UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-15536
Codorus Valley Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2428543
(State of incorporation) (I.R.S. Employer ID No.)
1 Manchester Street, P.O. Box 67, Glen Rock, PA 17327
(Address of principal executive offices) (Zip Code)
(717) 235-6871 or (717) 846-1970
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changes
since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
995,786 shares of $2.50 (par value) common stock were outstanding
as of 10-24-95 .
<PAGE>
CODORUS VALLEY BANCORP, INC.
10Q INDEX
Page
#
PART I - FINANCIAL INFORMATION:
- Consolidated Statements of Financial Condition... 1
- Consolidated Statements of Income................ 2
- Consolidated Statements of Cash Flows............ 3
- Notes to Consolidated Financial Statements....... 4
- Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 6
PART II - OTHER INFORMATION ............................... 14
Signature Page ............................................ 15
<PAGE>
CODORUS VALLEY BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
Unaudited
September December September
30, 31, 30,
1995 1994 1994
--------- --------- ---------
Assets (dollars in thousands)
Cash and due from banks:
Interest bearing deposits with banks $ 330 $ 119 $ 111
Non-interest bearing deposits and cash 6,036 4,873 4,855
Federal funds sold 0 1,850 0
Securities available for sale 63,184 53,717 56,801
Loans 160,886 150,637 147,040
Less-allowance for loan losses (2,150) (2,249) (1,937)
-------- -------- --------
Total net loans 158,736 148,388 145,103
Premises and equipment 3,567 3,301 3,387
Interest receivable 1,739 1,639 1,563
Other assets 1,151 2,110 2,176
-------- -------- --------
Total assets............................$234,743 $215,997 $213,996
======== ======== ========
Liabilities
Deposits
Non-interest bearing demand $ 17,270 $ 15,177 $ 14,860
NOW 19,448 20,375 20,298
Insured money fund 26,560 29,347 29,974
Savings 21,461 22,497 23,515
Time CD's less than $100,000 111,760 98,822 95,289
Time CD's $100,000 and above 16,075 10,678 10,440
-------- -------- --------
Total deposits 212,574 196,896 194,376
Federal funds purchased 375 0 450
Interest payable 997 852 912
Accrued expenses and other liabilities 389 377 416
-------- -------- --------
Total liabilities....................... 214,335 198,125 196,154
Stockholders' Equity
Series preferred stock, par value $2.50
per share; 1,000,000 shares authorized;
0 shares issued and outstanding 0 0 0
Common stock, par value $2.50 per share;
10,000,000 shares authorized; 995,786
shares issued and outstanding for 1995
and 958,621 for 1994. 2,490 2,396 2,396
Capital surplus 5,194 4,428 4,428
Retained earnings 12,218 11,932 11,362
Net unrealized gains(losses) on securities
available for sale, net of taxes 506 (884) (344)
-------- -------- --------
Total stockholders' equity............... 20,408 17,872 17,842
Total liabilities and stockholders'
equity.................................$234,743 $215,997 $213,996
======== ======== ========
See accompanying notes.
