Codorus Valley Bancorp Inc. in York, Pa., disclosed in a regulatory filing Tuesday that it expects to report a profit for the third quarter despite issues with a large commercial loan.

The $977.2 million-asset company also said it expects to record a $1.81 million loan-loss provision for the quarter that ended Sept. 30. Codorus Valley also disclosed that its nonperforming assets ratio will be about 4% at the end of the third quarter, compared to 5.11% at June 30. (The ratio measures nonperforming assets a percentage of period-end loans and net foreclosed real estate.)

The company said in the filing that it bank will record $1.98 million in chargeoffs tied to impaired collateral for a pair of nonperforming commercial loans. That compares to $1.18 million in loan-loss allowances that were created during the second quarter for the loans.

Codorus Valley also provided an update on a 27% participation interest its bank had on a nonperforming loan. The company said the borrower has begun meeting all covenants of the loan contract, and that it had returned the loan to interest accruing status. The bank's share of the participation was $4.27 million, the filing said.

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