UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004
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 or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
105 Leader Heights Road, P.O. Box 2887, York, Pennsylvania 17405
----------------------------------------------------------------
(Address of principal executive offices) (Zip code)
717-747-1519
------------
(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former name, former address and former fiscal year,
if changed since the 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 [ ]
Indicate by checkmark whether the registrant is an accelerated filer (as defined
in Rule 12b-2 of the Act). Yes [ ] No [X]
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. On April 27, 2004, 2,981,252
shares of common stock, par value $2.50, were outstanding, which includes the
effect of the 5 percent stock dividend declared April 13, 2004.
- 1 -
Codorus Valley Bancorp, Inc.
FORM 10-Q INDEX
Page #
------
PART I - FINANCIAL INFORMATION
Item 1. Financial statements:
Consolidated statements of financial condition 3
Consolidated statements of income 4
Consolidated statements of cash flows 5
Consolidated statements of changes in shareholders' equity 6
Notes to consolidated financial statements 7
Item 2. Management's discussion and analysis of financial condition and
results of operations 12
Item 3. Quantitative and qualitative disclosures about market risk 20
Item 4. Controls and procedures 20
PART II - OTHER INFORMATION
Item 1. Legal proceedings 20
Item 2. Changes in securities, use of proceeds and issuer purchases of
equity securities 21
Item 3. Defaults upon senior securities 21
Item 4. Submission of matters to a vote of security holders 21
Item 5. Other information 21
Item 6. Exhibits and reports on Form 8-K 21
SIGNATURES 23
- 2 -
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Codorus Valley Bancorp, Inc.
Consolidated Statements of Financial Condition
Unaudited
March 31, December 31,
(dollars in thousands, except per share data) 2004 2003
--------- ---------
ASSETS
Interest bearing deposits with banks $ 262 $ 108
Cash and due from banks 9,523 12,300
Federal funds sold 8,485 0
--------- ---------
Total cash and cash equivalents 18,270 12,408
Securities available-for-sale 61,576 62,738
Securities held-to-maturity (fair value $10,482 for 2004 and $10,233 for 2003) 9,355 9,355
Restricted investment in bank stock, at cost 1,682 1,976
Loans held for sale 1,494 2,157
Loans (net of deferred fees of $560 in 2004 and $610 in 2003) 264,014 260,206
Less-allowance for loan losses (1,768) (1,694)
--------- ---------
Net loans 262,246 258,512
Premises and equipment 9,333 9,358
Other assets 16,213 16,043
--------- ---------
Total assets $ 380,169 $ 372,547
========= =========
LIABILITIES
Deposits
Noninterest bearing $ 35,422 $ 33,188
Interest bearing 282,466 271,094
--------- ---------
Total deposits 317,888 304,282
Short-term borrowings 0 6,795
Long-term debt 24,227 24,439
Other liabilities 3,400 3,242
--------- ---------
Total liabilities 345,515 338,758
SHAREHOLDERS' EQUITY
Preferred stock, par value $2.50 per share;
1,000,000 shares authorized; 0 shares issued and outstanding 0 0
Common stock, par value $2.50 per share;
10,000,000 shares authorized; 2,981,252 shares issued and
outstanding on 3/31/04 and 2,837,634 on 12/31/03 7,453 7,094
Additional paid-in capital 20,135 17,451
Retained earnings 6,045 8,498
Accumulated other comprehensive income 1,021 746
--------- ---------
Total shareholders' equity 34,654 33,789
--------- ---------
Total liabilities and shareholders' equity $ 380,169 $ 372,547
========= =========
See accompanying notes.
-3-
Codorus Valley Bancorp, Inc.
Consolidated Statements of Income
Unaudited
Three months ended
March 31,
(dollars in thousands, except per share data) 2004 2003
------ ------
INTEREST INCOME
Loans, including fees $4,181 $4,055
Investment securities
Taxable 602 679
Tax-exempt 104 119
Dividends 13 15
Other 9 5
------ ------
Total interest income 4,909 4,873
INTEREST EXPENSE
Deposits 1,297 1,537
Federal funds purchased and other short-term borrowings 4 5
Long-term debt 322 241
------ ------
Total interest expense 1,623 1,783
------ ------
Net interest income 3,286 3,090
PROVISION FOR LOAN LOSSES 50 37
------ ------
Net interest income after provision for loan losses 3,236 3,053
NONINTEREST INCOME
Trust and investment services fees 243 215
Service charges on deposit accounts 340 215
Mutual fund, annuity and insurance sales 236 170
Income from bank owned life insurance 78 72
Other income 118 95
Gain on sale of mortgages 95 237
Gain on sale of securities 7 167
------ ------
Total noninterest income 1,117 1,171
NONINTEREST EXPENSE
Personnel 1,667 1,653
Occupancy of premises, net 272 267
Furniture and equipment 320 284
Postage, stationery and supplies 90 107
Professional and legal 85 77
Marketing and advertising 108 53
Foreclosed real estate, net 0 67
Other 565 565
------ ------
Total noninterest expense 3,107 3,073
------ ------
Income before income taxes 1,246 1,151
PROVISION FOR INCOME TAXES 327 290
------ ------
Net income $ 919 $ 861
====== ======
Net income per share, basic $ 0.31 $ 0.29
Net income per share, diluted $ 0.30 $ 0.29
====== ======
See accompanying notes.
-4-
Codorus Valley Bancorp, Inc.
