Codorus Valley Bancorp, !ne.
Codorus Valley Bancorp, Inc. Reports an Increase in Annual Earnings For the Year 2013 FOR IMMEDIATE NEWS RELEASE-York, Pennsylvania (January 17, 2014)
Codorus Valley Bancorp, Inc. (Nasdaq: CVLY), the parent company ofPeoplesBank, A Codorus
Valley Company, today announced net income available to common shareholders (earnings) for the year
2013 of$10,316,000 or $2.17 per share basic, $2.13 per share diluted, compared to $9,010,000 or $1.93 per share basic, $1.91 per share diluted, earned in the year 2012. For the quarter ended December 31,
2013, the Corporation earned $2,519,000 or $0.53 per share basic, $0.52 per share diluted, compared to
$2,391,000 or $0.51 per share basic, $0.50 per share diluted, for the quarter ended December 31, 2012.
President and CEO Larry J. Miller commented, "We are pleased with the Corporation's financial performance for the year 2013, which enabled us to pay cash dividends totaling $0.46 per common
share, an increase of $0.06 or 15 percent per share, distribute a 5 percent stock dividend and improve the price ofthe company's stock from the prior year-end. In addition to our focus on profitable operations, we also concentrated on expanding the banking franchise. During the year PeoplesBank opened two banking offices, one in downtown Hanover, PA (May) and the other in Dover, PA (September). To date, both offices have contributed to the growth of loans and deposits. We have also been busy this year
planning and laying the groundwork to celebrate a very special event in 2014, PeoplesBank's 1501
anniversary! To commemorate this important milestone in our history, we have many special activities and events planned throughout 2014, which we'll advertise under the banner of our anniversary theme Proud ofOur Past, Focused on Your Future."
As recently announced, the Corporation's Board ofDirectors declared a regular quarterly cash dividend of$0.12 per common share on January 14, 2014, payable on February Il, 2014, to shareholders ofrecord at the close ofbusiness on January 28, 2014.
Items worthy of mention for the quarter ending December 31, 2013, include:
• Net income available to common shareholders for the fourth quarter of2013 increased
$128,000 or 5 percent compared to the fourth quarter of2012. Earnings were driven primarily by a l O percent increase in net interest income, which resulted from an increase in interest income from a larger volume of earning assets, principally commercialloans, and a decrease in the cost of deposits. The increase in net interest income, more than offset a decrease in noninterest income and an increase in noninterest expense, which are described below under the Review of Operations for the full year 2013.
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Page l of6 Codorus Valley Corporate Center
105 Leader Heights Road, York, PA 17403
717-747-1519
Codorus Valley Bancorp, !ne.
• At December 31, 2013, the Corporation's nonperforming assets ratio was 2.24 percent, compared to 1.64 percent at December 31, 2012. The increase in the ratio was due largely to the reclassification of a $5.5 million commercialioan to nonaccrual status in the fourth quarter of this year. Management has established an appropriate allowance for this account while it evaluates its collection options.
Additional financial information, which like all information contained herein is unaudited, is provided in the Financial Highlights section ofthis Earnings Release.
For the full year 2013, net income available to common shareholders totaled $10,316,000, an increase of$1,306,000 or 14 percent compared to the year 2012. The increase in earnings was due primarily to an increase in net interest income and, to a lesser degree, decreases in the provision for loan losses and preferred stock dividends, which more than offset a decrease in noninterest income and an increase in noninterest expense, as described below.
The $2,368,000 or 7 percent increase in net interest income was due primarily to a decrease in funding costs resulting from a larger proportion of low cost core deposits to total deposits and lower rates generally paid on all deposit products, which reflected unusually low market interest rates. An increase in interest income from an increase in the average volume of loans also contributed to the
increase in net interest income, although the volume effect was muted by lower yields, a reflection of the low interest rate environment.
The $280,000 or 16 percent decrease in the provision for loan losses was due primarily to a decrease in the level of net charge-offs for the year and adequacy of the allowance for loan losses.
