Codorus Valley Bancorp, Inc. Reports First Quarter 2024 Results

• First quarter net income of $4.3 million compared to net income of $7.0 million in the quarter ended March 31, 2023, and $5.5 million in the quarter ended December 31, 2023;
  
  
  
  
• Net interest margin of 3.34% for the quarter ended March 31, 2024, a 66-basis point decrease from the net interest margin of 4.00% for the quarter ended March 31, 2023;
  
  
  
  
• Tier 1 leverage capital ratio of 10.80% for the quarter ending March 31, 2024, a 60-basis point increase from the tier 1 leverage capital ratio of 10.20% for the quarter ending March 31, 2023;
  
  
  
  
• Year-to-date efficiency ratio of 73.91%; return on average assets of 0.77%; and return on equity of 8.48%;
  
  
  
  
• Cash dividend of $0.17 per common share payable on May 14, 2024, to common stock holders of record on May 7, 2024.
  
  
  
  
• On December 12, 2023, Codorus Valley Bancorp, Inc. (NASDAQ:CVLY) and Orrstown Financial Services, Inc. (NASDAQ:ORRF) ("Orrstown") announced that the companies entered into an Agreement and Plan of Merger pursuant to which Codorus Valley Bancorp, Inc. will merge with and into Orrstown Financial Services, Inc. later this year, subject to receipt of regulatory and shareholder approval. As a result, the Corporation realized merger-related expenses of $118,000 in the first quarter 2024.
  
  

YORK, Pa., April 25, 2024 (GLOBE NEWSWIRE) -- Codorus Valley Bancorp, Inc. (the "Corporation") (NASDAQ:CVLY), parent company of PeoplesBank, A Codorus Valley Company ("PeoplesBank", or the "Bank"), today reported net income of $4.3 million or $0.44 per diluted common share, for the quarter ended March 31, 2024. This compares to net income of $7.0 million or $0.73 per diluted common share, for the quarter ended March 31, 2023, representing a decrease of $2.7 million or 39.1 percent, and compares to net income of $5.5 million or $0.57 per diluted common share for the fourth quarter of 2023, representing a decrease of $1.2 million or 22.0 percent.   Excluding the impact of $118,000 in merger-related expenses, net income and diluted earnings per share, respectively, were $4.3 million⁽¹⁾ and $0.45⁽¹⁾ for the quarter ended March 31, 2024.

"In the first quarter, the PeoplesBank team continued to work through a challenging banking environment, endeavoring to position the balance sheet for future opportunities, proactively managing credit risk and maintaining both strong capital and liquidity positions. The team remains focused on retaining and expanding client relationships, as evidenced by the loan and deposit growth exhibited in the first quarter, and our longstanding commitment to supporting our community. We are eager to leverage the momentum we've generated when we join forces with Orrstown Financial Services later this year to establish the premier regional community bank serving South Central Pennsylvania, Central Maryland and the Greater Baltimore area," stated Craig L. Kauffman, President, and Chief Executive Officer.

⁽¹⁾ Net income excluding merger-related expenses, diluted earnings per share excluding merger-related expenses, tangible book value per share and tangible book value per share without accumulated other comprehensive loss are non-GAAP financial measures. Please see Financial Highlights for disclosure and reconciliation of non-GAAP financial measures.

REVIEW OF RESULTS

Balance Sheet

Loans

Loans increased $32.5 million from December 31, 2023 to March 31, 2024, an annualized growth rate of 7.8 percent, with increases noted in commercial loans of 41.8 percent annualized growth and commercial real estate of 7.1 percent annualized growth.   Nonperforming assets increased $3.4 million, or 85.0 percent to $7.4 million from December 31, 2023 to March 31, 2024.   The increase was the result of several loans that exhibited deterioration during the quarter. The Bank continues to proactively manage credit quality.     

Investment Securities

Investment Securities decreased $10.3 million to $339.5 million at March 31, 2024 compared to $349.8 million at December 31, 2023 due to maturities and paydowns. The tax-equivalent yield on securities for the three months ended March 31, 2024 was 2.93 percent, compared to 2.68 percent for the three months ended March 31, 2023 and 2.84 percent for the three months ended December 31, 2023. The unrealized loss on the securities portfolio was $43.0 million at March 31, 2024, compared to $40.4 million at March 31, 2023 and $40.6 million at December 31, 2023.

