Codorus Valley Bancorp, Inc. Reports Fourth Quarter 2023 Results and Record Earnings for the Year
- Net interest margin increased by 37 basis points to 3.76% for the year ended December 31, 2023
- Return on average assets was 1.15% and return on equity was 13.47%
- Continued improvement in credit metrics with nonperforming assets to total loans ratio decreasing by 67.1%
- Cash dividend of $0.17 per common share payable on February 13, 2024
- Loans increased by $72.8 million, an annualized growth rate of 4.5%
- Noninterest income increased by 22.2% for the three months ended December 31, 2023
- Shareholders' equity increased to $199.6 million, primarily due to net income of $25.0 million
- Common equity tier 1 capital ratio increased to 12.81% at December 31, 2023
- The Bank maintains a well-diversified deposit base with 83% of deposits estimated to be FDIC-insured
- Net interest income decreased by 10.7% for the three months ended December 31, 2023
- Noninterest expense increased by 12.6% for the fourth quarter 2023
- Total deposits decreased by 3.6% from December 31, 2022 to December 31, 2023
- The average cost of interest-bearing deposits increased to 2.59% for the quarter ended December 31, 2023
Insights
The reported fourth quarter net income of $5.5 million, which is a decrease from both the previous year's quarter and the preceding quarter, is a critical indicator of the company's financial health. The year-over-year net income growth to $25.0 million suggests a positive trajectory in profitability, which could be appealing to investors. Notably, the net interest margin (NIM) improvement to 3.76% is a strong performance metric, particularly in a challenging interest rate environment, as it indicates efficient management of interest-earning assets and liabilities.
The efficiency ratio, return on average assets (ROAA) and return on equity (ROE) are also significant indicators of operational performance. An efficiency ratio of 65.75% falls within a reasonable range, although lower ratios are typically more desirable as they indicate greater efficiency. The ROAA of 1.15% and ROE of 13.47% are solid metrics that compare favorably to industry averages, suggesting effective use of assets and equity to generate profits.
However, the decline in net income for the quarter and the anticipated merger-related expenses could signal potential volatility in future earnings. The merger with Orrstown Financial Services Inc. indicates strategic growth but comes with integration risks and additional costs that need to be monitored closely.
The shift in deposit mix and the increase in certificates of deposit (CDs) by 18.3% suggest a change in consumer behavior, potentially driven by higher interest rates attracting savers to time deposits. This shift could impact liquidity management and cost of funds. The decrease in nonperforming assets by 67.1% is a positive sign of asset quality and risk management.
The anticipated downward pressure on net interest margin in early 2024 due to deposit costs and interest rate curve dynamics warrants attention as it could affect profitability. The competitive landscape may intensify post-merger and the combined entity's ability to realize synergies and navigate the integration process will be crucial for maintaining market position and achieving cost efficiencies.
The adoption of the Current Expected Credit Loss (CECL) methodology and the subsequent increase in the allowance for credit losses reflect the company's proactive stance on potential credit risks, aligning with broader industry trends towards more forward-looking risk assessments. The economic implications of the merger with Orrstown, projected to complete in the third quarter of 2024, could potentially create a regional powerhouse with enhanced market share, provided the integration is managed effectively without disrupting customer relationships.
Additionally, the liquidity risk management strategies, including the Bank's membership in the IntraFi Network®, indicate a conservative approach to ensuring stability amid market fluctuations. The Bank's well-capitalized status, according to regulatory guidelines, positions it favorably for potential economic downturns or unexpected financial stresses.
- Fourth quarter net income of
$5.5 million compared to net income of$7.9 million in the quarter ended December 31, 2022, and$5.9 million in the quarter ended September 30, 2023; - Net income of
$25.0 million for the year ended December 31, 2023, compared to net income of$20.1 million for the year ended December 31, 2022; - Net interest margin of
3.76% for the year ended December 31, 2023, a 37-basis point increase from the net interest margin of3.39% for the year ended December 31, 2022; - Year-to-date efficiency ratio of
65.75% ; return on average assets of1.15% ; and return on equity of13.47% ; - Continued improvement in credit metrics with nonperforming assets to total loans of
0.23% at December 31, 2023, a decrease of67.1% from the ratio at December 31, 2022; - Cash dividend of
$0.17 per common share payable on February 13, 2024, to common stock holders of record on January 23, 2024. - On December 12, 2023, Codorus Valley Bancorp Inc. (NASDAQ: CVLY) and Orrstown Financial Services Inc. (NASDAQ: ORRF) (“Orrstown”) announced that the companies entered into an Agreement and Plan of Merger to effect a merger of equals (the “Merger”) later this year. As a result, the Corporation realized merger-related expenses of
$956,000 in the fourth quarter 2023.
