Chesapeake Financial Shares Inc. (OTCQX:CPKF) this week reported strong financial results for the third quarter, including solid 8.1% loan growth and a 32-year streak of dividend increases.
CEO Jeff Szyperski joined Proactive to discuss the report.
Proactive: The company is reporting strong Q3 earnings and a dividend increase as well. We'll get to all that in just a second. But overall, are you happy with what you're seeing? It seems like a positive shift compared to the last time we spoke.
Jeff Szyperski: Yes, it was good. It's nice to actually see a rate decrease from the Fed, even though it was only 50 basis points. They raised rates by 550 basis points, so even a small decrease had a calming psychological effect on the markets. That has helped us as we look forward to improvements in our net interest margin.
Where did you see the strongest parts of the company this quarter?
We’ve had solid loan growth, which is not typical for community banks in our market. We’re maintaining the same credit standards but still securing a fair share of new commercial loans. It's not what I’d call robust, but it’s certainly better than our peers. Through the first nine months, we’ve achieved 8.1% loan growth, which is exceptional given the market conditions.
That can be a challenge—knowing you’re outperforming your peers but not necessarily seeing the market react. How do you manage that?
You're right. Our price-to-earnings ratio is lower than the market. At the time of writing our press release, it was 9.79, while our peers are typically in the 11 to 12 range, sometimes higher. Given our consistent earnings and 32 consecutive years of dividend increases, we feel we should be rewarded more in the market. But we remain confident because we’ve maintained this through crises like 1999, 2008, and the pandemic.
You’ve managed to raise your dividend for 32 consecutive years. That’s impressive. What does the future look like?
We believe it's going to be a strong financial year. We just wrapped up our strategic planning and see ourselves on the front end of a growth curve, especially with Chesapeake Payment Systems and Flexent, which are national in scope. We think we can parlay the next three years into higher profits for Chesapeake Financial.
Quotes have been lightly edited for clarity and style