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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001 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
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(Address of principal executive offices) (Zip Code)
(717) 747-1519
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $2.50
par value
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 check mark if the disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in the definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of Codorus Valley Bancorp, Inc.'s voting stock held
by non-affiliates was approximately $32,092,000 as of March 14, 2002.
As of March 14, 2002, Codorus Valley Bancorp, Inc. had 2,564,261 shares of
common stock outstanding, par value $2.50 per share.
DOCUMENTS INCORPORATED BY REFERENCE
2001 Annual Report to Stockholders Parts I, II and IV Proxy Statement for the
Annual Meeting of Stockholders to be held May 21, 2002 Parts III and IV
1
Codorus Valley Bancorp, Inc.
Form 10-K Index
Part I
Page
Item 1 Business...........................................................3
Item 2 Properties.........................................................7
Item 3 Legal proceedings..................................................8
Item 4 Submission of matters to a vote of security holders................8
Part II
Item 5 Market for Codorus Valley Bancorp, Inc.'s common equity
and related stockholder matters...................................8
Item 6 Selected financial data............................................8
Item 7 Management's discussion and analysis of financial
condition and results of operations...............................8
Item 7A Quantitative and qualitative disclosures
about market risk................................................8
Item 8 Financial statements and supplementary data.......................10
Item 9 Changes in and disagreements with accountants on
accounting and financial disclosure..............................10
Part III
Item 10 Directors and executive officers, Codorus Valley Bancorp, Inc.....11
Item 11 Executive compensation............................................11
Item 12 Security ownership of certain beneficial owners and management....11
Item 13 Certain relationships and related transactions....................11
Part IV
Item 14 Exhibits, Financial statement schedules, and Reports on Form 8-K..11
Signatures........................................................14
Exhibit index.....................................................15
2
PART I
Forward-looking statements:
Management of Codorus Valley Bancorp, Inc. (Codorus Valley) has made
forward-looking statements in the Annual Report on Form 10-K. These
forward-looking statements may be subject to risks and uncertainties.
Forward-looking statements include the information concerning possible or
assumed future results of operations of Codorus Valley Bancorp, Inc. and its
subsidiaries, PeoplesBank, A Codorus Valley Company (PeoplesBank) and SYC Realty
Company, Inc. Management is making forward-looking statements when words such as
"believes," "expects," "anticipates" or similar expressions are used in this
Annual Report.
Shareholders should note that many factors, some of which are discussed
elsewhere in the report and in the documents that management incorporates by
reference, could affect the future financial results of Codorus Valley and
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 Annual Report on Form 10-K. These
factors include:
o operating, legal and regulatory risks;
o economic, political and competitive forces affecting banking, securities,
asset management and credit services businesses; and
o 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.
Critical accounting policies:
Disclosure of Codorus Valley's significant accounting policies is included in
Note 1 to the consolidated financial statements on pages 8 through 11 of the
Annual Report to Stockholders (Exhibit 13). Some of these policies are
particularly sensitive requiring significant judgements, estimates and
assumptions to 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, which are located on
pages 27 and 36, and in Note 6 located on page 13 of Exhibit 13.
Significant estimates are made by management in determining the allowance for
loan losses. Consideration is given to a variety of factors in establishing this
estimate. In estimating the allowance for loan losses, management considers
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.
Item 1: Business
Codorus Valley Bancorp, Inc. is a Pennsylvania business corporation,
incorporated on October 7, 1986. On March 2, 1987, Codorus Valley became a bank
holding company, under the Bank Holding Company Act of 1956. PeoplesBank, is its
wholly-owned banking subsidiary. SYC Realty Co., Inc. is its wholly-owned
nonbank subsidiary. Codorus Valley's business consists primarily of managing
PeoplesBank, and its principal source of income is dividends received from
PeoplesBank. On December 31, 2001, Codorus Valley had total consolidated assets
of $330 million, total deposits and other liabilities of $301 million, and total
stockholders' equity of $29 million.
3
Bank Subsidiary
PeoplesBank, organized in 1934, is a Pennsylvania chartered bank. It is not a
member of the Federal Reserve System. PeoplesBank offers a full range of
commercial and consumer banking services through ten full service financial
centers located in York County, Pennsylvania. PeoplesBank offers trust and
investment services at Codorus Valley Corporate Center located in York,
Pennsylvania. PeoplesBank also markets investment products through a third-party
marketing arrangement. These investment products are not FDIC insured, not
obligations of or guaranteed by PeoplesBank, and are subject to investment risk
including the possible loss of principal. The Federal Deposit Insurance
Corporation insures the deposits of PeoplesBank to the extent provided by law.