YORK, Pa., Jan. 25, 2024 (GLOBE NEWSWIRE) -- 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
(1) Net income excluding merger-related expenses, diluted earnings per share excluding merger-related expenses, 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.
"Our robust performance in the fourth quarter is a testament to the dedicated efforts of our team over the past several years, resulting in Codorus Valley achieving its highest annual earnings on record. We attribute this success to our unwavering commitment to enhancing the client experience, fostering Associate engagement, and making a positive impact on the community, while also focusing on creating shareholder value. Despite the challenges faced by the banking industry in 2023, our steady loan production and prudent utilization of customer deposits have allowed us to maintain a strong net interest margin and mitigate the effects of margin compression. The continued improvement in our capital ratios positions us favorably for the upcoming exciting phase in our growth cycle. We are eager to leverage the momentum we’ve generated when we join forces with Orrstown Financial Services later this year to establish the premier regional community bank serving South Central Pennsylvania, Central Maryland and the Greater Baltimore area," stated Craig L. Kauffman, President, and Chief Executive Officer.
REVIEW OF RESULTS
Balance Sheet
Loans
Loans increased
Investment Securities
Investment Securities increased
Borrowings
FHLB advances and other short-term borrowings increased
Deposits
Total Deposits decreased
Income Statement
The Corporation’s net interest income for the three months ended December 31, 2023 was
The Corporation’s provision for credit losses, which includes provision for credit losses on unfunded commitments in 2023, for the three months ended December 31, 2023 was a reversal of
Noninterest income for the three months ended December 31, 2023 was
Noninterest expense was
Income tax expense for the quarter ended December 31, 2023 was
Capital
Shareholders’ equity totaled
Book value per share was
Liquidity Risk Management
The Bank maintains a well-diversified deposit base and has a comparatively low level of uninsured deposits. At December 31, 2023,
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
Although the Bank had not utilized the Federal Reserve’s Bank Term Funding Facility as of December 31, 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 January 9, 2024, the Board of Directors of the Corporation declared a regular quarterly cash dividend of
Agreement and Plan of Merger with Orrstown Financial Services, Inc. (“Orrstown”)
On December 12, 2023, Codorus Valley Bancorp Inc. (NASDAQ: CVLY) and Orrstown Financial Services Inc. (NASDAQ: ORRF) announced that the companies entered into an Agreement and Plan of Merger pursuant to which Codorus Valley Bancorp, Inc. will be merged with and into Orrstown, with Orrstown as the surviving corporation (the “Merger”). Promptly following the Merger, Codorus Valley’s wholly-owned subsidiary, PeoplesBank, will be merged with and into Orrstown Bank, with Orrstown Bank as the surviving bank. Subject to receipt of regulatory and shareholder approvals, CVLY expects the merger to be completed in the third quarter of 2024. “We are excited to be partnering with Orrstown to build long-term value for our clients, associates, shareholders and community. Thank you to our shareholders for your long-standing investment in our company,” noted Craig L. Kauffman, “and, to our clients, we very much look forward to continuing to serve your financial needs.”
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.
Annualized, proforma, projected, and estimated numbers used herein are for illustrative purposes only, are not forecasts and may not reflect actual results.
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. (“Codorus Valley”, or 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 may 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,” “could,” “will,” “could,” “believes,” “plans,” “expects,” “estimates,” “forecasts,” “intends,” “anticipates,” “projects,” “strives to,” “seeks,” “intends” 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, including its pending merger (the “Merger”) with Orrstown Financial Services, Inc. (“Orrstown”), 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. Note that the following factors, among others, 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 these forward-looking statements:
- changes or volatility in market interest rates and the persistence of an 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 current or future market conditions;
- changes in deposit flows, the cost of funds, demand for loan products and the demand for financial services;
- the remaining 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, 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 recent inflationary environment;
- geographic concentration of the Corporation’s business;
- deterioration of commercial real estate values;
- the adequacy of loan loss reserves;
- deterioration in the credit quality of borrowers;
- the Corporation’s ability to attract and retain key personnel, especially in light of the pending Merger with Orrstown;
- 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;
- 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, in particular, the effect that such occurrences could have on the pending Merger with Orrstown;
- 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
- economic, competitive, governmental and technological factors affecting the Corporation’s operations, markets, products, services and fees.
