Codorus Valley Bancorp, Inc. (Codorus Valley, or the Corporation)
(NASDAQ: CVLY), parent company of PeoplesBank, A Codorus Valley
Company (PeoplesBank), collectively referred to as the Company,
today announced net income of $3.6 million or $0.37 per share basic
and diluted, for the quarter ended September 30, 2020, as compared
to net income of $5.2 million or $0.53 per share basic and $0.52
per share diluted, for the quarter ended September 30, 2019. For
the first nine months of 2020, net income was $3.7 million or $0.38
per share basic and diluted, compared to $14.2 million or $1.43 per
share basic and $1.42 per share diluted, for the first nine months
of 2019.
“Earnings for the third quarter 2020 were
adversely affected by an increase in the provision for loan and
lease losses associated with the COVID-19 pandemic and a lower net
interest margin due to actions earlier this year by the Federal
Reserve Board of Governors,” stated Larry J. Miller, Chairman,
President/CEO. “Non-interest income has increased by 22% over last
year, predominately due to higher volumes of mortgages which are
being originated and then sold to the secondary market. All
Financial Centers and retirement community office drive-thru and
lobbies are open to serve clients with additional safety measures,”
added Miller.
The Corporation’s net interest income for the
three months ended September 30, 2020 was $15.0 million, a decrease
of $1.0 million or 6.4 percent when compared to the net interest
income of $16.0 million for the same period in 2019. For the nine
months ended September 30, 2020, net interest income was $45.2
million, reflecting a decrease of $2.5 million or 5.3 percent
compared to $47.8 million for the nine months ended September 30,
2019. The Corporation’s tax-equivalent net interest margin (NIM)
was 3.17 percent for the nine months ended September 30, 2020,
compared to the tax-equivalent NIM of 3.68 percent for the same
period in 2019. A major component of the reduction in the net
interest margin were the actions taken by the Federal Reserve Board
lowering benchmark interest rates 150 basis points during this
period.
The provision for loan losses for the three
months ended September 30, 2020 was $1.9 million compared to no
provision for the same period in 2019. For the nine months ended
September 30, 2020, the provision for loan losses was $13.9 million
compared to $2.2 million for the first nine months of 2019. The
increased provision expense was attributed primarily to the partial
charge off arising from four distinct commercial lending
relationships and the related impact to the historical loss portion
of the allowance for loan losses. In addition, changes in the
external environment created by COVID-19 caused Management to
increase the qualitative factors for certain loan segments in the
allowance for loan loss analysis, which resulted in additional
provision for loan losses in the quarter. The Corporation’s
nonperforming assets ratio was 1.29 percent as of September 30,
2020, a decrease from the nonperforming assets ratio as of
September 30, 2019 of 2.26 percent. As of September 30, 2020,
management believes the allowance for loan losses is adequate,
however, changing economic conditions associated with the COVID-19
pandemic may require future adjustments.
Noninterest income for the third quarter 2020
was $4.2 million, an increase of $771,000 or 22.2 percent, as
compared to noninterest income of $3.5 million for the third
quarter 2019 primarily due to gains on the sale of mortgage
loans. For the first nine months of 2020, noninterest
income was $11.2 million, an increase of $864,000 or 8.4 percent,
as compared to noninterest income of $10.3 million for the first
nine months of 2019.
Noninterest expense was $12.6 million for the
third quarter 2020, a decrease of $222,000, or 1.7 percent, as
compared to noninterest expense of $12.8 million for the third
quarter 2019. For the first nine months of 2020,
noninterest expense totaled $38.1 million, an increase of $162,000
or 0.4 percent compared to $37.9 million for the first nine months
of 2019.
Income tax expense for the quarter ended
September 30, 2020 was $1.0 million compared to $1.4 million for
the same period in 2019. Income tax expense for the nine months
ended September 30, 2020 was $772,000 compared to $3.8 million for
the same period in 2019.