Consolidated Statements of Cash Flows
Unaudited
Three months ended
March 31,
(dollars in thousands) 2004 2003
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 919 $ 861
Adjustments to reconcile net income to net cash provided by operations
Depreciation 255 253
Provision for loan losses 50 37
Provision for losses on foreclosed real estate 0 55
Amortization of investment in real estate partnership 54 52
Increase in cash surrender value of life insurance investment (78) (72)
Originations of held for sale mortgages (7,173) (15,862)
Proceeds from sales of held for sale mortgages 7,931 16,848
Gain on sales of held for sale mortgages (95) (237)
Gain on sales of securities (7) (167)
Loss on sales of foreclosed real estate 0 6
(Increase) decrease in accrued interest receivable and other assets (305) 169
Increase in accrued interest payable and other liabilities 601 236
Other, net 133 158
-------- --------
Net cash provided by operating activities 2,285 2,337
CASH FLOWS FROM INVESTING ACTIVITIES
Securities available-for-sale
Purchases (2,634) (8,076)
Maturities and calls 882 4,902
Sales 3,261 8,469
Net decrease (increase) in restricted investment in bank stock 294 (107)
Net increase in loans made to customers (3,823) (3,472)
Purchases of premises and equipment (230) (233)
Investment in real estate partnership (443) (670)
Proceeds from sales of foreclosed real estate 0 237
-------- --------
Net cash (used in) provided by investing activities (2,693) 1,050
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in demand and savings deposits 13,125 4,800
Net increase in time deposits 481 6,204
Net decrease in short-term borrowings (6,795) (7,089)
Proceeds from issuance of long-term debt 1,800 0
Repayment of long-term debt (2,012) (1,136)
Dividends paid (355) (324)
Issuance of common stock 26 0
-------- --------
Net cash provided by financing activities 6,270 2,455
-------- --------
Net increase in cash and cash equivalents 5,862 5,842
Cash and cash equivalents at beginning of year 12,408 11,120
-------- --------
Cash and cash equivalents at end of period $ 18,270 $ 16,962
======== ========
See accompanying notes.
-5-
Codorus Valley Bancorp, Inc.
Consolidated Statements of Changes in Shareholders' Equity
Unaudited
Accumulated
Additional Other
Common Paid-in Retained Comprehensive
(dollars in thousands) Stock Capital Earnings Income Total
- -----------------------------------------------------------------------------------------------------------------------
For the three months ended March 31, 2004
Balance, December 31, 2003 $7,094 $17,451 $8,498 $746 $33,789
Comprehensive income:
Net income 919 919
Other comprehensive income, net of tax:
Unrealized gains on securities, net 275 275
-------
Total comprehensive income 1,194
Cash dividends ($.119 per share, adjusted) (355) (355)
5% stock dividend - 141,964 shares at fair value 355 2,662 (3,017) 0
Issuance of common stock - 1,654 shares
under stock option plan 4 22 26
------ ------- ------ ------ -------
Balance, March 31, 2004 $7,453 $20,135 $6,045 $1,021 $34,654
====== ======= ====== ====== =======
For the three months ended March 31, 2003
Balance, December 31, 2002 $6,743 $15,549 $8,551 $1,380 $32,223
Comprehensive income:
Net income 861 861
Other comprehensive loss, net of tax:
Unrealized losses on securities, net (206) (206)
-------
Total comprehensive income 655
Cash dividends ($.109 per share, adjusted) (324) (324)
5% stock dividend - 134,852 shares at fair value 337 1,820 (2,157) 0
------ ------- ------ ------ -------
Balance, March 31, 2003 $7,080 $17,369 $6,931 $1,174 $32,554
====== ======= ====== ====== =======
See accompanying notes.
-6-
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- BASIS OF PRESENTATION
The interim financial statements are unaudited. However, they reflect all
adjustments that 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 the notes to the audited
financial statements contained in the 2003 Annual Report to Shareholders.
The consolidated financial statements include the accounts of Codorus Valley
Bancorp, Inc. and its wholly owned bank subsidiary, PeoplesBank, A Codorus
Valley Company (PeoplesBank), and its wholly owned nonbank subsidiary, SYC
Realty Company, Inc., collectively referred to as Codorus Valley or Corporation.
PeoplesBank has two wholly owned subsidiaries, SYC Insurance Services, Inc. and
SYC Settlement Services, Inc. All significant intercompany account balances and
transactions have been eliminated in consolidation. The combined results of
operations of the nonbank subsidiaries are not material to the consolidated
financial statements.
The results of operations for the three-month period ended March 31, 2004 are
not necessarily indicative of the results to be expected for the full year.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
Stock dividend and per share computations
All per share computations include the retroactive effect of stock dividends
declared, including the 5 percent stock dividend declared April 13, 2004. The
weighted average number of shares of common stock outstanding, used for basic
and diluted calculations follows.
Three months ended
March 31,
----------------------
(In thousands) 2004 2003
- ------------- ---- ----
Basic 2,980 2,973
Diluted 3,048 2,988
Stock-based compensation
Stock options issued under shareholder approved employee and director stock
option plans are accounted for under Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25). Stock options are granted
at exercise prices not less than the fair value of the common stock on the date
of grant. Under APB 25, no compensation expense is recognized related to these
plans.
In accordance with Financial Accounting Standard No. 123, the Corporation has
elected to disclose the pro forma information regarding net income and net
income per share as if the stock options had been accounted for under the
recognition provisions of the Standard. For purposes of pro forma disclosures,
the estimated fair value of the options is amortized to expense over the
options' vesting period. Pro forma amounts are indicated below:
- 7 -
Three months ended
March 31,
(Dollars in thousands, except per share data) 2004 2003
------------------------------------------- ---- ----
Reported net income $919 $861
Deduct total stock-based employee compensation expense
determined under fair value based method for all awards, net of
related tax effects 5 5
---- ----
Pro forma net income $914 $856
---- ----
Reported basic earnings per share $.31 $.29
---- ----
Reported diluted earnings per share $.30 $.29
---- ----
Pro forma basic earnings per share $.31 $.29
---- ----
Pro forma diluted earnings per share $.30 $.29
==== ====
Comprehensive income
Accounting principles generally require that recognized revenue, expenses, gains
and losses be included in net income. Although certain changes in assets and
liabilities, such as unrealized gains and losses on available-for-sale
securities, are reported as a separate component of the equity section of the
balance sheet, such items, along with net income, are components of
comprehensive income. The components of other comprehensive income (loss) and
related tax effects are presented in the following table:
Three months ended
March 31,
(Dollars in thousands) 2004 2003
--------------------- ---- ----
Unrealized holding gains (losses) arising during
the period $424 $(145)
Reclassification adjustment for gains included in
income (7) (167)
---- -----
Net unrealized gains (losses) 417 (312)
Tax effect (142) 106
---- -----
Net of tax amount $275 $(206)
---- -----
Reclassifications
Certain amounts in the 2003 financial statements have been reclassified to
conform to the 2004 presentation format. These reclassifications had no impact
on the Corporation's net income.