In addition to the foregoing factors with respect to the Corporation’s business, the following factors and uncertainties exist with respect to the pending Merger with Orrstown:
- the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive agreement and plan of merger between the Corporation and Orrstown;
- the outcome of any legal proceedings that may be instituted against the Corporation or Orrstown;
- delays in completing the proposed Merger;
- the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed Merger) or shareholder approvals;
- the failure to satisfy any of the other conditions to the proposed Merger on a timely basis or at all, including the ability of the Corporation or Orrstown to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed Merger;
- the possibility that the anticipated benefits of the proposed Merger are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where the Corporation and Orrstown do business;
- the possibility that the proposed Merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events;
- the possibility that revenues following the proposed Merger may be lower than expected; the impact of certain restrictions during the pendency of the proposed Merger on the parties’ ability to pursue certain business opportunities and strategic transactions;
- diversion of management’s attention from ongoing business operations and opportunities;
- potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or the completion of the proposed Merger;
- the ability to complete the proposed Merger and integration of the Corporation and Orrstown successfully;
- the dilution caused by Orrstown’s issuance of additional shares of its capital stock in connection with the proposed Merger; and
- the potential impact of general economic, political or market factors on the companies or the proposed Merger and other factors that may affect future results of the Corporation or Orrstown.
The Corporation does not commit to update or revise any forward-looking statements, whether written or oral, that may be made from time to time by or on behalf of the Corporation to reflect events or circumstances occurring after the date of this report. Further information regarding Codorus Valley, Orrstown and factors which could affect the forward-looking statements contained herein can be found in Codorus Valley’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, its Quarterly Reports on Form 10-Q for the periods ended March 31, 2023, June 30, 2023 and September 30, 2023, and its other filings with the SEC, and in Orrstown’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, its Quarterly Reports on Form 10-Q for the periods ended March 31, 2023, June 30, 2023 and September 30, 2023, and its other filings with the SEC. SEC filings are available free of charge on the SEC’s website at www.sec.gov.
No Offer or Solicitation
This communication is not a proxy statement or solicitation or a proxy, consent or authorization with respect to any securities or in respect of the proposed Merger and shall not constitute an offer to sell or a solicitation of an offer to buy the securities of Orrstown, Codorus Valley or the combined company, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be deemed to be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended, and otherwise in accordance with applicable law.
Additional Information About the Merger and Where to Find It
In connection with the proposed Merger, Orrstown intends to file a registration statement on Form S-4 with the SEC that will include a joint proxy statement of Codorus Valley and Orrstown and a prospectus of Orrstown, which will be distributed to the shareholders of Codorus Valley and Orrstown in connection with their votes on the Merger of Codorus Valley with and into Orrstown and the issuance of Orrstown common stock in the proposed transaction.
INVESTORS AND SECURITY HOLDERS ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS WHEN THEY BECOME AVAILABLE (AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION OR INCORPORATED BY REFERENCE INTO THE JOINT PROXY STATEMENT/PROSPECTUS) BECAUSE SUCH DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION REGARDING THE PROPOSED MERGER AND RELATED MATTERS.
Investors and security holders will be able to obtain these documents, and any other documents Orrstown and Codorus Valley have filed with the SEC, free of charge at the SEC’s website, www.sec.gov, or by accessing Orrstown’s website at www.Orrstown.com under the “Investor Relations” link and then under the heading “Documents,” or by accessing Codorus Valley’s website at ir.peoplesbanknet.com. In addition, documents filed with the SEC by Orrstown or Codorus Valley will be available free of charge by writing to (i) Orrstown at 4750 Lindle Road, Harrisburg, PA 17111, Attention: Neil Kalani or (ii) Codorus Valley at 105 Leader Heights Road, York, PA 17403, Attention: Daniel R. Stolzer.
Participants in the Solicitation
The directors, executive officers and certain other members of management and employees of Orrstown may be deemed to be participants in the solicitation of proxies from the shareholders of Orrstown in connection with the proposed Merger. Information about Orrstown’s directors and executive officers is included in the proxy statement for its 2023 annual meeting of Orrstown’s shareholders, which was filed with the SEC on March 31, 2023.
The directors, executive officers and certain other members of management and employees of Codorus Valley may also be deemed to be participants in the solicitation of proxies in connection with the proposed Merger from the shareholders of Codorus Valley. Information about the directors and executive officers of Codorus Valley is included in the proxy statement for its 2023 annual meeting of Codorus Valley shareholders, which was filed with the SEC on March 31, 2023.
Additional information regarding the interests of those participants and other persons who may be deemed participants in the proposed Merger may be obtained by reading the joint proxy statement/prospectus regarding the proposed Merger when it becomes available. Free copies of this document may be obtained as described above.