Borrowings

FHLB advances and other short-term borrowings decreased $26.2 million to $30.3 million at March 31, 2024 compared to $56.5 million at December 31, 2023.   FHLB advances and other short-term borrowings decreased $31.1 million or 50.6 percent from $61.4 million at March 31, 2023.

Deposits

From December 31, 2023 to March 31, 2024, total Deposits increased $41.7 million, or an annualized growth pace of 8.8 percent, ending the period at $1.92 billion; noninterest-bearing accounts decreased $13.9 million or 3.7 percent; and interest-bearing accounts increased $55.7 million or 3.7 percent. The growth in interest-bearing accounts during the period was primarily attributed to time deposits, which increased $39.7 million or 8.8 percent and money market accounts, which increased $16.5 million or 2.6 percent. The average cost of interest-bearing deposits increased to 2.86 percent for the quarter ended March 31, 2024, compared to 1.43 percent for the quarter ended March 31, 2023 and 2.59 percent for the quarter ended December 31, 2023. As anticipated, the Corporation experienced downward pressure on net interest margin over the past year due to the cost of deposits and the slope of the interest rate curve.

Income Statement

The Corporation's net interest income for the three months ended March 31, 2024 was $17.6 million, a decrease of 14.2 percent when compared to $20.6 million for the three months ended March 31, 2023 and a decrease of 8.0 percent when compared to $19.2 million for the three months ended December 31, 2023.   The Corporation's tax-equivalent net interest margin ("NIM") was 3.34 percent for the three months ended March 31, 2024, compared to 4.00 percent for the same period in 2023 and 3.61 percent for the quarter ended December 31, 2023.

The Corporation's provision for credit losses, which includes provision for credit losses on unfunded commitments, for the three months ended March 31, 2024 was $116,000 compared to $738,000 for the three months ended March 31, 2023 and a reversal of provision for credit losses of $767,000 for the quarter ended December 31, 2023.   The Corporation's ratio of nonperforming assets to total loans and foreclosed real estate was 0.42 percent at March 31, 2024, a 23.6 percent decrease from the nonperforming assets ratio of 0.55 percent at March 31, 2023 and an 82.6 percent increase from the nonperforming assets ratio of 0.23 at December 31, 2023.     

Noninterest income for the three months ended March 31, 2024 was $4.2 million, an increase of $196,000 or 4.9 percent, compared to noninterest income of $4.0 million for the three months ended March 31, 2023 and a decrease of $64,000 or 1.5 percent compared to the three months ended December 31, 2023.   The increase in the current quarter compared to the prior year, was primarily due to a loss on sales of securities in the first quarter 2023, offset by lower other income related to swap fees.  

Noninterest expense was $16.3 million for the first quarter 2024, an increase of $1.5 million or 9.8 percent, as compared to noninterest expense of $14.8 million for the first quarter 2023 and a decrease of $1.0 million or 5.9 percent compared to noninterest expense of $17.3 million for the fourth quarter of 2023.   During the fourth quarter 2023, the Corporation announced it has entered into an agreement to merge with Orrstown Financial Services, Inc. For the three months ended March 31, 2024 and December 31, 2023, merger-related expenses totaled $118,000 and $956,000, respectively, which included due diligence costs, legal expenses and investment banking expenses related to delivery of a fairness opinion to its Board of Directors. The Corporation expects to incur additional merger-related expenses in 2024 as it works toward consummation of the merger with Orrstown and the related merger and integration of PeoplesBank with and into Orrstown Bank. In addition to merger-related expenses, noninterest expense was impacted in the current period by higher other expense due to a reversal of expense in the prior year.  

Income tax expense for the quarter ended March 31, 2024 was $1.2 million compared to $2.0 million for the same period in 2023 and $1.4 million in the quarter ended December 31, 2023.   The effective tax rate for the three-month periods ended March 31, 2024, March 31, 2023 and December 31, 2023 was 21.8 percent, 22.2 percent and 20.8 percent, respectively.     

Capital

Shareholders' equity totaled $201.0 million at March 31, 2024, an increase of $1.4 million from $199.6 million at December 31, 2023. The increase was primarily attributable to net income of $4.3 million, partially offset by dividends paid of $1.6 million during the year. Other changes are related to accumulated other comprehensive loss and issuance of treasury stock.

