share data)	2013		2012		2013		2012
Net income available to common shareholders	$	2,615	$	1,809	$	7,797	$	6,619
Weighted average shares outstanding (basic)		4,751		4,671		4,730		4,654
Effect of dilutive stock options		94		77		89		60
Weighted average shares outstanding (diluted)		4,845		4,748		4,819		4,714
Basic earnings per common share	$	0.55	$	0.39	$	1.65	$	1.42
Diluted earnings per common share	$	0.54	$	0.38	$	1.62	$	1.40
Anti-dilutive stock options excluded from the
computation of earnings per share		4		81		33		87

Schedule Of Supplemental Cash Flow Information

		Nine months ended
		September 30,
(dollars in thousands)		2013		2012
Cash paid during the period for:
Income taxes	$	2,490	$	2,727
Interest	$	6,599	$	8,029
Noncash investing activities:
Transfer of loans to foreclosed real estate	$	551	$	231
Transfer of loans held for sale to the held-to-maturity portfolio	$	258	$	0
Increase in other liabilities for purchase of securities settling after quarter end	$	0	$	2,201
Increase in other assets for purchase of securities settling after quarter end	$	0	$	1,566

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Consolidated Statements Of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Consolidated Statements of Other Comprehensive Income [Abstract]
Net unrealized holding gains arising during the period, tax	$ 89	$ 447	$ (1,410)	$ 618
Reclassification adjustment for (gains) losses included in net income, tax expense and benefit	$ 0	$ 130	$ 15	$ 147

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Consolidated Statements Of Changes In Shareholders' Equity (USD $) In Thousands, unless otherwise specified	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]	Total
Beginning balance at Dec. 31, 2011	$ 25,000	$ 10,507	$ 37,253	$ 14,558	$ 5,924	$ 93,242
Net income				6,940		6,940
Other comprehensive income (loss), net of tax					915	915
Common stock cash dividends				(1,223)		(1,223)
Common stock dividend		530	2,480	(3,010)		0
Preferred stock cash dividends				(321)		(321)
Stock-based compensation			261			261
Issuance of common stock:
Shares under dividend reinvestment and stock purchase plan		43	180			223
Shares under stock option plan		35	110			145
Shares under employee stock purchase plan		15	28			43
Ending balance at Sep. 30, 2012	25,000	11,130	40,312	16,944	6,839	100,225
Beginning balance at Dec. 31, 2012	25,000	11,206	40,524	18,868	5,733	101,331
Net income				7,984		7,984
Other comprehensive income (loss), net of tax					(2,767)	(2,767)
Common stock cash dividends				(1,531)		(1,531)
Common stock dividend		566	3,467	(4,033)		0
Preferred stock cash dividends				(187)		(187)
Stock-based compensation			236			236
Issuance of common stock:
Shares under dividend reinvestment and stock purchase plan		38	229			267
Shares under stock option plan		68	278			346
Shares under employee stock purchase plan		11	43			54
Ending balance at Sep. 30, 2013	$ 25,000	$ 11,889	$ 44,777	$ 21,101	$ 2,966	$ 105,733

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Significant Accounting Policies

9 Months Ended

Sep. 30, 2013

Significant Accounting Policies [Abstract]

Significant Accounting Policies

Note 2—Significant Accounting Policies

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 and all other.  Consumer loans consist of the following classes: residential mortgage, home equity and all other.

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 is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for loan losses. 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, 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 uncollectible 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 adequate to provide for losses that can be reasonably anticipated. 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, general and unallocated components. The specific component relates to loans that are classified as impaired, generally substandard and nonaccrual loans.  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 include:

· Changes in national 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

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. An unallocated component is maintained to cover uncertainties that could affect the Corporation’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the loan portfolio. 

As disclosed in Note 5-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 or private equity companies.   Commercial related 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.  Within the consumer loan segment, junior (i.e., second) liens present a slightly higher risk to the Corporation because economic and housing market conditions can adversely affect the underlying value of the collateral and 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 considered to be a troubled debt restructuring. 

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 obviates 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. 

Banking regulatory agencies, as an integral part of their examination process, periodically review the Corporation’s allowance for loan losses and may require the Corporation to recognize additions to the allowance based on their judgments about information available to them at the time of their examination, which may not be currently available to the Corporation.  Based on a comprehensive analysis of the loan portfolio, the Corporation believes that the level of the allowance for loan losses at September 30, 2013 is adequate.

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, based upon 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 charge-off.  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 September 30, 2013, foreclosed real estate, net of allowance, was $3,867,000, compared to $3,633,000 for December 31, 2012.  

Per Common Share Computations

All per share computations include the effect of stock dividends declared, including a 5% common stock dividend declared October 8, 2013.  The computation of net income per common share is provided in the table below.

	Three months ended				Nine months ended
	September 30,				September 30,
(in thousands, except per share data)	2013		2012		2013		2012
Net income available to common shareholders	$	2,615	$	1,809	$	7,797	$	6,619
Weighted average shares outstanding (basic)		4,751		4,671		4,730		4,654
Effect of dilutive stock options		94		77		89		60
Weighted average shares outstanding (diluted)		4,845		4,748		4,819		4,714
Basic earnings per common share	$	0.55	$	0.39	$	1.65	$	1.42
Diluted earnings per common share	$	0.54	$	0.38	$	1.62	$	1.40
Anti-dilutive stock options excluded from the
computation of earnings per share		4		81		33		87

Comprehensive Income

Accounting principles generally accepted in the United States of America 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 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.

		Nine months ended
		September 30,
(dollars in thousands)		2013		2012
Cash paid during the period for:
Income taxes	$	2,490	$	2,727
Interest	$	6,599	$	8,029
Noncash investing activities:
Transfer of loans to foreclosed real estate	$	551	$	231
Transfer of loans held for sale to the held-to-maturity portfolio	$	258	$	0
Increase in other liabilities for purchase of securities settling after quarter end	$	0	$	2,201
Increase in other assets for purchase of securities settling after quarter end	$	0	$	1,566

Reclassification

Certain amounts in the 2012 consolidated financial statements have been reclassified to conform to the 2013 presentation, which did not impact net income or shareholders’ equity.

Recent Accounting Pronouncements

There were no new accounting pronouncements affecting the Corporation during the reporting period that were not already adopted or that are expected to have a material impact on the Corporation’s consolidated financial position or results of operations.  

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Consolidated Statements Of Changes In Shareholders' Equity (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Consolidated Statements Of Changes In Shareholders' Equity [Abstract]
Common stock cash dividends, per share	$ 0.324	$ 0.264
Common Stock Dividends, Shares	226,451	212,008
Common stock dividends, shares percentage	5.00%
Issuance of common stock under dividend reinvestment and stock purchase plan	15,429	17,339
Issuance of common stock under stock option plan	27,031	14,241
Issuance of common stock under employee stock purchase plan	4,246	5,966

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Securities (Schedule Of Gross Unrealized Losses And Fair Value, Aggregated By Investment Category And Length Of Time) (Details) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Total temporarily impaired debt securities, Less than 12 months, Fair Value	$ 70,445,000	$ 19,816,000
Total temporarily impaired debt securities, Less than 12 months, Unrealized Losses	(733,000)	(83,000)
Total temporarily impaired debt securities, 12 months or more, Fair Value	0	0
Total temporarily impaired debt securities, 12 months or more, Unrealized Losses	0	0
Total temporarily impaired debt securities, Total, Fair Value	70,445,000	19,816,000
Total temporarily impaired debt securities, Total, Unrealized Losses	(733,000)	(83,000)
U.S. Agency [Member]
Schedule of Available-for-sale Securities [Line Items]
Total temporarily impaired debt securities, Less than 12 months, Fair Value	29,897,000	8,251,000
Total temporarily impaired debt securities, Less than 12 months, Unrealized Losses	(374,000)	(25,000)
Total temporarily impaired debt securities, 12 months or more, Fair Value	0	0
Total temporarily impaired debt securities, 12 months or more, Unrealized Losses	0	0
Total temporarily impaired debt securities, Total, Fair Value	29,897,000	8,251,000
Total temporarily impaired debt securities, Total, Unrealized Losses	(374,000)	(25,000)
U.S. Agency Mortgage-Backed, Residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Total temporarily impaired debt securities, Less than 12 months, Fair Value	23,140,000
Total temporarily impaired debt securities, Less than 12 months, Unrealized Losses	(168,000)
Total temporarily impaired debt securities, 12 months or more, Fair Value	0
Total temporarily impaired debt securities, 12 months or more, Unrealized Losses	0
Total temporarily impaired debt securities, Total, Fair Value	23,140,000
Total temporarily impaired debt securities, Total, Unrealized Losses	(168,000)
State And Municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Total temporarily impaired debt securities, Less than 12 months, Fair Value	17,408,000	11,565,000
Total temporarily impaired debt securities, Less than 12 months, Unrealized Losses	(191,000)	(58,000)
Total temporarily impaired debt securities, 12 months or more, Fair Value	0	0
Total temporarily impaired debt securities, 12 months or more, Unrealized Losses	0	0
Total temporarily impaired debt securities, Total, Fair Value	17,408,000	11,565,000
Total temporarily impaired debt securities, Total, Unrealized Losses	$ (191,000)	$ (58,000)

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Allowance For Loan Losses (Tables)

9 Months Ended

Sep. 30, 2013

Allowance For Loan Losses [Abstract]

Summary Of Activity In And The Composition Of The Allowance For Loan Losses By Loan Segment And Class

			Commercial		Residential												Total
	Builder &		real estate		real estate		Hotel/		Wholesale &								commercial
(dollars in thousands)	developer		investor		investor		Motel		retail		Manufacturing		Agriculture		Other		related
Allowance for loan losses:
Balance, July 1, 2013	$	1,576	$	1,213	$	1,181	$	505	$	1,856	$	201	$	253	$	1,151	$	7,936
Charge-offs		0		0		(85)		0		0		0		0		0		(85)
Recoveries		0		0		0		0		25		0		0		16		41
Provisions		(400)		188		265		(13)		(1,239)		0		21		30		(1,148)
Balance, September 30, 2013	$	1,176	$	1,401	$	1,361	$	492	$	642	$	201	$	274	$	1,197	$	6,744
Balance, July 1, 2012	$	1,680	$	1,239	$	900	$	449	$	1,690	$	164	$	194	$	1,062	$	7,378
Charge-offs		(215)		0		(15)		0		0		0		0		(46)		(276)
Recoveries		0		0		0		0		3		0		0		0		3
Provisions		119		78		140		0		436		58		(3)		158		986
Balance, September 30, 2012	$	1,584	$	1,317	$	1,025	$	449	$	2,129	$	222	$	191	$	1,174	$	8,091

							Total
	Residential		Home				consumer
(dollars in thousands)	mortgage		equity		Other		related		Unallocated		Total
Allowance for loan losses:
Balance, July 1, 2013	$	77	$	236	$	276	$	589	$	934	$	9,459
Charge-offs		0		(25)		(106)		(131)		0		(216)
Recoveries		0		2		13		15		0		56
Provisions		(8)		24		124		140		1,158		150
Balance, September 30, 2013	$	69	$	237	$	307	$	613	$	2,092	$	9,449
Balance, July 1, 2012	$	78	$	152	$	137	$	367	$	945	$	8,690
Charge-offs		(76)		(42)		(165)		(283)		0		(559)
Recoveries		0		1		2		3		0		6
Provisions		133		77		236		446		(782)		650
Balance, September 30, 2012	$	135	$	188	$	210	$	533	$	163	$	8,787

			Commercial		Residential												Total
	Builder &		real estate		real estate		Hotel/		Wholesale &								commercial
(dollars in thousands)	developer		investor		investor		Motel		retail		Manufacturing		Agriculture		Other		related
Allowance for loan losses:
Balance, January 1, 2013	$	1,571	$	1,259	$	1,195	$	485	$	1,913	$	237	$	202	$	1,170	$	8,032
Charge-offs		(62)		0		(310)		0		(210)		0		0		0		(582)
Recoveries		0		0		0		0		47		0		0		17		64
Provisions		(333)		142		476		7		(1,108)		(36)		72		10		(770)
Balance, September 30, 2013	$	1,176	$	1,401	$	1,361	$	492	$	642	$	201	$	274	$	1,197	$	6,744
Balance, January 1, 2012	$	2,170	$	2,003	$	505	$	394	$	1,806	$	151	$	184	$	907	$	8,120
Charge-offs		(217)		(68)		(15)		0		0		0		0		(309)		(609)
Recoveries		0		0		0		0		14		0		0		0		14
Provisions		(369)		(618)		535		55		309		71		7		576		566
Balance, September 30, 2012	$	1,584	$	1,317	$	1,025	$	449	$	2,129	$	222	$	191	$	1,174	$	8,091