The $436,000 or 5 percent decrease in noninterest income was primarily the result of decreases in gains from the periodic sale of investment securities, net gain from the sale of loans held for sale and income from mutuai fund, annuity and insurance sales. Gains from the sale ofU.S. agency mortgage back securities were greater in the year 2012 as selected instruments that no longer met the Corporation's investment standards were liquidated in that year. Net gain from the sale ofloans held for sale, principally residential mortgages, for the year 2013 was adversely affected by a sharp decrease in refinancing demand as a result of saturation and an increase in market interest rates. The decrease in income from mutuai fund, annuity and insurance sales for the year 2013 reflected a decrease in sales volume and loss of accounts as a result of staff resignations. Core noninterest income, which excludes
gains or losses from the sale of securities, decreased $92,000 or l percent for the year 2013, compared to
the year 2012.
The $226,000 or l percent increase in noninterest expense was driven primarily by a lO percent increase in personnel expense, which resulted from expanding the banking franchise and normal
business growth. A significant reduction in impairment costs associated with foreclosed real estate more
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105 Leader Heights Road, York, PA 17403
717-747-1519
Codorus Valley Bancorp, !ne.
than offset the increase in personnel expense, which kept the overall increase in noninterest expense to a m1mmum.
The $814,000 or 26 percent increase in the provision for income taxes was due to the 16 percent increase in income before income taxes.
The $134,000 or 35 percent decrease in preferred stock dividends was the result ofa decrease in the dividend rate caused by the addition ofloans that qualified for the U.S. Treasury's Small Business Lending Fund Program. Dividends under this program were l percent for the year 2013, compared to approximately 1.5 percent for the year 2012.
On December 31, 2013, total assets were approximately $1.15 billion, representing a $91 million or 9 percent increase, compared to December 31, 2012. Compared to one year ago, asset growth occurred primarily in the commercialloan portfolio and was funded primarily by an increase in core deposits and low-rate advances from the Federai Home Loan Bank ofPittsburgh. The growth of core deposits is a particular focus ofthe Corporation because the rates are relatively low, are a source offee income and provide the opportunity to cross-sell other financial products and services. The Corporation excludes time deposits in its definition of core deposits.
As a result of profitable operations, the Corporation's capitallevel remained sound as evidenced by capitai ratios that exceed current regulatory requirements for well capitalized institutions as provided in the Financial Highlights section ofthis Earnings Release.
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, comprised currently oftwenty financial centers located throughout York County, Pennsylvania and in Hunt Valley, Bel Air and Westminster, Maryland. In addition to a full range ofbusiness and consumer banking services, the company also offers mortgage banking, wealth management, and real estate settlement services. Additional information is available on the bank's website at www.peoplesbanknet.com.
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717-747-1519
Codorus Valley Bancorp, !ne. Forward-looking statements
Codorus Valley Bancorp, Inc. has made forward-looking statements in this Press Announcement. 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 Announcement, the company is making forward-looking statements. Note that many factors could affect the future financial results ofthe 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 Announcement. Those factors include, but are not limited to: credit risk, changes in market interest rates, competition, economie downturn or recession, and government regulation and supervision. The company 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.
Larry J. Miller
Vice-Chairman, President, and CEO Codorus Valley Bancorp, Inc.
717-747-1500
888-846-1970 lmiller@peoplesbanknet.com
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Page 4 of6 Codorus Valley Corporate Center
105 Leader Heights Road, York, PA 17403
717-747-1519
