Codorus Valley Bancorp, Inc. :CVLY-US: Earnings Analysis: Q2, 2017 By the Numbers : September 28, 2017

Codorus Valley Bancorp, Inc. reports financial results for the quarter ended June 30, 2017.


  • Summary numbers: Revenues of USD 17.47 million, Net Earnings of USD 3.69 million.
  • Net interest income margins narrowed from 84.37% to 83.73% compared to the same period last year.
  • Net loan assets changed 15.88% compared to same period last year and 2.63% from previous period, total deposits changed 10.59% compared to same period last year and 1.88% from previous period.
  • Change in operating cash flow of -56.61% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as from one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-06-30 2017-03-31 2016-12-31 2016-09-30 2016-06-30
Relevant Numbers (Quarterly)
Revenues (mil) 17.47 16.74 16.63 15.99 15.65
Revenue Growth (%YOY) 11.67 9.06 14.59 11.29 12.05
Earnings (mil) 3.69 3.42 3.84 3.4 3.04
Earnings Growth (%YOY) 21.22 21.37 38.7 13.02 4.11
Net Margin (%) 21.09 20.42 23.1 21.29 19.43
EPS 0.43 0.4 0.45 0.38 0.36
Return on Equity (%) 2.31 2.19 2.48 2.21 2.01
Return on Assets (%) 0.88 0.83 0.98 0.9 0.83

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Market Share Versus Profits

Revenues History
Earnings History

Compared to the same period last year, CVLY-US’s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if CVLY-US’s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by 4.36% and earnings by 7.78% compared to the previous period.

Earnings Growth Analysis

CVLY-US’s earnings rose year-on-year. But this growth has not come as a result of improvement in net interest income margins or any loan loss improvement activities in its operations. Net interest income margins were 83.73% compared to 83.99% in the immediate last period. Net interest income after provisions margins were 79.01% this period compared to 80.10% in the previous period. In addition, loan loss provisions as a percentage of net interest income were 5.64% this period and 6.06% a year ago.

Net Interest Income Margin History
Loan Loss Provisions Margin History

Net Loans and Total Deposits

A financial institution’s core operations represented by Net Interest Income and Net Interest Income after Provisions are dependent on both the growth and quality of its deposits as well as the growth and quality of its loans. A firm could boost its interest income in the short-term by just increasing its loan assets with less concern about their quality – but this would eventually lead to greater loan loss provisions. Similarly a drive to increase deposits could result in higher interest expenses and eventually effect the firm’s equity. It is thus important to understand net interest income performance in context to loan loss provisions, loan assets and deposits.

Loan Assets Growth Rate History (Qtr YOY)
Total Deposits Growth Rate History (Qtr YOY)

The firm’s decline in net interest income margins came despite the relative increase in the levels of net loan assets. In addition, total deposits as a percentage of equity went from 7.83% to 8.21%. On an absolute basis, net loan assets changed 15.88% compared to the same period last year and 2.63% from the previous period. Total deposits changed 10.59% compared to the same period last year and 1.88% from the previous period.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

CVLY-US’s year-on-year change in operating cash flow of -56.61% is around its change in earnings. This suggests that there are likely no significant movement in accruals or reserves for managing earnings this period.


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating margins from 28.33% to 32.32% and (2) one-time items. The company’s pretax margins are now 31.36%, compared to 28.33% for the same period last year.

EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Codorus Valley Bancorp, Inc.

Company Profile

Codorus Valley Bancorp, Inc. operates as a bank holding company for Peoples Bank, which provides banking and financial services. The company also provides personal banking, mortgage banking, wealth management and real estate services. Codorus Valley Bancorp was founded on October 7, 1986 and is headquartered in York, PA.

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