U. S. Securities and Exchange commission
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE EXCHANGE ACT
For the transition period from to
Commission file number 0-18543
CHESAPEAKE FINANCIAL SHARES, INC.
(Exact name of registrant as specified in its charter)
Virginia 54-1210845
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
97 N. Main St., Kilmarnock, VA 22482
(Address of principal executive offices) (Zip Code)
(804) 435-1181
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if
changed since last report.)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities and Exchange Act of 1934 during
the preceding 12 months (or for such shorter period
that the registrant was required to file such reports),
and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of May 12, 1999.
Class Outstanding at May 12, 1999
Common Stock, voting, $5.00 par value 1,236,636
Common Stock, non-voting, $5.00 par value 0
CHESAPEAKE FINANCIAL SHARES, INC.
FORM 10-QSB
INDEX
PART I - FINANCIAL INFORMATION
Page
Item 1. Financial Statements.................................1-5
Consolidated Balance Sheets
March 31, 1999 and December 31, 1998.....................1-2
Consolidated Statements of Earnings
Three months ended March 31, 1999..........................3
Consolidated Statements of Cash Flows
Three months ended March 31, 1999..........................4
Consolidated Statement of Changes in Stockholder's Equity
Three months ended March 31, 1999..........................5
Notes to Consolidated Financial Statements.................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................7-11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings....................................12
Item 2. Changes in Securities................................12
Item 3. Defaults Upon Senior Securities......................12
Item 4. Submission of Matters to a Vote of Security Holders..12
Item 5. Other Information....................................12
Item 6. Exhibits and Reports on Form 8-K.....................13
Signatures.....................................................14
Page I
PART I. Item 1. - FINANCIAL INFORMATION
Chesapeake Financial Shares, Inc. March 31, December 31,
Consolidated Balance Sheets 1999 1998
ASSETS (Unaudited)
Cash and due from banks.................... $5,434,553 $5,937,686
Federal funds sold......................... 3,200,000 7,000,000
Securities available for sale
U.S. Treasury securities (book value of
$0-1999 and $500,187-1998................. 0 501,406
U.S. Government agencies (book value of
$29,255,466-1999 and $29,256,182-1998).... 29,207,359 28,200,031
Obligations of state and political
subdivisions (book value of
$12,626,256-1999 and $12,329,705-1998).... 13,286,637 12,932,429
Other Securities (book value of
$888,900-1999 and $834,300-1998).......... 888,900 841,050
Loans...................................... 116,162,782 111,445,793
Less: Reserve for loan loss................ (2,081,630) (2,023,752)
---------------------------
Net loans............................... 114,081,152 109,422,041
Bank premises and equipment, net........... 5,968,071 5,247,605
Accrued interest receivable................ 1,371,017 1,346,616
Business Manager Assets.................... 7,219,938 7,131,665
Other assets............................... 2,392,246 3,300,746
---------------------------
Total assets............................$183,049,873 $181,861,275
===========================
See accompanying notes to consolidated financial statements. Page: 1
PART I. Item 1. - FINANCIAL INFORMATION
Chesapeake Financial Shares, Inc. March 31, December 31,
Consolidated Balance Sheets 1999 1998
LIABILITIES AND SHAREHOLDERS' EQUITY (Unaudited)
Deposits
Noninterest bearing deposits.............. $ 22,471,082 $ 23,830,189
Savings and interest bearing deposits..... 61,134,577 55,718,469
Certificates of deposit................... 81,049,344 85,090,543
----------------------------
Total deposits......................... 164,655,003 164,639,201
Federal funds purchased.................... 500,000 0
Accrued interest payable................... 299,276 303,269
Other liabilities.......................... 1,211,558 1,115,825
Note payable............................... 870,198 874,574
----------------------------
Total liabilities...................... 167,536,035 166,932,869
Commitments and contingent liabilities
Shareholders' equity
Preferred stock, par value $1 per share;
authorized 50,000 shares; none outstanding 0 0
Common stock, voting...................... 6,184,755 6,147,995
Common stock, non-voting.................. 0 0
voting non-voting
3/31/99 12/31/98 3/31/99 12/31/98
--------- --------- ------- --------
Shares auth. 2,400,000 2,400,000 635,000 635,000
Shares o/s 1,236,951 1,229,599 0 0
Paid in capital............................ 520,602 523,795
Accumulated other comprehensive income..... 403,923 174,267
Retained earnings.......................... 8,404,558 8,082,349
---------------------------
Total shareholders' equity............... 15,513,838 14,928,406
---------------------------
Total liabilities & Shareholders' equity $183,049,873 $181,861,275
============================
See accompanying notes to consolidated financial statements. Page: 2
PART I. Item 1. - FINANCIAL INFORMATION (cont'd.)
