EX-99.1 2 codorus231103_ex99-1.htm PRESS RELEASE DATED OCTOBER 23, 2023

 

EXHIBIT 99.1

 

 

 

FOR IMMEDIATE RELEASE

October 26, 2023

 

Codorus Valley Bancorp, Inc.

Reports Third Quarter 2023 Earnings

 

ØThird quarter net income of $5.9 million compared to net income of $7.2 million in the quarter ended September 30, 2022, and $6.6 million in the quarter ended June 30, 2023;

 

ØNet income of $19.5 million for the year ended September 30, 2023 compared to $12.2 million for the year ended September 30, 2022;

 

ØNet interest margin of 3.81% for the nine months ended September 30, 2023, an increase from the net interest margin of 3.21% for the nine months ended September 30, 2022;

 

ØThird quarter efficiency ratio of 66.95%; return on average assets of 1.08%; and return on equity of 12.64%;

 

ØSteady performance in credit metrics with nonperforming assets to total loans of 0.47% at September 30, 2023, a decrease of 32.9% from the ratio at December 31, 2022;

 

ØCash dividend of $0.17 per common share payable on November 14, 2023, to holders of record on October 24, 2023.

 

YORK, Pa. – Codorus Valley Bancorp, Inc. (“Codorus Valley”, or the “Corporation”) (NASDAQ: CVLY), parent company of PeoplesBank, A Codorus Valley Company (“PeoplesBank”, or the “Bank”), today reported net income of $5.9 million or $0.61 per diluted common share, for the quarter ended September 30, 2023. This compares to net income of $7.2 million or $0.75 per diluted common share, for the quarter ended September 30, 2022, representing a decrease of $1.2 million or 17.3 percent, and compares to net income of $6.6 million or $0.69 per diluted common share for the second quarter of 2023, representing a decrease of $700,000 or 10.5 percent. For the first nine months of 2023, net income was $19.5 million or $2.03 per diluted share, compared to $12.2 million or $1.27 per diluted share, for the first nine months of 2022, representing an increase of $7.4 million or 60.5 percent.

 

“Despite the challenging environment, the company continued to generate strong earnings in the third quarter and remains focused on positioning the Corporation for long-term financial performance. During the quarter the Corporation continued to proactively manage the balance sheet, ensured strong liquidity and capital positions, and maintained diligence around expense control,” noted Craig L. Kauffman, President and CEO. “Additionally, the Corporation added several seasoned bankers who should contribute meaningfully to the growth plans of the Bank.”

 

1 

 

 

REVIEW OF RESULTS

 

Balance Sheet

 

Loans

 

Loans increased $70.8 million from December 31, 2022 to September 30, 2023, an annualized growth rate of 6.0 percent. Nonperforming assets decreased $3.4 million, or 30.2 percent to $8.0 million from December 31, 2022 to September 30, 2023.

 

Investment Securities

 

Investment Securities decreased $9.8 million to $335.7 million at September 30, 2023 compared to $345.5 million at December 31, 2022. The Bank sold $4.7 million of investment securities, realizing a net loss of $388,000 during the first quarter of 2023, improving the security portfolio yield by three basis points. The tax-equivalent yield on securities for the three months ended September 30, 2023 was 2.75 percent, compared to 2.36 percent for the three months ended September 30, 2022 and 2.72 percent for the three months ended June 30, 2023. The unrealized loss on the securities portfolio was $56.0 million at September 30, 2023, compared to $47.7 million at September 30, 2022 and $46.6 million at June 30, 2023.

 

Borrowings

 

FHLB advances and other short-term borrowings increased $27.5 million to $39.1 million at September 30, 2023 compared to $11.6 million at December 31, 2022, as the Bank added liquidity to the balance sheet during the recent industry turmoil to provide an added measure of liquidity in the event the Bank were to experience outsized deposit withdrawals. FHLB advances and other short-term borrowings decreased $44.2 million or 53.1 percent from $83.3 million at June 30, 2023.

 

Deposits

 

Total Deposits decreased $36.8 million, or 1.9 percent from December 31, 2022 to September 30, 2023, ending the period at $1.91 billion. From year-end 2022 to September 30, 2023, noninterest-bearing demand accounts decreased $65.4 million or 14.1 percent, and interest-bearing demand accounts decreased $18.1 million or 6.3 percent. During that same period, savings accounts decreased $19.9 million or 12.4 percent. Offsetting the decreases, money market accounts increased by $5.0 million or 1.0 percent and certificates of deposit increased by $61.6 million or 16.1 percent. As a result of the change in deposit mix, the average cost of interest-bearing deposits increased to 2.31 percent for the quarter ended September 30, 2023, compared to 0.46 percent for the quarter ended September 30, 2022 and 1.94 percent for the quarter ended June 30, 2023. For the nine months ended September 30, 2023, the average cost of interest-bearing deposits increased to 1.90 percent, compared to 0.33 percent for the nine months ended September 30, 2022. During the three months ended September 30, 2023 overall deposit activity continued to stabilize as deposits increased $23.7 million or 1.3 percent from the quarter ended June 30, 2023. We anticipate downward pressure on net interest margin to continue for the remainder of 2023 and into 2024 due to the cost of deposits.

