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 $3.1 million or $0.31 per share basic
and diluted, for the quarter ended June 30, 2020, as compared to
net income of $4.9 million or $0.49 per share basic and diluted,
for the quarter ended June 30, 2019. For the first six months
of 2020, net income was $61,000 or $0.01 per share basic and
diluted, compared to $9.0 million or $0.90 per share basic and
diluted, for the first six months of 2019.
“Earnings for the second quarter 2020 were
adversely affected by an increase in the provision for loan and
lease losses associated with the COVID-19 pandemic and due to a
loan provision expense associated with commercial loan
relationships,” stated Larry J. Miller, Chairman,
President/CEO. “There has been considerable focus this
quarter on providing SBA guaranteed Paycheck Protection Program
(PPP) loans to 1,300 small and mid-size businesses, managing an
influx of mortgage applications, and in continuing to adjust
operations to safely re-open our financial centers,” added
Miller.
The Corporation’s net interest income for the
three months ended June 30, 2020 was $14.9 million, a decrease of
$1.3 million or 8.3 percent when compared to the net interest
income of $16.2 million for the same period in 2019. For the
six months ended June 30, 2020, net interest income was $30.3
million, reflecting a decrease of $1.5 million or 4.7 percent
compared to $31.8 million for the six months ended June 30,
2019. The Corporation’s tax-equivalent net interest margin
(NIM) was 3.25 percent for the first half of 2020, compared to the
tax-equivalent NIM of 3.72 percent for the same period in
2019. A major component of the reduction in the net interest
margin (27 basis points) were the actions taken by the Federal
Reserve Board lowering benchmark interest rates 150 basis points
during this period.
The provision for loan and lease losses for the
three months ended June 30, 2020 was $2.5 million compared to $1.2
million for the same period in 2019. For the six months ended
June 30, 2020, the provision for loan and lease losses was $12.0
million compared to $2.2 million for the first six months of
2019. The increased provision expense was attributed
primarily to the partial charge off arising from two distinct
commercial lending relationships. 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 and lease loss analysis, which resulted in
additional provision for loan losses in the quarter. The
Corporation’s nonperforming assets ratio was 1.31 percent as of
June 30, 2020, a decrease from the nonperforming assets ratio as of
June 30, 2019 of 1.44 percent. As of June 30, 2020, management
believes the Allowance for Loan and Lease Losses is adequate,
however, changing economic conditions associated with the COVID-19
pandemic may require future adjustments.
Noninterest income for the second quarter 2020
was $3.5 million, a decrease of $100,000 or 2.9 percent, as
compared to noninterest income of $3.6 million for the second
quarter 2019. For the first six months of 2020, noninterest
income was $7.0 million, an increase of $100,000 or 1.4 percent, as
compared to noninterest income of $6.9 million for the first six
months of 2019.
Noninterest expense was $12.1 million for the
second quarter 2020, a decrease of $400,000, or 3.0 percent, as
compared to noninterest expense of $12.5 million for the second
quarter 2019. For the first six months of 2020, noninterest
expense totaled $25.5 million, an increase of $400,000 or 1.5
percent compared to $25.1 million for the first six months of
2019.
Income tax expense for the quarter ended June
30, 2020 was $700,000 compared to $1.3 million for the same period
in 2019. Income tax benefit for the six months ended June 30,
2020 was $300,000 compared to income tax expense of $2.4 million
for the same period in 2019.
Dividend Declared
As recently announced, on July 14, 2020, the
Board of Directors of the Corporation declared a regular quarterly
cash dividend of $0.10 per share, payable on August 11, 2020 to
shareholders of record at the close of business on July 28,
2020. The payment of this $0.10 per share cash dividend is a
six-cents per share decrease from the $0.16 per share cash dividend
that was paid for the past six quarters, respectively.
COVID – 19 Pandemic
The coronavirus has affected nearly every aspect
of personal and business life over the last quarter. The Company
has needed to react quickly to changing guidelines from the CDC and
at the state levels. The changes in how the Company must conduct
its essential services to the community are continuing to evolve.
Through the second quarter, efforts to mitigate the spread of this
virus have been successful in both Pennsylvania and Maryland,
allowing a path for re-opening businesses.
In recent weeks, the nation has seen a
resurgence of hot spots resulting in some states tightening up
guidelines and issuing lockdowns. The impact on the Company’s
market area from the number of growing cases in other parts of the
country is still unknown, but is starting to show signs of
potential impact. Governor Wolf has recently announced a need
to create stricter guidelines and travel restrictions in
Pennsylvania in order to slow the spread of COVID-19 due to higher
infection rates in other states.
The PeoplesBank Crisis Management Team has been
monitoring the situation closely and is meeting weekly to manage
the changing dynamics of COVID-19.
