Chesapeake Financial Shares Inc. (OTCQX:CPKF), the parent company of Chesapeake Bank and Chesapeake Wealth Management, told investors that its asset quality remains “extremely good,” as it reported a slight increase in total assets to over $1.35 billion for the second quarter of 2023.
For the period ended June 30, 2023, the Kilmarnock, Virginia-based community bank reported non-performing assets at 0.327% compared to 0.460% a year earlier. The net interest margin was 3.45% for the quarter, lower than the 3.74% for 2Q 2022.
“With the rapid increase in rates over the past year, we anticipate continued pressure on our margin and active management of both our loan and deposit rates,” Chesapeake Bank CEO Jeffrey Szyperski said in a statement.
“Two of our divisions, Flexent and Chesapeake Payment Systems, both again had an excellent quarter. On May 1 we consummated an asset purchase in our Flexent division of a factoring company, allowing us to diversify our overall concentration by industry. This acquisition increases revenue from Flexent by approximately 35% going forward. We will be finalizing the valuation accounting for this purchase in the third quarter.”
Over the quarter, the lender said it took a one-time pre-tax gain of $1.9 million on the sale of long-held VISA B stock and offset this with $1.5 million in investment losses in order to reposition its investment portfolio for better long-term returns.
“In the current rate environment we felt this was prudent balance sheet management to better preserve shareholder value," Szyperski added.
Earnings for the quarter amounted to $3.04 million, a 25% decrease from 2Q 2022. Reported earnings per share were $0.648 fully diluted compared to $0.861 fully diluted a year earlier.
Chesapeake’s board has declared a quarterly dividend of $0.15 per share effective September 1, 2023, payable on or before September 15, 2023. Currently, the stock has a 3.08% dividend yield. The company has had 30 consecutive years of dividend increases.
Contact the author at stephen.gunnion@proactiveinvestors.com