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 |
| CODORUS VALLEY BANCORP, INC. | |||||||
| Consolidated Balance Sheets (Unaudited) | |||||||
| December 31, | December 31, | ||||||
| (Dollars in thousands, except share and per share data) | 2023 | 2022 | |||||
| Assets | |||||||
| Interest bearing deposits with banks | $ | 10,882 | $ | 99,777 | |||
| Cash and due from banks | 22,809 | 20,662 | |||||
| Total cash and cash equivalents | 33,691 | 120,439 | |||||
| Securities, available-for-sale, at fair value (amortized cost | |||||||
| and | 349,767 | 345,457 | |||||
| Restricted investment in bank stocks, at cost | 3,146 | 955 | |||||
| Loans held for sale | 822 | 154 | |||||
| Loans (net of deferred fees of | 1,705,608 | 1,632,857 | |||||
| Less-allowance for credit losses (1) | (20,506 | ) | (20,736 | ) | |||
| Net loans | 1,685,102 | 1,612,121 | |||||
| Premises and equipment, net | 19,563 | 21,136 | |||||
| Operating leases right-of-use assets | 2,746 | 3,072 | |||||
| Goodwill | 2,301 | 2,301 | |||||
| Other assets | 94,656 | 89,417 | |||||
| Total assets | $ | 2,191,794 | $ | 2,195,052 | |||
| Liabilities | |||||||
| Deposits | |||||||
| Noninterest bearing | $ | 379,288 | $ | 463,853 | |||
| Interest bearing | 1,494,054 | 1,479,366 | |||||
| Total deposits | 1,873,342 | 1,943,219 | |||||
| Short-term borrowings | 56,541 | 11,605 | |||||
| Long-term debt and junior subordinated debt | 11,520 | 11,550 | |||||
| Subordinated notes - face amount | |||||||
| issuance cost of | 30,845 | 30,764 | |||||
| Operating leases liabilities | 2,848 | 3,204 | |||||
| Allowance for credit losses on off-balance sheet credit exposures | 2,278 | 0 | |||||
| Other liabilities | 14,815 | 17,410 | |||||
| Total liabilities | 1,992,189 | 2,017,752 | |||||
| Shareholders' equity | |||||||
| Preferred stock, par value | |||||||
| 1,000,000 shares authorized; no shares issued or outstanding | 0 | 0 | |||||
| Common stock, par value | |||||||
| shares issued: 9,883,660 at December 31, 2023 and December 31, 2022; | |||||||
| and shares outstanding: 9,642,851 at December 31, 2023 and 9,581,230 at December 31, 2022 | 24,709 | 24,709 | |||||
| Additional paid-in capital | 142,633 | 141,896 | |||||
| Retained earnings | 68,633 | 52,146 | |||||
| Accumulated other comprehensive loss | (31,082 | ) | (34,764 | ) | |||
| Treasury stock shares outstanding, at cost: 240,809 shares at December 31, 2023 | |||||||
| and 302,430 at December 31, 2022 | (5,288 | ) | (6,687 | ) | |||
| Total shareholders' equity | 199,605 | 177,300 | |||||
| Total liabilities and shareholders' equity | $ | 2,191,794 | $ | 2,195,052 | |||
| (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 | Twelve months ended | ||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | ||||||||||||||||
| (dollars in thousands, except per share data) | 2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Interest income | |||||||||||||||||||
| Loans, including fees | $ | 26,967 | $ | 26,000 | $ | 21,676 | $ | 100,804 | $ | 73,139 | |||||||||
| Investment securities: | |||||||||||||||||||
| Taxable | 2,781 | 2,562 | 2,374 | 10,292 | 7,455 | ||||||||||||||
| Tax-exempt | 108 | 106 | 110 | 414 | 427 | ||||||||||||||
| Dividends | (90 | ) | 44 | 14 | 22 | 44 | |||||||||||||
| Other | 176 | 361 | 1,226 | 1,766 | 3,588 | ||||||||||||||
| Total interest income | 29,942 | 29,073 | 25,400 | 113,298 | 84,653 | ||||||||||||||
| Interest expense | |||||||||||||||||||
| Deposits | 9,800 | 8,740 | 3,382 | 30,754 | 7,261 | ||||||||||||||
| Federal funds purchased and other short-term borrowings | 385 | 377 | 13 | 1,237 | 48 | ||||||||||||||
| Long-term debt and junior subordinated debt | 222 | 215 | 175 | 839 | 616 | ||||||||||||||