							Total
	Residential		Home				consumer
(dollars in thousands)	mortgage		equity		Other		related		Unallocated		Total
Allowance for loan losses:
Balance, January 1, 2013	$	124	$	237	$	238	$	599	$	671	$	9,302
Charge-offs		(28)		(99)		(239)		(366)		0		(948)
Recoveries		1		8		52		61		0		125
Provisions		(28)		91		256		319		1,421		970
Balance, September 30, 2013	$	69	$	237	$	307	$	613	$	2,092	$	9,449
Balance, January 1, 2012	$	88	$	86	$	171	$	345	$	237	$	8,702
Charge-offs		(115)		(170)		(241)		(526)		0		(1,135)
Recoveries		41		1		14		56		0		70
Provisions		121		271		266		658		(74)		1,150
Balance, September 30, 2012	$	135	$	188	$	210	$	533	$	163	$	8,787

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

			Commercial		Residential												Total
	Builder &		real estate		real estate		Hotel/		Wholesale &								commercial
(dollars in thousands)	developer		investor		investor		Motel		retail		Manufacturing		Agriculture		Other		related
Allowance for loan losses:
Individually evaluated for impairment	$	0	$	0	$	650	$	0	$	0	$	0	$	100	$	120	$	870
Collectively evaluated for impairment		1,176		1,401		711		492		642		201		174		1,077		5,874
Balance, September 30, 2013	$	1,176	$	1,401	$	1,361	$	492	$	642	$	201	$	274	$	1,197	$	6,744
Individually evaluated for impairment	$	147	$	0	$	700	$	0	$	0	$	0	$	100	$	215	$	1,162
Collectively evaluated for impairment		1,424		1,259		495		485		1,913		237		102		955		6,870
Balance, December 31, 2012	$	1,571	$	1,259	$	1,195	$	485	$	1,913	$	237	$	202	$	1,170	$	8,032
Individually evaluated for impairment	$	147	$	0	$	550	$	0	$	150	$	0	$	100	$	218	$	1,165
Collectively evaluated for impairment		1,437		1,317		475		449		1,979		222		91		956		6,926
Balance, September 30, 2012	$	1,584	$	1,317	$	1,025	$	449	$	2,129	$	222	$	191	$	1,174	$	8,091
Loans:
Individually evaluated for impairment	$	9,020	$	6,673	$	2,510	$	0	$	1,616	$	676	$	458	$	1,862	$	22,815
Collectively evaluated for impairment		94,092		129,808		70,482		65,940		72,863		33,474		34,852		149,878		651,389
Balance, September 30, 2013	$	103,112	$	136,481	$	72,992	$	65,940	$	74,479	$	34,150	$	35,310	$	151,740	$	674,204
Individually evaluated for impairment	$	12,467	$	5,736	$	2,731	$	0	$	3,048	$	699	$	471	$	2,455	$	27,607
Collectively evaluated for impairment		84,469		116,978		63,688		64,948		67,395		39,559		20,457		122,379		579,873
Balance, December 31, 2012	$	96,936	$	122,714	$	66,419	$	64,948	$	70,443	$	40,258	$	20,928	$	124,834	$	607,480
Individually evaluated for impairment	$	13,526	$	5,755	$	2,510	$	0	$	3,052	$	705	$	478	$	5,086	$	31,112
Collectively evaluated for impairment		85,660		122,313		61,068		60,187		65,099		37,015		18,196		123,739		573,277
Balance, September 30, 2012	$	99,186	$	128,068	$	63,578	$	60,187	$	68,151	$	37,720	$	18,674	$	128,825	$	604,389

								Total
		Residential		Home				consumer
(dollars in thousands)		mortgage		equity		Other		related		Unallocated		Total
Allowance for loan losses:
Individually evaluated for impairment	$	0	$	0	$	0	$	0	$	0	$	870
Collectively evaluated for impairment		69		237		307		613		2,092		8,579
Balance, September 30, 2013	$	69	$	237	$	307	$	613	$	2,092	$	9,449
Individually evaluated for impairment	$	0	$	0	$	0	$	0	$	0	$	1,162
Collectively evaluated for impairment		124		237		238		599		671		8,140
Balance, December 31, 2012	$	124	$	237	$	238	$	599	$	671	$	9,302
Individually evaluated for impairment	$	0	$	0	$	0	$	0	$	0	$	1,165
Collectively evaluated for impairment		135		188		210		533		163		7,622
Balance, September 30, 2012	$	135	$	188	$	210	$	533	$	163	$	8,787
Loans:
Individually evaluated for impairment	$	151	$	387	$	585	$	1,123	$		$	23,938
Collectively evaluated for impairment		24,974		74,693		38,667		138,334				789,723
Balance, September 30, 2013	$	25,125	$	75,080	$	39,252	$	139,457	$		$	813,661
Individually evaluated for impairment	$	85	$	340	$	642	$	1,067	$		$	28,674
Collectively evaluated for impairment		23,426		65,518		39,643		128,587				708,460
Balance, December 31, 2012	$	23,511	$	65,858	$	40,285	$	129,654	$		$	737,134
Individually evaluated for impairment	$	86	$	314	$	485	$	885	$		$	31,997
Collectively evaluated for impairment		21,875		63,284		42,205		127,364				700,641
Balance, September 30, 2012	$	21,961	$	63,598	$	42,690	$	128,249	$		$	732,638

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Fair Value Of Assets And Liabilities (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value Of Assets And Liabilities [Abstract]

Schedule Of Financial Assets Measured At Fair Value On A Recurring Basis

				Fair Value Measurements
			(Level 1)			(Level 2)	(Level 3)
			Quoted Prices in		Significant Other		Significant Other
			Active Markets for		Observable		Unobservable
(dollars in thousands)	Total		Identical Assets		Inputs		Inputs
September 30, 2013
Securities available-for-sale:
U.S. Treasury notes	$	1,505	$	1,505	$	0	$	0
U.S. agency		52,859		0		52,859		0
U.S. agency mortgage-backed, residential		91,321		0		91,321		0
State and municipal		93,444		0		93,444		0
December 31, 2012
Securities available-for-sale:
U.S. Treasury notes	$	5,032	$	5,032	$	0	$	0
U.S. agency		38,058		0		38,058		0
U.S. agency mortgage-backed, residential		88,233		0		88,233		0
State and municipal		102,739		0		102,739		0

Schedule Of Financial Assets Measured At Fair Value On A Nonrecurring Basis

				Fair Value Measurements
				(Level 1)		(Level 2)		(Level 3)
				Quoted Prices in				Significant Other
				Active Markets for		Significant Other		Unobservable
(dollars in thousands)		Total		Identical Assets		Observable Inputs		Inputs
September 30, 2013
Impaired loans	$	2,702	$	0	$	0	$	2,702
Foreclosed real estate		2,536		0		0		2,536
December 31, 2012
Impaired loans	$	4,493	$	0	$	0	$	4,493
Foreclosed real estate		2,779		0		0		2,779

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

		Quantitative Information about Level 3 Fair Value Measurements
		Fair Value	Valuation		Unobservable			Weighted
(dollars in thousands)		Estimate	Techniques		Input		Range	Average
September 30, 2013
Impaired loans	$	2,702	Appraisal	(1)	Appraisal adjustments	(2)	20% - 30%	26%
Foreclosed real estate		2,536	Appraisal	(1)	Appraisal adjustments	(2)	8% - 67%	49%
December 31, 2012
Impaired loans	$	4,493	Appraisal	(1)	Appraisal adjustments	(2)	10% - 100%	27%
Foreclosed real estate		2,779	Appraisal	(1)	Appraisal adjustments	(2)	5% - 100%	12%
(1) Fair value is generally determined through independent appraisals, which generally include various level 3 inputs
that are not identifiable.
(2) Appraisals may be adjusted downward by the Corporation's management for qualitative factors such as economic
conditions and estimated liquidation expenses.  The range of liquidation expenses and other appraisal
adjustments are presented as a percent of the appraisal.

Schedule Of Estimated Fair Values Of Corporation's 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
September 30, 2013
Financial assets
Cash and cash equivalents	$	17,147	$	17,147	$	17,147	$	0	$	0
Securities available-for-sale		239,129		239,129		1,505		237,624		0
Restricted investment in bank stocks		3,608		3,608		0		3,608		0
Loans held for sale		1,826		1,862		0		1,862		0
Loans, net		804,212		827,862		0		0		827,862
Interest receivable		3,518		3,518		0		3,518		0
Financial liabilities
Deposits	$	922,315	$	924,503	$	0	$	924,503	$	0
Short-term borrowings		31,535		31,535		0		31,535		0
Long-term debt		50,513		46,346		0		40,243		6,103
Interest payable		376		376		0		376		0
Off-balance sheet instruments		0		0		0		0		0
December 31, 2012
Financial assets
Cash and cash equivalents	$	49,757	$	49,757	$	49,757	$	0	$	0
Securities available-for-sale		234,062		234,062		5,032		229,030		0
Restricted investment in bank stocks		2,863		2,863		0		2,863		0
Loans held for sale		3,091		3,151		0		3,151		0
Loans, net		727,832		753,299		0		0		753,299
Interest receivable		3,579		3,579		0		3,579		0
Financial liabilities
Deposits	$	901,307	$	907,439	$	0	$	907,439	$	0
Short-term borrowings		19,356		19,356		0		19,356		0
Long-term debt		30,815		26,568		0		21,289		5,279
Interest payable		470		470		0		470		0
Off-balance sheet instruments		0		0		0		0		0

XML

Securities (Narrative) (Details) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Texas municipal utility district bond portfolio	$ 8,000,000
Carrying value of securities pledged as collateral	142,557,000	135,348,000
Unrealized losses within the less than 12 months category	733,000	83,000
TEXAS
Schedule of Available-for-sale Securities [Line Items]
Concentration of municipal bond portfolio	17.00%
PENNSYLVANIA
Schedule of Available-for-sale Securities [Line Items]
Concentration of municipal bond portfolio	43.00%
U.S. Agency [Member]
Schedule of Available-for-sale Securities [Line Items]
Unrealized losses within the less than 12 months category	374,000	25,000
Number of securities with unrealized losses within the less than 12 months category	9
U.S. Agency Mortgage-Backed, Residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Unrealized losses within the less than 12 months category	168,000
Number of securities with unrealized losses within the less than 12 months category	8
State And Municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Unrealized losses within the less than 12 months category	$ 191,000	$ 58,000
Number of securities with unrealized losses within the less than 12 months category	41

XML

Regulatory Matters (Schedule Of Capitalized Ratios) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013		Dec. 31, 2012
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Tier 1 risk based, Actual, Amount	$ 112,766		$ 105,597
Tier 1 risk based, Minimum for Capital Adequacy, Amount	34,726		31,074
Tier 1 risk based, Actual, Ratio	12.99%		13.59%
Tier 1 risk based, Minimum for Capital Adequacy, Ratio	4.00%		4.00%
Total risk based, Actual, Amount	122,215		114,899
Total risk based, Minimum for Capital Adequacy, Amount	69,452		62,147
Total risk based, Actual, Ratio	14.08%		14.79%
Total risk based, Minimum for Capital Adequacy, Ratio	8.00%		8.00%
Leverage, Actual, Amount	112,766		105,597
Leverage, Minimum for Capital Adequacy, Amount	44,252		42,143
Leverage, Actual, Ratio	10.19%		10.02%
Leverage, Minimum for Capital Adequacy, Ratio	4.00%		4.00%
PeoplesBank, A Codorus Valley Company [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Tier 1 risk based, Actual, Amount	109,063		102,120
Tier 1 risk based, Minimum for Capital Adequacy, Amount	34,602		30,951
Tier 1 risk based, Well Capitalized Minimum, Amount	51,903	[1]	46,427	[1]
Tier 1 risk based, Actual, Ratio	12.61%		13.20%
Tier 1 risk based, Minimum for Capital Adequacy, Ratio	4.00%		4.00%
Tier 1 risk based, Well Capitalized Minimum, Ratio	6.00%	[1]	6.00%	[1]
Total risk based, Actual, Amount	118,512		111,422
Total risk based, Minimum for Capital Adequacy, Amount	69,203		61,902
Total risk based, Well Capitalized Minimum, Amount	86,504	[1]	77,378	[1]
Total risk based, Actual, Ratio	13.70%		14.40%
Total risk based, Minimum for Capital Adequacy, Ratio	8.00%		8.00%
Total risk based, Well Capitalized Minimum, Ratio	10.00%	[1]	10.00%	[1]
Leverage, Actual, Amount	109,063		102,120
Leverage, Minimum for Capital Adequacy, Amount	44,124		42,020
Leverage, Well Capitalized Minimum, Amount	$ 55,155	[1]	$ 52,526	[1]
Leverage, Actual, Ratio	9.89%		9.72%
Leverage, Minimum for Capital Adequacy, Ratio	4.00%		4.00%
Leverage, Well Capitalized Minimum, Ratio	5.00%	[1]	5.00%	[1]

[1] To be well capitalized under prompt corrective action provisions.