Dividend Declared
As recently announced, on October 13, 2020, the
Board of Directors of the Corporation declared a regular quarterly
cash dividend of $0.10 per share, payable on November 10, 2020 to
shareholders of record at the close of business on October 27,
2020. The payment of this $0.10 per share cash dividend is equal to
the per share cash dividend paid in the immediate prior quarter,
and a six-cents per share decrease from the $0.16 per share cash
dividend that was paid for the six quarters prior,
respectively.
COVID – 19 Pandemic
During the third quarter, many businesses and
schools found paths to re-open and operate under a “new normal”
while following state and national guidelines to mitigate the
spread of the virus. COVID-19 cases in the Company’s Pennsylvania
and Maryland markets were relatively steady throughout the third
quarter.
The PeoplesBank Crisis Management Team continues
to monitor the situation and is meeting bi-weekly to manage the
changing dynamics of COVID-19.
In addition to the virus, social unrest has had
an occasional impact in some of the Company’s local urban markets.
This has precipitated the need to reinforce security protocols and
asset management practices.
Associates
Approximately 40 percent of the Company’s
associates continue to work off-premise. A phased approach and a
comprehensive plan to safely return associates working remotely has
been developed, and will be implemented as the number of COVID-19
cases decline. At the time of this release, two client-facing
associates have tested positive for COVID-19 since the start of the
pandemic. A detailed protocol for safeguarding the safety of
associates and clients has been followed, including notifying
clients who may have come into contact with an associate who has
tested positive.
Re-Opening
By late September, the final five Financial
Center lobbies re-opened. At the time of this release, all
Financial Centers are operating with normal drive-thru hours and
modified lobby hours. Additional lobby protocols including the use
of a lobby manager to screen and limit the number of clients within
the lobby continue.
All Retirement Community Office lobbies also remain open by
appointment only with several modifications to ensure the safety of
clients and associates. Three Loan Production Offices (Hanover,
Centerville, and Bel Air) remain closed.
Client Hardship
PeoplesBank continues to responsibly and
prudently extend credit to qualified borrowers. As of September
30th, PeoplesBank has processed approximately 1,329 SBA Paycheck
Protection Program (PPP) loans totaling $181.9 million. The
majority of these loans (83 percent) were supporting small
businesses with loan amounts below $150,000. PeoplesBank offered
several free PPP Forgiveness webinars in the third quarter tailored
specifically for PPP borrowers to provide an overview of the PPP
forgiveness process.
Other News
The Company is finalizing the rollout of phase one of a new
commercial loan origination system in the fourth quarter. This new
system will also serve as the backbone for PeoplesBank’s
companywide CRM (Customer Relationship Management) system in the
future.
The Mortgage department reached its annual 2020 performance
goals during the third quarter with a record-breaking number of
mortgage refinances. The recent implementation of e-signatures and
the ability to upload documents online has made the mortgage
process seamless for clients and has increased staff
productivity.
The Company
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.
Forward-looking Statements
Codorus Valley Bancorp, Inc. has made
forward-looking statements in this Press Release. 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 this Press Release,
the Corporation is making forward-looking statements. Note that
many factors 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 in
this Press Release. Those factors include, but are not limited to:
the recent and continuing coronavirus (COVID-19) pandemic which
poses risks and may harm the Corporation’s business and results of
operations in future quarters, credit risk, changes in market
interest rates, inability to achieve merger-related synergies,
competition, economic downturn or recession, and government
regulation and supervision. The Corporation provides greater detail
regarding these as well as other factors in its 2019 Form 10-K and
2020 Form 10-Qs, including Risk Factors sections of those reports,
and in its subsequent SEC filings. The Corporation undertakes no
obligation to update or revise any forward-looking statements.
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 including the filing date of a public
company’s financial statements when filed with the Securities and
Exchange Commission. Accordingly, the consolidated financial
information in this announcement is subject to change.
Questions or comments concerning this
Press Release should be directed
to:
Codorus Valley Bancorp, Inc.Larry J.