| Subordinated notes | 369 | 369 | 369 | 1,476 | 1,476 | ||||||||||||||
| Total interest expense | 10,776 | 9,701 | 3,939 | 34,306 | 9,401 | ||||||||||||||
| Net interest income | 19,166 | 19,372 | 21,461 | 78,992 | 75,252 | ||||||||||||||
| (Recovery of) provision for credit losses - loans (1) | (833 | ) | 128 | (544 | ) | (244 | ) | 2,890 | |||||||||||
| Provision for credit losses - unfunded commitments (1) | 66 | 123 | 0 | 389 | 0 | ||||||||||||||
| Net interest income after provision for credit losses | 19,933 | 19,121 | 22,005 | 78,847 | 72,362 | ||||||||||||||
| Noninterest income | |||||||||||||||||||
| Trust and investment services fees | 1,261 | 1,293 | 1,109 | 5,031 | 4,549 | ||||||||||||||
| Income from mutual fund, annuity and insurance sales | 299 | 315 | 289 | 1,306 | 1,247 | ||||||||||||||
| Service charges on deposit accounts | 1,529 | 1,598 | 1,458 | 6,153 | 5,503 | ||||||||||||||
| Income from bank owned life insurance | 405 | 396 | 315 | 1,452 | 1,256 | ||||||||||||||
| Other income | 773 | 549 | 401 | 2,771 | 1,880 | ||||||||||||||
| Gain on sale of loans held for sale | 27 | 42 | 4 | 75 | 625 | ||||||||||||||
| (Loss) gain on sale of assets held for sale | (54 | ) | 0 | 13 | 64 | (87 | ) | ||||||||||||
| Loss on sales of securities | 0 | 0 | (119 | ) | (388 | ) | (119 | ) | |||||||||||
| Total noninterest income | 4,240 | 4,193 | 3,470 | 16,464 | 14,854 | ||||||||||||||
| Noninterest expense | |||||||||||||||||||
| Personnel | 10,031 | 9,412 | 8,937 | 37,974 | 35,061 | ||||||||||||||
| Occupancy of premises, net | 926 | 853 | 1,004 | 3,637 | 3,848 | ||||||||||||||
| Furniture and equipment | 924 | 798 | 851 | 3,438 | 3,402 | ||||||||||||||
| Professional and legal | 444 | 549 | 345 | 1,839 | 2,626 | ||||||||||||||
| Marketing | 304 | 347 | 592 | 1,314 | 1,932 | ||||||||||||||
| FDIC insurance | 244 | 245 | 148 | 983 | 765 | ||||||||||||||
| Debit card processing | 520 | 546 | 481 | 1,976 | 1,703 | ||||||||||||||
| Charitable donations | 644 | 62 | 600 | 1,637 | 1,571 | ||||||||||||||
| External data processing | 1,015 | 974 | 1,064 | 4,042 | 3,884 | ||||||||||||||
| Settlement expenses | 0 | 0 | 1,000 | 0 | 1,000 | ||||||||||||||
| Merger-related expenses | 956 | 0 | 0 | 956 | 0 | ||||||||||||||
| (Recovery of) impaired loan carrying cost | (119 | ) | 107 | 34 | (348 | ) | 546 | ||||||||||||
| Other | 1,396 | 2,003 | 291 | 6,020 | 5,230 | ||||||||||||||
| Total noninterest expense | 17,285 | 15,896 | 15,347 | 63,468 | 61,568 | ||||||||||||||
| Income before income taxes | 6,888 | 7,418 | 10,128 | 31,843 | 25,648 | ||||||||||||||
| Provision for income taxes | 1,435 | 1,501 | 2,196 | 6,870 | 5,556 | ||||||||||||||
| Net income | $ | 5,453 | $ | 5,917 | $ | 7,932 | $ | 24,973 | $ | 20,092 | |||||||||
| Net income per share, basic | 0.57 | 0.62 | 0.83 | 2.60 | 2.11 | ||||||||||||||
| Net income per share, diluted | 0.57 | 0.61 | 0.83 | 2.59 | 2.10 | ||||||||||||||
| (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 | 2023 | 2022 | December 31, | ||||||||||||||||||||||
| 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | 2023 | 2022 | |||||||||||||||||||||
| Earnings and Per Share Data (1) | |||||||||||||||||||||||||||
| (in thousands, except per share data) | |||||||||||||||||||||||||||
| Net income | $ | 5,453 | $ | 5,917 | $ | 6,611 | $ | 6,992 | $ | 7,932 | $ | 24,973 | $ | 20,092 | |||||||||||||
| Basic earnings per share | $ | 0.57 | $ | 0.62 | $ | 0.69 | $ | 0.73 | $ | 0.83 | $ | 2.60 | $ | 2.11 | |||||||||||||
| Diluted earnings per share | $ | 0.57 | $ | 0.61 | $ | 0.69 | $ | 0.73 | $ | 0.83 | $ | 2.59 | $ | 2.10 | |||||||||||||
| Cash dividends paid per share | $ | 0.17 | $ | 0.17 | $ | 0.16 | $ | 0.16 | $ | 0.15 | $ | 0.66 | $ | 0.60 | |||||||||||||