Book value per share was $20.80 and $20.70 at March 31, 2024 and December 31, 2023, respectively. Tangible book value per share and tangible book value per share without accumulated other comprehensive loss ⁽¹⁾ was $20.56 per share and $23.97 per share, respectively, at March 31, 2024 from $20.46 per share and $23.68 per share, respectively, at December 31, 2023, primarily the result of changes in shareholders' equity discussed above. The Corporation's common equity tier 1 capital ratio was 12.85 percent at March 31, 2024, an increase from 12.79 percent at December 31, 2023.   At March 31, 2024, all capital ratios applicable to the Bank were above regulatory minimum levels and the Bank met the "well-capitalized" criteria under current bank regulatory guidelines. (Note that the regulatory "well-capitalized" definition is not applicable to small bank holding companies such as the Corporation).

Liquidity Risk Management

The Bank maintains a well-diversified deposit base and has a comparatively low level of uninsured deposits. At March 31, 2024, 84% of the Bank's deposits were estimated to be FDIC-insured, and an additional 7% of deposits were fully collateralized.         

The overall deposit and liquidity position of the Bank and the Corporation remain positive, with overall deposits exceeding the level at December 31, 2019, the start of the pandemic, by $324.5 million or 20.4 percent.

The Bank is a member of the IntraFi Network®, which provides reciprocal deposit alternatives allowing our clients to have the benefit of additional FDIC insurance coverage, and assisting the Bank in the management of its liquidity needs.

Dividend Declared

On April 9, 2024, the Board of Directors of the Corporation declared a regular quarterly cash dividend of $0.17 per share, payable on May 14, 2024 to common shareholders of record at the close of business on May 7, 2024.

Certain Accounting Matters

Accounting standards require the consideration of subsequent events occurring after the balance sheet date for matters that require adjustment to, or disclosure in, the consolidated financial statements. The review period for subsequent events extends up to and includes the filing date of a public company's financial statements when filed with the SEC. Accordingly, the consolidated financial information in this announcement is subject to change.

The Corporation uses certain non-GAAP (Generally Accepted Accounting Principles) financial measures in this Press Release. The Corporation's management believes that the supplemental non-GAAP information provided in this press release is utilized by market analysts and others to evaluate the Corporation's financial condition and results of operations and, therefore, such information is useful to investors. These measures have limitations as analytical tools and should not be considered a substitute for analysis of results under GAAP. These non-GAAP financial measures are reconciled to the most comparable measures following the "Financial Highlights" section of this press release.

Annualized, proforma, projected, and estimated numbers used herein are for illustrative purposes only, are not forecasts and may not reflect actual results.

About Codorus Valley Bancorp, Inc.

Codorus Valley Bancorp, Inc. is the largest independent financial services holding company headquartered in York, Pennsylvania. Codorus Valley primarily operates through its financial services subsidiary, PeoplesBank, A Codorus Valley Company. PeoplesBank offers a full range of consumer, business, wealth management, and mortgage services at financial centers located in communities throughout South Central Pennsylvania and Central Maryland. Codorus Valley Bancorp, Inc.'s Common Stock is listed on the NASDAQ Global Market under the symbol "CVLY".

Cautionary Note Regarding Forward-looking Statements    

This Press Release may contain forward-looking statements by Codorus Valley Bancorp, Inc. ("Codorus Valley", or the "Corporation"). Forward-looking statements may include information concerning the financial condition, results of operations and business of the Corporation and its subsidiaries and include, but are not limited to, statements regarding expectations or predictions of future financial or business performance or conditions relating to the Corporation and its operations. These forward-looking statements may include statements with respect to the Corporation's beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, that are subject to significant risks and uncertainties, and are subject to change based on various factors (some of which are beyond the Corporation's control). Forward-looking statements may also include, but are not limited to, discussions of strategy, financial projections and estimates and their underlying assumptions, statements regarding plans, objectives, goals, expectations or consequences, and statements about future performance, expenses, operations, or products and services of the Corporation and its subsidiaries. Forward-looking statements can be identified by the use of words such as "may," "should," "could," "will," "could," "believes," "plans," "expects," "estimates," "forecasts," "intends," "anticipates," "projects," "strives to," "seeks," "intends" or similar words or expressions.