AssociatesApproximately 40 percent of the
Company’s associates are continuing 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. On-going associate communication
and training related to staying healthy and safe during a pandemic
has been a priority. At the time of this release, one
associate has tested positive for COVID-19.
Re-OpeningA phased plan to re-open the majority
of Financial Centers was also implemented in the second quarter.
This involved developing and training associates on new lobby
protocols, installing new signage, removing upholstered furniture,
and adding plastic shields on the teller line.
The first eight financial centers re-opened with
lobby service on June 15th. The locations identified to open in the
first phase were based on transaction volumes, higher staffing
levels and the ability to serve clients across a geographic region.
By the end of June, nineteen financial centers and three Retirement
Community Office lobbies were open with several modifications to
ensure the safety of clients and associates. These include shorter
lobby hours, designated hours for seniors and clients at high risk,
a designated lobby manager to screen and limit the number of
clients in a lobby at a time, and additional cleaning protocols.
Five Financial Centers continue to offer drive-thru and by
appointment only hours, and four Retirement Community Offices and
three Loan Production Offices (Young Manor, Centerville, Bel Air)
remain closed.
Client HardshipIn addition to higher volume of
calls to our Client Care Center, financial hardship telephone lines
were set-up to assist clients with loan deferments, SBA loans, and
fee waivers. The Company continued to waive ATM foreign fees
throughout the entire second quarter for all clients.
PeoplesBank continues to responsibly and
prudently extend credit to qualified borrowers. In addition, we
were active participants in the SBA Paycheck Protection Program
(PPP). As of July 15th, PeoplesBank has processed
approximately 1,300 PPP loans totaling $180 million with projected
fees exceeding $6 million. The majority of these loans (83 percent)
were supporting small businesses with loan amounts below
$150,000.
Digital AdoptionIn mid-June, PeoplesBank began promoting video
call appointments to clients as another option for connecting with
a financial mentor. Associates who serve as financial mentors
participated in extensive training on how to conduct professional
and effective video calls with clients.
During this quarter, digital adoption continued to rise as
record numbers of clients utilized online banking and mobile
deposit features.
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 |
Larry D. Pickett, CPA |
Chairman, President and CEO |
Treasurer |
717-747-1500 |
717-747-1502 |
lmiller@peoplesbanknet.com |
lpickett@peoplesbanknet.com |
|
Codorus
Valley Bancorp, Inc. |
Financial
Highlights |
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Income (Unaudited) |
(in thousands of
dollars, except per share data) |
|
|
|
|
|
|
|
|
|
|
Three months
ended |
|
Six months
ended |
|
|
June 30, |
|
June 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Interest income |
$ |
18,838 |
|
|
$ |
21,535 |
|
|
$ |
39,027 |
|
|
$ |
42,411 |
|
Interest
expense |
|
3,938 |
|
|
|
5,292 |
|
|
|
8,760 |
|
|
|
10,637 |
|
Net interest income |
|
14,900 |
|
|
|
16,243 |
|
|
|
30,267 |
|
|
|
31,774 |
|
Provision
for loan losses |
|
2,550 |
|
|
|
1,200 |
|
|
|
11,985 |
|
|
|
2,250 |
|
Noninterest
income |
|
3,535 |
|
|
|