| Book value per share | $ | 20.70 | $ | 19.06 | $ | 19.34 | $ | 19.28 | $ | 18.51 | $ | 20.70 | $ | 18.51 | |||||||||||||
| Tangible book value per share (2) | $ | 20.46 | $ | 18.82 | $ | 19.10 | $ | 19.04 | $ | 18.27 | $ | 20.46 | $ | 18.27 | |||||||||||||
| Tangible book value per share without AOCI (8) | $ | 23.68 | $ | 23.28 | $ | 22.81 | $ | 22.26 | $ | 21.90 | $ | 23.68 | $ | 21.90 | |||||||||||||
| Average shares outstanding | 9,629 | 9,616 | 9,600 | 9,585 | 9,566 | 9,608 | 9,532 | ||||||||||||||||||||
| Average diluted shares outstanding | 9,644 | 9,631 | 9,610 | 9,612 | 9,589 | 9,625 | 9,560 | ||||||||||||||||||||
| Performance Ratios (%) | |||||||||||||||||||||||||||
| Return on average assets (3) | 1.00 | 1.08 | 1.22 | 1.29 | 1.43 | 1.15 | 0.87 | ||||||||||||||||||||
| Return on average equity (3) | 11.69 | 12.64 | 14.17 | 15.45 | 18.50 | 13.47 | 11.08 | ||||||||||||||||||||
| Net interest margin (4) | 3.61 | 3.64 | 3.81 | 4.00 | 3.98 | 3.76 | 3.39 | ||||||||||||||||||||
| Efficiency ratio (5) | 73.28 | 66.95 | 64.19 | 59.05 | 60.87 | 65.75 | 67.79 | ||||||||||||||||||||
| Net overhead ratio (3)(6) | 2.40 | 2.14 | 2.10 | 1.93 | 2.13 | 2.14 | 2.02 | ||||||||||||||||||||
| Asset Quality Ratios (%) | |||||||||||||||||||||||||||
| Net loan charge-offs to average loans (3) | 0.03 | (0.15 | ) | 0.20 | 0.15 | 0.24 | 0.05 | 0.31 | |||||||||||||||||||
| Allowance for credit losses to total loans (7) | 1.20 | 1.26 | 1.23 | 1.31 | 1.27 | 1.20 | 1.27 | ||||||||||||||||||||
| Nonperforming assets to total loans | |||||||||||||||||||||||||||
| and foreclosed real estate | 0.23 | 0.47 | 0.70 | 0.55 | 0.70 | 0.23 | 0.70 | ||||||||||||||||||||
| Capital Ratios (%) | |||||||||||||||||||||||||||
| Average equity to average assets | 8.57 | 8.55 | 8.58 | 8.38 | 7.75 | 8.52 | 7.87 | ||||||||||||||||||||
| Tier 1 leverage capital ratio | 10.75 | 10.50 | 10.38 | 10.20 | 9.77 | 10.75 | 9.77 | ||||||||||||||||||||
| Common equity Tier 1 capital ratio | 12.81 | 12.52 | 12.37 | 12.19 | 12.04 | 12.81 | 12.04 | ||||||||||||||||||||
| Tier 1 risk-based capital ratio | 13.37 | 13.08 | 12.94 | 12.76 | 12.61 | 13.37 | 12.61 | ||||||||||||||||||||
| Total risk-based capital ratio | 16.26 | 16.01 | 15.85 | 15.75 | 15.57 | 16.26 | 15.57 | ||||||||||||||||||||
| (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 and Adjusted Net Income) | |||||||||||||||||||||||||||
| 2023 | 2023 | 2023 | 2023 | 2022 | |||||||||||||||||||||||
| (in thousands, except per share data) | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | ||||||||||||||||||||||
| Total Shareholders' Equity | $ | 199,605 | $ | 183,363 | $ | 185,869 | $ | 184,946 | $ | 177,300 | |||||||||||||||||
| Less: Goodwill and Other Intangible Assets | (2,301 | ) | (2,302 | ) | (2,302 | ) | (2,303 | ) | (2,303 | ) | |||||||||||||||||
| Tangible Shareholders' Equity | $ | 197,304 | $ | 181,061 | $ | 183,567 | $ | 182,643 | $ | 174,997 | |||||||||||||||||
| Add: Accumulated Other Comprehensive Loss | 31,082 | 42,869 | 35,650 | 30,941 | 34,764 | ||||||||||||||||||||||
| Tangible Shareholders' Equity without AOCI | $ | 228,386 | $ | 223,930 | $ | 219,217 | $ | 213,584 | $ | 209,761 | |||||||||||||||||
| Common Shares Outstanding | 9,644 | 9,619 | 9,611 | 9,594 | 9,581 | ||||||||||||||||||||||
| Book Value Per Share | $ | 20.70 | $ | 19.06 | $ | 19.34 | $ | 19.28 | $ | 18.51 | |||||||||||||||||
| Effect of Intangible Assets | (0.24 | ) | (0.24 | ) | (0.24 | ) | (0.24 | ) | (0.24 | ) | |||||||||||||||||
| Tangible Book Value Per Share | $ | 20.46 | $ | 18.82 | $ | 19.10 | $ | 19.04 | $ | 18.27 | |||||||||||||||||
| Book Value Per Share | $ | 20.70 | $ | 19.06 | $ | 19.34 | $ | 19.28 | $ | 18.51 | |||||||||||||||||