On December 31, 2001, PeoplesBank had total loans of $228 million and total
deposits of $277 million.
PeoplesBank is not dependent on deposits or exposed to loan concentration to a
single customer, or a small group of customers. Therefore, losses from a single
customer, or small customer group, would not have a material adverse effect on
the financial condition of PeoplesBank. At year-end 2001, the largest
indebtedness for a single PeoplesBank client was $3,591,000 or 1.6 percent of
the total loan portfolio.
At year-end 2001, the loan portfolio included one industry concentration that
exceeded 10 percent of total loans. The commercial leasing industry accounted
for 21 percent of total loans. Commercial leasing pertains to borrowers who
lease real estate for business purposes. Comparatively, at year-end 2000, the
commercial leasing industry accounted for 22 percent of total loans.
In 1999, PeoplesBank created SYC Insurance Services, Inc. (SYC Insurance) as a
wholly-owned subsidiary, to facilitate the sale of investment products through a
third-party marketing arrangement. SYC Insurance began operations in January
2000 and currently offers fixed annuities. In the near term, SYC Insurance may
offer insurance products within PeoplesBank's service area. Products sold by SYC
Insurance are not FDIC insured, not obligations of or guaranteed by PeoplesBank
and are subject to investment risk including the possible loss of principal.
In 1998, PeoplesBank created SYC Settlement Services, Inc. (SYC Settlement), as
a wholly-owned subsidiary, to provide real estate settlement services. SYC
Settlement began operations in January 1999.
Historically, SYC Insurance and SYC Services have not had a material impact on
consolidated operating results.
NonBank Subsidiary
On June 20, 1991, SYC Realty Company, Inc., was incorporated as a wholly-owned
subsidiary of Codorus Valley Bancorp, Inc. Codorus Valley created this nonbank
subsidiary primarily for the purpose of disposing of selected properties
obtained from PeoplesBank in satisfaction of debts previously contracted. SYC
Realty commenced business operations in October 1995. To date, the financial
impact of this subsidiary's operations on Codorus Valley and PeoplesBank has not
been material.
Competition
The banking industry in PeoplesBank's service area, principally York County,
Pennsylvania, and northern Maryland is extremely competitive. PeoplesBank
competes with commercial banks and other financial service providers such as
thrifts, credit unions, consumer finance companies, investment firms and
mortgage companies. Some financial service providers operating in PeoplesBank's
service area operate on a national and regional scale and possess resources
greater than those of PeoplesBank.
4
Supervision and Regulation
Codorus Valley Bancorp, Inc. is registered as a bank holding company and is
subject to the regulations of the Board of Governors of the Federal Reserve
System under the Bank Holding Company Act of 1956, as amended. The Bank Holding
Company Act requires bank holding companies to file periodic reports with and
are subject to examination by the Federal Reserve. The Federal Reserve issued
regulations under the Bank Holding Company Act that require a bank holding
company to serve as a source of financial and managerial strength to its
subsidiary banks. As a result, the Federal Reserve, may require Codorus Valley
to use its resources to provide adequate capital funds to PeoplesBank during
periods of financial stress or adversity.
The Bank Holding Company Act prohibits Codorus Valley from acquiring direct or
indirect control of more than 5 percent of the outstanding voting stock of any
bank, or substantially all of the assets of any bank, or merging with another
bank holding company, without the prior approval of the Federal Reserve. The
Pennsylvania Department of Banking must also approve any similar transaction.
Pennsylvania law permits Pennsylvania bank holding companies to control an
unlimited number of banks.
The Bank Holding Company Act restricts Codorus Valley to engaging in activities
that the Federal Reserve has found to be closely related to banking, and which
are expected to produce benefits for the public that will outweigh any
potentially adverse effects. To this end, the Bank Holding Company Act prohibits
Codorus Valley Bancorp from engaging in most nonbanking businesses, or acquiring
ownership or control of more than 5 percent of the outstanding voting stock of
any company engaged in a nonbanking business, unless the Federal Reserve has
determined that the nonbanking business is closely related to banking. Under the
Bank Holding Company Act, the Federal Reserve may require a bank holding company
to end a nonbanking business if it constitutes a serious risk to the financial
soundness and stability of any bank subsidiary of the bank holding company.