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Allowance For Loan Losses (Summary Of Activity In And The Composition Of The Allowance For Loan Losses By Loan Segment And Class) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	$ 9,459	$ 8,690	$ 9,302	$ 8,702
Charge-offs	(216)	(559)	(948)	(1,135)
Recoveries	56	6	125	70
Provisions	150	650	970	1,150
Ending Balance	9,449	8,787	9,449	8,787
Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	7,936	7,378	8,032	8,120
Charge-offs	(85)	(276)	(582)	(609)
Recoveries	41	3	64	14
Provisions	(1,148)	986	(770)	566
Ending Balance	6,744	8,091	6,744	8,091
Builder & Developer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	1,576	1,680	1,571	2,170
Charge-offs	0	(215)	(62)	(217)
Recoveries	0	0	0	0
Provisions	(400)	119	(333)	(369)
Ending Balance	1,176	1,584	1,176	1,584
Commercial Real Estate Investor [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	1,213	1,239	1,259	2,003
Charge-offs	0	0	0	(68)
Recoveries	0	0	0	0
Provisions	188	78	142	(618)
Ending Balance	1,401	1,317	1,401	1,317
Residential Real Estate Investor [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	1,181	900	1,195	505
Charge-offs	(85)	(15)	(310)	(15)
Recoveries	0	0	0	0
Provisions	265	140	476	535
Ending Balance	1,361	1,025	1,361	1,025
Hotel/Motel [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	505	449	485	394
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provisions	(13)	0	7	55
Ending Balance	492	449	492	449
Wholesale & Retail [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	1,856	1,690	1,913	1,806
Charge-offs	0	0	(210)	0
Recoveries	25	3	47	14
Provisions	(1,239)	436	(1,108)	309
Ending Balance	642	2,129	642	2,129
Manufacturing [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	201	164	237	151
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provisions	0	58	(36)	71
Ending Balance	201	222	201	222
Agriculture [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	253	194	202	184
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provisions	21	(3)	72	7
Ending Balance	274	191	274	191
Other Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	1,151	1,062	1,170	907
Charge-offs	0	(46)	0	(309)
Recoveries	16	0	17	0
Provisions	30	158	10	576
Ending Balance	1,197	1,174	1,197	1,174
Consumer Related Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	589	367	599	345
Charge-offs	(131)	(283)	(366)	(526)
Recoveries	15	3	61	56
Provisions	140	446	319	658
Ending Balance	613	533	613	533
Residential Mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	77	78	124	88
Charge-offs	0	(76)	(28)	(115)
Recoveries	0	0	1	41
Provisions	(8)	133	(28)	121
Ending Balance	69	135	69	135
Home Equity [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	236	152	237	86
Charge-offs	(25)	(42)	(99)	(170)
Recoveries	2	1	8	1
Provisions	24	77	91	271
Ending Balance	237	188	237	188
Consumer Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	276	137	238	171
Charge-offs	(106)	(165)	(239)	(241)
Recoveries	13	2	52	14
Provisions	124	236	256	266
Ending Balance	307	210	307	210
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	934	945	671	237
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provisions	1,158	(782)	1,421	(74)
Ending Balance	$ 2,092	$ 163	$ 2,092	$ 163

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Loans (Summary Of Loan Risk Ratings By Loan Class) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2012
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 813,661	$ 737,134	$ 732,638
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	773,226	689,330
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	18,119	20,610
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	12,534	18,852
Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	9,782	8,342
Commercial Related Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	674,204	607,480	604,389
Commercial Related Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	634,957	561,185
Commercial Related Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	17,866	20,168
Commercial Related Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	12,465	18,281
Commercial Related Loans [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	8,916	7,846
Builder & Developer [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	103,112	96,936	99,186
Builder & Developer [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	87,864	79,101
Builder & Developer [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	7,386	6,567
Builder & Developer [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	7,615	11,013
Builder & Developer [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	247	255
Commercial Real Estate Investor [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	136,481	122,714	128,068
Commercial Real Estate Investor [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	124,882	107,415
Commercial Real Estate Investor [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	4,926	9,563
Commercial Real Estate Investor [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	3,286	2,459
Commercial Real Estate Investor [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	3,387	3,277
Residential Real Estate Investor [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	72,992	66,419	63,578
Residential Real Estate Investor [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	70,222	62,327
Residential Real Estate Investor [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	260	1,361
Residential Real Estate Investor [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	50	2,044
Residential Real Estate Investor [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	2,460	687
Hotel/Motel [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	65,940	64,948	60,187
Hotel/Motel [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	65,940	64,948
Hotel/Motel [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Hotel/Motel [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Hotel/Motel [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Wholesale & Retail [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	74,479	70,443	68,151
Wholesale & Retail [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	71,733	66,155
Wholesale & Retail [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,407	1,521
Wholesale & Retail [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	983
Wholesale & Retail [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,339	1,784
Manufacturing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	34,150	40,258	37,720
Manufacturing [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	33,474	39,559
Manufacturing [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Manufacturing [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	676	699
Manufacturing [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Agriculture [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	35,310	20,928	18,674
Agriculture [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	32,054	20,457
Agriculture [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	2,798	0
Agriculture [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	458	471
Agriculture [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	151,740	124,834	128,825
Other Commercial [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	148,788	121,223
Other Commercial [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,089	1,156
Other Commercial [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	380	612
Other Commercial [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,483	1,843
Consumer Related Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	139,457	129,654	128,249
Consumer Related Loan [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	138,269	128,145
Consumer Related Loan [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	253	442
Consumer Related Loan [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	69	571
Consumer Related Loan [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	866	496
Residential Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	25,125	23,511	21,961
Residential Mortgage [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	24,955	23,421
Residential Mortgage [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	19	5
Residential Mortgage [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	30	32
Residential Mortgage [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	121	53
Home Equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	75,080	65,858	63,598
Home Equity [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	74,818	65,406
Home Equity [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	63	112
Home Equity [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	188
Home Equity [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	199	152
Consumer Related Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	39,252	40,285	42,690
Consumer Related Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	38,496	39,318
Consumer Related Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	171	325
Consumer Related Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	39	351
Consumer Related Loans [Member] | Nonaccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 546	$ 291

XML

Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Deferred loan fees	$ 1,808	$ 1,186
Preferred stock, par value	$ 2.5	$ 2.5
Preferred stock, liquidation preference	$ 1,000	$ 1,000
Preferred stock, shares authorized	1,000,000	1,000,000
Common stock, par value	$ 2.5	$ 2.5
Common stock, shares authorized	15,000,000	15,000,000
Common stock, shares issued	4,755,476	4,482,319
Common stock, shares outstanding	4,755,476	4,482,319
Series B Preferred Stock [Member]
Preferred stock, shares issued	25,000	25,000
Preferred stock, shares outstanding	25,000	25,000

XML

Loans

9 Months Ended

Sep. 30, 2013

Loans [Abstract]

Loans

Note 5—Loans

Loan Portfolio Composition

The table below provides the composition of the loan portfolio at September 30, 2013 and December 31, 2012.  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 the following industries, including health services, professional services, public administration, restaurant, service, transportation, finance, natural resources, recreation and religious organizations.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.      

		September 30,		December 31,
(dollars in thousands)		2013		2012
Builder & developer	$	103,112	$	96,936
Commercial real estate investor		136,481		122,714
Residential real estate investor		72,992		66,419
Hotel/Motel		65,940		64,948
Wholesale & retail		74,479		70,443
Manufacturing		34,150		40,258
Agriculture		35,310		20,928
Other		151,740		124,834
Total commercial related loans		674,204		607,480
Residential mortgages		25,125		23,511
Home equity		75,080		65,858
Other		39,252		40,285
Total consumer related loans		139,457		129,654
Total loans	$	813,661	$	737,134

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 and residential mortgages held for investment are determined by a formal evaluation of risk factors performed by the Corporation’s underwriting staff.   For consumer loans, and commercial loans up to $750,000, the Corporation uses third-party credit scoring software models 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 are generally performed by the Special Asset Committee, which includes senior management.  The Committee, which meets monthly, 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.  

The Corporation uses ten risk ratings to grade loans.  The first seven ratings, representing the lowest risk, are combined and given a “pass” rating.  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 net worth or paying capacity of the borrower 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 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.  Accordingly, 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 known loan losses.

The table below presents a summary of loan risk ratings by loan class at September 30, 2013 and December 31, 2012.  

				Special
(dollars in thousands)		Pass		Mention		Substandard		Nonaccrual		Total
September 30, 2013
Builder & developer	$	87,864	$	7,386	$	7,615	$	247	$	103,112
Commercial real estate investor		124,882		4,926		3,286		3,387		136,481
Residential real estate investor		70,222		260		50		2,460		72,992
Hotel/Motel		65,940		0		0		0		65,940
Wholesale & retail		71,733		1,407		0		1,339		74,479
Manufacturing		33,474		0		676		0		34,150
Agriculture		32,054		2,798		458		0		35,310
Other		148,788		1,089		380		1,483		151,740
Total commercial related loans		634,957		17,866		12,465		8,916		674,204
Residential mortgage		24,955		19		30		121		25,125
Home equity		74,818		63		0		199		75,080
Other		38,496		171		39		546		39,252
Total consumer related loans		138,269		253		69		866		139,457
Total loans	$	773,226	$	18,119	$	12,534	$	9,782	$	813,661
December 31, 2012
Builder & developer	$	79,101	$	6,567	$	11,013	$	255	$	96,936
Commercial real estate investor		107,415		9,563		2,459		3,277		122,714
Residential real estate investor		62,327		1,361		2,044		687		66,419
Hotel/Motel		64,948		0		0		0		64,948
Wholesale & retail		66,155		1,521		983		1,784		70,443
Manufacturing		39,559		0		699		0		40,258
Agriculture		20,457		0		471		0		20,928
Other		121,223		1,156		612		1,843		124,834
Total commercial related loans		561,185		20,168		18,281		7,846		607,480
Residential mortgage		23,421		5		32		53		23,511
Home equity		65,406		112		188		152		65,858
Other		39,318		325		351		291		40,285
Total consumer related loans		128,145		442		571		496		129,654
Total loans	$	689,330	$	20,610	$	18,852	$	8,342	$	737,134

Impaired Loans

The table below presents a summary of impaired loans at September 30, 2013 and December 31, 2012.  Generally, impaired loans are loans risk rated substandard and nonaccrual or classified as troubled debt restructurings. An allowance is established for individual commercial related loans where the Corporation has doubt as to full recovery of the outstanding principal balance.  Typically, impaired consumer related loans are partially or fully charged off obviating the need for a specific allowance. The recorded investment represents outstanding unpaid principal loan balances adjusted for charge-offs. 

		September 30, 2013						December 31, 2012
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
(dollars in thousands)	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans with no related allowance:
Builder & developer	$	9,020	$	9,020		-	$	12,211	$	12,211		-
Commercial real estate investor		6,673		6,773		-		5,736		5,836		-
Residential real estate investor		287		512		-		72		72		-
Hotel/Motel		0		0		-		0		0		-
Wholesale & retail		1,616		4,101		-		3,048		5,323		-
Manufacturing		676		676		-		699		699		-
Agriculture		0		0		-		0		0		-
Other commercial		1,536		1,536		-		1,483		1,611		-
Residential mortgage		151		177		-		85		111		-
Home equity		387		412		-		340		340		-
Other consumer		585		585		-		642		718		-
Total impaired loans with no related allowance	$	20,931	$	23,792		-	$	24,316	$	26,921		-
Impaired loans with a related allowance:
Builder & developer	$	0	$	0	$	0	$	256	$	256	$	147
Commercial real estate investor		0		0		0		0		0		0
Residential real estate investor		2,223		2,223		650		2,659		2,659		700
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		0		0		0		0		0		0
Manufacturing		0		0		0		0		0		0
Agriculture		458		458		100		471		471		100
Other commercial		326		326		120		972		972		215
Residential mortgage		0		0		0		0		0		0
Home equity		0		0		0		0		0		0
Other consumer		0		0		0		0		0		0
Total impaired loans with a related allowance	$	3,007	$	3,007	$	870	$	4,358	$	4,358	$	1,162
Total impaired loans:
Builder & developer	$	9,020	$	9,020	$	0	$	12,467	$	12,467	$	147
Commercial real estate investor		6,673		6,773		0		5,736		5,836		0
Residential real estate investor		2,510		2,735		650		2,731		2,731		700
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		1,616		4,101		0		3,048		5,323		0
Manufacturing		676		676		0		699		699		0
Agriculture		458		458		100		471		471		100
Other commercial		1,862		1,862		120		2,455		2,583		215
Residential mortgage		151		177		0		85		111		0
Home equity		387		412		0		340		340		0
Other consumer		585		585		0		642		718		0
Total impaired loans	$	23,938	$	26,799	$	870	$	28,674	$	31,279	$	1,162

The tables below present a summary of average impaired loans and related interest income that was included in net income for the three and nine months ended September 30, 2013 and 2012.  