 

Income Statement

 

The Corporation’s net interest income for the three months ended September 30, 2023 was $19.1 million, a decrease of 8.6 percent when compared to $20.9 million for the three months ended September 30, 2022 and a decrease of 4.3 percent when compared to $20.0 million for the three months ended June 30, 2023. The Corporation’s tax-equivalent net interest margin (“NIM”) was 3.64 percent for the three months ended September 30, 2023, compared to 3.66 percent for the same period in 2022 and 3.81 percent for the quarter ended June 30, 2023. Net interest income for the nine months ended September 30, 2023 was $58.9 million, an increase of 17.0 percent when compared to $50.4 million for the nine months ended September 30, 2022. The Corporation’s tax-equivalent NIM was 3.81 percent for the nine months ended September 30, 2023, compared to 3.21 percent for the nine months ended September 30, 2022.

 

The Corporation’s provision for credit losses, which includes provision for credit losses on unfunded commitments in 2023, for the three months ended September 30, 2023 was $251,000 compared to a reversal of provision for loan losses of $567,000 for the three months ended September 30, 2022 and a reversal of provision for credit losses of $77,000 for the quarter ended June 30, 2023. The Corporation’s nonperforming assets ratio was 0.47 percent at September 30, 2023, a 32.9 percent decrease from the nonperforming assets ratio of 0.70 percent at December 31, 2022. On January 1, 2023, the Corporation adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) and now measures estimated credit losses on financial instruments at the time of origination using the current expected credit loss (“CECL”) methodology. At adoption of the CECL methodology, the allowance for credit losses increased $2.8 million. The net impact to retained earnings was $2.1 million.

 

2 

 

 

Noninterest income for the three months ended September 30, 2023 was $4.2 million, an increase of $582,000 or 16.1 percent, compared to noninterest income of $3.6 million for the three months ended September 30, 2022 and an increase of $142,000 or 3.5 percent compared to the three months ended June 30, 2023. The increase in the current quarter compared to both periods, was primarily due to higher service charges on deposit accounts and income from bank owned life insurance. Noninterest income for the nine months ended September 30, 2023 was $12.2 million, an increase of $840,000, as compared to noninterest income of $11.4 million for the nine months ended September 30, 2022. Higher trust and investment service fees, service charges on deposits, other income related to interest rate swap fees and gains on sale of assets held for sale in the current period were partially offset by a decrease in gains on sale of loans and a loss on sale of securities compared to the nine months ended September 30, 2022.

 

Noninterest expense was $15.9 million for the third quarter 2023, an increase of $574,000 or 3.8 percent, as compared to noninterest expense of $15.3 million for the third quarter 2022 and an increase of $420,000 compared to noninterest expense of $15.5 million for the second quarter of 2023. The increase in both periods was attributed to higher professional and legal fees, higher variable compensation accruals and higher other expense. Noninterest expense was $46.2 million for the nine months ended September 30, 2023, a decrease of $38,000 or 0.08 percent, as compared to noninterest expense of $46.2 million for the nine months ended September 30, 2022. The decrease was attributed to lower professional and legal fees, lower impaired loan carrying costs and lower other expense, offset by higher variable compensation accruals. Professional and legal fees and other expense were higher in the prior year as a result of costs associated with corporate matters. Previously expensed impaired loan carrying costs were recovered in the current year, contributing to the decrease year over year.

 

Income tax expense for the quarter ended September 30, 2023 was $1.5 million compared to $2.1 million for the same period in 2022 and $1.9 million in the quarter ended June 30, 2023. The effective tax rate for the three month periods ended September 30, 2023, September 30, 2022 and June 30, 2023 was 20.2 percent, 22.3 and 22.7 percent, respectively. Income tax expense for the nine months ended September 30, 2023 was $5.4 million compared to $3.4 million for the nine months ended September 30, 2022. The effective tax rate for the nine months ended September 30, 2023 and September 30, 2022 was 21.8 and 21.7, respectively.