3,642 |
|
|
|
6,958 |
|
|
|
6,865 |
|
Noninterest
expense |
|
12,130 |
|
|
|
12,504 |
|
|
|
25,449 |
|
|
|
25,065 |
|
Income (loss) before income taxes |
|
3,755 |
|
|
|
6,181 |
|
|
|
(209 |
) |
|
|
11,324 |
|
Provision
(benefit) for income taxes |
|
705 |
|
|
|
1,322 |
|
|
|
(270 |
) |
|
|
2,374 |
|
Net income |
$ |
3,050 |
|
|
$ |
4,859 |
|
|
$ |
61 |
|
|
$ |
8,950 |
|
Basic
earnings per share |
$ |
0.31 |
|
|
$ |
0.49 |
|
|
$ |
0.01 |
|
|
$ |
0.90 |
|
Diluted
earnings per share |
$ |
0.31 |
|
|
$ |
0.49 |
|
|
$ |
0.01 |
|
|
$ |
0.90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Financial Condition (Unaudited) |
(in thousands of
dollars) |
|
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
June 30, |
|
|
|
|
2020 |
|
2019 |
|
2019 |
|
|
|
Cash and
short term investments |
$ |
215,361 |
|
|
$ |
131,591 |
|
|
$ |
126,580 |
|
|
|
|
Investment
securities |
|
162,308 |
|
|
|
164,226 |
|
|
|
158,465 |
|
|
|
|
Loans |
|
1,618,663 |
|
|
|
1,516,938 |
|
|
|
1,482,509 |
|
|
|
|
Allowance
for loan losses |
|
(21,038 |
) |
|
|
(21,066 |
) |
|
|
(21,174 |
) |
|
|
|
Net
loans |
|
1,597,625 |
|
|
|
1,495,872 |
|
|
|
1,461,335 |
|
|
|
|
Premises and
equipment, net |
|
26,316 |
|
|
|
25,967 |
|
|
|
26,977 |
|
|
|
|
Operating
leases right-of-use assets |
|
2,683 |
|
|
|
3,021 |
|
|
|
2,563 |
|
|
|
|
Goodwill |
|
2,301 |
|
|
|
2,301 |
|
|
|
2,301 |
|
|
|
|
Other
assets |
|
64,411 |
|
|
|
63,567 |
|
|
|
64,134 |
|
|
|
|
Total assets |
$ |
2,071,005 |
|
|
$ |
1,886,545 |
|
|
$ |
1,842,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
$ |
1,807,642 |
|
|
$ |
1,590,564 |
|
|
$ |
1,533,095 |
|
|
|
|
Borrowed
funds |
|
56,096 |
|
|
|
89,557 |
|
|
|
106,755 |
|
|
|
|
Operating
leases liability |
|
2,824 |
|
|
|
3,184 |
|
|
|
2,742 |
|
|
|
|
Other
liabilities |
|
12,608 |
|
|
|
12,072 |
|
|
|
12,243 |
|
|
|
|
Shareholders' equity |
|
191,835 |
|
|
|
191,168 |
|
|
|
187,520 |
|
|
|
|
Total liabilities and shareholders' equity |
$ |
2,071,005 |
|
|
$ |
1,886,545 |
|
|
$ |
1,842,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Codorus
Valley Bancorp, Inc. |
|
Financial
Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Financial
Data (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly |
|
Year-to-Date |
|
|
2020 |
|
2020 |
|
2019 |
2019 |
2019 |
|
June 30, |
|
|
2nd Qtr |
|
1st Qtr |
|
4th Qtr |
|
3rd Qtr |
|
2nd Qtr |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings and
Per Share Data (1) |
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
3,050 |
|
|
$ |
(2,989 |
) |
|
$ |
4,494 |
|
|
$ |
5,203 |
|
|
$ |
4,859 |
|
|
$ |
61 |
|
$ |
8,950 |
|
Basic earnings (loss) per share |
$ |
0.31 |
|
|
$ |
(0.31 |
) |
|
$ |
0.46 |
|
|
$ |
0.53 |
|
|
$ |
0.49 |
|
|
$ |
0.01 |
|
$ |
0.90 |
|
Diluted earnings (loss) per share |
$ |
0.31 |
|
|
$ |
(0.31 |
) |
|
$ |
0.46 |
|
|
$ |
0.52 |
|
|
$ |
0.49 |
|
|
$ |
0.01 |
|
$ |
0.90 |
|
Cash dividends paid per share |
$ |
0.160 |
|
|
$ |
0.160 |
|
|
$ |
0.152 |
|
|
$ |
0.152 |
|
|
$ |
0.152 |
|
|
$ |
0.320 |
|
$ |
0.304 |
|
Tangible book value per share (2) |
$ |
19.36 |
|
|
$ |
19.18 |
|
|
$ |
19.36 |
|
|
$ |
19.10 |
|
|
$ |
18.69 |
|
|
$ |
19.36 |
|
$ |
18.69 |
|
Book value per share |
$ |
19.60 |
|
|
$ |
19.42 |
|
|
$ |
19.59 |
|
|
$ |
19.33 |
|
|
$ |
18.92 |
|
|
$ |
19.60 |
|
$ |
18.92 |
|
Average shares outstanding |
|
9,770 |
|
|
|
9,759 |
|
|
|
9,741 |
|
|
|
9,860 |
|
|
|
9,926 |
|
|
|
9,765 |
|
|
9,927 |
|
Average diluted shares outstanding |
|
9,794 |
|
|
|
9,813 |
|
|
|
9,803 |
|
|
|
9,923 |
|
|
|
