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Codorus Valley Bancorp, Inc. Reports First Quarter 2019 Earnings

YORK, Pa., April 18, 2019 (GLOBE NEWSWIRE) -- Codorus Valley Bancorp, Inc. (Codorus Valley, or the Corporation) (CVLY), parent company of PeoplesBank, A Codorus Valley Company (PeoplesBank), today announced net income of $4.1 million or $0.43 per share basic and diluted, for the quarter ended March 31, 2019, as compared to net income of $4.1 million or $0.44 per share basic and $0.43 per share diluted, for the quarter ended March 31, 2018.

“Earnings for the first quarter 2019 compared to the same period in 2018 were basically flat,” stated Larry J. Miller, Chairman, President/CEO. “Due to the rising interest rate environment, interest income increased approximately $2.3 million, however interest expense increased a similar amount ($2.1 million).” Miller added, “Management has implemented steps to improve Codorus Valley’s cost of funds, enhanced its balance sheet management and has improved operational efficiency.” Per Miller, “heretofore specific performing credits have indicated some weakness which required establishing specific reserves to those credits, which further required an increase in the Allowance for Loan and Lease Losses.”

The Corporation’s net interest income for the three months ended March 31, 2019 was $15.5 million, an increase of $0.2 million or 1.3 percent when compared to the net interest income of $15.3 million for the same period in 2018. The Corporation’s tax-equivalent net interest margin was 3.69 percent for the quarter ended March 31, 2019, a decrease of 5.1 percent when compared to the tax-equivalent net interest margin of 3.89 percent for the same period in 2018. The decrease was attributed to a temporary increase in balance sheet liquidity, a flat yield curve and an increase in loans identified as nonaccrual.

The provision for loan losses for the three months ended March 31, 2019 was $1.1 million compared to $0.2 million for the same period in 2018. The Corporation’s nonperforming assets ratio was 1.95 percent as of March 31, 2019, an increase from the nonperforming assets ratio as of December 31, 2018 of 1.67 percent. The increased provision expense in the first quarter of 2019 was primarily attributed to approximately $1.1 million of specific loan loss reserves established during the quarter, provision related to net loan growth during the quarter, net charge-offs of $113,000 and the net impact of adjustments made to certain qualitative factors and the unallocated reserve.

Noninterest income for the first quarter of 2019 was $3.2 million, which remained the same as the first quarter of 2018.

Noninterest expense was $12.6 million for the first quarter of 2019, a decrease of $0.7 million, or 5.3 percent, as compared to noninterest expense of $13.3 million for the first quarter of 2018. Lower personnel costs and charitable donations accounted for the majority of the decrease.

Income tax expense for the quarter ended March 31, 2019 was $1.1 million versus $1.0 million for the same period in 2018.

Other News

As recently announced, on April 9, 2019, the Board of Directors of the Corporation declared a regular quarterly cash dividend of $0.16 per share, payable on May 14, 2019 to shareholders of record at the close of business on April 23, 2019.

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.

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: 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 2018 Form 10-K and 2019 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 CEO

Larry D. Pickett, CPA - Treasuer

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

March 31,

2019

2018

Interest income

$

20,876

$

18,593

Interest expense

5,345

3,248

Net interest income

15,531

15,345

Provision for loan losses

1,050

200

Noninterest income

3,223

3,217

Noninterest expense

12,561

13,257

Income before income taxes

5,143

5,105

Provision for income taxes

1,052

1,022

Net income

$

4,091

$

4,083

Basic earnings per share

$

0.43

$

0.44

Diluted earnings per share

$

0.43

$

0.43

Condensed Consolidated Statements of Financial Condition (Unaudited)

(in thousands of dollars)

March 31,

December 31,

March 31,

2019

2018

2018

Cash and short term investments

$

94,285

$

96,782

$

78,193

Investment securities

154,490

155,515

157,889

Loans

1,499,740

1,489,807

1,425,414

Allowance for loan losses

(20,081

)

(19,144

)

(16,866

)

Net loans

1,479,659

1,470,663

1,408,548

Premises and equipment, net

27,137

24,724

24,311

Operating leases right-to-use assets

2,684

0

0

Goodwill

2,301

2,301

2,301

Other assets

64,413

57,495

53,696

Total assets

$

1,824,969

$

1,807,480

$

1,724,938

Deposits

$

1,502,877

$

1,495,280

$

1,402,553

Borrowed funds

123,609

122,332

145,025

Operating leases liabilities

2,864

0

0

Other liabilities

12,812

11,122

11,679

Shareholders' equity

182,807

178,746

165,681

Total liabilities and shareholders' equity

$

1,824,969

$

1,807,480

$

1,724,938


Codorus Valley Bancorp, Inc.