Forward-looking statements are not historical facts, nor should they be relied upon as providing assurance of future performance. Forward-looking statements are based on current beliefs, expectations and assumptions regarding the future of the Corporation's business, including its pending merger (the "Merger") with Orrstown Financial Services, Inc. ("Orrstown"), future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of the Corporation's control. Note that the following factors, among others, could affect the future financial results of the Corporation and its subsidiaries, both individually and collectively, and could cause those results to differ materially from those expressed in these forward-looking statements:

• changes or volatility in market interest rates and the persistence of an inflationary environment in the U.S. and our market areas and the potential for an economic downturn or recession;
• the effects of financial challenges at other banking institutions that could lead to depositor concerns that spread within the banking industry causing disruptive deposit outflows and other destabilizing results;
• legislative and regulatory changes, and the uncertain impact of new laws and regulations;
• monetary and fiscal policies of the federal government;
• the effects of changes in accounting policies and practices;
• ineffectiveness of the Corporation's business strategy due to changes in current or future market conditions;
• changes in deposit flows, the cost of funds, demand for loan products and the demand for financial services;
• the remaining effects of the COVID-19 pandemic, including on the Corporation's credit quality and operations as well as its impact on general economic conditions;
• competition; market volatility, market downturns, changes in consumer behavior, business closures;
• adverse changes in the quality or composition of the Corporation's loan, investment and mortgage-backed securities portfolios, including from the effects of the recent inflationary environment;
• geographic concentration of the Corporation's business;
• deterioration of commercial real estate values;
• the adequacy of loan loss reserves;
• deterioration in the credit quality of borrowers;
• the Corporation's ability to attract and retain key personnel, especially in light of the pending Merger with Orrstown;
• the impact of operational risks, including the risk of human error, failure or disruption of internal processes and systems, including of the Corporation's information and other technology systems;
• failure or circumvention of our internal controls;
• the Corporation's ability to keep pace with technological changes;
• breaches of security or failures of the Corporation to identify and adequately address cybersecurity and data breaches;
• changes in government regulation and supervision and the potential for negative consequences resulting from regulatory examinations, investigations and violations, in particular, the effect that such occurrences could have on the pending Merger with Orrstown; 
• the effects of adverse outcomes from claims and litigation;
• occurrence of natural or man-made disasters or calamities, including health emergencies, the spread of infectious diseases, epidemics or pandemics, an outbreak or escalation of hostilities or other geopolitical instabilities, the effects of climate change or extraordinary events beyond the Corporation's control, and the Corporation's ability to deal effectively with disruptions caused by the foregoing; and
• economic, competitive, governmental and technological factors affecting the Corporation's operations, markets, products, services and fees.
  
  

In addition to the foregoing factors with respect to the Corporation's business, the following factors and uncertainties exist with respect to the pending Merger with Orrstown:

• the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive agreement and plan of merger between the Corporation and Orrstown;
• the outcome of any legal proceedings that may be instituted against the Corporation or Orrstown;
• delays in completing the pending Merger;
• the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the pending Merger) or shareholder approvals;
• the failure to satisfy any of the other conditions to the pending Merger on a timely basis or at all, including the ability of the Corporation or Orrstown to meet expectations regarding the timing, completion and accounting and tax treatments of the pending Merger;
• the possibility that the anticipated benefits of the pending Merger are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where the Corporation and Orrstown do business;
• the possibility that the pending Merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events;
• the possibility that revenues following the pending Merger may be lower than expected; the impact of certain restrictions during the pendency of the pending Merger on the parties' ability to pursue certain business opportunities and strategic transactions;
• diversion of management's attention from ongoing business operations and opportunities;
• potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or the completion of the pending Merger;
• the ability to complete the pending Merger and integration of the Corporation and Orrstown successfully;
• the dilution caused by Orrstown's issuance of additional shares of its capital stock in connection with the pending Merger; and
• the potential impact of general economic, political or market factors on the companies or the pending Merger and other factors that may affect future results of the Corporation or Orrstown.
  
  

The Corporation does not commit to update or revise any forward-looking statements, whether written or oral, that may be made from time to time by or on behalf of the Corporation to reflect events or circumstances occurring after the date of this report. Further information regarding Codorus Valley, Orrstown and factors which could affect the forward-looking statements contained herein can be found in Codorus Valley's Annual Report on Form 10-K and Form 10-K/A for the fiscal year ended December 31, 2023 and its other filings with the SEC, and in Orrstown's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and its other filings with the SEC. SEC filings are available free of charge on the SEC's website at www.sec.gov. 