1
<PAGE>
CODORUS VALLEY BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
Unaudited
<TABLE>
Three months ended Nine months ended
September 30, September 30,
(dollars in thousands, except per share data) 1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Interest Income
Interest and fees from loans $3,661 $3,234 $10,708 $9,247
Interest from federal funds sold and interest
bearing deposits with banks 30 35 145 83
Interest and dividends from securities:
Taxable interest income 880 758 2,410 2,258
Tax-exempt interest income 73 60 220 181
Dividend income 12 11 38 34
------ ------ ------ ------
Total interest income.............................. 4,656 4,098 13,521 11,803
Interest Expense
NOW 124 137 377 402
Insured money fund 201 239 598 694
Savings 142 158 428 459
Time CD's less than $100,000 1,590 1,098 4,440 3,209
Time CD's $100,000 and above 232 110 617 347
------ ------ ------ ------
Total interest expense on deposits 2,289 1,742 6,460 5,111
Interest expense on short-term borrowings
and federal funds sold 3 0 3 1
------ ------ ------ ------
Total interest expense.............................. 2,292 1,742 6,463 5,112
------ ------ ------ ------
Net interest income................................. 2,364 2,356 7,058 6,691
Provision for Loan Losses 0 88 32 1,182
------ ------ ------ ------
Net interest income after provision for loan losses 2,364 2,268 7,026 5,509
Non-interest Income
Trust income 58 61 188 239
Service charges on deposit accounts 105 94 303 272
Other service charges and fees 55 58 179 157
Gain (loss) on sales of securities 0 0 (62) 0
------ ------ ------ ------
Total non-interest income 218 213 608 668
Non-interest Expense
Salaries and benefits 840 851 2,556 2,374
Occupancy of premises 116 100 329 334
Furniture and equipment 145 147 453 444
FDIC deposit insurance (11) 109 211 326
Professional and legal 51 40 102 109
Marketing and advertising 43 38 145 168
Acquired real estate, net 21 20 58 107
Other 330 278 994 859
------ ------ ------ ------
Total non-interest expense 1,535 1,583 4,848 4,721
Income before income taxes 1,047 898 2,786 1,456
Provision for Income Taxes 324 254 854 421
------ ------ ------ ------
Net income..........................................$ 723 $ 644 $1,932 $1,035
====== ====== ====== ======
Net income per common share..........................$0.73 $0.64 $1.94 $1.03
===== ===== ===== =====
See accompanying notes.
</TABLE>
2
<PAGE>
CODORUS VALLEY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
Nine months ended
September 30,
1995 1994
------ -------
Cash Flows From Operating Activities: (dollars in thousands)
Net Income $1,932 $ 1,035
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation 276 271
Provision for loan losses 32 1,182
Provision for losses on assets acquired in foreclosure 30 63
Loss on sales of securities 62 0
(Increase) in interest receivable (100) (10)
Decrease (increase) in other assets 182 (209)
Increase (decrease) in interest payable 145 (77)
(Decrease) increase in other liabilities (10) 212
Other, net 3 91
------ -------
Net cash provided by operating activities............. 2,552 2,558
Cash Flows From Investing Activities:
Proceeds from sales of securities available for sale 2,345 0
Proceeds from maturities and calls of securities
available for sale 8,763 15,002
Purchase of securities available for sale (18,615) (17,070)
Net increase in loans made to customers (11,033) (8,362)
Proceeds from loan sales 531 525
Purchases of premises and equipment (542) (449)
Proceeds from sale of assets acquired in foreclosure 256 304
------ -------
Net cash used in investing activities.................(18,295) (10,050)
Cash Flows From Financing Activities:
Net (decrease) in demand and savings deposits (2,657) (246)
Net increase in time deposits 18,335 1,897
Net increase in federal funds purchased 375 450
Proceeds from issuance of common stock 0 4
Dividends paid (510) (470)
Cash paid in lieu of fractional shares (6) 0
Payment to repurchase common stock (270) 0
------ -------
Net cash provided by financing activities.............15,267 1,635
------ -------
Net (decrease) in cash and cash equivalents........... (476) (5,857)
Cash and cash equivalents at beginning of year........ 6,842 10,823
------ -------
Cash and cash equivalents at September 30,...........$ 6,366 $ 4,966
======= =======
Supplemental Disclosures:
Interest payments $6,318 $5,188
Income tax payments $895 $542
See accompanying notes.
3
<PAGE>
CODORUS VALLEY BANCORP, INC.
Notes to Consolidated Financial Statements
Note 1-General
The interim financial statements are unaudited. However, they reflect
all adjustments which are, in the opinion of management, necessary to
present fairly the financial condition and results of operations for the
reported periods, and are of a normal and recurring nature.
These statements should be read in conjunction with notes to the
financial statements contained in the 1994 Annual Report to
Stockholders.
No shares of common stock are reserved for issuance in the event of
conversions or the exercise of warrants, options or other rights.
The results of operations for the nine month period ended September 30,
1995 are not necessarily indicative of the results to be expected for
the full year.
Note 2-Summary of Significant Accounting Policies
Allowance for Loan Losses - Management considers the allowance for loan
losses (reserve) to be adequate at this time.
Per Share Computations - All per share computations include the
retroactive effect of stock dividends.
Reclassifications - Certain reclassifications have been made to the 1994
consolidated financial statements to conform with the 1995 presentation.