		For the three months ended
		September 30, 2013						September 30, 2012
	Average		Total		Cash Basis		Average		Total		Cash Basis
	Recorded		Interest		Interest		Recorded		Interest		Interest
(dollars in thousands)	Investment		Income		Income		Investment		Income		Income
Impaired loans with no related allowance:
Builder & developer	$	9,094	$	132	$	0	$	10,771	$	121	$	11
Commercial real estate investor		6,182		61		23		5,146		73		34
Residential real estate investor		305		0		1		268		1		1
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		1,882		65		62		2,299		3		1
Manufacturing		679		11		0		706		10		0
Agriculture		0		0		0		0		0		0
Other commercial		1,563		4		0		3,936		3		1
Residential mortgage		152		3		2		86		1		1
Home equity		392		2		0		268		1		0
Other consumer		626		2		4		473		7		4
Total impaired loans with no related allowance	$	20,875	$	280	$	92	$	23,953	$	220	$	53
Impaired loans with a related allowance:
Builder & developer	$	0	$	0	$	0	$	259	$	2	$	2
Commercial real estate investor		0		0		0		0		0		0
Residential real estate investor		2,236		0		0		2,289		31		0
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		0		0		0		263		0		0
Manufacturing		0		0		0		0		0		0
Agriculture		460		8		0		479		9		0
Other commercial		602		0		0		927		0		0
Residential mortgage		0		0		0		0		0		0
Home equity		0		0		0		0		0		0
Other consumer		0		0		0		0		0		0
Total impaired loans with a related allowance	$	3,298	$	8	$	0	$	4,217	$	42	$	2
Total impaired loans:
Builder & developer	$	9,094	$	132	$	0	$	11,030	$	123	$	13
Commercial real estate investor		6,182		61		23		5,146		73		34
Residential real estate investor		2,541		0		1		2,557		32		1
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		1,882		65		62		2,562		3		1
Manufacturing		679		11		0		706		10		0
Agriculture		460		8		0		479		9		0
Other commercial		2,165		4		0		4,863		3		1
Residential mortgage		152		3		2		86		1		1
Home equity		392		2		0		268		1		0
Other consumer		626		2		4		473		7		4
Total impaired loans	$	24,173	$	288	$	92	$	28,170	$	262	$	55

		For the nine months ended
		September 30, 2013						September 30, 2012
	Average		Total		Cash Basis		Average		Total		Cash Basis
	Recorded		Interest		Interest		Recorded		Interest		Interest
(dollars in thousands)	Investment		Income		Income		Investment		Income		Income
Impaired loans with no related allowance:
Builder & developer	$	9,913	$	396	$	5	$	8,008	$	355	$	65
Commercial real estate investor		5,953		195		92		4,703		209		108
Residential real estate investor		210		5		4		366		4		4
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		2,435		108		126		2,627		5		4
Manufacturing		686		33		0		709		31		0
Agriculture		0		0		0		0		0		0
Other commercial		1,589		10		4		4,654		93		138
Residential mortgage		118		7		5		145		5		4
Home equity		351		8		0		257		5		1
Other consumer		628		15		17		384		16		10
Total impaired loans with no related allowance	$	21,883	$	777	$	253	$	21,853	$	723	$	334
Impaired loans with a related allowance:
Builder & developer	$	97	$	0	$	0	$	261	$	4	$	4
Commercial real estate investor		0		0		0		57		0		0
Residential real estate investor		2,447		(9)		0		1,189		33		0
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		0		0		0		131		(3)		0
Manufacturing		0		0		0		0		0		0
Agriculture		465		24		0		484		26		0
Other commercial		786		0		0		926		0		0
Residential mortgage		0		0		0		0		0		0
Home equity		0		0		0		0		0		0
Other consumer		0		0		0		0		0		0
Total impaired loans with a related allowance	$	3,795	$	15	$	0	$	3,048	$	60	$	4
Total impaired loans:
Builder & developer	$	10,010	$	396	$	5	$	8,269	$	359	$	69
Commercial real estate investor		5,953		195		92		4,760		209		108
Residential real estate investor		2,657		(4)		4		1,555		37		4
Hotel/Motel		0		0		0		0		0		0
Wholesale & retail		2,435		108		126		2,758		2		4
Manufacturing		686		33		0		709		31		0
Agriculture		465		24		0		484		26		0
Other commercial		2,375		10		4		5,580		93		138
Residential mortgage		118		7		5		145		5		4
Home equity		351		8		0		257		5		1
Other consumer		628		15		17		384		16		10
Total impaired loans	$	25,678	$	792	$	253	$	24,901	$	783	$	338

The performance and credit quality of the loan portfolio is also monitored by using an aging schedule which 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 September 30, 2013 and December 31, 2012.

					≥ 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
September 30, 2013
Builder & developer	$	0	$	0	$	0	$	247	$	247	$	102,865	$	103,112
Commercial real estate investor		997		0		0		3,387		4,384		132,097		136,481
Residential real estate investor		0		50		0		2,460		2,510		70,482		72,992
Hotel/Motel		335		0		0		0		335		65,605		65,940
Wholesale & retail		0		0		0		1,339		1,339		73,140		74,479
Manufacturing		0		0		0		0		0		34,150		34,150
Agriculture		0		0		0		0		0		35,310		35,310
Other		130		0		0		1,483		1,613		150,127		151,740
Total commercial related loans		1,462		50		0		8,916		10,428		663,776		674,204
Residential mortgage		0		24		0		121		145		24,980		25,125
Home equity		25		0		0		199		224		74,856		75,080
Other		159		67		0		546		772		38,480		39,252
Total consumer related loans		184		91		0		866		1,141		138,316		139,457
Total loans	$	1,646	$	141	$	0	$	9,782	$	11,569	$	802,092	$	813,661
December 31, 2012
Builder & developer	$	400	$	0	$	0	$	255	$	655	$	96,281	$	96,936
Commercial real estate investor		0		0		0		3,277		3,277		119,437		122,714
Residential real estate investor		2,044		0		0		687		2,731		63,688		66,419
Hotel/Motel		0		0		0		0		0		64,948		64,948
Wholesale & retail		1,067		0		0		1,784		2,851		67,592		70,443
Manufacturing		0		0		0		0		0		40,258		40,258
Agriculture		0		0		0		0		0		20,928		20,928
Other		456		0		0		1,843		2,299		122,535		124,834
Total commercial related loans		3,967		0		0		7,846		11,813		595,667		607,480
Residential mortgage		474		129		0		53		656		22,855		23,511
Home equity		62		0		0		152		214		65,644		65,858
Other		842		195		186		291		1,514		38,771		40,285
Total consumer related loans		1,378		324		186		496		2,384		127,270		129,654
Total loans	$	5,345	$	324	$	186	$	8,342	$	14,197	$	722,937	$	737,134

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 generally involve an extension of the maturity date or a below market interest rate relative to new debt with similar credit risk. 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 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.

The table below shows loans whose terms have been modified under TDRs during the three and nine months ended September 30, 2013 and 2012.  There was no impairment loss recognized on any of these TDRs, and they are all performing under their modified terms.  There were no defaults during the three and nine months ended September 30, 2013 and 2012 for TDRs entered into for the last 12 months.

	Modifications
		Pre-Modification		Post-Modification
	Number	Outstanding		Outstanding
	of	Recorded		Recorded
(dollars in thousands)	Contracts	Investments		Investments
Three months ended:
September 30, 2013
Commercial related loans nonaccrual	1	$	375		375
September 30, 2012
None
Nine months ended:
September 30, 2013
Commercial related loans accruing	1	$	208	$	208
Commercial related loans nonaccrual	1	$	375		375
September 30, 2012
Commercial related loans nonaccrual	1	$	286	$	286

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Consolidated Statements Of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2013		Sep. 30, 2012		Sep. 30, 2013		Sep. 30, 2012
Consolidated Statements of Other Comprehensive Income [Abstract]
Net income	$ 2,677		$ 1,871		$ 7,984		$ 6,940
Other comprehensive (loss) income:
Net unrealized holding (losses) gains arising during the period (net of tax (benefit) expense)	173		868		(2,738)		1,199
Reclassification adjustment for (gains) included in net income (net of tax expense)	0	[1],[2]	(252)	[1],[2]	(29)	[1],[2]	(284)	[1],[2]
Net unrealized (losses) gains	173		616		(2,767)		915
Comprehensive income	$ 2,850		$ 2,487		$ 5,217		$ 7,855

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

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

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Fair Value of Assets and Liabilities (Narrative) (Details) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Fair Value Of Assets And Liabilities [Abstract]
Impaired loans, balance	$ 2,702,000	$ 4,493,000
Impaired loans, valuation allowance	870,000	1,162,000
Impaired loans, charge offs	2,861,000	2,605,000
Carrying value of foreclosed real estate with valuation allowance	2,536,000	2,779,000
Foreclosed real estate valuation allowance	3,736,000	3,712,000
Foreclosed real estate charge-offs	$ 100,000	$ 0

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Assets
Interest bearing deposits with banks	$ 1,294	$ 34,866
Cash and due from banks	15,853	14,891
Total cash and cash equivalents	17,147	49,757
Securities, available-for-sale	239,129	234,062
Restricted investment in bank stocks, at cost	3,608	2,863
Loans held for sale	1,826	3,091
Loans (net of deferred fees of $1,808 - 2013 and $1,186 - 2012)	813,661	737,134
Less-allowance for loan losses	(9,449)	(9,302)
Net loans	804,212	727,832
Premises and equipment, net	14,289	11,493
Other assets	36,568	30,639
Total assets	1,116,779	1,059,737
Deposits
Noninterest bearing	98,848	88,476
Interest bearing	823,467	812,831
Total deposits	922,315	901,307
Short-term borrowings	31,535	19,356
Long-term debt	50,513	30,815
Other liabilities	6,683	6,928
Total liabilities	1,011,046	958,406
Shareholders' equity
Preferred stock, par value $2.50 per share; $1,000 liquidation preference, 1,000,000 shares authorized; 25,000 Series B shares issued and outstanding - 2013 and 2012	25,000	25,000
Common stock, par value $2.50 per share; 15,000,000 shares authorized; shares issued and outstanding: 4,755,476 at September 30, 2013 and 4,482,319 at December 31, 2012	11,889	11,206
Additional paid-in capital	44,777	40,524
Retained earnings	21,101	18,868
Accumulated other comprehensive income	2,966	5,733
Total shareholders' equity	105,733	101,331
Total liabilities and shareholders' equity	$ 1,116,779	$ 1,059,737

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Allowance For Loan Losses (Summary Of Allowance Amount Required For Loans Individually Evaluated For Impairment And The Amount Required For Loans Collectively Evaluated For Impairment) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Jun. 30, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2011
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	$ 870		$ 1,162	$ 1,165
Allowance for loan losses, Collectively evaluated for impairment	8,579		8,140	7,622
Allowance for loan losses, Balance	9,449	9,459	9,302	8,787	8,690	8,702
Loans, Individually evaluated for impairment	23,938		28,674	31,997
Loans, Collectively evaluated for impairment	789,723		708,460	700,641
Total loans	813,661		737,134	732,638
Commercial Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	870		1,162	1,165
Allowance for loan losses, Collectively evaluated for impairment	5,874		6,870	6,926
Allowance for loan losses, Balance	6,744	7,936	8,032	8,091	7,378	8,120
Loans, Individually evaluated for impairment	22,815		27,607	31,112
Loans, Collectively evaluated for impairment	651,389		579,873	573,277
Total loans	674,204		607,480	604,389
Builder & Developer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	0		147	147
Allowance for loan losses, Collectively evaluated for impairment	1,176		1,424	1,437
Allowance for loan losses, Balance	1,176	1,576	1,571	1,584	1,680	2,170
Loans, Individually evaluated for impairment	9,020		12,467	13,526
Loans, Collectively evaluated for impairment	94,092		84,469	85,660
Total loans	103,112		96,936	99,186
Commercial Real Estate Investor [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	0		0	0
Allowance for loan losses, Collectively evaluated for impairment	1,401		1,259	1,317
Allowance for loan losses, Balance	1,401	1,213	1,259	1,317	1,239	2,003
Loans, Individually evaluated for impairment	6,673		5,736	5,755
Loans, Collectively evaluated for impairment	129,808		116,978	122,313
Total loans	136,481		122,714	128,068
Residential Real Estate Investor [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	650		700	550
Allowance for loan losses, Collectively evaluated for impairment	711		495	475
Allowance for loan losses, Balance	1,361	1,181	1,195	1,025	900	505
Loans, Individually evaluated for impairment	2,510		2,731	2,510
Loans, Collectively evaluated for impairment	70,482		63,688	61,068
Total loans	72,992		66,419	63,578
Hotel/Motel [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	0		0	0
Allowance for loan losses, Collectively evaluated for impairment	492		485	449
Allowance for loan losses, Balance	492	505	485	449	449	394
Loans, Individually evaluated for impairment	0		0	0
Loans, Collectively evaluated for impairment	65,940		64,948	60,187
Total loans	65,940		64,948	60,187
Wholesale & Retail [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	0		0	150
Allowance for loan losses, Collectively evaluated for impairment	642		1,913	1,979
Allowance for loan losses, Balance	642	1,856	1,913	2,129	1,690	1,806
Loans, Individually evaluated for impairment	1,616		3,048	3,052
Loans, Collectively evaluated for impairment	72,863		67,395	65,099
Total loans	74,479		70,443	68,151
Manufacturing [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	0		0	0
Allowance for loan losses, Collectively evaluated for impairment	201		237	222
Allowance for loan losses, Balance	201	201	237	222	164	151
Loans, Individually evaluated for impairment	676		699	705
Loans, Collectively evaluated for impairment	33,474		39,559	37,015
Total loans	34,150		40,258	37,720
Agriculture [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	100		100	100
Allowance for loan losses, Collectively evaluated for impairment	174		102	91
Allowance for loan losses, Balance	274	253	202	191	194	184
Loans, Individually evaluated for impairment	458		471	478
Loans, Collectively evaluated for impairment	34,852		20,457	18,196
Total loans	35,310		20,928	18,674
Other Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	120		215	218
Allowance for loan losses, Collectively evaluated for impairment	1,077		955	956
Allowance for loan losses, Balance	1,197	1,151	1,170	1,174	1,062	907
Loans, Individually evaluated for impairment	1,862		2,455	5,086
Loans, Collectively evaluated for impairment	149,878		122,379	123,739
Total loans	151,740		124,834	128,825
Consumer Related Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	0		0	0
Allowance for loan losses, Collectively evaluated for impairment	613		599	533
Allowance for loan losses, Balance	613	589	599	533	367	345
Loans, Individually evaluated for impairment	1,123		1,067	885
Loans, Collectively evaluated for impairment	138,334		128,587	127,364
Total loans	139,457		129,654	128,249
Residential Mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	0		0	0
Allowance for loan losses, Collectively evaluated for impairment	69		124	135
Allowance for loan losses, Balance	69	77	124	135	78	88
Loans, Individually evaluated for impairment	151		85	86
Loans, Collectively evaluated for impairment	24,974		23,426	21,875
Total loans	25,125		23,511	21,961
Home Equity [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	0		0	0
Allowance for loan losses, Collectively evaluated for impairment	237		237	188
Allowance for loan losses, Balance	237	236	237	188	152	86
Loans, Individually evaluated for impairment	387		340	314
Loans, Collectively evaluated for impairment	74,693		65,518	63,284
Total loans	75,080		65,858	63,598
Consumer Related Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	0		0	0
Allowance for loan losses, Collectively evaluated for impairment	307		238	210
Allowance for loan losses, Balance	307	276	238	210	137	171
Loans, Individually evaluated for impairment	585		642	485
Loans, Collectively evaluated for impairment	38,667		39,643	42,205
Total loans	39,252		40,285	42,690
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	0		0	0
Allowance for loan losses, Collectively evaluated for impairment	2,092		671	163
Allowance for loan losses, Balance	$ 2,092	$ 934	$ 671	$ 163	$ 945	$ 237