The operations of PeoplesBank are subject to federal and state statutes
applicable to banks chartered under the banking laws of the Commonwealth of
Pennsylvania and whose deposits are insured by the Federal Deposit Insurance
Corporation.
The FDIC is the primary federal regulator of PeoplesBank. It regularly examines
banks in such areas of loss allowances, loans, investments, management practices
and other aspects of operations. These examinations are designed for the
protection of PeoplesBank's depositors rather than Codorus Valley's
shareholders. PeoplesBank must furnish annual and quarterly reports to the FDIC.
Federal and state banking laws and regulations govern, among other things, the
scope of a bank's business, the investments a bank may make, the reserves
against deposits a bank must maintain, the types and terms of loans a bank may
make and the collateral it may take, the activities of a bank with respect to
mergers and consolidations, and the establishment of branches.
The Federal Reserve Act imposes restrictions on a subsidiary bank of a bank
holding company, such as PeoplesBank. The restrictions affect extensions of
credit to the bank holding company and its subsidiaries, investments in the
stock or other securities of the bank holding company and its subsidiaries, and
taking such stock or securities as collateral for loans. The Federal Reserve Act
and the Federal Reserve regulations also place limitations and reporting
requirements on extensions of credit by a bank to the principal shareholders of
its parent holding company, among others, and to related interests of such
principal shareholders. In addition, such legislation and regulation may affect
the terms upon which any person becoming a principal shareholder of a holding
company may obtain credit from banks with which the subsidiary bank maintains a
correspondent relationship.
5
PeoplesBank and the banking industry in general, are affected by the monetary
and fiscal policies of government agencies, including the Federal Reserve.
Through open market securities transactions and changes in its discount rate and
reserve requirements, the Board of Governors of the Federal Reserve exerts
considerable influence over the cost and availability of funds for lending and
investment.
A brief discussion of recent federal agency pronouncements that affect Codorus
Valley and/or PeoplesBank follows.
The Gramm-Leach-Bliley Act, also known as the Financial Services Modernization
Act (FSMA), was signed into law on November 12, 1999, and amends the Bank
Holding Company Act of 1956. The law repeals Depression-era banking laws and
permits banks, insurance companies and securities firms to engage in each
others' businesses after complying with certain conditions and regulations. The
law grants to community banks the power to enter new financial markets as a
matter of right that larger institutions have managed to do on an ad hoc basis.
At this time Codorus Valley has no plans to pursue these additional
possibilities. Management believes that the FSMA will not have a material effect
on Codorus Valley's operations. However, the act may result in increased
competition from larger financial service companies, many of which have
substantially more financial resources than Codorus Valley, and now offer
banking services in addition to insurance and brokerage services. The FSMA also
modifies current law related to financial privacy and community reinvestment.
The new privacy provisions will generally prohibit financial institutions,
including Codorus Valley and PeoplesBank, from disclosing nonpublic personal
financial information to nonaffiliated third parties unless customers have the
opportunity to opt out of the disclosure.
Periodically, various types of federal and state legislation are proposed that
could result in additional regulation of, and restrictions on, the business of
Codorus Valley and PeoplesBank. 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. As a consequence of the extensive
regulation of commercial banking activities in the United States of America,
Codorus Valley's and PeoplesBank's business is particularly susceptible to being
affected by federal legislation and regulations that may increase the cost of
doing business. Except as specifically described above, management believes that
the effect of the provisions of the aforementioned legislation on the liquidity,
capital resources, and results of operations of Codorus Valley will not be
material. 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 and multiple federal and state laws and regulations does have, and in
the future my have, a negative impact on Codorus Valley's results of operations.
Other Information
On December 31, 2001, PeoplesBank had 143 full-time employees, 18 part-time
employees and 11 seasonal employees. Employees are not covered by a collective
bargaining agreement and management considers its relations with employees to be
good.
The required Statistical Information for Item 1 can be found in Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operations of this report.
6
Item 2: Properties
Codorus Valley Bancorp, Inc. owns the following property in fee, subject to two
liens. A local financial institution holds a first lien for approximately $1.9
million and Codorus Valley's wholly-owned subsidiary PeoplesBank holds a second
lien for approximately $2.1 million.