Note 3-Impaired Loans
On January 1, 1995, the Corporation adopted Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of
a Loan", as amended by Statement No. 118, "Accounting by Creditors for
Impairment of a Loan--Income Recognition and Disclosure." Under
Statement No. 114, a loan is considered impaired when, based on current
information and events, it is probable that a creditor will be unable to
collect all amounts due. The Statement requires that impaired loans be
measured based on the present value of expected future cash flows,
discounted at the loan's effective interest rate, or as a practical
expedient, at the loan's observable market price or the fair value of
the collateral if the loan is collateral dependent. If the measure of
the impaired loan is less than its recorded investment a creditor must
recognize an impairment by creating, or adjusting, a valuation allowance
with a corresponding charge to loan loss expense. The Corporation
uses the cash basis method to recognize interest income on loans that
are impaired. All of the Corporation's impaired loans were on a non-
accrual status for all reported periods. Additional information
regarding impaired loans is provided in the schedule that follows.
4
<PAGE>
CODORUS VALLEY BANCORP, INC.
Notes to Consolidated Financial Statements, continued
Note 3-Impaired Loans, continued
September 30, December 31, September 30,
(dollars in thousands) 1995 1994 1994
------ ------ ------
Impaired loans $4,137 $1,766 $1,187
Amount of impaired loans that
have a related allowance $4,137 $1,766 $1,187
Amount of impaired loans with
no related allowance $0 $0 $0
Allowance for impaired loans $570 $299 $131
For the nine month period ended
September 30,
1995 1994
------ ------
Average investment in impaired loans $2,300 $941
Interest income recognized on
impaired loans (all cash-basis method) $35 $16
Note 4-Analysis of Allowance for Loan Losses
Changes in the allowance for loan losses for the nine month period
ended September 30, were as follows:
(dollars in thousands) 1995 1994
------ ------
Balance-January 1, $2,249 $2,000
Provision charged to operating expense 32 1,182
Loans charged off (260) (1,266)
Recoveries 129 21
------ ------
Balance-September 30, $2,150 $1,937
====== ======
5
<PAGE>
CODORUS VALLEY BANCORP, INC.
Management's Discussion of Consolidated Financial Condition and
Results of Operations
The consolidated earnings of Codorus Valley Bancorp, Inc. (the Corporation),
were derived from the operations of its wholly-owned subsidiary, Peoples Bank
of Glen Rock (the Bank). This discussion is intended to enhance the reader's
understanding of the financial statements, notes to financial statements, and
tables appearing elsewhere in this report.
Three months ended September 30, 1995
compared to three months ended September 30, 1994
RESULTS OF OPERATIONS
Net income for the current three month period was $723,000, up $79,000 or 12%
above the $644,000 earned in the third quarter of 1994. The increase in net
income was due primarily to an $83,000 (after-tax) FDIC insurance expense
refund pursuant to a rate reduction effective June 1, 1995; and a $58,000
(after-tax) reduction in the provision expense for loan losses.
An explanation of the factors and trends that caused changes between the two
periods, by major earnings category, follows.
Total interest income for the current three month period was $4,656,000, up
$558,000 or 13.6% above the $4,098,000 earned in the same period of 1994.
The $558,000 increase in interest income was due primarily to improved yields
on a larger volume of earning assets. However, the total loan portfolio yield
was constrained in the current period due to a higher level of nonperforming
commercial loans.
Total interest expense for the current three month period was $2,292,000, up
$550,000 or 31.6% above the $1,742,000 incurred for the same period in 1994.
The $550,000 increase in interest expense was caused by higher rates paid,
due to competitive pressures, on a larger volume of time deposits.
Net interest income for the current three month period of $2,364,000,
approximated the same quarter in 1994. The $558,000 increase in total
interest income earned in the current quarter was offset by a similar
increase in funding costs.
No provision expense was incurred during the current quarter because the loan
loss reserve level was deemed adequate. Comparatively, an $88,000 loan loss
provision expense was incurred for the third quarter of 1994.
Total non-interest income for the current three month period was $218,000;
approximately the same as the third quarter in 1994.
6
<PAGE>
CODORUS VALLEY BANCORP, INC.
Total non-interest expense for the current three month period was $1,535,000,
down $48,000 or 3% below the $1,583,000 incurred for the same period in 1994.