Chesapeake Financial Shares, Inc. Three Months Ended
Consolidated Statements of Earnings March 31,
1999 1998
Interest Income (Unaudited)
Interest and fees on loans............... $ 2,595,407 $ 2,502,453
Interest on federal funds sold........... 34,960 25,818
Interest on time deposits with banks..... 4,013 4,111
Interest on U.S. Treasury securities..... 1,025 22,137
Interest on U.S. Agency Obligations...... 343,010 482,527
Interest on obligations of state and
political subs.......................... 178,961 165,158
___________________________
Total interest income 3,157,376 3,202,204
Interest Expense
Interest on savings and interest
bearing deposits........................ 446,044 267,339
Interest on certificates of deposit...... 1,074,948 1,263,193
Interest on federal funds purchased...... 3,240 13,617
Other interest expense................... 8,007 12,347
__________________________
Total interest expense 1,532,239 1,556,496
__________________________
Net interest income...................... 1,625,137 1,645,708
Provision for loan losses................ 56,675 54,000
__________________________
Net interest income after provision for
loan losses............................. 1,568,462 1,591,708
__________________________
Noninterest Income
Income from fiduciary activities......... 224,558 231,641
Service charges on deposit accounts...... 140,892 132,141
Merchant card income..................... 141,767 105,293
ATM income............................... 48,227 43,778
Business manager income.................. 262,738 170,985
Other income............................. 115,771 119,180
__________________________
Total noninterest income 933,953 803,018
__________________________
Noninterest Expense
Salaries................................. 751,985 688,451
Employee benefits........................ 149,845 158,002
Occupancy expenses....................... 377,519 352,848
Merchant card expense.................... 136,321 90,279
ATM expense.............................. 62,328 61,939
Business manager expense................. 89,135 67,167
Other expenses........................... 367,822 398,737
________________________
Total noninterest expense........... 1,934,955 1,817,423
________________________
Income before income taxes............... 567,460 577,303
Income taxes............................. 146,256 162,192
________________________
Net income.......................... $ 421,204 $ 415,111
========================
Earnings per share, basic................ $0.34 $0.34
Earnings per share, assuming dilution.... $0.33 $0.33
See accompanying notes to consolidated financial statements. Page: 3
PART I. - FINANCIAL INFORMATION (cont'd.)
Chesapeake Financial Shares, Inc. Three Months Ended
Consolidated Statements of Cash Flows March 31,
1999 1998
(Unaudited)
Cash flows from operating activities:
Net income.................................. $ 421,204 $ 415,111
Adjustments to reconcile net income to net
cash provided by (used for) operating activities:
Depreciation and amortization.............. 220,580 165,425
Provision for loan losses.................. 56,675 54,000
(Accretion) of discount and amortization
of premiums, net.......................... 208,237 129,967
Changes in assets and liabilities:
Decrease (increase) in accr. interest
receivable............................... (24,401) (15,474)
Decrease (increase) in other assets....... 701,921 (408,764)
Increase (decrease) in accrued interest
payable.................................. (3,993) 2,647
Increase (decrease) in other liabilities.. 95,733 307,454
-----------------------
Net cash provided by (used for) operating
activities................................. 1,675,956 650,366
Cash flows from investing activities:
Purchases of securities available for sale.. (6,228,189) (7,261,460)
Proceeds from sale or call of securities
available for sale......................... 0 970,207
Proceeds from maturities of securities
available for sale......................... 5,459,934 2,789,127
Origination of loans available for sale..... (2,286,650) (1,522,250)
Proceeds from sale of loans available for
sale....................................... 2,286,650 1,522,250
Net (increase) decrease in loans outstanding (4,715,786) (237,079)
Other capital expenditures.................. (941,046) (977,490)
------------------------
Net cash provided by (used for) investing
activities................................. (6,425,087) (4,716,695)
------------------------
Cash flows from financing activities:
Net increase (decrease) in demand accounts,
interest bearing demand deposit accounts
and savings deposits....................... 4,057,001 3,289,066
Net increase (decrease) in certificates of
deposit.................................... (4,041,199) 3,516,376
Net increase (decrease) in federal funds
purchased.................................. 500,000 (1,250,000)
Cash dividends.............................. (98,995) (80,808)
Proceeds from issuance of voting common stock 60,000 18,500
Acquisition of voting common stock.......... (26,433) (60,893)
Increase in long-term borrowings............ 0 900,000
Curtailment of long-term borrowings......... (4,376) (6,227)
-----------------------
Net cash provided by (used for) financing
activities................................. 445,998 6,326,014
Net (decrease) increase in cash and federal
funds sold................................. (4,303,133) 2,259,685
Cash and federal funds sold at beginning of
period...................................... 12,937,686 7,023,586
------------------------
Cash and federal funds sold at end of
period..................................... $ 8,634,553 $ 9,283,271
========================
See accompanying notes to consolidated financial statements. Page: 4
<TABLE>
Statement of changes in Stockholder's Equity
Chesapeake Financial Shares, Inc.