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Deposits (Tables)

9 Months Ended

Sep. 30, 2013

Deposits [Abstract]

Composition Of Deposits

	September 30,		December 31,
(dollars in thousands)	2013		2012
Noninterest bearing demand	$	98,848	$	88,476
NOW		85,409		77,531
Money market		294,665		289,149
Savings		38,270		34,372
Time deposits less than $100,000		231,977		236,683
Time deposits $100,000 or more		173,146		175,096
Total deposits	$	922,315	$	901,307

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Assets And Liabilities Subject To Offsetting

9 Months Ended

Sep. 30, 2013

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 (“Repurchase Agreements”)

PeoplesBank enters into agreements under which it sells securities subject to an obligation to repurchase the same securities the next business day.  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 remain in the respective securities asset accounts.  In other words, there is no offsetting or netting of the securities with the repurchase agreement liabilities. 

				Gross		Net Amounts
		Gross		Amounts		of Liabilities		Gross amounts Not Offset in
		Amounts of		Offset in the		Presented in		the Statements of Condition
		Recognized		Statements of		the Statements		Financial		Cash Collateral			Net
(dollars in thousands)		Liabilities		Condition		of Condition		Instruments		Pledged			Amount
September 30, 2013
Repurchase Agreements	(1)	$	25,702	$	0	$	25,702	$	(25,702)	$	0	$	0
December 31, 2012
Repurchase Agreements	(1)	$	19,356	$	0	$	19,356	$	(19,356)	$	0	$	0

(1) As of September 30, 2013 and December 31, 2012, the fair value of securities pledged in connection with repurchase agreements was $27,708,000 and $25,876,000, respectively.

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Loans (Composition Of Loan Portfolio) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 813,661	$ 737,134	$ 732,638
Commercial Related Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	674,204	607,480	604,389
Builder & Developer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	103,112	96,936	99,186
Commercial Real Estate Investor [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	136,481	122,714	128,068
Residential Real Estate Investor [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	72,992	66,419	63,578
Hotel/Motel [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	65,940	64,948	60,187
Wholesale & Retail [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	74,479	70,443	68,151
Manufacturing [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	34,150	40,258	37,720
Agriculture [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	35,310	20,928	18,674
Other Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	151,740	124,834	128,825
Consumer Related Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	139,457	129,654	128,249
Residential Mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	25,125	23,511	21,961
Home Equity [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	75,080	65,858	63,598
Consumer Related Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 39,252	$ 40,285	$ 42,690

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Short Term Borrowings And Long-Term Debt (Summary Of Long-Term Debt) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Total long-term debt	$ 50,513	$ 30,815
PeoplesBank, A Codorus Valley Company [Member]
Debt Instrument [Line Items]
Total FHLBP	40,000	20,245
Capital lease obligation	203	260
Due May 2013, 3.46%, amortizing [Member] | PeoplesBank, A Codorus Valley Company [Member]
Debt Instrument [Line Items]
Total FHLBP	0	245
Interest rate	3.46%	3.46%
FHLBP, due date	2013-05	2013-05
Due July 2015, 1.90% [Member] | PeoplesBank, A Codorus Valley Company [Member]
Debt Instrument [Line Items]
Total FHLBP	5,000	5,000
Interest rate	1.90%	1.90%
FHLBP, due date	2015-07	2015-07
Due July 2016, 2.35% [Member] | PeoplesBank, A Codorus Valley Company [Member]
Debt Instrument [Line Items]
Total FHLBP	5,000	5,000
Interest rate	2.35%	2.35%
FHLBP, due date	2016-07	2016-07
Due September 2016, 1.18% [Member] | PeoplesBank, A Codorus Valley Company [Member]
Debt Instrument [Line Items]
Total FHLBP	10,000	0
Interest rate	1.18%	1.18%
FHLBP, due date	2016-09	2016-09
Due March 2018, 1.17% [Member] | PeoplesBank, A Codorus Valley Company [Member]
Debt Instrument [Line Items]
Total FHLBP	10,000	0
Interest rate	1.17%	1.17%
FHLBP, due date	2018-03	2018-03
Due June 2018, 1.87% [Member] | PeoplesBank, A Codorus Valley Company [Member]
Debt Instrument [Line Items]
Total FHLBP	5,000	5,000
Interest rate	1.87%	1.87%
FHLBP, due date	2018-06	2018-06
Due June 2019, 2.10% [Member] | PeoplesBank, A Codorus Valley Company [Member]
Debt Instrument [Line Items]
Total FHLBP	5,000	5,000
Interest rate	2.10%	2.10%
FHLBP, due date	2019-06	2019-06
Due 2034, 2.27%, floating rate based on 3 month LIBOR plus 2.02%, callable quarterly [Member]
Debt Instrument [Line Items]
Total long-term debt	3,093	3,093
Interest rate	2.27%	2.27%
3 month LIBOR plus, rate	2.02%	2.02%
Long-term debt, due date	Dec. 15, 2034	Dec. 15, 2034
Due 2036, 1.81% floating rate based on 3 month LIBOR plus 1.54%, callable quarterly [Member]
Debt Instrument [Line Items]
Total long-term debt	$ 7,217	$ 7,217
Interest rate	1.81%	1.81%
3 month LIBOR plus, rate	1.54%	1.54%
Long-term debt, due date	Jul. 07, 2036	Jul. 07, 2036

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Securities (Schedule Of Amortized Cost And Estimated Fair Value Of Debt Securities) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Securities [Abstract]
Due in one year or less, Available-for-sale, Amortized Cost	$ 13,813
Due after one year through five years, Available-for-sale, Amortized Cost	176,254
Due after five years through ten years, Available-for-sale, Amortized Cost	40,747
Due after ten years, Available-for-sale, Amortized Cost	3,820
Total debt securities, Available-for-sale, Amortized Cost	234,634	225,375
Due in one year or less, Available-for-sale, Fair Value	13,924
Due after one year through five years, Available-for-sale, Fair Value	180,152
Due after five years through ten years, Available-for-sale, Fair Value	41,103
Due after ten years, Available-for-sale, Fair Value	3,950
Total debt securities, Fair Value	$ 239,129	$ 234,062

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Significant Accounting Policies (Schedule Of Weighted Average Number Of Shares Of Common Stock Outstanding Used For Basic And Diluted Calculations) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Significant Accounting Policies [Abstract]
Net income available to common shareholders	$ 2,615	$ 1,809	$ 7,797	$ 6,619
Weighted average shares outstanding (basic)	4,751	4,671	4,730	4,654
Effect of dilutive stock options	94	77	89	60
Weighted average shares outstanding (diluted)	4,845	4,748	4,819	4,714
Basic earnings per common share	$ 0.55	$ 0.39	$ 1.65	$ 1.42
Diluted earnings per common share	$ 0.54	$ 0.38	$ 1.62	$ 1.40
Anti-dilutive stock options excluded from the computation of earnings per share	4	81	33	87

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Significant Accounting Policies (Schedule Of Supplemental Cash Flow Information) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Significant Accounting Policies [Abstract]
Income taxes	$ 2,490	$ 2,727
Interest	6,599	8,029
Transfer of loans to foreclosed real estate	551	231
Transfer of loans held for sale to the held-to-maturity porfolio	258	0
Increase in other liabilities for purchase of securities settling after quarter end	0	2,201
Increase in other Assets for purchase of securities settling after quarter end	$ 0	$ 1,566

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Restricted Investment In Bank Stocks

9 Months Ended

Sep. 30, 2013

Restricted Investment In Bank Stocks [Abstract]

Restricted Investment In Bank Stocks

Note 4—Restricted Investment in Bank Stocks

Restricted stock, which represents required investments in the common stock of correspondent banks, is carried at cost and, as ofSeptember 30, 2013 and December 31, 2012, consisted primarily of the common stock of the Federal Home Loan Bank of Pittsburgh (FHLBP) and, to a lesser degree, Atlantic Community Bankers Bank (ACBB).  Under the FHLBP’s Capital Plan, PeoplesBank is required to maintain a minimum member stock investment, both as a condition of becoming and remaining a member and as a condition of obtaining borrowings from the FHLBP. 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 September 30, 2013 and 2012 but reported that future dividends will be dependent upon the condition of its private-label residential mortgage-backed securities portfolio, its overall financial performance, retained earnings and other factors. 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 September 30, 2013 and 2012.

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Fair Value of Assets and Liabilities (Schedule Of Estimated Fair Values Of Corporation's Financial Instruments) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Carrying Amount [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 17,147	$ 49,757
Securities, available-for-sale	239,129	234,062
Restricted investment in bank stocks	3,608	2,863
Loans held for sale	1,826	3,091
Loans, net	804,212	727,832
Interest receivable	3,518	3,579
Deposits	922,315	901,307
Short-term borrowings	31,535	19,356
Long-term debt	50,513	30,815
Interest payable	376	470
Off-balance sheet instruments	0	0
Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	17,147	49,757
Securities, available-for-sale	239,129	234,062
Restricted investment in bank stocks	3,608	2,863
Loans held for sale	1,862	3,151
Loans, net	827,862	753,299
Interest receivable	3,518	3,579
Deposits	924,503	907,439
Short-term borrowings	31,535	19,356
Long-term debt	46,346	26,568
Interest payable	376	470
Off-balance sheet instruments	0	0
(Level 1) Quoted Prices In Active Markets For Identical Assets [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	17,147	49,757
Securities, available-for-sale	1,505	5,032
Restricted investment in bank stocks	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	0	0
Interest payable	0	0
Off-balance sheet instruments	0	0
(Level 2) Significant Other Observable Inputs [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	0	0
Securities, available-for-sale	237,624	229,030
Restricted investment in bank stocks	3,608	2,863
Loans held for sale	1,862	3,151
Loans, net	0	0
Interest receivable	3,518	3,579
Deposits	924,503	907,439
Short-term borrowings	31,535	19,356
Long-term debt	40,243	21,289
Interest payable	376	470
Off-balance sheet instruments	0	0
(Level 3) Significant Other Unobservable Inputs [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	0	0
Securities, available-for-sale	0	0
Restricted investment in bank stocks	0	0
Loans held for sale	0	0
Loans, net	827,862	753,299
Interest receivable	0	0
Deposits	0	0
Short-term borrowings	0	0
Long-term debt	6,103	5,279
Interest payable	0	0
Off-balance sheet instruments	$ 0	$ 0

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Short Term Borrowings And Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2013

Short Term Borrowings And Long-Term Debt [Abstract]

Summary Of Long-Term Debt

	September 30,		December 31,
(dollars in thousands)	2013		2012
PeoplesBank’s obligations:
FHLBP
Due May 2013,  3.46%, amortizing	$	0	$	245
Due July 2015,  1.90%		5,000		5,000
Due July 2016,  2.35%		5,000		5,000
Due September 2016,  1.18%		10,000		0
Due March 2018,  1.17%		10,000		0
Due June 2018,  1.87%		5,000		5,000
Due June 2019,  2.10%		5,000		5,000
Total FHLBP		40,000		20,245
Capital lease obligation		203		260
Codorus Valley Bancorp, Inc. obligations:
Junior subordinated debt
Due 2034,  2.27%, floating rate based on 3 month
LIBOR plus 2.02%, callable quarterly		3,093		3,093
Due 2036,  1.81% floating rate based on 3 month
LIBOR plus 1.54%, callable quarterly		7,217		7,217
Total long-term debt	$	50,513	$	30,815

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Restricted Investment In Bank Stocks (Narrative) (Details)	Sep. 30, 2013
Restricted Investment In Bank Stocks [Abstract]
Maximum percent of a member's total capital stock outstanding that can be repurchased	5.00%

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Deposits

9 Months Ended

Sep. 30, 2013

Deposits [Abstract]

Deposits

Note 7—Deposits

The composition of deposits as of September 30, 2013 and December 31, 2012 is shown below.