- 8 -
NOTE 3 -- DEPOSITS
The composition of deposits on March 31, 2004 and December 31, 2003, was as
follows:
March 31, December 31,
(Dollars in thousands) 2004 2003
- --------------------- -------- --------
Noninterest bearing demand $ 35,422 $ 33,188
NOW 42,082 40,552
Money market 83,718 75,529
Savings 16,799 15,627
Time CDs less than $100,000 114,351 113,014
Time CDs $100,000 or more 25,516 26,372
-------- --------
Total deposits $317,888 $304,282
======== ========
NOTE 4 -- LONG-TERM DEBT
A summary of long-term debt at March 31, 2004 and December 31, 2003 follows:
March 31, December 31,
(Dollars in thousands) 2004 2003
-------------------- ---- ----
Obligations of PeoplesBank to FHLBP
Due 2005, 5.36%, convertible quarterly 6,000 6,000
Due 2007, 4.69%, amortizing 1,157 1,256
Due 2009, 3.47%, convertible quarterly after
December 2006 5,000 5,000
Due 2013, 3.46%, amortizing 4,646 4,753
Due 2014, 6.43%, convertible quarterly after
July 2009 5,000 5,000
Obligations of Codorus Valley Bancorp, Inc.
Due 2009, 7.35%, amortizing 0 1,793
Due 2011, floating rate based on 1 month
LIBOR plus 1.50%, amortizing 1,792 0
------- -------
23,595 23,802
Capital lease obligation 632 637
------- -------
Total long-term debt $24,227 $24,439
------- -------
PeoplesBank's obligations to Federal Home Loan Bank of Pittsburgh (FHLBP) are
fixed rate and fixed/floating (convertible) rate instruments. The FHLBP has an
option on the convertible borrowings to convert the rate to a floating rate
after the expiration of a specified period. The floating rate is based on the
LIBOR index plus a spread. If the FHLBP elects to exercise its conversion
option, PeoplesBank, can repay the converted loan without a prepayment penalty.
The obligation of Codorus Valley is secured by a mortgage on the Codorus Valley
Corporate Center office building at 105 Leader Heights Road, York, Pennsylvania.
In February 2004, the obligation, due in 2009, was refinanced without interest
penalty. The new obligation, for approximately the same amount, matures in 2011
and has a floating rate based on the 1-month LIBOR index plus 150 basis points.
- 9 -
NOTE 5--REGULATORY MATTERS
Codorus Valley and PeoplesBank are subject to various regulatory capital
requirements administered by banking regulators. Failure to meet minimum capital
requirements can initiate certain mandatory and possible additional
discretionary actions by regulators that, if undertaken, could have a material
effect on Codorus Valley's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, Codorus
Valley and PeoplesBank must meet specific capital guidelines that involve
quantitative measures of assets, liabilities, and certain off-balance sheet
items as calculated under regulatory accounting practices. The capital amounts
and classifications are also subject to qualitative judgments by the regulators.
Quantitative measures established by regulators to ensure capital adequacy
require Codorus Valley and PeoplesBank to maintain minimum ratios, as set forth
below, to total and Tier 1 capital as a percentage of risk-weighted assets, and
of Tier 1 capital to average assets (leverage ratio). Management believes that
Codorus Valley and PeoplesBank were well capitalized on March 31, 2004, based on
FDIC capital guidelines.
CODORUS VALLEY BANCORP, INC.
MINIMUM FOR WELL CAPITALIZED
ACTUAL CAPITAL ADEQUACY MINIMUM*
------------------------------------------------------------------------------------
(dollars in thousands) AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
- ------------------------------------------------------------------------------------------------------------------
AT MARCH 31, 2004
Capital ratios:
Tier 1 risk based $33,297 11.11% > or =$11,983 > or =4.0 % n/a n/a
Total risk based 35,065 11.70 > or = 23,966 > or =8.0 n/a n/a
Leverage 33,297 8.89 > or = 14,989 > or =4.0 n/a n/a
- ------------------------------------------------------------------------------------------------------------------
AT DECEMBER 31, 2003
Capital ratios:
Tier 1 risk based $32,702 11.13% > or =$11,751 > or =4.0 % n/a n/a
Total risk based 34,396 11.71 > or = 23,502 > or =8.0 n/a n/a
Leverage 32,702 9.15 > or = 14,292 > or =4.0 n/a n/a
- ------------------------------------------------------------------------------------------------------------------
PEOPLESBANK
MINIMUM FOR WELL CAPITALIZED
ACTUAL CAPITAL ADEQUACY MINIMUM*
-----------------------------------------------------------------------------------------
(dollars in thousands) AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
- -----------------------------------------------------------------------------------------------------------------------
AT MARCH 31, 2004
Capital ratios:
Tier 1 risk based $28,652 9.76% > or =$11,737 > or =4.0 % > or =$17,606 > or = 6.0%
Total risk based 30,420 10.37 > or = 23,474 > or =8.0 > or = 29,343 > or =10.0
Leverage 28,652 7.77 > or = 14,743 > or =4.0 > or = 18,428 > or = 5.0
- -----------------------------------------------------------------------------------------------------------------------
AT DECEMBER 31, 2003
Capital ratios:
Tier 1 risk based $28,048 9.75% > or =$11,504 > or =4.0 % > or =$17,256 > or = 6.0%
Total risk based 29,742 10.34 > or = 23,008 > or =8.0 > or = 28,760 > or =10.0
Leverage 28,048 7.99 > or = 14,043 > or =4.0 > or = 17,554 > or = 5.0
- -----------------------------------------------------------------------------------------------------------------------
* To be well capitalized under prompt correction action provisions.