Financial Highlights

Selected Financial Data (Unaudited)

Quarterly

2019

2018

2018

2018

2018

1st Qtr

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr

Earnings and Per Share Data (1)

(in thousands, except per share data)

Net income available to shareholders

$

4,091

$

4,345

$

5,060

$

6,054

$

4,083

Basic earnings per share

$

0.43

$

0.46

$

0.53

$

0.65

$

0.44

Diluted earnings per share

$

0.43

$

0.46

$

0.53

$

0.64

$

0.43

Cash dividends paid per share

$

0.160

$

0.148

$

0.148

$

0.148

$

0.148

Tangible book value per share (2)

$

19.08

$

18.67

$

18.22

$

17.89

$

17.43

Book value per share

$

19.33

$

18.91

$

18.46

$

18.14

$

17.68

Average shares outstanding

9,455

9,417

9,398

9,379

9,359

Average diluted shares outstanding

9,521

9,502

9,505

9,487

9,455

Performance Ratios (%)

Return on average assets (3)

0.91

0.96

1.14

1.39

0.97

Return on average equity (3)

9.04

9.84

11.66

14.36

9.87

Return on average realized equity (3)(4)

8.95

9.63

11.45

14.10

9.74

Net interest margin (5)

3.69

3.78

3.86

3.89

3.89

Efficiency ratio (6)

66.35

66.43

60.30

58.73

70.76

Net overhead ratio (3)(7)

2.07

2.15

1.95

1.85

2.38

Asset Quality Ratios (%)

Net loan (recoveries) charge-offs to average loans (3)

0.03

0.00

0.06

0.01

0.01

Allowance for loan losses to total loans (8)

1.34

1.29

1.22

1.17

1.18

Nonperforming assets to total loans

and foreclosed real estate

1.95

1.67

1.00

0.40

0.40

Capital Ratios (%)

Average equity to average assets

10.02

9.80

9.74

9.65

9.80

Tier 1 leverage capital ratio

10.60

10.46

10.39

10.37

10.43

Common equity Tier 1 capital ratio

12.18

12.15

11.82

11.78

11.66

Tier 1 risk-based capital ratio

12.85

12.83

12.49

12.47

12.36

Total risk-based capital ratio

14.11

14.09

13.73

13.65

13.55

(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) excludes accumulated other comprehensive income (loss), principally unrealized gains (losses) on investment securities

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

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

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

(8) excludes loans held for sale


Reconciliation of Non-GAAP Financial Measure (Tangible Book Value)

2019

2018

2018

2018

2018

(in thousands, except per share data)

1st Qtr

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr

Total Shareholders' Equity

$

182,807

$

178,746

$

173,597

$

170,373

$

165,681

Less: Preferred Stock

0

0

0

0

0

Less: Goodwill and Other Intangible Assets

(2,315

)

(2,316

)

(2,318

)

(2,319

)

(2,320

)

Tangible Shareholders' Equity

$

180,492

$

176,430

$

171,279

$

168,054

$

163,361

Common Shares Outstanding

9,457

9,452

9,402

9,391

9,371

Book Value Per Share

$

19.33

$

18.91

$

18.46

$

18.14

$

17.68

Book Value Per Share

$

19.33

$

18.91

$

18.46

$

18.14

$

17.68

Effect of Intangible Assets

(0.24

)

(0.25

)

(0.25

)

(0.25

)

(0.25

)

Tangible Book Value Per Share

$

19.08

$

18.67

$

18.22

$

17.89

$

17.43

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 ts analysis of our performance because it believes this measure is material and will be used as a measure of our performance by investors.