	September 30,		December 31,
(dollars in thousands)	2013		2012
Noninterest bearing demand	$	98,848	$	88,476
NOW		85,409		77,531
Money market		294,665		289,149
Savings		38,270		34,372
Time deposits less than $100,000		231,977		236,683
Time deposits $100,000 or more		173,146		175,096
Total deposits	$	922,315	$	901,307

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Securities

9 Months Ended

Sep. 30, 2013

Securities [Abstract]

Securities

Note 3-Securities

A summary of securities available-for-sale at September 30, 2013 and December 31, 2012 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. Also included in the portfolio are investments in the obligations of states and municipalities. With the exception of an approximately $8 million portfolio (fair value) of Texas municipal utility district bonds, which has its own criteria for investment (e.g., maximum debt to assessed valuation, minimum assessed valuation and district size, proximity to employment, etc.), the remaining municipal bonds were all rated A or above by a national rating service at September 30, 2013. 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 September 30, 2013, the fair value of the municipal bond portfolio was concentrated in the states of Pennsylvania at 43 percent and Texas at 17 percent. 

		Amortized		Gross Unrealized				Fair
(dollars in thousands)		Cost		Gains		Losses		Value
September 30, 2013
Debt securities:
U.S. Treasury notes	$	1,500	$	5	$	0	$	1,505
U.S. agency		52,416		817		(374)		52,859
U.S. agency mortgage-backed, residential		89,582		1,907		(168)		91,321
State and municipal		91,136		2,499		(191)		93,444
Total debt securities	$	234,634	$	5,228	$	(733)	$	239,129
December 31, 2012
Debt securities:
U.S. Treasury notes	$	5,001	$	31	$	0	$	5,032
U.S. agency		37,000		1,083		(25)		38,058
U.S. agency mortgage-backed, residential		84,630		3,603		0		88,233
State and municipal		98,744		4,053		(58)		102,739
Total debt securities	$	225,375	$	8,770	$	(83)	$	234,062

The amortized cost and estimated fair value of debt securities at September 30, 2013 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	$	13,813	$	13,924
Due after one year through five years		176,254		180,152
Due after five years through ten years		40,747		41,103
Due after ten years		3,820		3,950
Total debt securities	$	234,634	$	239,129

Gross realized gains and losses on sales of securities available-for-sale are shown 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				Nine months ended
		September 30,				September 30,
(dollars in thousands)		2013		2012		2013		2012
Realized gains	$	0	$	382	$	44	$	431
Realized losses		0		0		0		0
Net gains	$	0	$	382	$	44	$	431

Securities, issued by agencies of the federal government, with a carrying value of $142,557,000 and $135,348,000 on September 30, 2013 and December 31, 2012, 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 September 30, 2013 and December 31, 2012.    

	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
September 30, 2013
Debt securities:
U.S. agency	$	29,897	$	(374)	$	0	$	0	$	29,897	$	(374)
U.S. agency mortgage-backed, residential		23,140		(168)		0		0		23,140		(168)
State and municipal		17,408		(191)		0		0		17,408		(191)
Total temporarily impaired debt
securities, available for sale	$	70,445	$	(733)	$	0	$	0	$	70,445	$	(733)
December 31, 2012
Debt securities:
U.S. agency	$	8,251	$	(25)	$	0	$	0	$	8,251	$	(25)
State and municipal		11,565		(58)		0		0		11,565		(58)
Total temporarily impaired debt
securities, available for sale	$	19,816	$	(83)	$	0	$	0	$	19,816	$	(83)

The unrealized losses of $733,000at September 30, 2013 within the less than 12 months category were attributable to nine U.S. agency securities, eight U.S. agency mortgage-backed securities, and forty-one state and municipal securities, all rated A or above by a national rating service.

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 September 30, 2013 were primarily the result of changes in market interest rates and that it has the ability to hold these investments for a time necessary to recover the amortized cost.  Through September 30, 2013 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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Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities
Net income	$ 7,984	$ 6,940
Adjustments to reconcile net income to net cash provided by operations:
Depreciation/amortization	1,116	1,028
Net amortization of premiums on securities	997	1,049
Amortization of deferred loan origination fees and costs	(404)	(201)
Amortization of intangible assets	0	22
Provision for loan losses	970	1,150
Provision for losses on foreclosed real estate	125	2,273
Amortization of investment in real estate partnership	242	258
Increase in cash surrender value and death benefit on bank owned life insurance	(543)	(487)
Originations of loans held for sale	(46,719)	(47,539)
Proceeds from sales of loans held for sale	48,600	47,388
Net gain on sales of loans held for sale	(874)	(833)
Gain on disposal of premises and equipment	0	7
Net gain on sales of securities available-for-sale	(44)	(431)
Net (gain) loss on sales of foreclosed real estate	(15)	167
Stock-based compensation	236	234
Decrease in interest receivable	61	107
Decrease (increase) in other assets	1,270	(229)
Decrease in interest payable	(94)	(21)
Decrease in other liabilities	(143)	(1,020)
Net cash provided by operating activities	12,765	9,862
Cash flows from investing activities
Purchases of securities, available-for-sale	(43,348)	(51,533)
Maturities, repayments and calls of securities, available-for-sale	32,209	32,272
Sales of securities, available-for-sale	927	15,920
(Purchase) redemption of restricted investment in bank stock	(745)	655
Net increase in loans made to customers	(77,240)	(40,218)
Purchases of premises and equipment	(3,912)	(798)
Investment in bank owned life insurance	(5,307)	(237)
Proceeds from bank owned life insurance	0	206
Investment in foreclosed real estate	0	(17)
Proceeds from sales of foreclosed real estate	207	9,967
Net cash used in investing activities	(97,209)	(33,783)
Cash flows from financing activities
Net increase in demand and savings deposits	27,664	38,842
Net (decrease) increase in time deposits	(6,656)	2,213
Net increase in short-term borrowings	12,179	13,936
Proceeds from issuance of long-term debt	20,000	0
Repayment of long-term debt	(302)	(10,650)
Tax benefit on vested restricted stock	0	27
Cash dividends paid to preferred shareholders	(187)	(571)
Cash dividends paid to common shareholders	(1,531)	(1,223)
Issuance of common stock	667	411
Net cash provided by financing activities	51,834	42,985
Net (decrease) increase in cash and cash equivalents	(32,610)	19,064
Cash and cash equivalents at beginning of year	49,757	32,195
Cash and cash equivalents at end of period	$ 17,147	$ 51,259

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Deposits (Composition Of Deposits) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Deposits [Abstract]
Noninterest bearing demand	$ 98,848	$ 88,476
NOW	85,409	77,531
Money market	294,665	289,149
Savings	38,270	34,372
Time deposits less than $100,000	231,977	236,683
Time deposits $100,000 or more	173,146	175,096
Total deposits	$ 922,315	$ 901,307

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Loans (Summary Of Average Impaired Loans And Related Interest Income) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Average Recorded Investment	$ 20,875	$ 23,953	$ 21,883	$ 21,853
Impaired loans with no related allowance, Interest Income	280	220	777	723
Impaired loans with no related allowance, Cash Basis	92	53	253	334
Impaired loans with a related allowance, Average Recorded Investment	3,298	4,217	3,795	3,048
Impaired loans with a related allowance, Interest Income	8	42	15	60
Impaired loans with a related allowance, Cash Basis	0	2	0	4
Total impaired loans, Average Recorded Investment	24,173	28,170	25,678	24,901
Total impaired loans, Interest Income	288	262	792	783
Total impaired loans, Cash Basis	92	55	253	338
Builder & Developer [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Average Recorded Investment	9,094	10,771	9,913	8,008
Impaired loans with no related allowance, Interest Income	132	121	396	355
Impaired loans with no related allowance, Cash Basis	0	11	5	65
Impaired loans with a related allowance, Average Recorded Investment	0	259	97	261
Impaired loans with a related allowance, Interest Income	0	2	0	4
Impaired loans with a related allowance, Cash Basis	0	2	0	4
Total impaired loans, Average Recorded Investment	9,094	11,030	10,010	8,269
Total impaired loans, Interest Income	132	123	396	359
Total impaired loans, Cash Basis	0	13	5	69
Commercial Real Estate Investor [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Average Recorded Investment	6,182	5,146	5,953	4,703
Impaired loans with no related allowance, Interest Income	61	73	195	209
Impaired loans with no related allowance, Cash Basis	23	34	92	108
Impaired loans with a related allowance, Average Recorded Investment	0	0	0	57
Impaired loans with a related allowance, Interest Income	0	0	0	0
Impaired loans with a related allowance, Cash Basis	0	0	0	0
Total impaired loans, Average Recorded Investment	6,182	5,146	5,953	4,760
Total impaired loans, Interest Income	61	73	195	209
Total impaired loans, Cash Basis	23	34	92	108
Residential Real Estate Investor [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Average Recorded Investment	305	268	210	366
Impaired loans with no related allowance, Interest Income	0	1	5	4
Impaired loans with no related allowance, Cash Basis	1	1	4	4
Impaired loans with a related allowance, Average Recorded Investment	2,236	2,289	2,447	1,189
Impaired loans with a related allowance, Interest Income	0	31	(9)	33
Impaired loans with a related allowance, Cash Basis	0	0	0	0
Total impaired loans, Average Recorded Investment	2,541	2,557	2,657	1,555
Total impaired loans, Interest Income	0	32	(4)	37
Total impaired loans, Cash Basis	1	1	4	4
Hotel/Motel [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Average Recorded Investment	0	0	0	0
Impaired loans with no related allowance, Interest Income	0	0	0	0
Impaired loans with no related allowance, Cash Basis	0	0	0	0
Impaired loans with a related allowance, Average Recorded Investment	0	0	0	0
Impaired loans with a related allowance, Interest Income	0	0	0	0
Impaired loans with a related allowance, Cash Basis	0	0	0	0
Total impaired loans, Average Recorded Investment	0	0	0	0
Total impaired loans, Interest Income	0	0	0	0
Total impaired loans, Cash Basis	0	0	0	0
Wholesale & Retail [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Average Recorded Investment	1,882	2,299	2,435	2,627
Impaired loans with no related allowance, Interest Income	65	3	108	5
Impaired loans with no related allowance, Cash Basis	62	1	126	4
Impaired loans with a related allowance, Average Recorded Investment	0	263	0	131
Impaired loans with a related allowance, Interest Income	0	0	0	(3)
Impaired loans with a related allowance, Cash Basis	0	0	0	0
Total impaired loans, Average Recorded Investment	1,882	2,562	2,435	2,758
Total impaired loans, Interest Income	65	3	108	2
Total impaired loans, Cash Basis	62	1	126	4
Manufacturing [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Average Recorded Investment	679	706	686	709
Impaired loans with no related allowance, Interest Income	11	10	33	31
Impaired loans with no related allowance, Cash Basis	0	0	0	0
Impaired loans with a related allowance, Average Recorded Investment	0	0	0	0
Impaired loans with a related allowance, Interest Income	0	0	0	0
Impaired loans with a related allowance, Cash Basis	0	0	0	0
Total impaired loans, Average Recorded Investment	679	706	686	709
Total impaired loans, Interest Income	11	10	33	31
Total impaired loans, Cash Basis	0	0	0	0
Agriculture [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Average Recorded Investment	0	0	0	0
Impaired loans with no related allowance, Interest Income	0	0	0	0
Impaired loans with no related allowance, Cash Basis	0	0	0	0
Impaired loans with a related allowance, Average Recorded Investment	460	479	465	484
Impaired loans with a related allowance, Interest Income	8	9	24	26
Impaired loans with a related allowance, Cash Basis	0	0	0	0
Total impaired loans, Average Recorded Investment	460	479	465	484
Total impaired loans, Interest Income	8	9	24	26
Total impaired loans, Cash Basis	0	0	0	0
Other Commercial [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Average Recorded Investment	1,563	3,936	1,589	4,654
Impaired loans with no related allowance, Interest Income	4	3	10	93
Impaired loans with no related allowance, Cash Basis	0	1	4	138
Impaired loans with a related allowance, Average Recorded Investment	602	927	786	926
Impaired loans with a related allowance, Interest Income	0	0	0	0
Impaired loans with a related allowance, Cash Basis	0	0	0	0
Total impaired loans, Average Recorded Investment	2,165	4,863	2,375	5,580
Total impaired loans, Interest Income	4	3	10	93
Total impaired loans, Cash Basis	0	1	4	138
Residential Mortgage [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Average Recorded Investment	152	86	118	145
Impaired loans with no related allowance, Interest Income	3	1	7	5
Impaired loans with no related allowance, Cash Basis	2	1	5	4
Impaired loans with a related allowance, Average Recorded Investment	0	0	0	0
Impaired loans with a related allowance, Interest Income	0	0	0	0
Impaired loans with a related allowance, Cash Basis	0	0	0	0
Total impaired loans, Average Recorded Investment	152	86	118	145
Total impaired loans, Interest Income	3	1	7	5
Total impaired loans, Cash Basis	2	1	5	4
Home Equity [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Average Recorded Investment	392	268	351	257
Impaired loans with no related allowance, Interest Income	2	1	8	5
Impaired loans with no related allowance, Cash Basis	0	0	0	1
Impaired loans with a related allowance, Average Recorded Investment	0	0	0	0
Impaired loans with a related allowance, Interest Income	0	0	0	0
Impaired loans with a related allowance, Cash Basis	0	0	0	0
Total impaired loans, Average Recorded Investment	392	268	351	257
Total impaired loans, Interest Income	2	1	8	5
Total impaired loans, Cash Basis	0	0	0	1
Consumer Related Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance, Average Recorded Investment	626	473	628	384
Impaired loans with no related allowance, Interest Income	2	7	15	16
Impaired loans with no related allowance, Cash Basis	4	4	17	10
Impaired loans with a related allowance, Average Recorded Investment	0	0	0	0
Impaired loans with a related allowance, Interest Income	0	0	0	0
Impaired loans with a related allowance, Cash Basis	0	0	0	0
Total impaired loans, Average Recorded Investment	626	473	628	384
Total impaired loans, Interest Income	2	7	15	16
Total impaired loans, Cash Basis	$ 4	$ 4	$ 17	$ 10