No Offer or Solicitation

This communication is not a proxy statement or solicitation or a proxy, consent or authorization with respect to any securities or in respect of the pending Merger and shall not constitute an offer to sell or a solicitation of an offer to buy the securities of Orrstown, Codorus Valley or the combined company, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be deemed to be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended, and otherwise in accordance with applicable law.

Additional Information About the Merger and Where to Find It

In connection with the pending Merger, Orrstown intends to file a registration statement on Form S-4 with the SEC that will include a joint proxy statement of Codorus Valley and Orrstown and a prospectus of Orrstown, which will be distributed to the shareholders of Codorus Valley and Orrstown in connection with their votes on the Merger of Codorus Valley with and into Orrstown and the issuance of Orrstown common stock in the pending transaction.

INVESTORS AND SECURITY HOLDERS ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS WHEN THEY BECOME AVAILABLE (AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PENDING TRANSACTION OR INCORPORATED BY REFERENCE INTO THE JOINT PROXY STATEMENT/PROSPECTUS) BECAUSE SUCH DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION REGARDING THE PENDING MERGER AND RELATED MATTERS.

Investors and security holders will be able to obtain these documents, and any other documents Orrstown and Codorus Valley have filed with the SEC, free of charge at the SEC's website, www.sec.gov, or by accessing Orrstown's website at www.Orrstown.com under the "Investor Relations" link and then under the heading "Documents," or by accessing Codorus Valley's website at ir.peoplesbanknet.com. In addition, documents filed with the SEC by Orrstown or Codorus Valley will be available free of charge by writing to (i) Orrstown at 4750 Lindle Road, Harrisburg, PA 17111, Attention: Neil Kalani or (ii) Codorus Valley at 105 Leader Heights Road, York, PA 17403, Attention: Daniel R. Stolzer.

Participants in the Solicitation

The directors, executive officers and certain other members of management and employees of Orrstown may be deemed to be participants in the solicitation of proxies from the shareholders of Orrstown in connection with the pending Merger. Information about Orrstown's directors and executive officers is included in the proxy statement for its 2024 annual meeting of Orrstown's shareholders, which was filed with the SEC on March 22, 2024.

The directors, executive officers and certain other members of management and employees of Codorus Valley may also be deemed to be participants in the solicitation of proxies in connection with the pending Merger from the shareholders of Codorus Valley. Information about the directors and executive officers of Codorus Valley is included in the proxy statement for its 2023 annual meeting of Codorus Valley shareholders, which was filed with the SEC on March 31, 2023 and in Part III of Codorus Valley's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed on March 12, 2024.

Additional information regarding the interests of those participants and other persons who may be deemed participants in the pending Merger may be obtained by reading the joint proxy statement/prospectus regarding the pending Merger when it becomes available. Free copies of this document may be obtained as described above.

Questions or comments concerning this Press Release should be directed to:

Codorus Valley Bancorp, Inc.
Craig L. Kauffman	Larry D. Pickett
President and CEO	Chief Financial Officer
717-747-1501	717-747-1502
[email protected]	[email protected]