 

Capital

 

Shareholders’ equity totaled $183.4 million at September 30, 2023, an increase of $6.0 million from $177.3 million at December 31, 2022. The increase was primarily attributable to net income of $19.5 million, partially offset by dividends paid of $4.7 million for the nine months ended September 30, 2023 and the adoption of CECL of $2.1 million. Other changes are related to accumulated other comprehensive loss and issuance of treasury stock.

 

Book value per share was $19.06 and $18.51 at September 30, 2023 and December 31, 2022, respectively. Tangible book value per share and tangible book value per share without accumulated other comprehensive loss (1) increased to $18.82 per share and $23.28 per share, respectively, at September 30, 2023 from $18.27 per share and $21.90 per share, respectively, at December 31, 2022, primarily the result of changes in shareholders’ equity discussed above. The Corporation’s common equity tier 1 capital ratio was 12.53 percent at September 30, 2023, an increase from 12.04 percent at December 31, 2022. At September 30, 2023, all capital ratios applicable to the Bank were above regulatory minimum levels and the Bank met the “well-capitalized” criteria under current bank regulatory guidelines. (Note that the regulatory “well-capitalized” definition is not applicable to small bank holding companies such as the Corporation).

 

(1) Tangible book value per share and tangible book value per share without accumulated other comprehensive loss are non-GAAP financial measures. Please see Financial Highlights for disclosure and reconciliation of non-GAAP financial measures.

 

3 

 

 

Liquidity Risk Management

 

The Bank maintains a well-diversified deposit base and has a comparatively low level of uninsured deposits. At September 30, 2023, 83% of the Bank’s deposits were estimated to be FDIC-insured, and an additional 7% of deposits were fully collateralized.

 

The overall deposit and liquidity position of the Bank and the Corporation remain positive, with overall deposits exceeding the level at December 31, 2019, the start of the pandemic, by $315.8 million or 19.9 percent.

 

Although the Bank had not utilized the Federal Reserve’s Bank Term Funding Facility as of September 30, 2023, the program has attractive features, such as being able to borrow based on the par values (rather than market values) of a bank’s investment securities that are pledged as collateral. For this reason, the program would be considered among the Bank’s other wholesale borrowing options if additional liquidity was needed.

 

The Bank is a member of the IntraFi Network, which provides reciprocal deposit alternatives allowing our clients to have the benefit of additional FDIC insurance coverage, and assisting the Bank in the management of its liquidity needs.

 

Dividend Declared

 

On October 10, 2023, the Board of Directors of the Corporation declared a regular quarterly cash dividend of $0.17 per share, payable on November 14, 2023 to common shareholders of record at the close of business on October 24, 2023.

 

Business Lines Update

 

Consumer Banking efforts in the third quarter of 2023 continued to focus on assisting clients with their financial needs, including an attractive 0% credit card balance transfer offer to help clients manage their finances. We also concluded a successful vehicle financing campaign to help clients manage their vehicle purchases. In addition, mortgage events were held throughout our Financial Center network to help clients with their mortgage-related questions, focusing on educating buyers on their options in the current environment.

 

The Leader Heights Financial Center was updated and is now the third Connections Center in the York Area. Connections Centers offer the PeoplesBank Vision Board Experience on a large touchscreen, and help facilitate discussions regarding a client’s goals and aspirations, focusing on how PeoplesBank can help them achieve their dreams and live confidently. A concierge desk also helps clients become more familiar with our digital capabilities, and casual meeting spaces include booth seating and a comfortable conversation room to foster discussions.

 

Our Business Banking team continued to help clients through personalized outreach. As part of the outreach to ensure the PeoplesBank team is meeting the needs of local businesses, a variety of promotions focused on specific needs of different business segments were made available. In addition, the Business Banking team participated in several events to help small- and medium-sized businesses navigate topics such as SBA funding and healthcare considerations. An annual Voice of Client Survey was also conducted, the results of which will help the bank continue to focus on the topics and needs of our business clients.

 

PeoplesBank Wealth Management continued to offer the expertise of its team to clients looking for perspectives on the current economic environment. In addition to sharing economic data and information with its clients, the PeoplesBank Wealth Management team held several Roundtable Discussion Events throughout the quarter.

 

To thank our local community, PeoplesBank sponsored the York State Fair, offering attendees entrance to the fair for just $1. PeoplesBank also hosted a client-appreciation event at Wellspan Park on August 31, offering clients free tickets to see the York Revolution. Readers of the York Daily Record in turn voted PeoplesBank 2023 Best Bank in York and Hanover.

 

4 

 

 

About Codorus Valley Bancorp, Inc.

