Record Year for Chesapeake Financial Shares

By WYDaily Staff Tuesday, January 25, 2011

It was another banner year for Chesapeake Financial Shares, Inc., parent company of Chesapeake Bank and Chesapeake Investment Group.

Chairman of the board and CEO Jeffrey M. Szyperski reported earnings for 2010 of $5,446,164, representing a 12.6 percent increase over 2009 earnings. The reported earnings per share were $2.027 fully diluted as compared to $1.773 in 2009, a 14.3 percent increase.

“In a year where the economy was stagnant, our continued focus on the quality of our loans and investments paid off," said Szyperski. "Additionally, our diversification of income from nontraditional sources greatly boosted our income.”

Szyperski said Chesapeake Financial Shares ended 2010 with total assets of $607,733,094, an increase of 3.6 percent over 2009. "Despite continuous media reports to the contrary, we are still lending despite a pullback in demand," he said. "We had a decrease in loans of less than one percent from 2009, ending with $362,644,818 at December 31, 2010. We also were able to boost our loan loss reserve to 1.7 percent of total loans at December 31, 2010 from 1.41 percent at yearend 2009.”

In addition to increased earnings, Chesapeake Financial Shares was able to increase dividends paid to shareholders by 2.38 percent over 2009. During 2010 Chesapeake Financial Shares paid $.43 per share as compared to $.42 per share in 2009. At their January 21 meeting, the Board of Directors voted to increase the dividend a half-cent a share to $.115 per share payable on or before March 15, 2011 to shareholders of record as of March 1, 2011. Szyperski noted the dividend represented a 9.5 percent increase in the company's quarterly dividend from one year ago.

The other subsidiary of Chesapeake Financial Shares, Chesapeake Investment Group, also had a strong year, growing assets under management from $274 million to $302 million through its asset management and trust subsidiaries. Mark Monroe, president of Chesapeake Investment Group, said conservative money management and good communication with clients contributed to the growth.

In addition to Chesapeake Investment Group, Chesapeake Financial Shares worked in 2010 to diversify its business, which Szyperski noted was largely responsible for the company's ability to maintain a strong earnings stream in a slow economy.  

Chesapeake Payment Systems is the merchant card division of Chesapeake Bank. The division had 678 merchants by the end of 2010 and processed over $125 million in merchant card transactions for them. This division alone was responsible for $4 million of gross income in 2010.

Since launching its Clear Sky online branch in 2009, Chesapeake Bank now has customers in all 50 states, representing $50 million in deposits.

Marshall N. Warner, executive vice president of Chesapeake Bank, said the source of Clear Sky's success is its ability to "give a community bank feel to the online banking experience."

Cash Flow is another division of Chesapeake Bank that specializes in accounts receivable financing. Started in 1994, it has blossomed to a significant contributor to Chesapeake Bank’s noninterest income. It's currently offered in the eastern U.S. and serves about 80 customers.

“This diversity of revenue sources is not common among our peers," said Szyperski. "It definitely gives us earnings stability others do not have."