Miller Chairman, President and
CEO717-747-1500 lmiller@peoplesbanknet.com |
Larry D. Pickett,
CPATreasurer 717-747-1502lpickett@peoplesbanknet.com |
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Codorus Valley Bancorp, Inc. |
Financial Highlights |
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of Income (Unaudited) |
(in thousands of dollars, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Nine months ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
Interest income |
|
|
$ |
18,411 |
|
|
$ |
21,466 |
|
|
$ |
57,438 |
|
|
$ |
63,877 |
|
Interest expense |
|
|
|
3,430 |
|
|
|
5,453 |
|
|
|
12,190 |
|
|
|
16,090 |
|
Net interest income |
|
|
|
14,981 |
|
|
|
16,013 |
|
|
|
45,248 |
|
|
|
47,787 |
|
Provision for loan losses |
|
|
|
1,930 |
|
|
|
0 |
|
|
|
13,915 |
|
|
|
2,250 |
|
Noninterest income |
|
|
|
4,244 |
|
|
|
3,473 |
|
|
|
11,202 |
|
|
|
10,338 |
|
Noninterest expense |
|
|
|
12,629 |
|
|
|
12,851 |
|
|
|
38,078 |
|
|
|
37,916 |
|
Income before income taxes |
|
|
|
4,666 |
|
|
|
6,635 |
|
|
|
4,457 |
|
|
|
17,959 |
|
Provision for income taxes |
|
|
|
1,042 |
|
|
|
1,432 |
|
|
|
772 |
|
|
|
3,806 |
|
Net income |
|
|
$ |
3,624 |
|
|
$ |
5,203 |
|
|
$ |
3,685 |
|
|
$ |
14,153 |
|
Basic earnings per share |
|
|
$ |
0.37 |
|
|
$ |
0.53 |
|
|
$ |
0.38 |
|
|
$ |
1.43 |
|
Diluted earnings per share |
|
|
$ |
0.37 |
|
|
$ |
0.52 |
|
|
$ |
0.38 |
|
|
$ |
1.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of Financial Condition
(Unaudited) |
(in thousands of dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
December 31, |
September 30, |
|
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2019 |
|
|
|
Cash and short term investments |
|
|
$ |
241,509 |
|
|
$ |
131,591 |
|
|
$ |
127,346 |
|
|
|
Investment securities |
|
|
|
200,389 |
|
|
|
164,226 |
|
|
|
167,469 |
|
|
|
Loans |
|
|
|
1,588,828 |
|
|
|
1,516,938 |
|
|
|
1,500,391 |
|
|
|
Allowance for loan losses |
|
|
|
(20,909 |
) |
|
|
(21,066 |
) |
|
|
(21,164 |
) |
|
|
Net loans |
|
|
|
1,567,919 |
|
|
|
1,495,872 |
|
|
|
1,479,227 |
|
|
|
Premises and equipment, net |
|
|
|
25,785 |
|
|
|
25,967 |
|
|
|
26,782 |
|
|
|
Operating leases right-of-use assets |
|
|
|
2,534 |
|
|
|
3,021 |
|
|
|
2,408 |
|
|
|
Goodwill |
|
|
|
2,301 |
|
|
|
2,301 |
|
|
|
2,301 |
|
|
|
Other assets |
|
|
|
68,534 |
|
|
|
63,567 |
|
|
|
63,863 |
|
|
|
Total assets |
|
|
$ |
2,108,971 |
|
|
$ |
1,886,545 |
|
|
$ |
1,869,396 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
$ |
1,845,873 |
|
|
$ |
1,590,564 |
|
|
$ |
1,560,024 |
|
|
|
Borrowed funds |
|
|
|
55,922 |
|
|
|
89,557 |
|
|
|
105,588 |
|
|
|
Operating leases liability |
|
|
|
2,669 |
|
|
|
3,184 |
|
|
|
2,579 |
|
|
|
Other liabilities |
|
|
|
10,246 |
|
|
|
12,072 |
|
|
|
11,832 |
|
|
|
Shareholders' equity |
|
|
|
194,261 |
|
|
|