CODORUS VALLEY BANCORP, INC.
Consolidated Balance Sheets (Unaudited)
		March 31,				December 31,				March 31,
(Dollars in thousands, except share and per share data)		2024				2023				2023
Assets
Interest bearing deposits with banks	$	11,128			$	10,882			$	83,266
Cash and due from banks		15,534				22,809				19,999
Total cash and cash equivalents		26,662				33,691				103,265
Securities, available-for-sale, at fair value (amortized cost $382,516 at March 31, 2024
and $390,397 at December 31, 2023, respectively)		339,495				349,767				349,850
Restricted investment in bank stocks, at cost		3,186				3,146				2,955
Loans held for sale		958				822				0
Loans (net of deferred fees of $3,636 - 2024 and $3,752 - 2023)		1,739,269				1,705,608				1,647,881
Less-allowance for credit losses		(21,645	)			(20,506	)			(21,544	)
Net loans		1,717,624				1,685,102				1,626,337
Premises and equipment, net		19,090				19,563				21,297
Operating leases right-of-use assets		2,591				2,746				2,933
Goodwill		2,301				2,301				2,301
Other assets		96,686				97,660				89,789
Total assets	$	2,208,593			$	2,194,798			$	2,198,727
Liabilities
Deposits
Noninterest bearing	$	365,358			$	379,288			$	453,351
Interest bearing		1,549,705				1,494,054				1,436,034
Total deposits		1,915,063				1,873,342				1,889,385
Short-term borrowings		30,314				56,541				61,371
Long-term debt and junior subordinated debt		11,513				11,520				11,543
Subordinated notes - face amount $31,000 (less discount and debt
issuance cost of $135 at March 31, 2024 and $155 at December 31, 2023)		30,865				30,845				30,784
Operating leases liabilities		2,687				2,848				3,059
Allowance for credit losses on off-balance sheet credit exposures		1,503				2,278				2,135
Other liabilities		15,654				17,819				15,504
Total liabilities		2,007,599				1,995,193				2,013,781
Shareholders' equity
Preferred stock, par value $2.50 per share;
1,000,000 shares authorized; no shares issued or outstanding		0				0				0
Common stock, par value $2.50 per share; 30,000,000 shares authorized;
shares issued: 9,883,660 at March 31, 2024 and December 31, 2023;
and shares outstanding: 9,662,378 at March 31, 2024 and 9,642,851 at December 31, 2023		24,709				24,709				24,709
Additional paid-in capital		142,816				142,633				142,098
Retained earnings		71,249				68,633				55,456
Accumulated other comprehensive loss		(32,911	)			(31,082	)			(30,941	)
Treasury stock shares outstanding, at cost: 221,282 shares at March 31, 2024
and 240,809 at December 31, 2023		(4,869	)			(5,288	)			(6,376	)
Total shareholders' equity		200,994				199,605				184,946
Total liabilities and shareholders' equity	$	2,208,593			$	2,194,798			$	2,198,727

CODORUS VALLEY BANCORP, INC.
Consolidated Statements of Income (Unaudited)
	Three months ended
		March 31,				December 31,				March 31,
(dollars in thousands, except per share data)		2024				2023				2023
Interest income
Loans, including fees	$	26,855			$	26,967			$	23,034
Investment securities:
Taxable		2,651				2,781				2,457
Tax-exempt		109				108				101
Dividends		74				(90	)			17
Other		155				176				684
Total interest income		29,844				29,942				26,293
Interest expense
Deposits		10,738				9,800				5,137
Federal funds purchased and other short-term borrowings		878				385				38
Long-term debt and junior subordinated debt		217				222				194
Subordinated notes		369				369				369
Total interest expense		12,202				10,776				5,738
Net interest income		17,642				19,166				20,555
Provision for (recovery of) credit losses - loans		891				(833	)			492
(Recovery of) provision for credit losses - unfunded commitments		(775	)			66				246
Net interest income after provision for credit losses		17,526				19,933				19,817
Noninterest income
Trust and investment services fees		1,421				1,261				1,202
Income from mutual fund, annuity and insurance sales		314				299				369
Service charges on deposit accounts		1,455				1,529				1,485
Income from bank owned life insurance		414				405				322
Other income		467				773				862
Gain on sale of loans held for sale		105				27				10
(Loss) gain on sale of assets held for sale		0				(54	)			118
Loss on sales of securities		0				0				(388	)
Total noninterest income		4,176				4,240				3,980
Noninterest expense
Personnel		9,879				10,031				9,042
Occupancy of premises, net		894				926				978
Furniture and equipment		828				924				838
Professional and legal		283				444				467
Marketing		312				304				276
FDIC insurance		246				244				250
Debit card processing		470				520				478
External data processing		1,111				1,015				1,010
Merger-related expenses		118				956				0
Committee & Director Fees		320				617				358
PA shares tax		363				303				343
Impaired (recovery of) loan carrying cost		74				(119	)			(98	)
Other		1,363				1,120				869
Total noninterest expense		16,261				17,285				14,811
Income before income taxes		5,441				6,888				8,986
Provision for income taxes		1,186				1,435				1,994
Net income	$	4,255			$	5,453			$	6,992
Net income per share, basic		0.44				0.57				0.73
Net income per share, diluted		0.44				0.57				0.73