-10-
NOTE 6 -- CONTINGENT LIABILITIES
During the first quarter of 2003, a business-banking client filed a counterclaim
against PeoplesBank, alleging, among other things, that PeoplesBank breached an
implied-in-fact agreement to the claimants related to loans made to the
claimants. PeoplesBank's management believes there are substantial defenses to
this lawsuit and intends to defend it vigorously. Further information regarding
this claim is included in this Form 10-Q, on page 21, under Part II, Item 1.
Legal Proceedings.
Also during the first quarter of 2003, PeoplesBank became aware of a civil
forfeiture action brought about by the United States Attorney's Office. The
forfeiture action involves real estate supporting a loan guaranteed by a
customer who has pled guilty to criminal activity. PeoplesBank is actively
protecting its mortgage interest in the real estate from forfeiture through
available defenses including the "innocent owner defense." Further information
regarding this forfeiture action is included in this Form 10-Q, on page 17,
under Forfeiture Action Related to Mortgaged Property.
NOTE 7 -- GUARANTEES
Codorus Valley does not issue any guarantees that would require liability
recognition or disclosure, other than its standby letters of credit. Standby
letters of credit written are conditional commitments issued by the PeoplesBank
to guarantee the performance of a customer to a third party. Generally, all
letters of credit, when issued have expiration dates within one year. The credit
risk involved in issuing letters of credit is essentially the same as those that
are involved in extending loan facilities to customers. The Corporation,
generally, holds collateral and/or personal guarantees supporting these
commitments. The Corporation had $3,707,000 of standby letters of credit as of
March 31, 2004. Management believes that the proceeds obtained through a
liquidation of collateral and the enforcement of guarantees would be sufficient
to cover the potential amount of future payment required under the corresponding
guarantees. The current amount of the liability as of March 31, 2004, for
guarantees under standby letters of credit issued is not material.
- 11 -
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's discussion and analysis of the significant changes in the results
of operations, capital resources and liquidity presented in the accompanying
consolidated financial statements for Codorus Valley Bancorp, Inc. (Codorus
Valley or Corporation), a bank holding company, and its wholly owned subsidiary,
PeoplesBank, A Codorus Valley Company (PeoplesBank), are provided below. Codorus
Valley's consolidated financial condition and results of operations consist
almost entirely of PeoplesBank's financial condition and results of operations.
Current performance does not guarantee and may not be indicative of similar
performance in the future.
FORWARD-LOOKING STATEMENTS:
Management of the Corporation has made forward-looking statements in this Form
10-Q. 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 the
Form 10-Q, management is making forward-looking statements.
Readers should note that many factors, some of which are discussed elsewhere in
this report and in the documents that management incorporates by reference,
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 or incorporated by reference in this Form 10-Q. These factors include:
- - operating, legal and regulatory risks;
- - economic, political and competitive forces affecting banking,
securities, asset management and credit services businesses; and
- - the risk that management's analysis of these risks and forces could be
incorrect and/or that the strategies developed to address them could be
unsuccessful.
The Corporation undertakes no obligation to publicly revise or update these
forward-looking statements to reflect events or circumstances that arise after
the date of this report. Readers should carefully review the risk factors
described in other documents that Codorus Valley files periodically with the
Securities and Exchange Commission.
CRITICAL ACCOUNTING ESTIMATES:
Disclosure of Codorus Valley's significant accounting policies is included in
Note 1 to the consolidated financial statements of the 2003 Annual Report to
Shareholders, filed as Exhibit 13 to the Annual Report on Form 10-K for the
period ended December 31, 2003. Some of these policies are particularly
sensitive, requiring that significant judgments, estimates and assumptions be
made by management. Additional information is contained in Management's
Discussion and Analysis for the most sensitive of these issues, including the
provision and allowance for loan losses, located on pages 14 and 17 of this Form
10-Q.
Significant estimates are made by management in determining the allowance for
loan losses. Management considers a variety of factors in establishing this
estimate such as current economic conditions, diversification of the loan
portfolio, delinquency statistics, results of internal loan reviews, financial
and managerial strengths of borrowers, adequacy of collateral, if collateral
dependent, or present value of future cash flows and other relevant factors.
Estimates related to the value of collateral
- 12 -
also have a significant impact on whether or not management continues to accrue
income on delinquent loans and on the amounts at which foreclosed real estate is
recorded on the statement of financial condition. As described on page 21, under
Part II, Item 1. Legal Proceedings, property collateralizing a loan on
PeoplesBank's books is subject to litigation. In establishing the loan loss
allowance, management presumed that the rights to the property would be
protected. If, however, PeoplesBank's property rights are not successfully
protected the allowance for loan losses will need to be increased through
provision expense to cover the loss.
As permitted by SFAS No. 123, the Corporation accounts for stock-based
compensation in accordance with Accounting Principles Board Opinion (APB) No.
25. Under APB No. 25, no compensation expense is recognized in the income
statement related to any options granted under the Corporation's stock option
plans. The pro forma impact of net income and earnings per share that would
occur if compensation expense was recognized, based on the estimated fair value
of the options on the date of grant, is disclosed in Note 2 to the financial
statements under Stock-Based Compensation. The Corporation has no current plans
to change its method of accounting for stock-based compensation.
Management discussed the development and selection of critical accounting
estimates and related Management Discussion and Analysis disclosure with the
Audit Committee. There were no material changes made to the critical accounting
estimates during the periods presented within this report.