9,991 |
|
|
|
9,798 |
|
|
9,994 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Ratios (%) |
|
|
|
|
|
|
|
|
|
|
|
Return (loss) on average assets (3) |
|
0.59 |
|
|
|
(0.63 |
) |
|
|
0.96 |
|
|
|
1.12 |
|
|
|
1.06 |
|
|
|
0.01 |
|
|
0.98 |
|
Return (loss) on average equity (3) |
|
6.37 |
|
|
|
(6.15 |
) |
|
|
9.43 |
|
|
|
10.98 |
|
|
|
10.45 |
|
|
|
0.06 |
|
|
9.75 |
|
Net interest margin (4) |
|
3.07 |
|
|
|
3.44 |
|
|
|
3.61 |
|
|
|
3.60 |
|
|
|
3.75 |
|
|
|
3.25 |
|
|
3.72 |
|
Efficiency ratio (5) |
|
65.52 |
|
|
|
70.42 |
|
|
|
69.50 |
|
|
|
65.48 |
|
|
|
62.42 |
|
|
|
68.00 |
|
|
64.33 |
|
Net overhead ratio (3)(6) |
|
1.68 |
|
|
|
2.09 |
|
|
|
2.18 |
|
|
|
2.01 |
|
|
|
1.93 |
|
|
|
1.88 |
|
|
2.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
Quality Ratios (%) |
|
|
|
|
|
|
|
|
|
|
|
Net loan charge-offs to average loans (3) |
|
1.09 |
|
|
|
2.04 |
|
|
|
0.08 |
|
|
|
0.00 |
|
|
|
0.03 |
|
|
|
1.55 |
|
|
0.03 |
|
Allowance for loan losses to total loans (7) |
|
1.31 |
|
|
|
1.55 |
|
|
|
1.40 |
|
|
|
1.42 |
|
|
|
1.44 |
|
|
|
1.31 |
|
|
1.44 |
|
Nonperforming assets to total loans and foreclosed real estate |
|
1.31 |
|
|
|
1.97 |
|
|
|
1.72 |
|
|
|
2.26 |
|
|
|
1.82 |
|
|
|
1.31 |
|
|
1.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Ratios (%) |
|
|
|
|
|
|
|
|
|
|
|
Average equity to average assets |
|
9.30 |
|
|
|
10.23 |
|
|
|
10.17 |
|
|
|
10.16 |
|
|
|
10.13 |
|
|
|
9.75 |
|
|
10.08 |
|
Tier 1 leverage capital ratio |
|
9.50 |
|
|
|
10.18 |
|
|
|
10.55 |
|
|
|
10.50 |
|
|
|
10.58 |
|
|
|
9.50 |
|
|
10.58 |
|
Common equity Tier 1 capital ratio |
|
12.85 |
|
|
|
12.24 |
|
|
|
12.45 |
|
|
|
12.33 |
|
|
|
12.49 |
|
|
|
12.85 |
|
|
12.49 |
|
Tier 1 risk-based capital ratio |
|
13.55 |
|
|
|
12.91 |
|
|
|
13.11 |
|
|
|
13.00 |
|
|
|
13.16 |
|
|
|
13.55 |
|
|
13.16 |
|
Total risk-based capital ratio |
|
14.80 |
|
|
|
14.17 |
|
|
|
14.36 |
|
|
|
14.25 |
|
|
|
14.42 |
|
|
|
14.80 |
|
|
14.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Non-GAAP Financial Measure (Tangible Book Value) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands, except per share data) |
2020 |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
|
|
|
|
|
|
2nd Qtr |
|
1st Qtr |
|
4th Qtr |
|
3rd Qtr |
|
2nd Qtr |
|
|
|
|
|
Total
Shareholders' Equity |
$ |
191,835 |
|
|
$ |
189,596 |
|
|
$ |
191,168 |
|
|
$ |
189,373 |
|
|
$ |
187,520 |
|
|
|
|
|
|
Less:
Preferred Stock |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
Less:
Goodwill and Other Intangible Assets |
|
(2,310 |
) |
|
|
(2,311 |
) |
|
|
(2,312 |
) |
|
|
(2,313 |
) |
|
|
(2,314 |
) |
|
|
|
|
|
Tangible
Shareholders' Equity |
$ |
189,525 |
|
|
$ |
187,285 |
|
|
$ |
188,856 |
|
|
$ |
187,060 |
|
|
$ |
185,206 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Shares Outstanding |
|
9,788 |
|
|
|
9,764 |
|
|
|
9,756 |
|
|
|
9,794 |
|
|
|
9,909 |
|
|
|
|
|
|
Book Value
Per Share |
$ |
19.60 |
|
|
$ |
19.42 |
|
|
$ |
19.59 |
|
|
$ |
19.33 |
|
|
$ |
18.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book Value
Per Share |
$ |
19.60 |
|
|
$ |
19.42 |
|
|
$ |
19.59 |
|
|
$ |
19.33 |
|
|
$ |
18.92 |
|
|
|
|
|
|
Effect of
Intangible Assets |
|
(0.24 |
) |
|
|
(0.24 |
) |
|
|
(0.23 |
) |
|
|
(0.23 |
) |
|
|
(0.23 |
) |
|
|
|
|
|
Tangible
Book Value Per Share |
$ |
19.36 |
|
|
$ |
19.18 |
|
|
$ |
19.36 |
|
|
$ |
19.10 |
|
|
$ |
18.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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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