Codorus Valley Bancorp, Inc.
Financial Highlights
Selected Financial Data (Unaudited)
			Quarterly
				2024				2023				2023				2023				2023
			1st Qtr				4th Qtr				3rd Qtr				2nd Qtr				1st Qtr
Earnings and Per Share Data (1)
(in thousands, except per share data)
	Net income		$	4,255			$	5,453			$	5,917			$	6,611			$	6,992
	Basic earnings per share		$	0.44			$	0.57			$	0.62			$	0.69			$	0.73
	Diluted earnings per share		$	0.44			$	0.57			$	0.61			$	0.69			$	0.73
	Cash dividends paid per share		$	0.17			$	0.17			$	0.17			$	0.16			$	0.16
	Book value per share		$	20.80			$	20.70			$	19.06			$	19.34			$	19.28
	Tangible book value per share (2)		$	20.56			$	20.46			$	18.82			$	19.10			$	19.04
	Tangible book value per share without AOCI (8)		$	23.97			$	23.68			$	23.28			$	22.81			$	22.26
	Average shares outstanding			9,649				9,629				9,616				9,600				9,585
	Average diluted shares outstanding			9,670				9,644				9,631				9,610				9,612
Performance Ratios (%)
	Return on average assets (3)			0.77				1.00				1.08				1.22				1.29
	Return on average equity (3)			8.48				11.69				12.64				14.17				15.45
	Net interest margin (4)			3.34				3.61				3.64				3.81				4.00
	Efficiency ratio (5)			73.91				73.28				66.95				64.19				59.05
	Net overhead ratio (3)(6)			2.19				2.40				2.14				2.10				1.93
Asset Quality Ratios (%)
	Net loan charge-offs to average loans (3)			(0.06	)			0.03				(0.15	)			0.20				0.15
	Allowance for credit losses to total loans (7)			1.24				1.20				1.26				1.23				1.31
	Nonperforming assets to total loans
	and foreclosed real estate			0.42				0.23				0.47				0.70				0.55
Capital Ratios (%)
	Average equity to average assets			9.10				8.57				8.55				8.58				8.38
	Tier 1 leverage capital ratio			10.80				10.75				10.50				10.38				10.20
	Common equity Tier 1 capital ratio			12.85				12.79				12.52				12.37				12.19
	Tier 1 risk-based capital ratio			13.40				13.35				13.08				12.94				12.76
	Total risk-based capital ratio			16.34				16.23				16.01				15.85				15.75
(1) per share amounts and shares outstanding were adjusted for stock dividends
(2) non-GAAP measure - book value less goodwill and core deposit intangibles; see reconciliation below
(3) annualized for the quarterly periods presented
(4) net interest income (tax-equivalent) as a percentage of average interest earning assets
(5) noninterest expense as a percentage of net interest income and noninterest income (tax-equivalent)
(6) noninterest expense less noninterest income as a percentage of average assets
(7) excludes loans held for sale
(8) non-GAAP measure - book value less accumulated other comprehensive income; see reconciliation below
	Reconciliation of Non-GAAP Financial Measures (Tangible Book Value and Tangible Book Value without AOCI and Adjusted Net Income)
				2024				2023				2023				2023				2023
	(in thousands, except per share data)		1st Qtr				4th Qtr				3rd Qtr				2nd Qtr				1st Qtr
	Total Shareholders' Equity		$	200,994			$	199,605			$	183,363			$	185,869			$	184,946
	Less: Goodwill and Other Intangible Assets			(2,301	)			(2,301	)			(2,302	)			(2,302	)			(2,303	)
	Tangible Shareholders' Equity		$	198,693			$	197,304			$	181,061			$	183,567			$	182,643
	Add: Accumulated Other Comprehensive Loss			32,911				31,082				42,869				35,650				30,941
	Tangible Shareholders' Equity without AOCI		$	231,604			$	228,386			$	223,930			$	219,217			$	213,584
	Common Shares Outstanding			9,662				9,644				9,619				9,611				9,594
	Book Value Per Share		$	20.80			$	20.70			$	19.06			$	19.34			$	19.28
	Effect of Intangible Assets			(0.24	)			(0.24	)			(0.24	)			(0.24	)			(0.24	)
	Tangible Book Value Per Share		$	20.56			$	20.46			$	18.82			$	19.10			$	19.04
	Book Value Per Share		$	20.80			$	20.70			$	19.06			$	19.34			$	19.28
	Effect of Intangible Assets and AOCI			3.17				2.98				4.22				3.47				2.98
	Tangible Book Value Per Share without AOCI		$	23.97			$	23.68			$	23.28			$	22.81			$	22.26
			Quarterly
				2024				2023				2023
	(in thousands, except per share data)		1st Qtr				4th Qtr				1st Qtr
	Average Diluted Shares Outstanding			9,670				9,644				9,612
	Net Income		$	4,255			$	5,453			$	6,992
	Plus: Merger-related expenses			118				956				-
	Less: Related tax effect			25				200				-
	Adjusted Net Income		$	4,348			$	6,209			$	6,992
	Adjusted Diluted Earnings Per Share		$	0.45			$	0.64			$	0.73
	This report contains certain financial information determined by methods other than in accordance with GAAP. This non-GAAP disclosure has limitation as an analytical tool
	and should not be considered in isolation or as a substitute for the analysis of the Corporation's results as reported under GAAP, nor is it necessarily comparable to non-GAAP
	performance measures that may be presented by other companies. Our management uses this non-GAAP measure in its analysis of our performance because it believes this measure
	is material and will be used as a measure of our performance by investors.