| Effect of Intangible Assets and AOCI | (3.46 | ) | (4.70 | ) | (3.95 | ) | (3.47 | ) | (3.87 | ) | |||||||||||||||||
| Tangible Book Value Per Share without AOCI | $ | 17.24 | $ | 14.37 | $ | 15.39 | $ | 15.81 | $ | 21.90 | |||||||||||||||||
| Quarterly | Year-to-Date | ||||||||||||||||||||||||||
| 2023 | 2022 | December 31, | |||||||||||||||||||||||||
| (in thousands, except per share data) | 4th Qtr | 4th Qtr | 2023 | 2022 | |||||||||||||||||||||||
| Average Diluted Shares Outstanding | 9,644 | 9,589 | 9,625 | 9,560 | |||||||||||||||||||||||
| Net Income | $ | 5,453 | $ | 7,932 | 24,973 | 20,092 | |||||||||||||||||||||
| Plus: Merger-related expenses | 956 | - | 956 | - | |||||||||||||||||||||||
| Less: Related tax effect | 200 | - | 200 | - | |||||||||||||||||||||||
| Adjusted Net Income | $ | 6,209 | $ | 7,932 | $ | 25,729 | $ | 20,092 | |||||||||||||||||||
| Adjusted Diluted Earnings Per Share | $ | 0.64 | $ | 0.83 | $ | 2.67 | $ | 2.10 | |||||||||||||||||||
| 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 | ||||||||||||||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 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 | $ | 12,724 | $ | 176 | 5.46 | % | $ | 26,772 | $ | 361 | 5.35 | % | $ | 132,772 | $ | 1,226 | 3.66 | % | ||||||||||||
| Investment securities: | ||||||||||||||||||||||||||||||
| Taxable | 371,949 | 2,691 | 2.87 | 371,603 | 2,606 | 2.78 | 366,923 | 2,388 | 2.58 | |||||||||||||||||||||
| Tax-exempt | 22,476 | 132 | 2.33 | 22,523 | 128 | 2.25 | 25,601 | 137 | 2.13 | |||||||||||||||||||||
| Total investment securities | 394,426 | 2,822 | 2.84 | 394,126 | 2,734 | 2.75 | 392,524 | 2,524 | 2.55 | |||||||||||||||||||||
| Loans: | ||||||||||||||||||||||||||||||
| Taxable (1) | 1,682,403 | 26,797 | 6.32 | 1,677,117 | 25,829 | 6.11 | 1,598,206 | 21,499 | 5.34 | |||||||||||||||||||||
| Tax-exempt | 21,359 | 210 | 3.90 | 21,721 | 213 | 3.89 | 22,829 | 222 | 3.85 | |||||||||||||||||||||
| Total loans | 1,703,762 | 27,007 | 6.29 | 1,698,838 | 26,042 | 6.08 | 1,621,035 | 21,721 | 5.32 | |||||||||||||||||||||
| Total earning assets | 2,110,913 | 30,005 | 5.64 | 2,119,736 | 29,137 | 5.45 | 2,146,331 | 25,471 | 4.71 | |||||||||||||||||||||
| Other assets (2) | 65,067 | 71,008 | 66,173 | |||||||||||||||||||||||||||
| Total assets | $ | 2,175,980 | $ | 2,190,744 | $ | 2,212,504 | ||||||||||||||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||||||
| Interest bearing demand | $ | 914,832 | 5,918 | 2.57 | % | $ | 917,983 | 5,542 | 2.40 | % | $ | 942,286 | 2,561 | 1.08 | % | |||||||||||||||
| Savings | 136,622 | 11 | 0.03 | 146,038 | 11 | 0.03 | 163,184 | 12 | 0.03 | |||||||||||||||||||||
| Time | 447,884 | 3,873 | 3.43 | 435,439 | 3,187 | 2.90 | 383,013 | 808 | 0.84 | |||||||||||||||||||||
| Total interest bearing deposits | 1,499,338 | 9,800 | 2.59 | 1,499,460 | 8,740 | 2.31 | 1,488,483 | 3,382 | 0.90 | |||||||||||||||||||||
| Short-term borrowings | 36,836 | 385 | 4.15 | 38,726 | 377 | 3.86 | 12,605 | 13 | 0.40 | |||||||||||||||||||||
| Long-term debt and junior subordinated debt | 14,395 | 222 | 6.12 | 14,356 | 215 | 5.94 | 14,858 | 175 | 4.68 | |||||||||||||||||||||
| Subordinated notes | 30,838 | 369 | 4.75 | 30,818 | 369 | 4.75 | 30,757 | 369 | 4.76 | |||||||||||||||||||||
| Total interest bearing liabilities | 1,581,406 | 10,776 | 2.70 | 1,583,360 | 9,701 | 2.43 | 1,546,703 | 3,939 | 1.01 | |||||||||||||||||||||
| Noninterest bearing deposits | 388,589 | 401,734 | 476,347 | |||||||||||||||||||||||||||
| Other liabilities | 19,473 | 18,439 | 17,974 | |||||||||||||||||||||||||||
| Shareholders' equity | 186,511 | 187,211 | 171,480 | |||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 2,175,980 | $ | 2,190,744 | $ | 2,212,504 | ||||||||||||||||||||||||