The decrease in total non-interest expense was primarily the result of a
$126,000 FDIC deposit insurance expense refund, including interest, for the
four month period June though September 1995. The FDIC lowered its deposit
insurance rate for Bank Insurance Fund (BIF) insured commercial banks from
$.23 per $100 of deposits to $.04 per $100 of deposits, effective June 1,
1995. The $52,000 increase in "other" expenses was due primarily to increases
in problem loan carrying costs, and donations and sponsorship expenses.
The provision for income taxes in the current quarter increased $70,000 above
the same quarter in 1994 due to a higher level of pretax earnings.
Nine months ended September 30, 1995
compared to nine months ended September 30, 1994
RESULTS OF OPERATIONS
Net income for the first nine months of 1995 was $1,932,000, up $897,000
above the $1,035,000 earned for the same period in 1994. The increase in net
income was due primarily to a smaller loan loss provision, improved yields on
a larger volume of earning assets, and an FDIC insurance expense refund
pursuant to a rate reduction effective June 1, 1995. For comparative
purposes, prior year net income would have approximated $1,742,000 absent an
unusual loan loss which was directly attributable to a former Bank officer.
Earnings per share was $1.94 on September 30, 1995, compared to $1.03 on
September 30, 1994. For the nine month period (annualized) of 1995, return on
average assets (ROA) and return on average equity (ROE) were 1.14% and 13.5%,
respectively, compared to 0.75% and 8.8%, respectively, for 1994.
At September 30, 1995, total assets approximated $235 million, reflecting a
$21 million or 9.8% increase above September 30, 1994. Book value per share
was $20.49 on September 30, 1995, compared to $17.74 on September 30, 1994.
The Corporation's capital remained sound as evidenced by a Tier I Risk-Based
Capital Ratio of 12.9% and a Total Risk-Based Capital ratio of 14.2% at
September 30, 1995.
An explanation of the factors and trends that caused changes between the two
periods, by major earnings category, follows.
Since early January 1995, market interest rates experienced a downward trend
from their sharp ascent in 1994. The decline in market interest rates during
the current period was in response to slower economic growth and low
inflation.
Total interest income for the current nine month period was $13,521,000, up
$1,718,000 or 14.6% above the $11,803,000 earned in the same period of last
year. The $1,718,000 increase in interest income was due primarily to
7
<PAGE>
CODORUS VALLEY BANCORP, INC.
improved yields on a larger volume of loans. However, the total loan
portfolio yield was constrained in the current period due to a higher level
of nonperforming commercial loans. Total loans outstanding averaged $154
million during the current nine month period at an average taxable equivalent
yield of 9.1%. Comparatively, total loans outstanding averaged $144 million
at an average taxable equivalent yield of 8.3% for the same period in 1994.
Most of the loan growth in the current period occurred in the consumer loan
portfolio.
Total interest expense for the current nine month period was $6,463,000, up
$1,351,000 or 26.4% above the $5,112,000 incurred for the same period in
1994. The $1,351,000 increase in interest expense was due to higher rates on
a larger volume of deposits. Total interest bearing deposits averaged $190
million during the current nine month period at an average rate of 4.5%.
Comparatively, total interest bearing deposits averaged $179 million at an
average rate of 3.8% for the same period of 1994. During the current period,
rates paid on interest bearing demand and savings deposits were comparable to
1994; however, rates paid on time deposits were higher due to market forces
effecting interest rates. Deposits are expected to grow at a slower rate in
the period ahead based on a presumption of gradually declining market
interest rates.
Net interest income was $7,058,000 for the current period, up $367,000 or
5.5% above the same period in 1994, as income from loans outpaced funding
costs. The net yield (taxable equivalent basis) on earning assets was 4.50%
for the first nine months of 1995 compared to 4.52% for the same period in
1994.
The provision expense for loan losses was $32,000 for the current nine month
period to support the growth in total loans. Comparatively, the provision
expense for the same period in 1994 was $1,182,000 which primarily reflected
the unusual loan loss recognized in the second quarter of that year.
