Chesapeake Financial Shares Inc. (OTCQX:CPKF) CEO Jeff Szyperski talked with Proactive about the firm’s second quarter 2024 earnings report.
He highlighted that, despite a challenging banking environment due to an inverted yield curve, the company is pleased with its $3 million earnings for the second quarter, consistent with last year’s results.
The cost of funds has started to level off, positively impacting their net interest margin, he added.
Proactive: The company is out with your Q2 earnings for 2024. There's been some positives and also some challenges as well. How do you see the numbers?
Jeff Szyperski: We're really pleased with those numbers. We're still two years into an inverted yield curve, which you know is the longest that there's ever been and so it's a very difficult banking environment with that going on. So, we're really pleased with our slightly north of $3 million number for the second quarter. It's roughly level with last year. We're definitely holding our own. We're doing great.
Absolutely. And where did you see the biggest parts being able to sustain what you brought back last year?
The biggest thing is our cost of funds. Cost of funds has been going up for all banks across the country for the last two years, but ours has started to level off. And so we're starting to pick up money back on our net interest margin which is very good. We've been swimming upstream against the net interest margin for the last 24 months, so it's nice to see that starting to abate somewhat and, hopefully, turn around. That's probably the biggest change that we've seen.
Obviously, you're dependent on what goes on in the economy as well when you run a bank. And so where do you see things at right now?
We've had steady loan demand. we still have solid loan demand. It's slowed somewhat from a year ago, but it's still a lot more solid than I would expect it to be when you have Prime at 8.5%. So, we're getting our more our fair share of those lending requests and there’s still quality loans. We're still been becoming the beneficiary of consolidation going on around us. So I think people are maybe getting a little fed up with the quietude that that consolidation brings to them as customers and so they come to us looking for stability. Our marketing campaign now is where stability meets community. We've been in the top 200 now, the top 100 banks for 17 consecutive years based on return on equity. Next year we'll be celebrating our 125th anniversary. All the stability boxes are checked for us. We just try to get that message out.
And you are offering a dividend again. This is a 31-year consecutive dividend, which is, really impressive for a bank.
It is. If you go back 31 years that takes you through the recession of 99, 2000, that takes you back to 08,09 and takes you back through the pandemic. So, there's been a fair amount of tribulation in that 31 years and I think that's just a testament to the stability and why we think it's important to have a steady dividend for our shareholders.
Quotes have been lightly edited for clarity and style