 

Codorus Valley Bancorp, Inc. is the largest independent financial services holding company headquartered in York, Pennsylvania. Codorus Valley primarily operates through its financial services subsidiary, PeoplesBank, A Codorus Valley Company. PeoplesBank offers a full range of consumer, business, wealth management, and mortgage services at financial centers located in communities throughout South Central Pennsylvania and Central Maryland. Codorus Valley Bancorp, Inc.’s Common Stock is listed on the NASDAQ Global Market under the symbol “CVLY”.

 

Cautionary Note Regarding Forward-looking Statements

 

This Press Release may contain forward-looking statements by Codorus Valley Bancorp, Inc. (the “Corporation”). Forward-looking statements may include information concerning the financial condition, results of operations and business of the Corporation and its subsidiaries and include, but are not limited to, statements regarding expectations or predictions of future financial or business performance or conditions relating to the Corporation and its operations. These forward-looking statements include statements with respect to the Corporation’s beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, that are subject to significant risks and uncertainties, and are subject to change based on various factors (some of which are beyond the Corporation’s control). Forward-looking statements may also include, but are not limited to, discussions of strategy, financial projections and estimates and their underlying assumptions, statements regarding plans, objectives, goals, expectations or consequences, and statements about future performance, expenses, operations, or products and services of the Corporation and its subsidiaries. Forward-looking statements can be identified by the use of words such as “may,” “should,” “will,” “could,” “believes,” “plans,” “expects,” “estimates,” “intends,” “anticipates,” “strives to,” “seeks,” “intends,” “anticipates” or similar words or expressions.

 

Forward-looking statements are not historical facts, nor should they be relied upon as providing assurance of future performance. Forward-looking statements are based on current beliefs, expectations and assumptions regarding the future of the Corporation’s business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of the Corporation’s control. Actual results could differ materially from those indicated in forward-looking statements due to, among others, the following factors: changes in market interest rates and the persistence of the current inflationary environment in the U.S. and our market areas and the potential for an economic downturn or recession; the effects of financial challenges at other banking institutions that could lead to depositor concerns that spread within the banking industry causing disruptive deposit outflows and other destabilizing results; legislative and regulatory changes and the uncertain impact of new laws and regulations; monetary and fiscal policies of the federal government; the effects of changes in accounting policies and practices; ineffectiveness of the Corporation’s business strategy due to changes in the current or future market conditions; changes in deposit flows, the cost of funds, demand for loan products and the demand for financial services; the effects of the COVID-19 pandemic, including on the Corporation’s credit quality and operations as well as its impact on general economic conditions; competition; market volatility, market downturns, changes in consumer behavior and business closures; adverse changes in the quality or composition of the Corporation’s loan, investment and mortgage-backed securities portfolios, including from the effects of the current inflationary environment; geographic concentration of the Corporation’s business; deterioration of commercial real estate values; the adequacy of loan loss reserves and the Corporation’s transition to the Current Expected Credit Loss (CECL) method of reserving for losses in its loan portfolio; deterioration in the credit quality of borrowers; the Company’s ability to attract and retain key personnel; the impact of operational risks, including the risk of human error, failure or disruption of internal processes and systems, including of the Corporation’s information and other technology systems; uncertainty surrounding the transition from LIBOR to an alternate reference rate: failure or circumvention of our internal controls; the Corporation’s ability to keep pace with technological changes; breaches of security or failures of the Corporation to identify and adequately address cybersecurity and data breaches; changes in government regulation and supervision and the potential for negative consequences resulting from regulatory examinations, investigations and violations; the effects of adverse outcomes from claims and litigation; occurrence of natural or man-made disasters or calamities, including health emergencies, the spread of infectious diseases, epidemics or pandemics, an outbreak or escalation of hostilities or other geopolitical instabilities, the effects of climate change or extraordinary events beyond the Corporation’s control, and the Corporation’s ability to deal effectively with disruptions caused by the foregoing; and other economic, competitive, governmental and technological factors affecting the Corporation’s operations, markets, products, services and fees.

 

5 

 

 

For a discussion of certain risks and uncertainties that could affect the Corporation, please refer to the “Risk Factors” section of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022, and in its current and periodic reports that are, or will be, filed with the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website at www.sec.gov or in the Investor Relations section of the Corporation’s website at www.peoplesbanknet.com. The Corporation undertakes no obligation, other than as required by law, to update or revise any forward-looking statements to reflect new information, events occurring after the date of this press release or other circumstances.

 

Certain Accounting Matters

 

Accounting standards require the consideration of subsequent events occurring after the balance sheet date for matters that require adjustment to, or disclosure in, the consolidated financial statements. The review period for subsequent events extends up to and includes the filing date of a public company’s financial statements when filed with the SEC. Accordingly, the consolidated financial information in this announcement is subject to change.