191,168 |
|
|
|
189,373 |
|
|
|
Total liabilities and shareholders' equity |
|
$ |
2,108,971 |
|
|
$ |
1,886,545 |
|
|
$ |
1,869,396 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Codorus Valley Bancorp, Inc. |
Financial Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Financial Data (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly |
|
Year-to-Date |
|
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
|
2019 |
|
|
|
2019 |
|
|
September 30, |
|
|
3rd Qtr |
2nd Qtr |
1st Qtr |
|
4th Qtr |
|
3rd Qtr |
|
|
2020 |
|
|
|
2019 |
|
Earnings and Per Share Data (1) |
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
3,624 |
|
$ |
3,050 |
|
$ |
(2,989 |
) |
|
$ |
4,494 |
|
|
$ |
5,203 |
|
|
$ |
3,685 |
|
|
$ |
14,153 |
|
Basic earnings (loss) per share |
|
$ |
0.37 |
|
$ |
0.31 |
|
$ |
(0.31 |
) |
|
$ |
0.46 |
|
|
$ |
0.53 |
|
|
$ |
0.38 |
|
|
$ |
1.43 |
|
Diluted earnings (loss) per share |
|
$ |
0.37 |
|
$ |
0.31 |
|
$ |
(0.31 |
) |
|
$ |
0.46 |
|
|
$ |
0.52 |
|
|
$ |
0.38 |
|
|
$ |
1.42 |
|
Cash dividends paid per share |
|
$ |
0.100 |
|
$ |
0.160 |
|
$ |
0.160 |
|
|
$ |
0.152 |
|
|
$ |
0.152 |
|
|
$ |
0.420 |
|
|
$ |
0.456 |
|
Tangible book value per share (2) |
|
$ |
19.60 |
|
$ |
19.36 |
|
$ |
19.18 |
|
|
$ |
19.36 |
|
|
$ |
19.10 |
|
|
$ |
19.60 |
|
|
$ |
19.10 |
|
Book value per share |
|
$ |
19.83 |
|
$ |
19.60 |
|
$ |
19.42 |
|
|
$ |
19.59 |
|
|
$ |
19.33 |
|
|
$ |
19.83 |
|
|
$ |
19.33 |
|
Average shares outstanding |
|
|
9,792 |
|
|
9,770 |
|
|
9,759 |
|
|
|
9,741 |
|
|
|
9,860 |
|
|
|
9,774 |
|
|
|
9,904 |
|
Average diluted shares outstanding |
|
|
9,814 |
|
|
9,794 |
|
|
9,813 |
|
|
|
9,803 |
|
|
|
9,923 |
|
|
|
9,803 |
|
|
|
9,971 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Ratios (%) |
|
|
|
|
|
|
|
|
|
|
|
|
Return (loss) on average assets (3) |
|
|
0.70 |
|
|
0.59 |
|
|
(0.63 |
) |
|
|
0.96 |
|
|
|
1.12 |
|
|
|
0.24 |
|
|
|
1.03 |
|
Return (loss) on average equity (3) |
|
|
7.47 |
|
|
6.37 |
|
|
(6.15 |
) |
|
|
9.43 |
|
|
|
10.98 |
|
|
|
2.54 |
|
|
|
10.17 |
|
Net interest margin (4) |
|
|
3.02 |
|
|
3.07 |
|
|
3.44 |
|
|
|
3.61 |
|
|
|
3.60 |
|
|
|
3.17 |
|
|
|
3.68 |
|
Efficiency ratio (5) |
|
|
65.27 |
|
|
65.52 |
|
|
70.42 |
|
|
|
69.50 |
|
|
|
65.48 |
|
|
|
67.07 |
|
|
|
64.72 |
|
Net overhead ratio (3)(6) |
|
|
1.61 |
|
|
1.68 |
|
|
2.09 |
|
|
|
2.18 |
|
|
|
2.01 |
|
|
|
1.78 |
|
|
|
2.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality Ratios (%) |
|
|
|
|
|
|
|
|
|
|
|
|
Net loan charge-offs to average loans (3) |
|
|
0.52 |
|
|
1.09 |
|
|
2.04 |
|
|
|
0.08 |
|
|
|
0.00 |
|
|
|
1.20 |
|
|
|
0.02 |
|
Allowance for loan losses to total loans (7) |
|
|
1.33 |
|
|
1.31 |
|
|
1.55 |
|
|
|
1.40 |
|
|
|
1.42 |
|
|
|
1.33 |
|
|
|
1.42 |
|
Nonperforming assets to total loans |
|
|
|
|
|
|
|
|
|
|
|
|