Total non-interest income for the current nine month period was $608,000,
down $60,000 or 9% below the $668,000 earned for the same period in 1994. The
$60,000 decrease in the current period was caused by two factors. First,
trust income was below the prior year due to a reduction in the estate fee
component which is earned periodically. Second, the current period contained
a $62,000 loss from the sale of investment securities. Approximately $2.4
million in low yielding securities were exchanged for higher yielding
securities to improve overall portfolio yield. The income produced from the
higher yielding securities will more than offset the loss in 1995. To achieve
comparability in non-interest income from normal operations, it is necessary
to exclude the relatively infrequent $62,000 loss on the sale of securities
from current period income. On an adjusted basis, total non-interest income
for the current nine month period was comparable to the same period in 1994.
In the period ahead non-interest income, excluding the infrequent securities
loss, is expected to increase based on normal business growth.
8
<PAGE>
CODORUS VALLEY BANCORP, INC.
Total non-interest expense for the current nine month period was $4,848,000,
up $127,000 or 2.7% above the $4,721,000 incurred for the same period in
1994. The $127,000 expense increase was due to two factors. First, salaries
and benefits expenses increased to support normal business growth, branch
office expansion, and staff additions relative to internal credit controls.
Second, the "other" expense category increased due to normal business growth,
and greater problem loan carrying costs. In the period ahead, total non-
interest expense is expected to increase due to planned business growth.
In September 1995, the Bank received a $126,000 refund, including interest,
from the FDIC for deposit insurance premiums for the four month period June
through September 1995. The FDIC lowered their deposit insurance rate for BIF
insured commercial banks from $.23 per $100 of deposits to $.04 per $100 of
deposits, effective June 1, 1995. The refund was made because the FDIC's BIF
achieved its required reserve level of $1.25 per $100 of deposits in May
1995. For the remainder of 1995, the Bank's deposit insurance premium will be
based on the new rate of $.04 per $100 of deposits. The fourth quarter
premium (paid in advance) is $20,568, approximately $98,000 less than if the
assessment were based on the old rate. The FDIC's BIF rates may vary in the
future.
The provision for income taxes in the current period increased $1,330,000
above the same period in 1994 due primarily to greater pretax earnings.
CREDIT RISK AND LOAN QUALITY
Table 1, Nonperforming Assets and Past Due Loans, depicts an upward trend in
the volume of nonperforming assets, and related ratios. An explanation for
this trend is provided below.
Total impaired loans, the major component of total nonperforming assets,
increased $2,950,000 or 249% since September 30, 1994 to a current level of
$4,137,000. The overall increase was caused primarily by six commercial loan
relationships which totalled $2,928,000. These loan relationships range from
$323,000 to 795,000, vary by industry, and are generally well collaterized.
Efforts to modify contractual terms for individual accounts or liquidate
collateral assets are proceeding as quickly as potential buyers can be
located and legal constraints permit.
The other component of nonperforming assets, assets acquired in foreclosure
(net of a related reserve) declined since September 30, 1994 to a level of
$572,000 due primarily to liquidations. Assets acquired (also known as OREO)
consist primarily of improved real estate from four commercial loan customers
in unrelated businesses. Generally Accepted Accounting Principles require
that assets taken in satisfaction of debt be accounted for on an individual
asset basis, at the lower of (a) fair value minus estimated costs to sell or
(b) cost. Accordingly, the Corporation recorded a $30,000 loss provision for
the first nine months of 1995, compared to $62,500 for the same period in
9
<PAGE>
CODORUS VALLEY BANCORP, INC.
1994, to reflect a decline in the estimated fair value of assets acquired.
Efforts to liquidate assets acquired are proceeding as quickly as potential
buyers can be located and legal constraints permit.
At September 30, 1995, loans past due 90 days or more and still accruing
interest totalled $326,000. Generally, loans in this category are well
collaterized and in the process of collection.
Table 2, Analysis of Allowance for Loan Losses, depicts a $2,150,000
allowance (reserve) at September 30, 1995, which is 1.34% of total loans. The
current allowance was increased above the prior period to support a larger
volume of loans. Based on a recent evaluation of potential loan losses,
management believes that the allowance is adequate to support any reasonably
foreseeable level of losses that may arise. Ultimately, however, the adequacy
of the allowance is largely dependent upon future economic factors beyond the
Corporation's control. With this in mind, additions to the allowance for
loan losses may be required in future periods.