 

The Corporation uses certain non-GAAP (Generally Accepted Accounting Principles) financial measures in this Press Release. The Corporation’s management believes that the supplemental non-GAAP information provided in this press release is utilized by market analysts and others to evaluate the Corporation’s financial condition and results of operations and, therefore, such information is useful to investors. These measures have limitations as analytical tools and should not be considered a substitute for analysis of results under GAAP. These non-GAAP financial measures are reconciled to the most comparable measures following the “Financial Highlights” section of this press release.

 

Questions or comments concerning this Press Release should be directed to:

 

Codorus Valley Bancorp, Inc.

Craig L. Kauffman Larry D. Pickett
President and CEO Chief Financial Officer
717-747-1501 717-747-1502
ckauffman@peoplesbanknet.com lpickett@peoplesbanknet.com

 

6 

 

 

CODORUS VALLEY BANCORP, INC.

Consolidated Balance Sheets (Unaudited)

 

   September 30,   December 31,   September 30, 
(Dollars in thousands, except share and per share data)  2023   2022   2022 
             
Assets               
Interest bearing deposits with banks  $28,858   $99,777   $201,024 
Cash and due from banks   22,449    20,662    21,772 
Total cash and cash equivalents   51,307    120,439    222,796 
Securities, available-for-sale, at fair value (amortized cost $391,694, net of allowance for credit losses of $0)   335,656    345,457    343,253 
Restricted investment in bank stocks, at cost   2,152    955    955 
Loans held for sale   1,103    154    863 
Loans (net of deferred fees of $3,718 - 2023 and $3,813 - 2022)   1,704,380    1,632,857    1,599,033 
Less-allowance for credit losses(1)   (21,449)   (20,736)   (22,232)
Net loans   1,682,931    1,612,121    1,576,801 
Premises and equipment, net   19,562    21,136    21,094 
Operating leases right-of-use assets   2,618    3,072    3,242 
Goodwill   2,301    2,301    2,301 
Other assets   92,962    89,417    87,100 
Total assets  $2,190,592   $2,195,052   $2,258,405 
Liabilities               
Deposits               
Noninterest bearing  $398,486   $463,853   $486,946 
Interest bearing   1,507,892    1,479,366    1,527,061 
Total deposits   1,906,378    1,943,219    2,014,007 
Short-term borrowings   39,099    11,605    13,251 
Long-term debt and junior subordinated debt   11,528    11,550    11,557 
Subordinated notes - face amount $31,000 (less discount and debt issuance cost of $175 at September 30, 2023 and $236 at December 31, 2022)   30,825    30,764    30,744 
Operating leases liabilities   2,726    3,204    3,381 
Allowance for credit losses on off-balance sheet credit exposures   2,212    0    0 
Other liabilities   14,461    17,410    17,126 
Total liabilities   2,007,229    2,017,752    2,090,066 
Shareholders’ equity               
Preferred stock, par value $2.50 per share; 1,000,000 shares authorized; no shares issued or outstanding   0    0    0 
Common stock, par value $2.50 per share; 30,000,000 shares authorized; shares issued: 9,883,660 at September 30, 2023 and December 31, 2022; and shares outstanding: 9,618,854 at September 30, 2023 and 9,581,230 at December 31, 2022   24,709    24,709    24,709 
Additional paid-in capital   142,525    141,896    141,929 
Retained earnings   64,816    52,146    45,648 
Accumulated other comprehensive loss   (42,869)   (34,764)   (36,499)
Treasury stock shares outstanding, at cost: 264,806 shares at September 30, 2023 and 302,430 at December 31, 2022   (5,818)   (6,687)   (7,448)
Total shareholders’ equity   183,363    177,300    168,339 
Total liabilities and shareholders’ equity  $2,190,592   $2,195,052   $2,258,405 

 

(1) Beginning January 1, 2023, calculation is based on current expected loss methodology. Prior to January 1, 2023, calculation was based on incurred loss methodology.

 

 

 

 

CODORUS VALLEY BANCORP, INC.