THREE MONTHS ENDED MARCH 31, 2004
COMPARED TO THREE MONTHS ENDED MARCH 31, 2003
INCOME STATEMENT ANALYSIS
OVERVIEW
Net income for the three-month period ended March 31, 2004, was $919,000 or $.30
per diluted share, compared to $861,000 or $.29 per diluted share, for the same
period of 2003. The $58,000 or 7 percent increase in net income was caused
primarily by an increase in net interest income. The $196,000 or 6 percent
increase in net interest income was attributable to lower funding costs (rate
driven) and a larger volume of loans. With the exception of gains from the sale
of investment securities and mortgages, all categories of noninterest income
increased above the first quarter of 2003. Gains from the periodic sale of
investment securities totaled $7,000 for the current period compared to $167,000
in 2003. Current period gains from the sale of mortgages were $142,000 below
2003 due to various constraints, which included: rising market interest rates
which curtailed mortgage refinancing, escalating home prices and staff turnover
within the mortgage banking division. Total noninterest expense increased only 1
percent above 2003, reflecting in part a leaner staff. Personnel expense
increased less than 1 percent due primarily to a company wide performance
evaluation by an external consulting firm in the prior year, which reduced and
realigned the staff. Net income as a percentage of average total assets for the
first three months (annualized) of 2004 was .98 percent, compared to 1.01
percent for the same period of 2003. Net income as a percentage of average
shareholders' equity for the first three months (annualized) of 2004 was 10.70
percent, compared to 10.57 percent for the same period of 2003.
Total assets of the Corporation on March 31, 2004, were approximately $380
million, an increase of $7.6 million or 2 percent above December 31, 2003. Asset
growth occurred primarily in business loans, which were funded by core deposits.
Based on a recent evaluation of probable loan losses and the current loan
portfolio, management believes that the allowance is adequate to support losses
inherent in the portfolio at March 31, 2004. Management also believes that the
Corporation and PeoplesBank were
- 13 -
well capitalized on March 31, 2004, based on FDIC capital guidelines. An
explanation of the factors and trends that caused changes between the two
periods, by earnings category, is provided below.
NET INTEREST INCOME
The U.S. economy continues to expand as evidenced by a 4.2 percent (annualized)
growth rate in the GDP for the first quarter of 2004. Many market watchers
predict that the Federal Reserve will raise short-term interest rates sometime
in 2004. The short-term federal funds rate and the prime rate are currently at 1
percent and 4 percent, respectively, the lowest level in 46 years. The rate on
30-year mortgages has been slowly increasing and recently edged above 6 percent.
Net interest income for the three-month period ended March 31, 2004, was
$3,286,000, an increase of $196,000 or 6 percent above the same period in 2003.
Net interest income increased primarily as a result of lower deposit rates and a
larger volume of loans. Earning assets averaged $341 million and yielded 5.91
percent (tax equivalent) for 2004, compared to $307 million and 6.61 percent,
respectively, for 2003. The increase in average earning assets occurred
primarily in business and installment loans. Interest bearing liabilities
averaged $305 million at an average rate of 2.14 percent for 2004, compared to
$280 million and 2.59 percent, respectively, for 2003. The increase in interest
bearing liabilities occurred primarily in demand and money market deposits and
long-term debt.
PROVISION FOR LOAN LOSSES
A $50,000 provision expense for loan losses was recorded in the three-month
period ended March 31, 2004, compared to $37,000 for the same period in 2003.
The current period provision was the result of charging off $50,000 for a
business loan that was under-collateralized. Information regarding nonperforming
assets and the allowance for loan losses can be found within those sections of
this report.
NONINTEREST INCOME
Total noninterest income for the current three-month period was $1,117,000, a
decrease of $54,000 or 5 percent below the same period in 2003. The decrease was
attributable to a $160,000 decrease in gains from the periodic sale of
investment securities and a $142,000 decrease in gains from the sale of
mortgages. Income from the sale of mortgages was constrained by rising market
interest rates which curtailed mortgage refinancing, escalating home prices and
staff turnover within the mortgage banking division. With the exception of gains
from sales of securities and mortgages, all other noninterest income categories
increased above the prior year. Service charges on deposit accounts, principally
insufficient funds fees, increased $125,000 or 58 percent as a result of a
discretionary overdraft service, implemented by PeoplesBank in June 2003.
Commission income from mutual fund, annuity and insurance sales increased
$66,000 or 39 percent due to an increase in sales volume. Trust and investment
services fees increased $28,000 or 13 percent due to a price increase, effective
January 1, 2004, and business growth.
NONINTEREST EXPENSE
Total noninterest expense for the current three-month period was $3,107,000, an
increase of $34,000 or 1 percent above the same period in 2003. The small
increase was due primarily to increases in equipment, principally software
maintenance contracts, and marketing expense. Personnel expense increased less
than 1 percent due primarily to a company wide performance evaluation by an
external consulting firm in the prior year, which reduced and realigned the
staff. During the current quarter the Corporation did not incur any foreclosed
real estate expense because the foreclosed real estate portfolio
- 14 -
was relatively small and its net realizable value exceeded its cost basis.
Comparatively, foreclosed real estate expense was $67,000 in the first quarter
of 2003.
INCOME TAXES
The provision for federal income tax was $327,000 for the current three-month
period, compared to $290,000 for the same period in 2003. The $37,000 or 13
percent increase in tax reflects an increase in pretax income.
Management anticipates a reduction in the provision for federal income tax for
2004, which is expected to result from the recognition of low-income housing tax
credits from PeoplesBank's investment in a real estate joint venture.
PeoplesBank holds a 73.47 percent interest, as a limited partner, representing a
$2.8 million investment. The joint venture involves the construction and lease
of 60 new townhouses in Dover, PA. The project is well underway but rain has
hampered construction efforts and delayed its completion. Management anticipates
that this venture will be complete and fully operational by the end of 2004,
based on a projection provided by the general partner.
BALANCE SHEET REVIEW
LOANS
On March 31, 2004, loans were approximately $264 million, an increase of $4
million or 1.5 percent above year-end 2003. The increase was attributable to
growth in the business loan portfolio.