LIQUIDITY
The loan-to-deposit ratio was 75.7% at September 30, 1995, compared to 75.6%
at September 30, 1994. The ratio for both periods was within the 70-80% range
that the Corporation uses for liquidity policy purposes.
STOCKHOLDERS' EQUITY (CAPITAL)
Total stockholders' equity, or capital, was $20,408,000 at September 30,
1995, compared to $17,842,000 at September 30, 1994. Growth in equity during
the current period was due to earnings retention from profitable operations
and an increase in unrealized gains, net of taxes, on securities available
for sale. Book value per share was $20.49 on September 30, 1995, compared to
$17.74 on September 30, 1994.
On October 10, 1995, the Board of Directors declared a regular quarterly cash
dividend of $.15 per share, payable November 14, 1995, to stockholders of
record October 24, 1995. The payment of this cash dividend brings total cash
dividends paid in 1995 to $.68 per share, up $.06 or almost ten percent above
the $.62 paid in 1994.
At September 30, 1995, the Corporation's tier I risk-based capital ratio was
12.9% and its total risk-based capital ratio was 14.2%. Both capital ratios
exceeded the minimum federal regulatory requirements for well capitalized
banks of 6% and 10%, respectively.
On June 28, 1995, the Corporation filed a Form S-3 Registration Statement
with the SEC in connection with the registration of 50,000 shares of the
Corporation's common stock for use in the Corporation's Dividend Reinvestment
10
<PAGE>
CODORUS VALLEY BANCORP, INC.
and Stock Purchase Plan. Shares may be purchased by stockholders only
pursuant to the prospectus contained in the Registration Statement.
The Board of Directors recently approved a plan to purchase, in open market
and privately negotiated transactions, up to 50,000 shares of the
Corporation's outstanding common stock. The Board believes that it is in the
best interests of the Corporation and its stockholders to undertake the
repurchase program because the Corporation's stock is undervalued at the
current market price. The repurchase program may increase the return on
equity and net income per share on the remaining outstanding shares held by
stockholders. The stock repurchase program is expected to be funded by
available excess capital.
As previously disclosed in the Form 10-K for the period ended December 31,
1994 and the Form 10-Q for period ended March 31, 1995, the Corporation and
the Bank have several capital projects under consideration. A summary of
these projects is as follows: headquarters facility replacement and
relocation; bankwide computer system replacement; and the addition of a full
service banking office. Relative to the Corporate headquarters project, the
Corporation purchased a parcel of land on September 28, 1995, to serve as the
site for the headquarters facility. The property is located at 105 Leader
Heights Road, York; which is adjacent to the Bank's Data Operations Center
and banking office. This acquisition, coupled with real estate owned by the
Bank, was a material piece in the long range plan for Corporate office
consolidation and expansion. Also, the Board of Directors recently approved
the design for the new Corporate headquarters facility. Initial plans call
for the Bank to occupy a major portion of the building and lease the
remaining space as a source of revenue. Occupancy is tentatively scheduled
for July 1997. While the Corporate headquarters will be relocated, the Bank
will still maintain a full service banking office in Glen Rock. Alternatives
for funding these projects are being reviewed and analyzed by the Board of
Directors.
Planned capital investments relative to expansion and automation could reduce
Corporate net income and capital growth in the short term; however, these
expenditures are deemed necessary to grow market share and net income over
the long term. We believe that these investments are an important part of the
overall strategy to achieve the goal of enhancing long term shareholder
value.
11
<PAGE>
CODORUS VALLEY BANCORP, INC.
Table 1 - Nonperforming Assets and Past Due Loans
September 30, December 31, September 30,
(dollars in thousands) 1995 1994 1994
------ ------ ------
Impaired loans $4,137 $1,766 $1,187
Assets acquired in foreclosure,
net of reserve 572 670 862
------ ------ ------
Total nonperforming assets $4,709 $2,436 $2,049
====== ====== ======
Loans past due 90 days or more
and still accruing interest $326 $522 $802
Ratios:
Impaired loans as a % of
total period-end loans 2.57% 1.17% 0.80%
Nonperforming assets as a % of
total period-end loans and net
assets acquired in foreclosure 2.92% 1.61% 1.39%
Nonperforming assets as a % of
total period-end stockholders'
equity 23.07% 13.63% 11.38%
Allowance for loan losses as a
multiple of impaired loans .5x 1.3x 1.6x
Interest not recognized on impaired
loans at period-end:(1)
Contractual interest due $278 $125 $103
Interest revenue recognized 35 23 16
---- ---- ---
Interest not recognized in operations $243 $102 $87
==== ==== ===
(1) This table includes interest not recognized on loans which were
classified as impaired at period-end. While every effort is being
made to collect this interest revenue, it is probable a portion will
never be recovered.