Codorus Valley Corporate Center--The Corporate Center is located at 105
Leader Heights Road, York Township, York, PA. This facility serves as
the corporate headquarters and is approximately 40,000 square feet.
Approximately sixty-seven percent of the leasable space is leased to
PeoplesBank, the remaining thirty-three percent is available for lease
to nonaffiliated parties. The Corporate Center is adjacent to
PeopleBank's Data Operations Center and the Leader Heights office.
PeoplesBank owns the following properties in fee and without liens:
Glen Rock Office--Located at 1 Manchester Street in the borough of Glen
Rock, PA. Two bank-owned parking lots are located nearby on Hanover
Street and at 7 Manchester Street in the borough of Glen Rock.
Jacobus Office--Located at 1 North Main Street in the borough of
Jacobus, PA.
Jefferson Office--Located at 6 Baltimore Street in Jefferson Borough,
PA. A bank-owned parking lot is located nearby at 10 Baltimore Street
in Jefferson Borough.
York New Salem Office--Located at 320 North Main Street in the borough
of York New Salem, PA.
Leader Heights Office--This facility serves as both a banking office
and data operations center. It is located at 109 Leader Heights Road in
York Township, PA.
Cape Horn Office--Located at 2587 Cape Horn Road, Red Lion in the
Township of Windsor, PA.
East York Office--Located at 2701 Eastern Boulevard, York in the
Township of Springettsbury, PA.
PeoplesBank leases the following properties:
Stewartstown Office--Located at 2 Ballast Lane in the borough of
Stewartstown, PA. This office is a 1,278 square foot unit of a business
complex known as Village Square at Stewartstown. The lease, signed on
November 29, 1993, is for a twenty year term, with four five year term
options.
South Hanover Office--Located at 1400 Baltimore Street, Hanover in Penn
Township, PA. This office is a 1,850 square foot unit adjacent to a
Rutter's Farm Store and gas station. The lease, which was effective on
February 1, 2001, is for a fifteen-year term, with three five-year
options.
East Market Street Office--Located at 118 E. Market Street, York City,
PA. This office is a 1,750 square foot unit located in downtown York.
Management has negotiated a short-term lease for this space to coincide
with possible relocation in 2002.
7
All of the above properties are located in York County, Pennsylvania and are, in
the opinion of management, adequate for the business purposes of Codorus Valley
and its subsidiaries.
Item 3: Legal Proceedings
In the opinion of the management of Codorus Valley Bancorp, Inc., there are no
proceedings pending to which Codorus Valley and PeoplesBank are a party or to
which its property is subject, which, if determined adversely to Codorus Valley
and PeoplesBank, would be material in relation to Codorus Valley's and
PeoplesBank's financial condition. There are no proceedings pending other than
ordinary routine litigation incident to the business of Codorus Valley and
PeoplesBank. In addition, management is not aware of any material proceedings
pending, threatened or contemplated against Codorus Valley and PeoplesBank by
government authorities.
Item 4: Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5: Market for Codorus Valley Bancorp, Inc.'s Common Equity and Related
Stockholder Matters
Market and dividend information appearing in the 2001 Annual Report to
Stockholders, under the caption Stock, Dividend and Broker Information, is
incorporated by reference in response to this item and is included on page 44 of
Exhibit 13.
As of March 14, 2002, Codorus Valley had approximately 973 stockholders of
record.
Related stockholder information appearing in the 2001 Annual Report to
Stockholders, under the caption Stockholders' Equity and Capital Adequacy,
included in Management's Discussion and Analysis of Consolidated Financial
Condition and Results of Operations, is incorporated by reference in response to
this item and is included on pages 33 and 34 of Exhibit 13.
Item 6: Selected Financial Data
Information appearing in the 2001 Annual Report to Stockholders, under the
caption Selected Financial Data, is incorporated by reference in response to
this item and is included on page 3 of Exhibit 13.
Item 7: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Management's Discussion and Analysis of Consolidated Financial Condition and
Results of Operations in the 2001 Annual Report to Stockholders is incorporated
by reference in response to this item and is included on pages 25 through 39 of
Exhibit 13.
Item 7A: Quantitative and Qualitative Disclosures About Market Risk
Information appearing in the 2001 Annual Report to Stockholders, under the
caption Market Risk Management included in Management's Discussion and Analysis
of Consolidated Financial Condition and Results of Operations, is incorporated
by reference in response to this item and is included on pages 37 and 38 of
Exhibit 13.