DEPOSITS
On March 31, 2004, total deposits were approximately $318 million, an increase
of $13.6 million or 4.5 percent above year-end 2003. The increase occurred in
core deposits such as money market, demand and savings accounts. During the
first quarter, PeoplesBank created a money market deposit vehicle called the
Index Fund whose rate is linked to the published federal funds rate. The Index
Fund, which has a high minimum balance, was targeted at PeoplesBank's wealth
management customers. To date, the Index Fund has generated approximately $8
million in deposits.
SHAREHOLDERS' EQUITY AND CAPITAL ADEQUACY
Shareholders' equity or capital, as a source of funds, enables Codorus Valley to
maintain asset growth and absorb losses. Total shareholders' equity was
approximately $34,654,000 on March 31, 2004, an increase of $865,000 or 2.5
percent above December 31, 2003. The increase was caused primarily by an
increase in retained net income from profitable operations.
On April 13, 2004, the board of directors declared a quarterly cash dividend of
$.125 per common share ($.119 adjusted), payable on or before May 11, 2004, to
shareholders of record April 27, 2004. This follows a $.125 per common share
($.119 adjusted) dividend paid in February. Also on April 13, 2004, the board
declared a 5 percent stock dividend payable on or before June 10, 2004, to
shareholders of record April 27, 2004. Distribution of the stock dividend will
result in the issuance of approximately 141,964 common shares, as reflected in
the enclosed financial statements.
Codorus Valley and PeoplesBank are subject to various regulatory capital
requirements administered by banking regulators that involve quantitative
guidelines and qualitative judgments. Quantitative measures established by
regulators pertain to minimum capital ratios, as set forth in Note 5 --
Regulatory
- 15 -
Matters, to the financial statements. Management believes that Codorus Valley
and PeoplesBank were well capitalized on March 31, 2004, based on FDIC capital
guidelines.
RISK MANAGEMENT
NONPERFORMING ASSETS
Table 1--Nonperforming Assets, provides a summary of nonperforming assets and
related ratios. The paragraphs below provide information for selected categories
for March 31, 2004, compared to December 31, 2003.
TABLE 1-NONPERFORMING ASSETS
March 31, December 31,
(dollars in thousands) 2004 2003
- -------------------------------------------------------------------------------------------
Nonaccrual loans $1,047 $516
Accruing loans that are contractually past due
90 days or more as to principal or interest 143 49
Foreclosed real estate, net of allowance 1,315 1,326
- -------------------------------------------------------------------------------------------
Total nonperforming assets $2,505 $1,891
===========================================================================================
Ratios:
Nonaccrual loans as a % of total period-end loans 0.40% 0.20%
Nonperforming assets as a % of total period-end
loans and net foreclosed real estate 0.94% 0.72%
Nonperforming assets as a % of total period-end
stockholders' equity 7.23% 5.60%
Allowance for loan losses as a multiple of
nonaccrual loans 1.7x 3.3x
Nonaccrual loans were principally comprised of collateral dependent business
loans. Accordingly, Codorus Valley recognized interest income on a cash basis
for these loans. On March 31, 2004, the nonaccrual loan portfolio was
$1,047,000, compared to $516,000 on December 31, 2003. The level of
nonperforming loans was relatively low for both periods. On March 31, 2004, the
portfolio was comprised of 15 unrelated accounts ranging in size from $14,000 to
$240,000. Accounts within the nonaccrual loan portfolio vary by industry and are
generally collateralized with real estate assets.
Management and the board of directors evaluate the allowance for loan losses at
least quarterly. Efforts to modify contractual terms for individual accounts,
based on prevailing market conditions, or liquidate collateral assets, are
proceeding as quickly as potential buyers can be located and legal constraints
permit.
The level of accruing loans that are contractually past due 90 days or more as
to principal or interest was not significant for the periods presented.
Generally, loans in the past due category are adequately collateralized and in
the process of collection.
-16-
Foreclosed real estate, net of allowance, was $1,315,000 on March 31, 2004,
approximately the same as year end 2003. One account for $1,208,000 represented
most of the portfolio balance. This account is currently in litigation with the
borrower and described on page 21, under Part II, Item 1. Legal Proceedings of
this report. As of March 31, 2004, a loss allowance and provision for foreclosed
real estate assets was unnecessary in management's judgment because the fair
value supported by independent appraisal, less selling expenses, exceeded
carrying value. Comparatively, a $55,000 loss provision was recorded in the
first quarter of 2003 to reflect losses associated with declines in net
realizable value. Efforts to liquidate foreclosed real estate are proceeding as
quickly as potential buyers can be located.
FORFEITURE ACTION RELATED TO MORTGAGED PROPERTY
On March 26, 2003, the United States Attorney's Office began a property (in rem)
civil forfeiture action, by Complaint in the United States District Court for
the Middle District of Pennsylvania, titled United States of America v.
Approximately 83 Acres of Real Estate Located in Fairview Township, York County,
Pennsylvania, titled in the name of CCA Associates, Inc. The real property,
which is the subject of the forfeiture action, serves as the sole collateral for
a loan by PeoplesBank to CCA Associates, Inc. (CCA), the owner or reputed owner
of this property. The loan to CCA, which was guaranteed by a third party, has a
current principal balance of $1,500,000 plus accrued interest and other fees and
costs. The third party guarantor recently pled guilty and is awaiting sentencing
by the federal government for his involvement in criminal activity. PeoplesBank
intends to protect its mortgage interest in the real estate from forfeiture
through available defenses including the "innocent owner defense." As of the
date this report was filed, the loan was current and classified as a performing
asset. Management believes that the primary debt obligation to PeoplesBank will
be satisfied once the property is liquidated and the proceeds from the sale
distributed. Therefore, management does not believe that the forfeiture action
will have a material adverse impact on the Corporation.
ALLOWANCE FOR LOAN LOSSES
Table 2 -- Analysis of Allowance for Loan Losses, shows the allowance was
$1,768,000 or .67 percent of total loans on March 31, 2004, compared to
$1,515,000 or .64 percent of total loans, respectively, for March 31, 2003. The
$253,000 or 17 percent increase in the allowance was attributable to loan growth
and management's overall assessment of the condition of the loan portfolio.