Consolidated Statements of Income (Unaudited)

 

   Three months ended   Nine months ended 
   September 30,   June 30,   September 30,   September 30, 
(dollars in thousands, except per share data)  2023   2023   2022   2023   2022 
Interest income                         
Loans, including fees  $26,000   $24,803   $18,994   $73,837   $51,463 
Investment securities:                         
Taxable   2,562    2,492    2,069    7,511    5,081 
Tax-exempt   106    99    113    306    317 
Dividends   44    51    11    112    30 
Other   361    545    1,486    1,590    2,362 
Total interest income   29,073    27,990    22,673    83,356    59,253 
Interest expense                         
Deposits   8,740    7,077    1,807    20,954    3,879 
Federal funds purchased and other short-term borrowings   377    437    13    852    35 
Long-term debt and junior subordinated debt   215    208    133    617    441 
Subordinated notes   369    369    369    1,107    1,107 
 Total interest expense   9,701    8,091    2,322    23,530    5,462 
 Net interest income   19,372    19,899    20,351    59,826    53,791 
Provision for (recovery of) credit losses - loans (1)   128    (31)   (567)   589    3,434 
Provision for (recovery of) credit losses - unfunded commitments (1)   123    (46)   0    323    0 
Net interest income after provision for (recovery of) provision credit losses   19,121    19,976    20,918    58,914    50,357 
Noninterest income                         
Trust and investment services fees   1,293    1,275    1,141    3,770    3,440 
Income from mutual fund, annuity and insurance sales   315    323    283    1,007    958 
Service charges on deposit accounts   1,598    1,541    1,395    4,624    4,045 
Income from bank owned life insurance   396    329    322    1,047    941 
Other income   549    587    528    1,998    1,479 
Gain (loss) on sale of loans held for sale   42    (4)   42    48    621 
(Loss) gain on sale of assets held for sale   0    0    (100)   118    (100)
Loss on sales of securities   0    0    0    (388)   0 
Total noninterest income   4,193    4,051    3,611    12,224    11,384 
Noninterest expense                         
Personnel   9,412    9,489    9,243    27,943    26,124 
Occupancy of premises, net   853    880    943    2,711    2,844 
Furniture and equipment   798    878    852    2,514    2,551 
Professional and legal   549    379    367    1,395    2,281 
Marketing   347    387    507    1,010    1,340 
FDIC insurance   245    244    190    739    617 
Debit card processing   546    432    455    1,456    1,222 
Charitable donations   62    899    56    993    971 
External data processing   974    1,043    981    3,027    2,820 
Impaired loan carrying costs (recovery)   107    (238)   217    (229)   512 
Other   2,003    1,083    1,511    4,624    4,939 
Total noninterest expense   15,896    15,476    15,322    46,183    46,221 
 Income before income taxes   7,418    8,551    9,207    24,955    15,520 
Provision for income taxes   1,501    1,940    2,053    5,435    3,360 
Net income  $5,917   $6,611   $7,154   $19,520   $12,160 
Net income per share, basic   0.62    0.69    0.75    2.03    1.28 
Net income per share, diluted   0.61    0.69    0.75    2.03    1.27 

 

(1) Beginning January 1, 2023, calculation is based on current expected loss methodology. Prior to January 1, 2023, calculation was based on incurred loss methodology.

 

 

 

 

Codorus Valley Bancorp, Inc.

Financial Highlights

 

Selected Financial Data (Unaudited)

 

   Quarterly   Year-to-Date 
   2023   2023   2023   2022   2022   September 30, 
   3rd Qtr   2nd Qtr   1st Qtr   4th Qtr   3rd Qtr   2023   2022 
Earnings and Per Share Data (1)                            
(in thousands, except per share data)                            
Net income  $5,917   $6,611   $6,992   $7,932   $7,154   $19,520   $12,160 
Basic earnings per share  $0.62   $0.69   $0.73   $0.83   $0.75   $2.03   $1.28 
Diluted earnings per share  $0.61   $0.69   $0.73   $0.83   $0.75   $2.03   $1.27 
Cash dividends paid per share  $0.17   $0.16   $0.16   $0.15   $0.15   $0.49   $0.45 
Book value per share  $19.06   $19.34   $19.28   $18.51   $17.63   $19.06   $17.63 
Tangible book value per share (2)  $18.82   $19.10   $19.04   $18.27   $17.39   $18.82   $17.39 
Tangible book value per share without AOCI (8)  $23.28   $22.81   $22.26   $21.90   $21.21   $23.28   $21.21 
Average shares outstanding   9,616    9,600    9,585    9,566    9,545    9,601    9,521 
Average diluted shares outstanding   9,631    9,610    9,612    9,589    9,568    9,618    9,550 
                                    
Performance Ratios (%)                                   
Return on average assets (3)   1.08    1.22    1.29    1.43    1.25    1.20    0.69 
Return on average equity (3)   12.64    14.17    15.45    18.50    15.93    14.07    8.78 
Net interest margin (4)   3.64    3.81    4.00    3.98    3.66    3.81    3.21 
Efficiency ratio (5)   66.95    64.19    59.05    60.87    63.51    63.32    70.44 
Net overhead ratio (3)(6)   2.14    2.10    1.93    2.13    2.04    2.06    1.99 
                                    
