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     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