Based on a recent evaluation of potential loan losses in the current portfolio,
management believes that the allowance is adequate to support losses inherent in
the loan portfolio on March 31, 2004.
- 17 -
TABLE 2-ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
(dollars in thousands) 2004 2003
- --------------------------------------------------------------------------------
Balance-January 1, $1,694 $1,515
Provision charged to operating expense 50 37
Loans charged off:
Commercial 50 5
Real estate-mortgage 0 0
Consumer 13 62
- --------------------------------------------------------------------------------
Total loans charged off 63 67
Recoveries:
Commercial 87 16
Real estate-mortgage 0 0
Consumer 0 14
- --------------------------------------------------------------------------------
Total recoveries 87 30
- --------------------------------------------------------------------------------
Net charge-offs (recoveries) (24) 37
- --------------------------------------------------------------------------------
Balance-March 31, $1,768 $1,515
================================================================================
Ratios:
Net charge-offs (annualized) to average total loans -0.04% 0.06%
Allowance for loan losses to total loans
at period-end 0.67% 0.64%
Allowance for loan losses to nonaccrual loans
and loans past due 90 days or more 148.6% 25.0%
LIQUIDITY
Codorus Valley's loan-to-deposit ratio, which is used as a broad measure of
liquidity, was approximately 83 percent on March 31, 2004, compared to 86
percent on December 31, 2003. Liquidity for both periods was adequate based on
availability from many sources, including the potential liquidation of a $62
million portfolio of available-for-sale securities, valued at March 31, 2004.
Another important source of liquidity for PeoplesBank is available credit from
the Federal Home Loan Bank of Pittsburgh (FHLBP). On December 31, 2003, the
latest available date, available funding from the FHLBP was approximately $74
million.
Off-Balance Sheet Arrangements
Codorus Valley's financial statements do not reflect various commitments that
are made in the normal course of business, which may involve some liquidity
risk. These commitments consist primarily of commitments to grant new loans,
unfunded commitments of existing loans, and letters of credit made under the
same standards as on-balance sheet instruments. Unused commitments on March 31,
2004, totaled $86,670,000 and consisted of $49,035,000 in unfunded commitments
of existing loans, $33,928,000 to grant new loans and $3,707,000 in letters of
credit. Due to fixed maturity dates and specified conditions within these
instruments, many will expire without being drawn upon. Management believes that
amounts actually drawn upon can be funded in the normal course of operations and
therefore do not present a significant liquidity risk to Codorus Valley.
-18-
Contractual Obligations
Codorus Valley has various long-term contractual obligations outstanding at
March 31, 2004, including long-term debt, time deposits and obligations under
capital and operating leases. These obligations have not changed significantly
from those reported in Table 11 of the Form 10-K for 2003. A schedule of
long-term debt for the period ended March 31, 2004, compared to December 31,
2003, is provided in Note 4 to the financial statements.
MARKET RISK MANAGEMENT
In the normal course of conducting business, Codorus Valley is exposed to market
risk, principally interest rate risk, through the operations of its banking
subsidiary. Interest rate risk arises from market driven fluctuations in
interest rates, which may affect cash flows, income, expense and values of
financial instruments. An asset-liability management committee comprised of
members of management manages interest rate risk.
Codorus Valley performed a simulation on its balance sheet at March 31, 2004 and
December 31, 2003. The results of the point-in-time analyses are shown in Table
3 -- Interest Rate Sensitivity. The analyses reveal that the Corporation's
balance sheet was asset sensitive for both periods. Asset sensitive means that
loan and investment assets will reprice to a greater and faster degree than the
deposits and debt that fund them. Therefore, the balance sheet is positioned to
benefit from economic growth and rising market interest rates. Conversely, if
market interest rates decline, earnings are expected to decline. A detailed
discussion of market interest risk is provided in the Corporation's annual
report on Form 10-K for the period ended December 31, 2003.
TABLE 3-INTEREST RATE SENSITIVITY
at March 31, 2004
- ----------------------------------------------------------------------------------------------
Change in
Change in interest rates Forecasted interest net income
(basis points) over 12 mos rate scenario $000's %
- ----------------------------------------------------------------------------------------------
+200 High 348 9.2
0 Flat (baseline) 0 0.0
-200 Low (517) (13.7)
+87 Most likely 84 2.2
at December 31, 2003
- ----------------------------------------------------------------------------------------------
Change in
Change in interest rates Forecasted interest net income
(basis points) over 12 mos rate scenario $000's %
- ----------------------------------------------------------------------------------------------
+200 High 241 5.8
0 Flat (baseline) 0 0.0
-200 Low (438) (10.6)
+88 Most likely 17 0.4
OTHER RISKS
Additional grand acts of terrorism in the United States of America, or in other
countries, could erode consumer and business confidence and disrupt commerce,
resulting in a prolonged economic recession.
- 19 -
A prolonged economic recession could have a material adverse effect on the
liquidity, capital resources or results of operations of Codorus Valley.
Periodically, federal and state legislation is proposed that could result in
additional regulation of, or restrictions on, the business of Codorus Valley and
its subsidiaries. Other than as discussed in the Corporation's Form 10-K for the
period ended December 31, 2003, it cannot be predicted whether such legislation
will be adopted or, if adopted, how such legislation would affect the business
of Codorus Valley and its subsidiaries.
Management is not aware of any other current specific recommendations by
regulatory authorities or proposed legislation, which, if they were implemented,
would have a material adverse effect upon the liquidity, capital resources, or
results of operations. Although the general cost of compliance with numerous
federal and state laws and regulations has, and in the future, may have a
negative impact on Codorus Valley's results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Refer to the section entitled "Market risk management" within Management's
Discussion and Analysis of Consolidated Financial Condition and Results of
Operations.
ITEM 4. CONTROLS AND PROCEDURES
Codorus Valley maintains controls and procedures designed to ensure that
information required to be disclosed in the reports that the Corporation files
or submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
of the Securities and Exchange Commission. Based upon their evaluation of those
controls and procedures performed as of March 31, 2004, the chief executive and
chief financial officers of Codorus Valley concluded that Codorus Valley's
disclosure controls and procedures were adequate.
