Codorus Valley(CVLY) - 2020 Q4 - Annual Report

Financial Overview - As of December 31, 2020, PeoplesBank had total gross loans of $1.54 billion and total deposits of $1.86 billion[6]. - PeoplesBank held a 15.2% market share of deposits in York County, Pennsylvania, as of June 30, 2020[6]. - The largest single client indebtedness at PeoplesBank was approximately $23.05 million, representing 1.4% of the total loan portfolio[7]. - As of December 31, 2020, residential real estate investors constituted 15.4% and commercial real estate investors constituted 15.3% of the total loan portfolio[8]. - As of December 31, 2020, the Corporation had remaining loan modifications totaling approximately $26 million and outstanding Paycheck Protection Program loans of approximately $143 million[47]. Employee Information - PeoplesBank employed 320 full-time and 26 part-time employees, equating to approximately 343 full-time equivalent employees as of year-end 2020[14]. - The employee turnover rate was reported at 18.9% as of December 31, 2020, down from 20.9% in 2019[14]. Risk and Regulatory Environment - PeoplesBank is classified as a risk category I institution by the FDIC, indicating it is the least risky category[29]. - PeoplesBank is not dependent on a single client or small group of clients, mitigating concentration risk[7]. - The bank operates in a highly competitive environment, primarily in South Central Pennsylvania and North Central Maryland[17]. - The FDIC's final rule reduced assessment rates for risk category I institutions, such as PeoplesBank, from 7 to 24 basis points to 2.5 to 9 basis points[30]. - The Deposit Insurance Fund (DIF) reserve ratio reached 1.40% as of June 30, 2019, exceeding the 1.38% threshold, allowing small bank assessment credits to be applied[32]. - The Corporation's ability to declare and pay cash dividends is dependent on cash dividend payments from PeoplesBank, which is subject to regulatory restrictions under the Pennsylvania Banking Code[33]. - The federal banking agencies have indicated that paying dividends that deplete a depository institution's capital base to an inadequate level would be considered unsafe and unsound banking practice[35]. - The Economic Growth, Regulatory Relief, and Consumer Protection Act amended provisions affecting community banks, including simplifying capital calculations and raising eligibility for short-form Call Reports from $1 billion to $5 billion in assets[36]. - The community bank leverage ratio (CBLR) framework allows qualifying banks with less than $10 billion in assets to meet capital requirements if they maintain a CBLR of not less than 8%[37]. - The Dodd-Frank Act imposes strict controls on large bank holding companies and increases bank supervision, affecting corporate governance and capital requirements[41]. - The Sarbanes-Oxley Act requires publicly held companies to document and certify the effectiveness of their internal control systems over financial reporting[43]. - The Corporation's compliance with numerous federal and state laws and regulations may negatively impact its results of operations in the future[48]. Business Impact - The Corporation continues to analyze the changes implemented by the Regulatory Relief Act but does not expect a material impact on its business or financial results[39].