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Assets And Liabilities Subject To Offsetting (Tables)

9 Months Ended

Sep. 30, 2013

Assets And Liabilities Subject To Offsetting [Abstract]

Securities Sold Under Agreements to Repurchase Offsetting

				Gross		Net Amounts
		Gross		Amounts		of Liabilities		Gross amounts Not Offset in
		Amounts of		Offset in the		Presented in		the Statements of Condition
		Recognized		Statements of		the Statements		Financial		Cash Collateral			Net
(dollars in thousands)		Liabilities		Condition		of Condition		Instruments		Pledged			Amount
September 30, 2013
Repurchase Agreements	(1)	$	25,702	$	0	$	25,702	$	(25,702)	$	0	$	0
December 31, 2012
Repurchase Agreements	(1)	$	19,356	$	0	$	19,356	$	(19,356)	$	0	$	0

As of September 30, 2013 and December 31, 2012, the fair value of securities pledged in connection with repurchase agreements was $27,708,000 and $25,876,000, respectively.

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Fair Value of Assets and Liabilities (Schedule Of Financial Assets Measured At Fair Value On A Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
U.S. Treasury Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities, available-for-sale, Recurring Basis	$ 1,505	$ 5,032
U.S. Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities, available-for-sale, Recurring Basis	52,859	38,058
U.S. Agency Mortgage-Backed, Residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities, available-for-sale, Recurring Basis	91,321	88,233
State And Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities, available-for-sale, Recurring Basis	93,444	102,739
(Level 1) Quoted Prices In Active Markets For Identical Assets [Member] | U.S. Treasury Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities, available-for-sale, Recurring Basis	1,505	5,032
(Level 1) Quoted Prices In Active Markets For Identical Assets [Member] | U.S. Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities, available-for-sale, Recurring Basis	0	0
(Level 1) Quoted Prices In Active Markets For Identical Assets [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, Recurring Basis	0	0
(Level 1) Quoted Prices In Active Markets For Identical Assets [Member] | State And Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities, available-for-sale, Recurring Basis	0	0
(Level 2) Significant Other Observable Inputs [Member] | U.S. Treasury Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities, available-for-sale, Recurring Basis	0	0
(Level 2) Significant Other Observable Inputs [Member] | U.S. Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities, available-for-sale, Recurring Basis	52,859	38,058
(Level 2) Significant Other Observable Inputs [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, Recurring Basis	91,321	88,233
(Level 2) Significant Other Observable Inputs [Member] | State And Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities, available-for-sale, Recurring Basis	93,444	102,739
(Level 3) Significant Other Unobservable Inputs [Member] | U.S. Treasury Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities, available-for-sale, Recurring Basis	0	0
(Level 3) Significant Other Unobservable Inputs [Member] | U.S. Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities, available-for-sale, Recurring Basis	0	0
(Level 3) Significant Other Unobservable Inputs [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, Recurring Basis	0	0
(Level 3) Significant Other Unobservable Inputs [Member] | State And Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities, available-for-sale, Recurring Basis	$ 0	$ 0

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Shareholders' Equity

9 Months Ended

Sep. 30, 2013

Shareholders' Equity [Abstract]

Shareholders' Equity

Note 10—Shareholders’ Equity

Preferred stock issued under the US Treasury’s Small Business Lending Fund Program

The annualized dividend rate on the $25 million of preferred stock issued under the U.S. Treasury’s Small Business Lending Fund Program (SBLF Program) was 1 percent for the quarters ended September 30, 2013, December 31, 2012 and September 30, 2012.  For the nine-month period ended September 30, 2013, the annualized dividend rate was 1 percent, compared to 1.71 percent for the same period of 2012. Based on the increase in the qualified small business lending portfolio balance over the baseline level at September 30, 2013, the dividend rate will remain at 1 percent through February 18, 2016. Thereafter, under the provisions of the SBLF Program the dividend rate will increase to 9% (including a quarterly lending incentive fee of 0.5%).  Additional information about SBLF preferred stock is disclosed in Note 10—Shareholders’ Equity in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2012.  

Common stock dividend

Periodically, the Corporation distributes stock dividends on its common stock. On October 8, 2013, the Corporation declared a 5 percent common stock dividend payable on December 10, 2013, to shareholders of record at the close of business on October 22, 2013. Distribution of this stock dividend will result in the issuance of approximately 226,451 additional common shares.  The Corporation distributed a 5 percent common stock dividend on December 11, 2012 which resulted in the issuance of 211,564 additional common shares.

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Allowance For Loan Losses

9 Months Ended

Sep. 30, 2013

Allowance For Loan Losses [Abstract]

Allowance For Loan Losses

NOTE 6 – 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 and nine months ended September 30, 2013 and 2012.

			Commercial		Residential												Total
	Builder &		real estate		real estate		Hotel/		Wholesale &								commercial
(dollars in thousands)	developer		investor		investor		Motel		retail		Manufacturing		Agriculture		Other		related
Allowance for loan losses:
Balance, July 1, 2013	$	1,576	$	1,213	$	1,181	$	505	$	1,856	$	201	$	253	$	1,151	$	7,936
Charge-offs		0		0		(85)		0		0		0		0		0		(85)
Recoveries		0		0		0		0		25		0		0		16		41
Provisions		(400)		188		265		(13)		(1,239)		0		21		30		(1,148)
Balance, September 30, 2013	$	1,176	$	1,401	$	1,361	$	492	$	642	$	201	$	274	$	1,197	$	6,744
Balance, July 1, 2012	$	1,680	$	1,239	$	900	$	449	$	1,690	$	164	$	194	$	1,062	$	7,378
Charge-offs		(215)		0		(15)		0		0		0		0		(46)		(276)
Recoveries		0		0		0		0		3		0		0		0		3
Provisions		119		78		140		0		436		58		(3)		158		986
Balance, September 30, 2012	$	1,584	$	1,317	$	1,025	$	449	$	2,129	$	222	$	191	$	1,174	$	8,091

							Total
	Residential		Home				consumer
(dollars in thousands)	mortgage		equity		Other		related		Unallocated		Total
Allowance for loan losses:
Balance, July 1, 2013	$	77	$	236	$	276	$	589	$	934	$	9,459
Charge-offs		0		(25)		(106)		(131)		0		(216)
Recoveries		0		2		13		15		0		56
Provisions		(8)		24		124		140		1,158		150
Balance, September 30, 2013	$	69	$	237	$	307	$	613	$	2,092	$	9,449
Balance, July 1, 2012	$	78	$	152	$	137	$	367	$	945	$	8,690
Charge-offs		(76)		(42)		(165)		(283)		0		(559)
Recoveries		0		1		2		3		0		6
Provisions		133		77		236		446		(782)		650
Balance, September 30, 2012	$	135	$	188	$	210	$	533	$	163	$	8,787

			Commercial		Residential												Total
	Builder &		real estate		real estate		Hotel/		Wholesale &								commercial
(dollars in thousands)	developer		investor		investor		Motel		retail		Manufacturing		Agriculture		Other		related
Allowance for loan losses:
Balance, January 1, 2013	$	1,571	$	1,259	$	1,195	$	485	$	1,913	$	237	$	202	$	1,170	$	8,032
Charge-offs		(62)		0		(310)		0		(210)		0		0		0		(582)
Recoveries		0		0		0		0		47		0		0		17		64
Provisions		(333)		142		476		7		(1,108)		(36)		72		10		(770)
Balance, September 30, 2013	$	1,176	$	1,401	$	1,361	$	492	$	642	$	201	$	274	$	1,197	$	6,744
Balance, January 1, 2012	$	2,170	$	2,003	$	505	$	394	$	1,806	$	151	$	184	$	907	$	8,120
Charge-offs		(217)		(68)		(15)		0		0		0		0		(309)		(609)
Recoveries		0		0		0		0		14		0		0		0		14
Provisions		(369)		(618)		535		55		309		71		7		576		566
Balance, September 30, 2012	$	1,584	$	1,317	$	1,025	$	449	$	2,129	$	222	$	191	$	1,174	$	8,091

							Total
	Residential		Home				consumer
(dollars in thousands)	mortgage		equity		Other		related		Unallocated		Total
Allowance for loan losses:
Balance, January 1, 2013	$	124	$	237	$	238	$	599	$	671	$	9,302
Charge-offs		(28)		(99)		(239)		(366)		0		(948)
Recoveries		1		8		52		61		0		125
Provisions		(28)		91		256		319		1,421		970
Balance, September 30, 2013	$	69	$	237	$	307	$	613	$	2,092	$	9,449
Balance, January 1, 2012	$	88	$	86	$	171	$	345	$	237	$	8,702
Charge-offs		(115)		(170)		(241)		(526)		0		(1,135)
Recoveries		41		1		14		56		0		70
Provisions		121		271		266		658		(74)		1,150
Balance, September 30, 2012	$	135	$	188	$	210	$	533	$	163	$	8,787

The table below shows the allowance amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment at September 30, 2013 and 2012 and December 31, 2012.