and foreclosed real estate |
|
|
1.29 |
|
|
1.31 |
|
|
1.97 |
|
|
|
1.72 |
|
|
|
2.26 |
|
|
|
1.29 |
|
|
|
2.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Ratios (%) |
|
|
|
|
|
|
|
|
|
|
|
|
Average equity to average assets |
|
|
9.31 |
|
|
9.30 |
|
|
10.23 |
|
|
|
10.17 |
|
|
|
10.16 |
|
|
|
9.59 |
|
|
|
10.11 |
|
Tier 1 leverage capital ratio |
|
|
9.51 |
|
|
9.50 |
|
|
10.18 |
|
|
|
10.55 |
|
|
|
10.50 |
|
|
|
9.51 |
|
|
|
10.50 |
|
Common equity Tier 1 capital ratio |
|
|
13.20 |
|
|
12.85 |
|
|
12.24 |
|
|
|
12.45 |
|
|
|
12.33 |
|
|
|
13.20 |
|
|
|
12.33 |
|
Tier 1 risk-based capital ratio |
|
|
13.90 |
|
|
13.55 |
|
|
12.91 |
|
|
|
13.11 |
|
|
|
13.00 |
|
|
|
13.90 |
|
|
|
13.00 |
|
Total risk-based capital ratio |
|
|
15.15 |
|
|
14.80 |
|
|
14.17 |
|
|
|
14.36 |
|
|
|
14.25 |
|
|
|
15.15 |
|
|
|
14.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) per share amounts and shares outstanding were adjusted for
stock dividends |
(2) book value less goodwill and core deposit intangibles |
(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 |
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|
|
|
Reconciliation of Non-GAAP Financial Measure (Tangible Book
Value) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per share data) |
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
|
2019 |
|
|
|
2019 |
|
|
|
|
|
|
|
3rd Qtr |
2nd Qtr |
1st Qtr |
|
4th Qtr |
|
3rd Qtr |
|
|
|
|
Total Shareholders' Equity |
|
$ |
194,261 |
|
$ |
191,835 |
|
$ |
189,596 |
|
|
$ |
191,168 |
|
|
$ |
189,373 |
|
|
|
|
|
Less: Preferred Stock |
|
|
0 |
|
|
0 |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
Less: Goodwill and Other Intangible Assets |
|
|
(2,309 |
) |
|
(2,310 |
) |
|
(2,311 |
) |
|
|
(2,312 |
) |
|
|
(2,313 |
) |
|
|
|
|
Tangible Shareholders' Equity |
|
$ |
191,952 |
|
$ |
189,525 |
|
$ |
187,285 |
|
|
$ |
188,856 |
|
|
$ |
187,060 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares Outstanding |
|
|
9,795 |
|
|
9,788 |
|
|
9,764 |
|
|
|
9,756 |
|
|
|
9,794 |
|
|
|
|
|
Book Value Per Share |
|
$ |
19.83 |
|
$ |
19.60 |
|
$ |
19.42 |
|
|
$ |
19.59 |
|
|
$ |
19.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book Value Per Share |
|
$ |
19.83 |
|
$ |
19.60 |
|
$ |
19.42 |
|
|
$ |
19.59 |
|
|
$ |
19.33 |
|
|
|
|
|
Effect of Intangible Assets |
|
|
(0.23 |
) |
|
(0.24 |
) |
|
(0.24 |
) |
|
|
(0.23 |
) |
|
|
(0.23 |
) |
|
|
|
|
Tangible Book Value Per Share |
|
$ |
19.60 |
|
$ |
19.36 |
|
$ |
19.18 |
|
|
$ |
19.36 |
|
|
$ |
19.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This report contains certain financial information determined by
methods other than in accordance with GAAP. This |
non-GAAP disclosure has limitations 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. |
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