Codorus Valley Bancorp, !ne. Codorus Valley Bancorp, Inc. Financial HighlightsCondensed Consolidated Statements of Income (Unaudited)
(in thousands of dollars, except per share data)
Interest income Interest expense | Three months ended | Yearended |
Interest income Interest expense | December 31, | December 31, |
Interest income Interest expense | 2013 2012 | 2013 2012 |
Interest income Interest expense | $ 12,319 $ 11,819 | $ 46,972 $ 46,512 |
Interest income Interest expense | 2,114 2,519 | 8,619 10,527 |
Net interest income | 10,205 9,300 | 38,353 35,985 |
Provision for loan losses | 500 600 | 1,470 1,750 |
Noninterest income 1,855 2,156 7,754 8,190
Noninterest expense Income before income taxes Provision for income taxes Net income Preferred stock dividends | 8,012 | 7,512 | 30,154 | 29,928 | |||
Noninterest expense Income before income taxes Provision for income taxes Net income Preferred stock dividends | 3,548 | 3,344 | 14,483 | 12,497 | |||
Noninterest expense Income before income taxes Provision for income taxes Net income Preferred stock dividends | 966 | 890 | 3,917 | 3,103 | |||
Noninterest expense Income before income taxes Provision for income taxes Net income Preferred stock dividends | 2,582 | 2,454 | 10,566 | 9,394 | |||
Noninterest expense Income before income taxes Provision for income taxes Net income Preferred stock dividends | 63 | 63 | 250 | 384 | |||
Net income available to common shareholders | $ 2,519 | $ 2,391 | $ 10,316 | $ 9,010 | |||
Basic earnings per common share | $ 0.53 | $ 0.51 | $ 2.17 | $ 1.93 | |||
Diluted eamings per common share | $ 0.52 | $ 0.50 | $ 2.13 | $ 1.91 |
Condensed Consolidated Statements ofFinancial Condition (Unaudited)
(in thousands of dollars)
December 31, 2013 | December 31, 2012 | ||
Cash and short term investments | $ 15,062 | $ 49,757 | |
Investment securities | 233,483 | 236,925 | |
Loans | 859,898 | 740,225 | |
Allowance for loan losses | (9,975) | (9,302) | |
Net loans | 849,923 | 730,923 | |
Premises and equipment, net | 14,599 | 11,493 | |
Other assets | 37,574 | 30,639 | |
Total assets | $ 1,150,641 | $ 1,059,737 | |
Deposits | $ 925,303 | $ 901,307 | |
Borrowed funds | 110,856 | 50,171 | |
Other liabilities | 6,833 | 6,928 | |
Shareholders' equity | 107,649 | 101,331 | |
Totalliabilities and shareholders' equity | $ 1,150,641 | $ 1,059,737 |
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105 Leader Heights Road, York, PA 17403
717-747-1519
Codorus Valley Bancorp, !ne.Codorus Valley Bancorp, Inc.
Financial Highlights
Selected Financial Data (Unaudited)
E
Performance Ratios (%)
Retum on average assets (4) | 0.91 | 0.97 | 0.98 | l.OI | 0.93 | 0.96 | 0.90 |
Retum on average equity (4) | 9.57 | 10.26 | 10.13 | 10.39 | 9.69 | 10.08 | 9.55 |
Retum on average realized equity (1)(4) | 9.86 | 10.51 | 10.63 | 10.98 | 10.35 | 10.48 | 10.22 |
Net interest rnargin (2) | 3.88 | 3.78 | 3.79 | 3.86 | 3.82 | 3.83 | 3.81 |
Efficiency ratio (3) | 64.26 | 64.39 | 60.86 | 62.42 | 63.03 | 63.01 | 65.65 |
Net overhead ratio (6)(4) | 2.18 | 2.12 | 1.91 | 1.99 | 2.02 | 2.05 | 2.13 |
Asset Quality Ratios (%)
Net loan charge-offs (recoveries) to average loans (4) | (0.01) | 0.08 | 0.31 | 0.04 | 0.05 | 0.10 | 0.16 |
Allowance for loan losses to totalloans (5) | l.l6 | l.l6 | 1.23 | 1.25 | 1.26 | l.l6 | 1.26 |
Nonperforming assets to totalloans and foreclosed real estate | 2.24 | 1.67 | 1.89 | 2.04 | 1.64 | 2.24 | 1.64 |
Capitai Ratios (%)
Average equity to average assets | 9.49 | 9.42 | 9.67 | 9.73 | 9.55 | 9.57 | 9.45 |
Tier l leverage capitai ratio | 10.18 | 10.19 | 10.28 | 10.29 | 10.02 | 10.18 | 10.02 |
Tier l risk-based capitai ratio | 12.77 | 12.99 | 13.52 | 13.52 | 13.59 | 12.77 | 13.59 |
Total risk-based capitai ratio | 13.88 | 14.08 | 14.68 | 14.70 | 14.79 | 13.88 | 14.79 |
(l) excludes accumulated other cornprehensive incarne (loss), principally umealized gains (losses) on investrnent securities
(2) net interest incarne (tax-equivalent) as a percentage of average interest eaming assets
(3) noninterest expense as a percentage of net interest incarne and noninterest incarne (tax-equivalent) (4) annualized for the quarterly periods presented
(5) excludes loans held for sale
(6) noninterest expense less noninterest incarne as a percentage of average assets
(7) per share arnounts and shares outstanding were adjusted for cornrnon stock dividends
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