| Net interest income (tax equivalent basis) | $ | 19,229 | $ | 19,436 | $ | 21,533 | ||||||||||||||||||||||||
| Net interest margin (3) | 3.61 | % | 3.64 | % | 3.98 | % | ||||||||||||||||||||||||
| Tax equivalent adjustment | (63 | ) | (64 | ) | (72 | ) | ||||||||||||||||||||||||
| Net interest income | $ | 19,166 | $ | 19,372 | $ | 21,461 | ||||||||||||||||||||||||
| (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) | ||||||||||||||||||||
| Twelve Months Ended | ||||||||||||||||||||
| December 31, 2023 | December 31, 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 | $ | 35,542 | $ | 1,766 | 4.97 | % | $ | 300,922 | $ | 3,588 | 1.19 | % | ||||||||
| Investment securities: | ||||||||||||||||||||
| Taxable | 370,774 | 10,314 | 2.78 | 323,011 | 7,499 | 2.32 | ||||||||||||||
| Tax-exempt | 22,776 | 506 | 2.22 | 25,545 | 536 | 2.10 | ||||||||||||||
| Total investment securities | 393,550 | 10,820 | 2.75 | 348,556 | 8,035 | 2.31 | ||||||||||||||
| Loans: | ||||||||||||||||||||
| Taxable (1) | 1,654,614 | 100,114 | 6.05 | 1,557,289 | 72,558 | 4.66 | ||||||||||||||
| Tax-exempt | 21,988 | 854 | 3.88 | 18,200 | 730 | 4.01 | ||||||||||||||
| Total loans | 1,676,602 | 100,968 | 6.02 | 1,575,489 | 73,288 | 4.65 | ||||||||||||||
| Total earning assets | 2,105,694 | 113,554 | 5.39 | 2,224,967 | 84,911 | 3.82 | ||||||||||||||
| Other assets (2) | 70,027 | 79,891 | ||||||||||||||||||
| Total assets | $ | 2,175,721 | $ | 2,304,858 | ||||||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Interest bearing demand | $ | 908,860 | 19,532 | 2.15 | % | $ | 975,583 | $ | 4,562 | 0.47 | % | |||||||||
| Savings | 148,395 | 45 | 0.03 | 162,701 | 49 | 0.03 | ||||||||||||||
| Time | 422,276 | 11,177 | 2.65 | 414,784 | 2,650 | 0.64 | ||||||||||||||
| Total interest bearing deposits | 1,479,531 | 30,754 | 2.08 | 1,553,068 | 7,261 | 0.47 | ||||||||||||||
| Short-term borrowings | 33,229 | 1,237 | 3.72 | 11,987 | 48 | 0.40 | ||||||||||||||
| Long-term debt | 14,489 | 839 | 5.79 | 18,741 | 616 | 3.29 | ||||||||||||||
| Subordinated debentures | 30,808 | 1,476 | 4.79 | 30,727 | 1,476 | 4.80 | ||||||||||||||
| Total interest bearing liabilities | 1,558,057 | 34,306 | 2.20 | 1,614,523 | 9,401 | 0.58 | ||||||||||||||
| Noninterest bearing deposits | 413,126 | 494,969 | ||||||||||||||||||
| Other liabilities | 19,186 | 14,073 | ||||||||||||||||||
| Shareholders' equity | 185,352 | 181,293 | ||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 2,175,721 | $ | 2,304,858 | ||||||||||||||||
| Net interest income (tax equivalent basis) | $ | 79,248 | $ | 75,510 | ||||||||||||||||
| Net interest margin (3) | 3.76 | % | 3.39 | % | ||||||||||||||||
| Tax equivalent adjustment | (256 | ) | (258 | ) | ||||||||||||||||
| Net interest income | $ | 78,992 | $ | 75,252 | ||||||||||||||||
| (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. | ||||||||||||||||||||
FAQ
What is the net income reported for the year ended December 31, 2023?
What was the net interest margin for the year ended December 31, 2023?
What was the cash dividend per common share payable on February 13, 2024?
What was the impact of merger-related expenses on net income and diluted earnings per share for the quarter ended December 31, 2023?
What was the increase in loans from December 31, 2022, to December 31, 2023?
What was the change in noninterest income for the three months ended December 31, 2023?
What was the shareholders' equity at December 31, 2023?
What was the common equity tier 1 capital ratio at December 31, 2023?
What percentage of the Bank's deposits were estimated to be FDIC-insured at December 31, 2023?