Asset Quality Ratios (%)                                   
Net loan charge-offs to average loans (3)   -0.15    0.20    0.15    0.24    0.02    0.06    0.34 
Allowance for credit losses to total loans (7)   1.26    1.23    1.31    1.27    1.39    1.26    1.39 
Nonperforming assets to total loans and foreclosed real estate   0.47    0.70    0.55    0.70    0.99    0.47    0.99 
                                    
Capital Ratios (%)                                   
Average equity to average assets   8.55    8.58    8.38    7.75    7.84    8.50    7.90 
Tier 1 leverage capital ratio   10.50    10.38    10.20    9.77    9.18    10.50    9.18 
Common equity Tier 1 capital ratio   12.52    12.37    12.19    12.04    11.80    12.53    11.80 
Tier 1 risk-based capital ratio   13.08    12.94    12.76    12.61    12.38    13.09    12.38 
Total risk-based capital ratio   16.01    15.85    15.75    15.57    15.42    16.02    15.42 

 

(1) per share amounts and shares outstanding were adjusted for stock dividends

(2) non-GAAP measure - book value less goodwill and core deposit intangibles; see reconciliation below

(3) annualized for the quarterly periods presented

(4) net interest income (tax-equivalent) as a percentage of average interest earning assets

(5) noninterest expense as a percentage of net interest income and noninterest income (tax-equivalent)

(6) noninterest expense less noninterest income as a percentage of average assets

(7) excludes loans held for sale 

(8) non-GAAP measure - book value less accumulated other comprehensive income; see reconciliation below

 

Reconciliation of Non-GAAP Financial Measures (Tangible Book Value and Tangible Book Value without AOCI)

 

(in thousands, except per share data)  2023   2023   2023   2022   2022 
   3rd Qtr   2nd Qtr   1st Qtr   4th Qtr   3rd Qtr 
Total Shareholders’ Equity  $183,363   $185,869   $184,946   $177,300   $168,339 
Less: Goodwill and Other Intangible Assets   (2,302)   (2,302)   (2,303)   (2,303)   (2,303)
Tangible Shareholders’ Equity  $181,061   $183,567   $182,643   $174,997   $166,036 
Less: Accumulated Other Comprehensive Income   (42,869)   (35,650)   (30,941)   (34,764)   (36,499)
Tangible Shareholders’ Equity without AOCI  $223,930   $219,217   $213,584   $209,761   $202,535 
                          
Common Shares Outstanding   9,619    9,611    9,594    9,581    9,548 
Book Value Per Share  $19.06   $19.34   $19.28   $18.51   $17.63 
Effect of Intangible Assets   (0.24)   (0.24)   (0.24)   (0.24)   (0.24)
Tangible Book Value Per Share  $18.82   $19.10   $19.04   $18.27   $17.39 
                          
Book Value Per Share  $19.06   $19.34   $19.28   $18.51   $17.63 
Effect of Intangible Assets and AOCI   4.22    3.47    2.98    3.39    3.58 
Tangible Book Value Per Share without AOCI  $23.28   $22.81   $22.26   $21.90   $21.21 

 

This report contains certain financial information determined by methods other than in accordance with GAAP. This non-GAAP disclosure has limitation as an analytical tool and should not be considered in isolation or as a substitute for the analysis of the Corporation’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Our management uses this non-GAAP measure in its analysis of our performance because it believes this measure is material and will be used as a measure of our performance by investors.

 

 

 

 

ANALYSIS OF NET INTEREST INCOME
Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)

 

   Three Months Ended 
   September 30, 2023   June 30, 2023   September 30, 2022 
(Dollars in thousands)  Average
Balance		   Taxable-Equivalent Interest   Taxable-Equivalent Rate   Average
Balance		   Taxable-Equivalent Interest   Taxable-Equivalent Rate   Average
Balance		   Taxable-Equivalent Interest   Taxable-Equivalent Rate 
                                     