			Commercial		Residential												Total
	Builder &		real estate		real estate		Hotel/		Wholesale &								commercial
(dollars in thousands)	developer		investor		investor		Motel		retail		Manufacturing		Agriculture		Other		related
Allowance for loan losses:
Individually evaluated for impairment	$	0	$	0	$	650	$	0	$	0	$	0	$	100	$	120	$	870
Collectively evaluated for impairment		1,176		1,401		711		492		642		201		174		1,077		5,874
Balance, September 30, 2013	$	1,176	$	1,401	$	1,361	$	492	$	642	$	201	$	274	$	1,197	$	6,744
Individually evaluated for impairment	$	147	$	0	$	700	$	0	$	0	$	0	$	100	$	215	$	1,162
Collectively evaluated for impairment		1,424		1,259		495		485		1,913		237		102		955		6,870
Balance, December 31, 2012	$	1,571	$	1,259	$	1,195	$	485	$	1,913	$	237	$	202	$	1,170	$	8,032
Individually evaluated for impairment	$	147	$	0	$	550	$	0	$	150	$	0	$	100	$	218	$	1,165
Collectively evaluated for impairment		1,437		1,317		475		449		1,979		222		91		956		6,926
Balance, September 30, 2012	$	1,584	$	1,317	$	1,025	$	449	$	2,129	$	222	$	191	$	1,174	$	8,091
Loans:
Individually evaluated for impairment	$	9,020	$	6,673	$	2,510	$	0	$	1,616	$	676	$	458	$	1,862	$	22,815
Collectively evaluated for impairment		94,092		129,808		70,482		65,940		72,863		33,474		34,852		149,878		651,389
Balance, September 30, 2013	$	103,112	$	136,481	$	72,992	$	65,940	$	74,479	$	34,150	$	35,310	$	151,740	$	674,204
Individually evaluated for impairment	$	12,467	$	5,736	$	2,731	$	0	$	3,048	$	699	$	471	$	2,455	$	27,607
Collectively evaluated for impairment		84,469		116,978		63,688		64,948		67,395		39,559		20,457		122,379		579,873
Balance, December 31, 2012	$	96,936	$	122,714	$	66,419	$	64,948	$	70,443	$	40,258	$	20,928	$	124,834	$	607,480
Individually evaluated for impairment	$	13,526	$	5,755	$	2,510	$	0	$	3,052	$	705	$	478	$	5,086	$	31,112
Collectively evaluated for impairment		85,660		122,313		61,068		60,187		65,099		37,015		18,196		123,739		573,277
Balance, September 30, 2012	$	99,186	$	128,068	$	63,578	$	60,187	$	68,151	$	37,720	$	18,674	$	128,825	$	604,389

								Total
		Residential		Home				consumer
(dollars in thousands)		mortgage		equity		Other		related		Unallocated		Total
Allowance for loan losses:
Individually evaluated for impairment	$	0	$	0	$	0	$	0	$	0	$	870
Collectively evaluated for impairment		69		237		307		613		2,092		8,579
Balance, September 30, 2013	$	69	$	237	$	307	$	613	$	2,092	$	9,449
Individually evaluated for impairment	$	0	$	0	$	0	$	0	$	0	$	1,162
Collectively evaluated for impairment		124		237		238		599		671		8,140
Balance, December 31, 2012	$	124	$	237	$	238	$	599	$	671	$	9,302
Individually evaluated for impairment	$	0	$	0	$	0	$	0	$	0	$	1,165
Collectively evaluated for impairment		135		188		210		533		163		7,622
Balance, September 30, 2012	$	135	$	188	$	210	$	533	$	163	$	8,787
Loans:
Individually evaluated for impairment	$	151	$	387	$	585	$	1,123	$		$	23,938
Collectively evaluated for impairment		24,974		74,693		38,667		138,334				789,723
Balance, September 30, 2013	$	25,125	$	75,080	$	39,252	$	139,457	$		$	813,661
Individually evaluated for impairment	$	85	$	340	$	642	$	1,067	$		$	28,674
Collectively evaluated for impairment		23,426		65,518		39,643		128,587				708,460
Balance, December 31, 2012	$	23,511	$	65,858	$	40,285	$	129,654	$		$	737,134
Individually evaluated for impairment	$	86	$	314	$	485	$	885	$		$	31,997
Collectively evaluated for impairment		21,875		63,284		42,205		127,364				700,641
Balance, September 30, 2012	$	21,961	$	63,598	$	42,690	$	128,249	$		$	732,638

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Fair Value Of Assets And Liabilities

9 Months Ended

Sep. 30, 2013

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.  Therefore, the fair value estimates herein are not necessarily indicative of the amounts that could be realized in sales transactions on the dates indicated.  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. At least annually, the Corporation reviews a random sample of the pricing information received from the third-party pricing service by comparing it to price quotes from third-party brokers. Historically, price deviations have been immaterial.

				Fair Value Measurements
			(Level 1)			(Level 2)	(Level 3)
			Quoted Prices in		Significant Other		Significant Other
			Active Markets for		Observable		Unobservable
(dollars in thousands)	Total		Identical Assets		Inputs		Inputs
September 30, 2013
Securities available-for-sale:
U.S. Treasury notes	$	1,505	$	1,505	$	0	$	0
U.S. agency		52,859		0		52,859		0
U.S. agency mortgage-backed, residential		91,321		0		91,321		0
State and municipal		93,444		0		93,444		0
December 31, 2012
Securities available-for-sale:
U.S. Treasury notes	$	5,032	$	5,032	$	0	$	0
U.S. agency		38,058		0		38,058		0
U.S. agency mortgage-backed, residential		88,233		0		88,233		0
State and municipal		102,739		0		102,739		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 included as Level 3 fair values, based on the lowest level of input that is significant to the fair value measurements.  At September 30, 2013, the fair value of impaired loans with a valuation allowance or charge-off was of $2,702,000, which is net of valuation allowances of $870,000 and charge-offs of $2,861,000.  At December 31, 2012 the fair value of impaired loans with a valuation allowance or charge-offwas  $4,493,000,  which is net of valuation allowances of $1,162,000 and charge-offs of $2,605,000. 

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 upon an independent third-party appraisal of the property or occasionally upon a recent sales offer.  At September 30, 2013, the fair value of foreclosed real estate with a valuation allowance or charge-off was $2,536,000,  which isnet of valuation allowancesof  $3,736,000and charge-offs of $100,000.  At December 31, 2012, the carrying value of foreclosed real estate with a  valuation allowance or charge-off was $2,779,000,which is net of valuation allowances of  $3,712,000and no charge-offs. 

				Fair Value Measurements
				(Level 1)		(Level 2)		(Level 3)
				Quoted Prices in				Significant Other
				Active Markets for		Significant Other		Unobservable
(dollars in thousands)		Total		Identical Assets		Observable Inputs		Inputs
September 30, 2013
Impaired loans	$	2,702	$	0	$	0	$	2,702
Foreclosed real estate		2,536		0		0		2,536
December 31, 2012
Impaired loans	$	4,493	$	0	$	0	$	4,493
Foreclosed real estate		2,779		0		0		2,779

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
September 30, 2013
Impaired loans	$	2,702	Appraisal	(1)	Appraisal adjustments	(2)	20% - 30%	26%
Foreclosed real estate		2,536	Appraisal	(1)	Appraisal adjustments	(2)	8% - 67%	49%
December 31, 2012
Impaired loans	$	4,493	Appraisal	(1)	Appraisal adjustments	(2)	10% - 100%	27%
Foreclosed real estate		2,779	Appraisal	(1)	Appraisal adjustments	(2)	5% - 100%	12%
(1) Fair value is generally determined through independent appraisals, which generally include various level 3 inputs
that are not identifiable.
(2) Appraisals may be adjusted downward by the Corporation's management for qualitative factors such as economic
conditions and estimated liquidation expenses.  The range of liquidation expenses and other appraisal
adjustments are presented as a percent of the appraisal.

Disclosures about Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of the Corporation’s financial instruments as of September 30, 2013 and December 31, 2012:

Cash and cash equivalents

The carrying amount is a reasonable estimate of fair value.

Securities available for sale

The fair value of securities available for sale is determined in accordance with the methods described under FASB ASC Topic 820 as described above.

Restricted investment in bank stocks

The carrying amount of restricted investment in bank stocks is a reasonable estimate of fair value.  The Corporation is required to maintain minimum investment balances in these stocks, which are not actively traded and therefore have no readily determinable market value.

Loans held for sale

The fair value of loans held for sale is determined, when possible, using quoted secondary-market prices.  If no such quoted prices exist, the fair value of a loan is determined using quoted prices for a similar loan or loans, adjusted for the specific attributes of that loan.  

Loans, net

The fair value of loans, excluding all impaired loans, is estimated using discounted cash flow analyses using the current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.  Loans were first segregated by type such as commercial, real estate, and consumer, and were then further segmented into fixed and variable rate.  Projected future cash flows are calculated based upon contractual maturity or call dates.  Generally, variable rate loans that reprice frequently have no significant change in credit risk; fair value is based on carrying value. 

Interest receivable

The carrying value of interest receivable is a reasonable estimate of fair value.

Deposits

The fair value of demand deposits, savings accounts and money market deposits is the amount payable on demand at the reporting date.  The fair values of time deposits are estimated using a discounted cash flow analyses.  The discount rates used are based on rates currently offered for deposits with similar remaining maturities.  The fair values of variable rate time deposits that reprice frequently are based on carrying value.  The fair values of time deposit liabilities do not take into consideration the value of the Corporation’s long-term relationships with depositors, which may have significant value.

Short-term borrowings

For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

Long-term debt

Long-term debt includes FHLB advances (Level 2) and junior subordinated debt (Level 3).  The fair value of FHLB advances are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity.  These prices are obtained from this active market and represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party.  The fair value of junior subordinated debt is estimated using discounted cash flow analysis, based on market rates and spread characteristics of similar debt with similar credit risk characteristics, terms and remaining maturity.

Interest payable

The carrying value of interest payable is a reasonable estimate of fair value.

Off-balance sheet instruments

Off-balance sheet instruments consist of lending commitments and letters of credit are based on fees currently charged in the market to enter into similar arrangements, taking into account the remaining terms of the agreements and counterparties’ credit standing.  These amounts were not considered material.

The following presents the carrying amounts and estimated fair values of the Corporation’s financial instruments as of September 30, 2013 and December 31, 2012. 

						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
September 30, 2013
Financial assets
Cash and cash equivalents	$	17,147	$	17,147	$	17,147	$	0	$	0
Securities available-for-sale		239,129		239,129		1,505		237,624		0
Restricted investment in bank stocks		3,608		3,608		0		3,608		0
Loans held for sale		1,826		1,862		0		1,862		0
Loans, net		804,212		827,862		0		0		827,862
Interest receivable		3,518		3,518		0		3,518		0
Financial liabilities
Deposits	$	922,315	$	924,503	$	0	$	924,503	$	0
Short-term borrowings		31,535		31,535		0		31,535		0
Long-term debt		50,513		46,346		0		40,243		6,103
Interest payable		376		376		0		376		0
Off-balance sheet instruments		0		0		0		0		0
December 31, 2012
Financial assets
Cash and cash equivalents	$	49,757	$	49,757	$	49,757	$	0	$	0
Securities available-for-sale		234,062		234,062		5,032		229,030		0
Restricted investment in bank stocks		2,863		2,863		0		2,863		0
Loans held for sale		3,091		3,151		0		3,151		0
Loans, net		727,832		753,299		0		0		753,299
Interest receivable		3,579		3,579		0		3,579		0
Financial liabilities
Deposits	$	901,307	$	907,439	$	0	$	907,439	$	0
Short-term borrowings		19,356		19,356		0		19,356		0
Long-term debt		30,815		26,568		0		21,289		5,279
Interest payable		470		470		0		470		0
Off-balance sheet instruments		0		0		0		0		0

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Contingent Liabilities

9 Months Ended

Sep. 30, 2013

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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Document And Entity Information	9 Months Ended
	Sep. 30, 2013	Nov. 01, 2013
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
Entity Registrant Name	Codorus Valley Bancorp Inc
Entity Central Index Key	0000806279
Entity Filer Category	Smaller Reporting Company
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		4,791,194

XML

Guarantees

9 Months Ended

Sep. 30, 2013

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 customer 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 customers.  The Corporation generally holds collateral and/or personal guarantees supporting these commitments.  The Corporation had $27,063,000 of standby letters of credit outstanding on September 30, 2013, compared to $17,064,000 on December 31, 2012. 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 September 30, 2013 and December 31, 2012, 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 (Schedule Level 3 Assets Measured At Fair Value On A Nonrecurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2013		Dec. 31, 2012
Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on a nonrecurring basis	$ 2,702		$ 4,493
Foreclosed Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on a nonrecurring basis	2,536		2,779
(Level 3) Significant Other Unobservable Inputs [Member] | Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on a nonrecurring basis	2,702		4,493
Valuation Techniques	Appraisal	[1]	Appraisal	[1]
Unobservable Input	Appraisal adjustments	[2]	Appraisal adjustments	[2]
Weighted Average	26.00%		27.00%
(Level 3) Significant Other Unobservable Inputs [Member] | Foreclosed Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on a nonrecurring basis	$ 2,536		$ 2,779
Valuation Techniques	Appraisal	[1]	Appraisal	[1]
Unobservable Input	Appraisal adjustments	[2]	Appraisal adjustments	[2]
Weighted Average	49.00%		12.00%
Maximum [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value measurements, Range	30.00%		100.00%
Maximum [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Foreclosed Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value measurements, Range	67.00%		100.00%
Minimum [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value measurements, Range	20.00%		10.00%
Minimum [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Foreclosed Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value measurements, Range	8.00%		5.00%

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

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

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Fair Value of Assets and Liabilities (Schedule Of Financial Assets Measured At Fair Value On A Nonrecurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on a nonrecurring basis	$ 2,702	$ 4,493
Foreclosed Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on a nonrecurring basis	2,536	2,779
(Level 1) Quoted Prices In Active Markets For Identical Assets [Member] | Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on a nonrecurring basis	0	0
(Level 1) Quoted Prices In Active Markets For Identical Assets [Member] | Foreclosed Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on a nonrecurring basis	0	0
(Level 2) Significant Other Observable Inputs [Member] | Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on a nonrecurring basis	0	0
(Level 2) Significant Other Observable Inputs [Member] | Foreclosed Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on a nonrecurring basis	0	0
(Level 3) Significant Other Unobservable Inputs [Member] | Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on a nonrecurring basis	2,702	4,493
(Level 3) Significant Other Unobservable Inputs [Member] | Foreclosed Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on a nonrecurring basis	$ 2,536	$ 2,779