Press Releases

Chesapeake Financial Shares Annual Shareholders Meeting

For additional information please contact
Jeffrey M. Szyperski, President & CEO
Chesapeake Financial Shares, Inc.
804-435-1181 or 1-800-434-1181

Chesapeake Financial Shares (parent company of Chesapeake Bank and Chesapeake Investment Group) held its Annual Shareholders Meeting on Friday, April 4, 2008, at Rappahannock Westminster-Canterbury, Irvington. The meeting was followed by a reception in the Rappahannock Room and was attended by over 130 people. Over 73% of the shares were voted in person or were voted by proxy. Douglas D. Monroe, Jr., Chairman of the Board, called the meeting to order and reported that Chesapeake Financial Shares had once again completed a record-breaking year for earnings. He noted that this was especially important in a year in which most financial services companies had earnings decreases and resulting stock decreases. Mr. Monroe turned the meeting over to Jeffrey M. Szyperski, President & CEO of Chesapeake Financial Shares, for an overall review of the current industry environment as well as Chesapeake's financial results for 2007.

Mr. Szyperski began his presentation drawing a clear delineation between the recent problems in the investment banking environment as compared to the current commercial banking environment. He noted most of the highly publicized write-downs were primarily due to investment banking operations and either a direct or indirect result of involvement in the sub-prime mortgage market. Mr. Szyperski stated that Chesapeake never did get involved in the sub-prime sector of the mortgage market, and this was a risk management decision that has resulted in the fact that Chesapeake Bank currently does not have any sort of a mortgage problem. Mr. Szyperski next reviewed some national FDIC statistics that reflected the difficult economic environment for banking in general at the current time.

In a year in which most banks saw earnings decreases as compared to 2006, Chesapeake Bank and its affiliate, Chesapeake Investment Group, posted a net income increase of over 10% compared to 2006. Net income ended the year at $4,345,000, representing an 11% increase in earnings per share over 2006. Chesapeake Financial Shares had an increase in its average return on equity of 13.73%, up over 13.58% in 2006.



As mentioned in the prior year's Annual Meeting, Mr. Szyperski noted the diversification of overall Chesapeake Financial Shares income away from traditional core banking income. This diversification had been furthered in 2007, and as a result, buoyed Chesapeake's earnings, especially compared to other Virginia community bank competitors. Reflective of this, Chesapeake Financial Shares' stock increased 18% in 2007.

Mr. Szyperski next turned the meeting over to Marshall N. Warner, Executive Vice President, for coverage of market share information and specialty lines of business. Mr. Warner reviewed market share data for each of the four distinct markets in which Chesapeake serves. He noted Chesapeake's continued overall growth in deposit market share as well as remaining existing potential in each of these markets.

As an emerging niche, Chesapeake Payment Systems, the merchant card processing department of Chesapeake Bank, has expanded its offerings beyond merchant services into the point of sale (POS) arena. As a division, Chesapeake Payment Systems sees huge potential in this market and provides a direct tie-in with the merchant services as well as the commercial lending and deposit offerings of the bank. Mr. Warner displayed a handheld device called an Orderman in which waiters or waitresses can immediately take orders from the table and transmit those to the kitchen as well as take credit card swipes directly at the table without having to leave the sight of the customers. In an era in which identify theft is growing, the advantages of such a device are compelling.

Mr. Warner next reviewed the continued strength of Chesapeake's Cash Flow department. The Cash Flow receivables financing division of Chesapeake Bank serves a market area east of the Mississippi. This division is currently in its 14th year and has shown continued and steady growth during that period of time. In 2007 in particular, this division grew up to over $27 million in outstandings.

Mr. Warner then reviewed a key strategic goal of Chesapeake Bank during 2008 and beyond would be deposit acquisition. This is currently the most competitive environment for commercial banks, and it is envisioned, per Mr. Warner, to continue to be so. He reviewed Chesapeake Bank's multi-prong strategy in efforts both technologically and otherwise of garnering deposits to help support the growth of the bank going forward. At this point in time Mr. Warner turned the meeting back over to Mr. Szyperski.

Mr. Szyperski next reviewed the results of the wealth management subsidiary of Chesapeake Financial Shares, Chesapeake Investment Group. Chesapeake Investment Group experienced over 16% growth in assets under management during 2007, even in a down market. The Investment Group's primary cause for its growth, commented Mr. Szyperski, was its heavy reliance on in-house expertise as well as face-to-face meetings with its clients. Despite an uphill struggle in the current market, the Investment Group expects to have an even larger increase in assets under management during 2008. Mr. Szyperski noted that the turbulent economic environment plays to the strengths of the Investment Group as people need to rely more heavily on investment expertise as well as the comfort of knowing that those investment advisors and account managers are in their own backyard.

Mr. Szyperski then closed his portion of the presentation reviewing Chesapeake Financial Shares' overall mission statement. He reviewed the current emphasis on attracting and retaining great employees. With that as the cornerstone of both the bank and Chesapeake Investment Group's growth, coupled with heavy emphasis on community leadership, he relayed his key measures of future success. At this point in the presentation, he noted to the shareholders that Chesapeake Bank was voted “Corporate Citizen of the Year” by the Williamsburg Chamber and Tourism Alliance. Additionally, the readers of the Virginia Gazette in Williamsburg voted Chesapeake Financial Shares “Best Financial Institution,” with over 15 competitors. Both are reflective of Chesapeake's commitment to the communities it serves. At this point in time Mr. Szyperski turned the meeting back to Douglas D. Monroe, Jr., Chairman, for the introductions and elections of directors.

Mr. Monroe noted the Chesapeake Bank Board of Directors would be elected by the Chesapeake Financial Shares Board. The bank board members were David E. Bush, Thomas E. Kellum, Charles C. Chase, II, E. S. “Bud” Hudnall, Jr., James M. Holmes, Jr., Albert C. Pollard, Jeffrey M. Szyperski, Thomas G. Tingle, Harry M. Ward, and Douglas D. Monroe, Jr., Chairman Emeritus. Additionally, those elected to the Chesapeake Investment Group Board of Directors were Leland T. James, Marshall N. Warner, William F. Shumadine, Jr., Douglas D. Monroe, Jr., and Jeffrey M. Szyperski.

Mr. Monroe next reviewed the proposal that was sent out via proxy statement several weeks ago to elect nine directors to serve for the ensuing year until the next Annual Meeting. The Directors elected were E. S. “Bud” Hudnall, Jr., Thomas E. Kellum, Douglas D. Monroe, Jr., Katherine W. Monroe, Bruce P. Robertson, William F. Shumadine, Jr., Robert J. Singley, Jeffrey M. Szyperski, and Thomas G. Tingle. After the election of directors, Mr. Monroe thanked each of the shareholders for their attendance at the meeting and requested a motion for adjournment to go upstairs for the reception.

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