EXHIBIT 99.1
Codorus Valley Bancorp, Inc. Reports Earnings and Declaration of Cash Dividend
FOR IMMEDIATE RELEASE -- York, Pennsylvania (April 17, 2009) -- Codorus Valley Bancorp, Inc. (Nasdaq: CVLY), the parent company of PeoplesBank, today announced earnings available to common shareholders of $740,000 or $.18 per share ($.18 diluted) for the quarter ended March 31, 2009, compared to the $1,523,000 or $.39 per share ($.38 diluted) earned in the first quarter of 2008. The $783,000 or 51 percent decrease in net income available to common shareholders for the current quarter was the result of a decrease in net interest income and increases in operating expenses and provision for loan losses.
Net interest income for first quarter 2009 continued to be constrained by the unusually low interest rate environment, influenced by the Federal Reserve Bank to stimulate the U.S. economy out of the economic recession, which has lowered yields on loans and investment securities to a greater degree then rates paid for deposits. The increase in operating expenses was primarily the result of adding three new financial centers during 2008, increases in deposit insurance costs due in part to increased assessment rates levied on the commercial banking industry by the Federal Deposit Insurance Corporation, and a non-recurring cost of $242,000 to restructure employee benefit plans. Restructuring the benefit plans resulted in federal income tax benefit so that the overall transaction had an insignificant impact on net income. The increase in the provision for loan losses for the current period reflected strong growth in the Company’s loan portfolio and heightened risk associated with the economic recession at the local and national levels.
On March 31, 2009, total assets were approximately $821 million, representing a $211 million or 35% increase above March 31, 2008. Asset growth was driven primarily by a strong increase in business loans and investment securities. Asset growth was funded primarily by an increase in deposits generated from local markets, and to a lesser degree borrowing from the Federal Home Loan Bank of Pittsburgh (FHLBP).
As previously disclosed, the Company, which is well capitalized, issued $16.5 million nonvoting perpetual preferred stock (along with a warrant to purchase common stock) during the current quarter to the U.S. Treasury under the Treasury’s voluntary Capital Purchase Program. The Company plans to use the capital to sustain its loan growth plans, expand its banking franchise and to strengthen its capital base against economic uncertainties. The dividend on the preferred stock is 5 percent for the first five years and 9 percent thereafter. To minimize dilution of common earnings per share, as a result of incremental costs from the stock issuance, the Company initiated a temporary leverage strategy to generate incremental “spread” income. The mechanics of the leverage strategy involved borrowing approximately $80 million from the FHLBP and investing the funds in U.S. agency mortgage-backed bonds and municipal bonds to earn a net interest spread of approximately 2 percent. Additional detailed financial information is provided in the Financial Highlights section of this Press Announcement.
In other news, on April 14, 2009, Codorus Valley’s Board of Directors declared a regular quarterly cash dividend of $.08 per share, payable on or before May 12, 2009 to shareholders of record April 28, 2009. The dividend was decreased by $.04 from the prior quarter to reflect a decline in earnings and to preserve capital for balance sheet growth and for unexpected losses that could arise from a prolonged economic recession.
“Like many companies in our industry, our earnings have been impacted by the economic crises facing our nation and our market area. That said, we remain confident that our enhanced capital position and long-range plan have placed Codorus Valley Bancorp, Inc. in a position to weather this storm,” said Larry J. Miller, President and Chief Executive Officer of the Company. “Our core banking activities of generating deposits and granting credit-worthy loans remain strong, and as always, we will conduct our business with the long-term interests of our shareholders in mind.”
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, with a total of 17 financial centers located throughout York County, Pennsylvania and in Hunt Valley and Bel Air, Maryland. In addition to a full range of business 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.
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 of the corporation and its subsidiaries, both individually and collectively, and could cause those results to differ materially from those expressed in the forward-looking statements contained in this Press Announcement. Those factors include, but are not limited to: credit risk, changes in market interest rates, competition, economic downturn or recession, and government regulation and supervision. The Company undertakes no obligation to update or revise any forward-looking statements.
Questions or comments concerning this Press Announcement should be directed to the following:
Larry J. Miller
Vice-Chairman, President, and CEO
Codorus Valley Bancorp, Inc.
717-747-1500
888-846-1970
lmiller@peoplesbanknet.com
