Chesapeake Financial Shares Reports Second Quarter Earnings

A "Top 200 Community Bank" in the U.S. for the thirteenth consecutive year

KILMARNOCK, VA / ACCESSWIRE / July 28, 2020 / On behalf of Chesapeake Financial Shares, Inc. (parent company of both Chesapeake Bank and Chesapeake Wealth Management), Jeffrey M. Szyperski, Chairman of the Board & CEO, reported earnings for the second quarter of 2020 of $2,050,676, a 37% decrease from the second quarter of 2019. The components of the decrease were driven by the second quarter slowdown in both the merchant services and receivables financing divisions of 30% and 48% respectively. Standalone bank operations reflected an 11% increase in net interest income in the second quarter of 2020 as compared to the prior year's second quarter. The reported earnings per share were $0.416 fully diluted compared to $0.659 fully diluted for the second quarter of 2019.

The bank's total assets grew 16% from December 31, 2019 to $1,114,791,000 of which approximately half was due to Paycheck Protection Program loans closed as part of the CARES Act. The bank has received $2,960,917 in fee income from processing these loans but has only recognized $25,000 into income as of June 30 consistent with current accounting treatment of these fees. We anticipate recognizing almost all of these fees prior to year end once these loans have been forgiven by the Small Business Administration. Through June 30, 2020 Chesapeake has recognized $808,152 in pare-off fees for mortgage origination as compared to $310,068 for the same period in the prior year reflecting the huge and continued spike in mortgage originations.

The bank also increased its loan loss provision by $450,000 in the second quarter as compared to the second quarter of 2019. Chesapeake has added $1,150,000 to the provision for loan losses in 2020 as compared to $350,000 for the first six months of the prior year. Excluding the Paycheck Protection Programs loans, the allowance for loan losses is 16% higher than the second quarter of 2019. Mr. Szyperski noted, "We have increased our monthly loan loss provision ever since March in an effort to have a sufficient reserve for any anticipated weaknesses in our portfolio. We are closely tracking sectors within our portfolio we feel need close monitoring in the current economic environment. Our allowance for loan loss is 1.16% of total loans at June 30, 2020 excluding the Paycheck Protection Program portfolio which is 100% guaranteed by The Small Business Administration.

"On a year-to-date basis, our net income is 13.3% behind 2019. With the low level of rates thus far in 2020 we are pleased with these results. Our year-to-date net interest income after provision for loan losses is 4.6% ahead of 2019," said Szyperski.

At the July 17, 2020 Chesapeake Financial Shares Board of Directors meeting, the Board affirmed the quarterly dividend of $0.125 per share effective September 1, 2020, payable on or before September 15, 2020. Chesapeake has increased its dividend for the last 29 years consecutively. Currently the stock has a 2.65% dividend yield.

"2020 has been a trying year but we feel we are proactively addressing the challenge," stated Szyperski. "Our non-performing assets are 0.749% at June 30, 2020 as compared to 1.666% a year earlier. With a conservative loan-to-deposit ratio of 66% we feel our balance sheet is well positioned to provide us with the financial flexibility these uncertain economic times demand. We are mindful of the need to maintain a well-capitalized balance sheet currently. Likewise, this positioning and earnings also allow us to provide support to our communities in this environment."

For more information about Chesapeake Financial Shares stock (CPKF), or to receive daily e-mail alerts of our stock price, see www.chesapeakefinancialshares.com. The company is followed by Zacks Investment Research, and a copy of their report can also be found on this site or at www.zacks.com. Chesapeake Financial Shares is an over-the-counter, publicly traded stock. "Like" Chesapeake Bank on Facebook and follow us on LinkedIn, Twitter, and Instagram.

Contact:

Jeffrey M. Szyperski
804-435-4249
1-800-434-1181

SOURCE: Chesapeake Financial Shares Inc.

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