Chesapeake Financial Shares, Inc., CEO Jeffrey Szyperski spoke with Proactive's Stephen Gunnion about the company's asset quality. Jeff said that it is “as good as it has ever been” in this video interview. Szyperski and Gunnion spoke on quite a few topics, which are all captured on video, and are also available as text below:
JEFF SZYPERSKI Thank you, Steven, nice to be here.
STEVEN GUNNION So Jeff, you’re just taught with third quarter results, it was a strong three months for Chesapeake with earnings up 58%. What drove that growth?
JEFF SZYPERSKI First off, we had a strong quarter. But we also had a $2.2 million gain on sale of a partial interest in a brokerage firm that we’ve been in since the mid ’90s. We still have a relationship, but the brokerage firm sold upstream to an even larger firm.
STEVEN GUNNION How are you seeing the environment at the moment? You said it was a decent quarter for the bank.
JEFF SZYPERSKI Yeah it’s really interesting times right. Now, Steven, as you can imagine, you know, the Fed has raised rates precipitously this year. So from interest rate environment, or just trying to normalize with what’s going on, on both the loans and the deposit side, we’ve been able to stretch out our margin, your margin was 3.786, which is up for more. It had been previously, primarily because we’ve had a lot of liquidity, and we have not raised our deposit rates quite as fast as our lending rates. But still the markets pretty tough, there’s going to be increased competitive pressure on the margin going forward. It’s what we anticipate.
STEVEN GUNNION You’ve made to grow assets to $1.3 billion at the end of the quarter, non performing assets, though, 0.43%. So a nice improvement there.
JEFF SZYPERSKI Yeah, are non performing assets, even our that’s a really low number. And I think we’re lower than most of our peers. But in general, the industry has very low non performing numbers. So if if we happen to be going into a recession in 2023, we feel like we’ve done about all we can on the balance sheet side of that to prepare ourselves for it. So portfolio is really clean right now knock on wood, and nothing has raised its head as of yet going forward. So we’re we’re cautiously optimistic about that.
STEVEN GUNNION How would you describe your asset quality going into the fourth quarter?
JEFF SZYPERSKI Our asset quality is as good as it’s ever been in the last 15 years. So that from from from the metrics that drive that it’s extremely strong. So we feel good about that really good.
STEVEN GUNNION The dividend of 15 cents a share. So you’ve continued your 29-year history of consecutive dividend increases, so keeping shareholders happy as well.
JEFF SZYPERSKI We are we’re trying to do that, you know, we are our shareholders are our lifeblood. So we never take that for granted and pay a lot of attention to return on equity as a proxy for how we’re doing for our shareholders. And, obviously, shareholders are always concerned with our dividend or dividend yields, right about 2.63% as of last week, when I checked, so it’s a strong dividend yield. But we would, we’d ideally like to have the dividend yield go down, meaning that our price has gone up. So that’s what we hope for.
STEVEN GUNNION And Jeff, you mentioned those interest rate increases from the Federal Reserve and we had another one yesterday 75 basis points, what’s your outlook for the fourth quarter and going into 2023?
JEFF SZYPERSKI We had about a $19 million growth in loans in the third quarter, which we were really edified with considering this sharp increase in rates. You know, I do think there’ll be more Fed increases, you know, all the prognosticators predict that into at least the first several months or 2023 till they feel like inflation is under control. It’ll be really interesting to see what it does with the loan demand, we would have anticipated loan demand in our pipeline to have slack and somewhat in it’s not as strong as it was a year ago, but it’s still relatively strong. So there are still people borrowing even at these higher rates.
STEVEN GUNNION Well, Jeff, I hope you’ll keep us updated on any progress. Look forward to speaking to you again in three months time.
JEFF SZYPERSKI Thank you so much, Steven. It’s been my pleasure.
STEVEN GUNNION Jeff Szyperski — he is the CEO of Chesapeake Financial Shares.