Codorus Valley made no significant changes in its internal controls or in other
factors that could significantly affect these controls in the quarter ended
March 31, 2004, as evaluated by the chief executive and chief financial
officers.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On March 19, 2003, a former bank client filed a counterclaim against PeoplesBank
in the Court of Common Pleas of Dauphin County, Pennsylvania, alleging, among
other things, that PeoplesBank: breached an implied-in-fact agreement to the
claimants' related to loans made to the claimants; intentionally interfered with
the claimants' existing contracts and prospective business relations; and made
certain misrepresentations to the claimants. The claimants allege to have
incurred unliquidated losses and other damages in excess of $3.9 million and
exemplary damages in excess of $35,000. The counterclaim was filed in response
to the complaint filed by PeoplesBank whereby PeoplesBank alleges that the
claimants defaulted on a promissory note resulting in damages to PeoplesBank in
excess of $1.2 million. Management believes there are substantial defenses to
this lawsuit and intends to defend it vigorously. The impact of the final
disposition of this lawsuit cannot be assessed at this time. Counsel believes
that the claim may qualify as a "covered claim" under PeoplesBank's lender
liability insurance policy, which provides coverage for losses in excess of
$100,000, and which should cover the defense and indemnification of PeoplesBank
for the claim. The factual discovery process has not been
- 20 -
completed. Although PeoplesBank expects to incur costs in defending these
claims, based on the results of its investigation thus far and preliminary
discussions with its lawyers, PeoplesBank currently does not believe the
ultimate resolution of the claims will have a material impact on its financial
condition or results of operations.
Another legal proceeding appears on page 17 under the caption, Forfeiture Action
Related to Mortgaged Property.
Management of Codorus Valley and PeoplesBank is not aware of any other material
litigation, other than routine litigation incident to the nature of its
business, nor any material proceedings pending, threatened or contemplated
against Codorus Valley and PeoplesBank by government authorities.
ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY
SECURITIES Codorus Valley made no repurchases of equity securities during the
first quarter of 2004.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Nothing to report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Nothing to report.
ITEM 5. OTHER INFORMATION
Nothing to report.
ITEM 6. (a) EXHIBITS
Exhibit
Number Description of Exhibit
- ------ ----------------------
3(i) Articles of Incorporation (Incorporated by reference to
Exhibit 3(i) to Current Report on Form 8-K, filed with the
Commission on March 29, 2001.)
3(ii) By-laws (Incorporated by reference to Exhibit 3(ii) to Current
Report on Form 8-K, filed with the Commission on March 29,
2001.)
4 Rights Agreement dated as of November 4, 1995 (Incorporated by
reference to Current Report on Form 8-K, filed with the
Commission on March 29, 2001.)
10.1 1996 Stock Incentive Plan (Incorporated by reference to
Exhibit 99 of Registration Statement No. 333-9277 on Form S-8,
filed with the Commission on July 31, 1996.)
10.2 Amendments to the Employment Agreement by and among
PeoplesBank, A Codorus Valley Company, Codorus Valley Bancorp,
Inc., and Larry J. Miller dated October 1, 1997, including
Executive Employment Agreement dated January 1, 1993 between
Codorus Valley Bancorp, Inc., Peoples Bank of Glen Rock and
Larry J. Miller. (Incorporated by reference to Exhibit 10.1
to Registrant's Current Report on Form 8-K, filed with the
Commission on March 20, 2003.)
10.3 Change of Control Agreement between PeoplesBank, A Codorus
Valley Company, Codorus Valley Bancorp, Inc. and Jann A.
Weaver, dated October 1, 1997. (Incorporated
- 21 -
by reference to Exhibit 10.2 to the Registrant's Current
Report on Form 8-K, filed with the Commission March 20, 2003.)
10.4 Change of Control Agreement between PeoplesBank, A Codorus
Valley Company, Codorus Valley Bancorp, Inc. and Harry R.
Swift, dated October 1, 1997. (Incorporated by reference to
Exhibit 10.4 to the Registrant's Current Report on Form 8-K,
filed with the Commission on March 20, 2003.)
10.5 1998 Independent Directors Stock Option Plan (Incorporated by
reference to Exhibit 4.3 of Registration Statement No.
333-61851 on Form S-8, filed with the Commission on August 19,
1998.)
10.6 2000 Stock Incentive Plan (Incorporated by reference to
Exhibit 4.3 of Registration Statement No. 333-40532 on Form
S-8, filed with the Commission on June 30, 2000.)
10.7 2001 Employee Stock Bonus Plan (Incorporated by reference to
Exhibit 99.1 of Registration Statement No. 333-68410 on Form
S-8, filed with the Commission on August 27, 2001.)
10.8 Dividend Reinvestment and Stock Purchase Plan (Incorporated by
reference to Exhibit 4 (a) Registration Statement no. 33-46171
on Amendment no. 3 to Form S-3, filed with the Commission on
February 2, 1999.)
31a Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
31b Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
ITEM 6. (b) REPORTS ON FORM 8-K
On January 22, 2004, Codorus Valley Bancorp, Inc. filed a report on Form 8-K,
Item 12, dated January 20, 2004. The Form 8-K disclosed that Codorus Valley
Bancorp, Inc. issued a Press Release announcing the declaration of a quarterly
cash dividend and the results of operations, in summary form, for the year ended
December 31, 2003, compared to the year ended December 31, 2002.
- 22 -
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the authorized
undersigned.
Codorus Valley Bancorp, Inc.
(Registrant)
May 11, 2004 /s/ Larry J. Miller
--------------------------------
Date Larry J. Miller
President & CEO
(Principal executive officer)
May 11, 2004 /s/ Jann A. Weaver
--------------------------------
Date Jann A. Weaver
Treasurer & Assistant Secretary
(Principal financial and accounting
officer)
- 23 -