Assets                                             
Interest bearing deposits with banks  $26,772   $361    5.35%  $43,006   $545    5.08%  $260,302   $1,486    2.26%
Investment securities:                                             
Taxable   371,603    2,606    2.78    370,345    2,543    2.75    347,656    2,080    2.37 
Tax-exempt   22,523    128    2.25    22,581    121    2.15    26,414    142    2.13 
Total investment securities   394,126    2,734    2.75    392,926    2,664    2.72    374,070    2,222    2.36 
Loans:                                             
Taxable (1)   1,677,117    25,829    6.11    1,644,775    24,630    6.01    1,556,060    18,817    4.80 
Tax-exempt   21,721    213    3.89    22,292    214    3.85    23,057    222    3.82 
Total loans   1,698,838    26,042    6.08    1,667,067    24,844    5.98    1,579,117    19,039    4.78 
Total earning assets   2,119,736    29,137    5.45    2,102,999    28,053    5.35    2,213,489    22,747    4.08 
Other assets (2)   71,008              72,796              78,942           
Total assets  $2,190,744             $2,175,795             $2,292,431           
Liabilities and Shareholders’ Equity                                             
Deposits:                                             
Interest bearing demand  $917,983    5,542    2.40%  $899,474    4,612    2.06%  $982,174    1,238    0.50%
Savings   146,038    11    0.03    151,143    12    0.03    166,275    13    0.03 
Time   435,439    3,187    2.90    411,309    2,453    2.39    402,576    556    0.55 
Total interest bearing deposits   1,499,460    8,740    2.31    1,461,926    7,077    1.94    1,551,025    1,807    0.46 
Short-term borrowings   38,726    377    3.86    44,139    437    3.97    13,255    13    0.39 
Long-term debt and junior subordinated debt   14,356    215    5.94    14,520    208    5.75    15,047    133    3.51 
Subordinated notes   30,818    369    4.75    30,798    369    4.81    30,737    369    4.76 
 Total interest bearing liabilities   1,583,360    9,701    2.43    1,551,383    8,091    2.09    1,610,064    2,322    0.57 
Noninterest bearing deposits   401,734              418,504              489,589           
Other liabilities   18,439              19,277              12,992           
Shareholders’ equity   187,211              186,631              179,786           
Total liabilities and shareholders’ equity  $2,190,744             $2,175,795             $2,292,431           
Net interest income (tax equivalent basis)       $19,436             $19,962             $20,425      
Net interest margin (3)             3.64%             3.81%             3.66%
Tax equivalent adjustment        (64)             (63)             (74)     
Net interest income       $19,372             $19,899             $20,351      

 

(1) Average balances include nonaccrual loans.

(2) Average balances include bank owned life insurance and foreclosed real estate.

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

 

 

 

 

ANALYSIS OF NET INTEREST INCOME
Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)

 

   Nine Months Ended 
   September 30, 2023   September 30, 2022 
(Dollars in thousands)  Average
Balance		   Taxable-Equivalent Interest   Taxable-Equivalent Rate   Average
Balance		   Taxable-Equivalent Interest   Taxable-Equivalent Rate 
                         
Assets                              
Interest bearing deposits with banks  $43,232   $1,590    4.92%  $357,588   $2,362    0.88%
Investment securities:                              
Taxable   370,376    7,623    2.75    308,214    5,111    2.22 
Tax-exempt   22,877    374    2.19    25,526    398    2.08 
Total investment securities   393,253    7,997    2.72    333,740    5,509    2.21 
Loans:                              
Taxable (1)   1,645,243    73,319    5.96    1,543,502    51,059    4.42 
Tax-exempt   22,200    644    3.88    16,640    509    4.09 
Total loans   1,667,443    73,963    5.93    1,560,142    51,568    4.42 
Total earning assets   2,103,928    83,550    5.31    2,251,470    59,439    3.53 
Other assets (2)   71,693              84,516           
Total assets  $2,175,621             $2,335,986           
Liabilities and Shareholders’ Equity                              
Deposits:                              
Interest bearing demand  $906,847    13,615    2.01%  $986,805   $1,999    0.27%
Savings   152,363    35    0.03    162,538    37    0.03 
Time   413,646    7,304    2.36    425,490    1,843    0.58 
Total interest bearing deposits   1,472,856    20,954    1.90    1,574,833    3,879    0.33 
Short-term borrowings   32,014    852    3.56    11,780    35    0.40 
Long-term debt   14,521    617    5.68    20,049    441    2.94 
Subordinated debentures   30,798    1,107    4.81    30,717    1,107    4.82 
Total interest bearing liabilities   1,550,189    23,530    2.03    1,637,379    5,462    0.45 
Noninterest bearing deposits   421,397              501,243           
Other liabilities   19,064              12,766           
Shareholders’ equity   184,971              184,598           
Total liabilities and shareholders’ equity  $2,175,621             $2,335,986           
Net interest income (tax equivalent basis)       $60,020             $53,977      
Net interest margin (3)             3.81%             3.21%
Tax equivalent adjustment        (194)             (186)     
Net interest income       $59,826             $53,791      

 

(1) Average balances include nonaccrual loans.

(2) Average balances include bank owned life insurance and foreclosed real estate.

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