8
The Asset-Liability Management Committee of PeoplesBank manages interest rate
risk primarily though sensitivity analysis, which is described on pages 37 and
38 of Exhibit 13. Periodically, it may also use a gap analysis as a secondary
means for managing interest rate risk. The gap analysis begins by assigning
interest rate sensitive assets and interest rate sensitive liabilities into
future time periods, typically one year, based on a scheduled maturity or
repricing date. Repriceable liabilities are then subtracted from repriceable
assets to determine a difference, or gap. The measurement process relies on many
assumptions such as the amount and timing of repriceable cash flows from
interest rate sensitive assets and liabilities. The following assumptions are
made about repriceable cash flows from interest rate sensitive assets:
o variable rate instruments reprice daily,
o adjustable rate instruments reprice at the interest maturity date,
o fixed rate loans reprice at their scheduled maturity date and include
estimated prepayments,
o fixed rate investment securities, except for mortgage-backed instruments,
reprice at their scheduled maturity date, or call date if more appropriate,
and
o fixed rate mortgage-backed instruments reprice based on principal paydown
estimates.
Generally, the cash flow assumptions for interest sensitive assets apply to
interest sensitive liabilities with the exception of NOW and savings deposits
which do not have scheduled maturities. Technically, NOW and savings balances
can be repriced at any time. Historically, NOW and savings balances and rates
have been relatively stable despite changes in market interest rates. This
stability assumption was made in the current measurement process.
A schedule showing balance sheet repricing characteristics and an estimate of
gap at December 31, 2001 is provided below. The gap is one way to measure how a
change in market interest rates might impact net interest income for specific
time frames. For example, the cumulative gap in the "181-365" repricing category
represents a one year net liability position of $37.9 million or 12.6 percent of
interest earning assets on December 31, 2001. The liability sensitive gap
position implies that over the next year net income will increase if market
interest rates fall and decrease if rates rise. The theory is that more
liabilities will reprice, at lower market interest rates, than the assets that
they fund.
A gap analysis is limited in its usefulness since it represents a one-day
position, which is continually changing and not necessarily indicative of
Codorus Valley's position at any other time. Gap analysis does not consider the
complexity of interest rate relationships and spreads depending on the
direction, magnitude and timing of changes in market interest rates.
Additionally, it does not consider the impact of financial strategies that
management could employ. Due to its limitations, interest rate risk implications
from a gap analysis may differ significantly from the results of an interest
sensitivity/simulation analysis.
After
At December 31, 2001 0-30 31-90 91-180 181-365 1-2 2-5 5
(dollars in thousands) Days Days Days Days Years Years Years Total
-----------------------------------------------------------------------
Interest earning
assets:
Interest earning deposits $ 188 $ 0 $ 0 $ 00 $ 0 $ 0 $ 0 $ 388
Federal funds sold 14,925 0 0 0 0 0 0 14,925
Securities, available for
sale 2,512 2,848 2,543 4,176 7,252 10,275 8,756 38,362
Securities, held to
maturity 0 0 0 0 0 0 9,358 9,358
Loans, held for sale 12,349 0 0 0 0 0 0 12,349
Loans 62,130 11,547 15,985 32,769 36,357 65,823 1,174 225,785
-----------------------------------------------------------------------
Total $92,104 $14,395 $18,528 $37,145 $43,609 $76,098 $19,288 $301,167
9
After
At December 31, 2001 0-30 31-90 91-180 181-365 1-2 2-5 5
(dollars in thousands) Days Days Days Days Years Years Years Total
-------------------------------------------------------------------------
Interest bearing
liabilities:
NOW deposits $29,301 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $29,301
Money market deposits 62,148 0 0 0 0 0 0 62,148
Savings deposits 13,719 0 0 0 0 0 0 13,719
Time CDs less than $100,000 21,558 9,807 21,590 18,122 21,388 25,259 0 117,724
Time CDs $100,000 and above 6,554 2,487 5,065 6,264 2,935 4,655 0 27,960
Long-term debt 43 72 110 3,223 465 8,573 7,087 19,573
-------------------------------------------------------------------------
Total $133,323 $12,366 $26,765 $27,609 $24,788 $38,487 $7,087 $270,425
Period gap $(41,219) $2,029 $ (8,237) $9,536 $18,821 $37,611 $12,201 $30,742
Cumulative gap $(41,219)$(39,190)$(47,427)$(37,891) $(19,070) $18,541 $30,742
Cumulative gap as a % of (13.7) (13.0) (15.7) (12.6) (6.3) 6.2 10.2
interest earning assets
at December 31, 2001
Item 8: Financial Statements and Supplementary Data
Codorus Valley's Consolidated Financial Statements and the Notes thereto, in the
2001 Annual Report to Stockholders, are incorporated by reference in response to
this item and are included on pages 4 through 23 of Exhibit 13. Table 12-Summary
of Quarterly Financial Data included in Management's Discussion and Analysis of
Consolidated Financial Condition and Results of Operations, in the 2001 Annual
Report to Stockholders, is incorporated by reference in response to
supplementary financial data and is included on page 39 of Exhibit 13.