12
<PAGE>
CODORUS VALLEY BANCORP, INC.
Table 2-Analysis of Allowance for Loan Losses
(dollars in thousands) 1995 1994
------ ------
Balance-January 1, $2,249 $2,000
Provision charged to operating expense 32 1,182
Loans charged off:
Commercial 228 1,255
Real estate-mortgage 0 0
Consumer 32 11
------ ------
Total loans charged off 260 1,266
Recoveries:
Commercial 115 21
Real estate-mortgage 0 0
Consumer 14 0
------ ------
Total recoveries 129 21
------ ------
Net charge-offs 131 1,245
Balance-September 30, $2,150 $1,937
====== ======
Ratios:
Net charge-offs (annualized) to average
total loans .11% 0.90%(1)
Allowance for loan losses to total loans
at period-end 1.34% 1.31%
(1) Net charge-offs for the period ended September 30, 1994 were adjusted for
the unusually large charge-off recorded in June 1994.
13
<PAGE>
CODORUS VALLEY BANCORP, INC.
PART II - Other Information:
Item 1. Legal proceedings
Except as previously reported, in the opinion of the management of the
Corporation and the Bank, there are no proceedings pending to which the
Corporation and the Bank is a party or to which their property is subject,
which, if determined adversely to the Corporation and the Bank, would be
material in relation to the Corporation's and the Bank's undivided profits or
financial condition. There are no proceedings pending other than ordinary
routine litigation incident to the business of the Corporation and the Bank.
In addition, no material proceedings are pending or are known to be
threatened or contemplated against the Corporation and the Bank by government
authorities.
Item 2. Changes in the rights of the Company's security holders -
nothing to report.
Item 3. Defaults by the Company on its senior securities - nothing to report.
Item 4. Results of votes of security holders - nothing to report.
Item 5. Other information - nothing to report.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits - none.
(b) Reports on Form 8-K - none.
14
<PAGE>
CODORUS VALLEY BANCORP, INC.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Codorus Valley Bancorp, Inc.
(Registrant)
/s/ Larry J. Miller
By_____________________________
(principal executive officer)
Larry J. Miller,
President & CEO
Date: November 10, 1995
/s/ Jann A. Weaver
By_____________________________
(principal financial and
accounting officer)
Jann A. Weaver,
Assistant Treasurer &
Assistant Secretary
Date: November 10, 1995
15
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 6,036
<INT-BEARING-DEPOSITS> 330
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 63,184
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 160,886
<ALLOWANCE> 2,150
<TOTAL-ASSETS> 234,743
<DEPOSITS> 212,574
<SHORT-TERM> 375
<LIABILITIES-OTHER> 1,386
<LONG-TERM> 0
<COMMON> 2,490
0
0
<OTHER-SE> 17,918
<TOTAL-LIABILITIES-AND-EQUITY> 234,743
<INTEREST-LOAN> 10,708
<INTEREST-INVEST> 2,668
<INTEREST-OTHER> 145
<INTEREST-TOTAL> 13,521
<INTEREST-DEPOSIT> 6,460
<INTEREST-EXPENSE> 3
<INTEREST-INCOME-NET> 7,058
<LOAN-LOSSES> 32
<SECURITIES-GAINS> (62)
<EXPENSE-OTHER> 4,848
<INCOME-PRETAX> 2,786
<INCOME-PRE-EXTRAORDINARY> 2,786
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,932
<EPS-PRIMARY> 1.94
<EPS-DILUTED> 1.94
<YIELD-ACTUAL> 4.39
<LOANS-NON> 4,137
<LOANS-PAST> 326
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,249
<CHARGE-OFFS> 260
<RECOVERIES> 129
<ALLOWANCE-CLOSE> 2,150
<ALLOWANCE-DOMESTIC> 2,150
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