ANALYSIS OF NET INTEREST INCOME
Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)
		Three Months Ended
		March 31, 2024										December 31, 2023										March 31, 2023
(Dollars in thousands)		Average Balance			Taxable-Equivalent Interest				Taxable-Equivalent Rate			Average Balance			Taxable-Equivalent Interest				Taxable-Equivalent Rate			Average Balance			Taxable-Equivalent Interest				Taxable-Equivalent Rate
Assets
Interest bearing deposits with banks		$	11,125		$	155			5.62	%		$	12,724		$	176			5.46	%		$	60,286		$	684			4.60	%
Investment securities:
Taxable			369,223			2,725			2.97				371,949			2,691			2.87				369,154			2,474			2.72
Tax-exempt			22,436			131			2.35				22,476			132			2.33				23,537			125			2.15
Total investment securities			391,659			2,856			2.93				394,426			2,822			2.84				392,691			2,599			2.68
Loans:
Taxable (1)			1,707,857			26,687			6.28				1,682,403			26,797			6.32				1,613,154			22,860			5.75
Tax-exempt			21,078			207			3.95				21,359			210			3.90				22,597			217			3.89
Total loans			1,728,935			26,894			6.26				1,703,762			27,007			6.29				1,635,751			23,077			5.72
Total earning assets			2,131,719			29,905			5.64				2,110,913			30,005			5.64				2,088,728			26,360			5.12
Other assets (2)			73,213										65,067										71,428
Total assets		$	2,204,932									$	2,175,980									$	2,160,156
Liabilities and Shareholders' Equity
Deposits:
Interest bearing demand		$	909,735			5,987			2.65	%		$	914,832			5,918			2.57	%		$	902,917			3,461			1.55	%
Savings			131,143			10			0.03				136,622			11			0.03				160,062			12			0.03
Time			471,386			4,741			4.05				447,884			3,873			3.43				393,732			1,664			1.71
Total interest bearing deposits			1,512,264			10,738			2.86				1,499,338			9,800			2.59				1,456,711			5,137			1.43
Short-term borrowings			68,001			878			5.19				36,836			385			4.15				12,894			38			1.20
Long-term debt and junior subordinated debt			14,270			217			6.12				14,395			222			6.12				14,690			194			5.37
Subordinated notes			30,858			369			4.81				30,838			369			4.75				30,777			369			4.86
Total interest bearing liabilities			1,625,393			12,202			3.02				1,581,406			10,776			2.70				1,515,072			5,738			1.54
Noninterest bearing deposits			361,215										388,589										444,416
Other liabilities			17,586										19,473										18,250
Shareholders' equity			200,738										186,511										182,418
Total liabilities and shareholders' equity		$	2,204,932									$	2,175,980									$	2,160,156
Net interest income (tax equivalent basis)					$	17,703									$	19,229									$	20,622
Net interest margin (3)									3.34	%									3.61	%									4.00	%
Tax equivalent adjustment						(61	)									(63	)									(67	)
Net interest income					$	17,642									$	19,166									$	20,555
(1) Average balances include nonaccrual loans.
(2) Average balances include bank owned life insurance and foreclosed real estate.
(3) Net interest income (tax-equivalent basis) annualized as a percentage of average interest earning assets.