Item 9: Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
On June 12, 2001, the boards of directors of Codorus Valley and PeoplesBank
approved a resolution, based on recommendations by management and the audit
committee of Codorus Valley, to engage Beard Miller Company LLP as Codorus
Valley's independent accountant. Beard Miller Company LLP replaced Ernst & Young
LLP (Ernst & Young), the prior independent accountant.
Ernst & Young's report on Codorus Valley's consolidated financial statements for
2000 and 1999 contained no adverse opinion or disclaimer of opinion or
qualification as to uncertainty, audit scope or accounting principles.
During the fiscal years 2000 and 1999 and interim periods, there were no
disagreements or reportable events relating to any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which Ernst & Young would have referred to in connection with their
report if the disagreement wasn't resolved to their satisfaction. Codorus Valley
acknowledges that disagreements required to be reported in response to the
preceding sentence include both those resolved to Ernst & Young's satisfaction
and those not resolved to Ernst & Young's satisfaction. Codorus Valley further
acknowledges that disagreements contemplated by this rule are those which
occurred at the decision-making level, ie., between Codorus Valley personnel
responsible for the presentation of its financial statements and Ernst & Young
personnel responsible for rendering its report. There have been no reportable
events within the meaning of Item 304 of Regulation S-K.
10
PART III
Item 10: Directors and Executive Officers, Codorus Valley Bancorp, Inc.
Information appearing in the Proxy Statement relating to the 2001 Annual Meeting
of Stockholders to be held May 21, 2002 (Proxy Statement), under the captions
"Information as to Nominees and Directors" and "Board of Directors and Executive
Officers" is incorporated by reference in response to this item. Information
regarding Section 16(a) Beneficial Ownership Reporting Compliance follows.
Section 16(a) of the Securities Exchange Act of 1934, requires that the
corporation's officers and directors, and persons who own more than 10% of the
registered class of the corporation's equity securities, file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than 10% shareholders are required by SEC
regulation to furnish the corporation with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of Forms 3, 4 and 5 and amendments
thereto received by it, or written representations from certain reporting
persons that no Form 5 was required for that reporting person, the corporation
believes that during the period from January 1, 2001 through December 31, 2001,
its officers and directors were in compliance with all filing requirements
applicable to them, except for PeoplesBank senior vice president Todd A. Tyson
who inadvertently filed one late Form 4 to report a transaction during 2001.
Item 11: Executive Compensation
Information appearing in the Proxy Statement, under the captions "Executive
Officers Compensation," "Board of Directors Report on Executive Compensation"
and "Performance Graph" is incorporated by reference in response to this item.
Item 12: Security Ownership of Certain Beneficial Owners and Management
Information appearing in the Proxy Statement, under the caption "Beneficial
Ownership of Codorus Valley Bancorp, Inc.'s Stock Owned by Principal Owners and
Management" is incorporated by reference in response to this item.
Item 13: Certain Relationships and Related Transactions
Information appearing in the Proxy Statement, under the caption "Certain
Relationships and Related Transactions," is incorporated by reference in
response to this item.
PART IV
Item 14: Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Documents filed as part of this Form 10-K report.
1. Financial Statements
The following consolidated statements of Codorus Valley Bancorp,
Inc. are included by reference in Part II, Item 8 hereof:
Report of Independent Auditors
Consolidated Statements of Financial Condition
Consolidated Statements of Income
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Stockholders' Equity
Notes to Consolidated Financial Statements
11
2. Financial Statement Schedules
Required financial statement schedules are omitted. This information is
either not applicable, not required or is shown in the respective
financial statements or in the notes thereto.
3. Exhibits filed as part of 10-K pursuant to Item 601 of Regulation S-K.
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 Amendment 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, dated and filed with
the Commission on March 13, 1998.)
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 by reference to
Exhibit 10.2 to the Registrant's Current Report on Form 8-K,
dated and filed with the Commission March 13, 1998.)
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 13, 1998.)
10.5 1998 Independent Directors Stock Option Plan (Incorporated by
reference to Exhibit 4.3 of Registrant 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.)
12
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.)
11 Statement re: Computation of Earnings Per Share (Incorporated
by reference to Exhibit 13 hereof, 2001 Annual Report to
Stockholders at Note 1 to the Consolidated Financial
Statements.)
13 Excerpts from the Annual Report to Stockholders for fiscal
year ended December 31, 2001.
16 Letter re: Change in Certifying Accountant (Incorporated by
reference to Exhibit 16.1 of Form 8-K/A filed with the
Commission on June 25, 2001.)
21 List of subsidiaries of Codorus Valley Bancorp, Inc.
23.1 Consent of Beard Miller Company LLP, Independent Auditors
23.2 Consent of Ernst & Young LLP, Independent Auditors
24 Power of Attorney
99 Report of Independent Auditors
(b) Reports on Form 8-K.
Codorus Valley Bancorp, Inc. filed no Current Reports on Form 8-K for the
quarter ended December 31, 2001.
13
Signatures
Under the requirements of Section 13 or 15(d) 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)
/s/ Larry J. Miller
- -------------------------------
Larry J. Miller, President Date: March 26, 2002
and Chief Executive Officer
Under the requirements of the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dated indicated.
Signature and Capacity
/s/ George A. Trout, DDS Chairman of the Board of 3/26/02
- ------------------------------- Directors and Director
George A. Trout, DDS
/s/ Larry J. Miller President, Chief Executive 3/26/02
- ------------------------------- Officer and Director
Larry J. Miller, President
(Principal Executive Officer)
/s/ Rodney L. Krebs Vice Chairman of the Board 3/26/02
- ------------------------------- of Directors and Director
Rodney L. Krebs
/s/ D. Reed Anderson, Esq. Director 3/26/02
- -------------------------
D. Reed Anderson, Esq.
/s/ M. Carol Druck Director 3/26/02
- -------------------------------
M. Carol Druck
/s/ MacGregor S. Jones Director 3/26/02
- -------------------------------
MacGregor S. Jones
/s/ Dallas L. Smith Director 3/26/02
- -------------------------------
Dallas L. Smith
- ------------------------------- Vice President and Director 3/26/02
Donald H. Warner
/s/ Jann A. Weaver Treasurer and 3/26/02
- ------------------------------- Assistant Secretary
Jann A. Weaver
(Principal Financial Officer)
/s/ Harry R. Swift, Esq. Vice President and Secretary 3/26/02
- -------------------------------
Harry R. Swift, Esq.
14
Exhibit Index
Page # in
manually signed
original
Exhibit Form 10-K
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 Amendment 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., PeoplesBank of
Glen Rock and Larry J. Miller. (Incorporated by reference to
Exhibit 10.1 to Registrant's Current Report on Form 8-K,
dated and filed with the Commission on March 13, 1998.)
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 by reference to
Exhibit 10.2 to the Registrant's Current Report on Form 8-K,
filed with the Commission on March 13, 1998.)
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,
dated and filed with the Commission March 13, 1998.)
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.)
15
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.)
11 Statement re: Computation of Earnings Per Share (Incorporated by
reference to Exhibit 13, 2001 Annual Report to Stock holders
at Note 1 to the Consolidated Financial Statements.) 25
13 Excerpts from the Annual Report to Stockholders for fiscal
year ended December 31, 2001. 17-55
16 Letter re: Change in Certifying Accountant (Incorporated
by reference to Exhibit 16.1 of Form 8-K/A filed with the
Commission on June 25, 2001.)
21 List of subsidiaries of the Registrant 56
23.1 Consent of Beard Miller Company LLP, Independent Auditors 57
23.2 Consent of Ernst & Young LLP, Independent Auditors 58
24 Power of Attorney 59
99 Report of Independent Auditors 60