Three Months Ended March 31, 1999
<CAPTION>
Accumulated Additional
Comprehensive Retained Other Compr. Common Paid-In
Total Income Earnings Income Stock Capital
----------- ---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Beginning balance $14,928,406 $ $8,082,349 $174,267 $6,147,995 $523,795
Comprehensive Income:
Net Income 421,204 421,204 421,204
Other comprehensive
income, net of tax:
Unrealized gain on securities
available for sale: 229,656 229,656 229,656
---------- -------- -------
Total comprehensive income,
net of tax: $650,860
=========
Acquisition of common stock (26,433) (6,440) (19,993)
Issuance of common stock 60,000 43,200 16,800
Dividends declared (98,995) (98,995)
---------- --------- ------- -------- --------
Ending balance $15,513,838 $8,404,558 $403,923 $6,184,755 $520,602
========== ========= ======= ========= =======
</TABLE>
Page 5
PART I. Item 1. - FINANCIAL INFORMATION (cont'd.) 3/99-10QSB
Chesapeake Financial Shares, Inc.
Notes to Consolidated Financial Statements
1. Chesapeake Financial Shares, Inc. ("CFS) owns 100%
of Chesapeake Bank (the "Bank"). Two additional
subsidiaries, Chesapeake Mortgage Company, Inc. and
Chesapeake Insurance Agency, Inc. (t/a Chesapeake
Investment Services) are wholly owned subsidiaries of
CFS and the Bank, respectively. The Bank also is the
100% owner of CNB Properties, Inc. CFS chartered
Chesapeake Financial Group, Inc. (CFG) on August 31,
1998. The purpose of CFG is to provide investment
advice and management to the upscale customer. The
consolidated financial statements include the accounts
of CFS and its wholly owned subsidiaries. All
significant intercompany accounts have been eliminated.
2. The accounting and reporting policies of the
registrant conform to generally accepted accounting
principles and to the general practices within the
banking industry. The interim financial statements
have not been audited; however, in the opinion of
management, all adjustments, consisting only of normal
recurring adjustments, necessary for a fair
presentation of the consolidated financial statements
have been included.
These financial statements should be read in
conjunction with the financial statements and the
footnotes included in the registrant's 1998 Annual
Report to Shareholders.
3. The following data shows the amounts used in
computing earnings per share and the effect on the
weighted average number of shares of potential dilutive
common stock. The potential common stock will not have
a significant impact on net income. The number of
shares used in the calculation for March 31, 1998
reflects a 20% stock dividend paid on October 15, 1998.
March 31, 1999 March 31, 1998
Weighted average number of
common shares, basic
1,232,136 1,213,266
Effect of dilutive stock options 58,066 69,069
Weighted number of common shares
and dilutive potential common --------- ---------
stock used in diluted EPS 1,290,202 1,282,362
========= =========
Page: 6
PART I. Item 2. - FINANCIAL INFORMATION (cont'd.) 3/99-10QSB
Chesapeake Financial Shares, Inc.
Management's Discussion and Analysis of Financial
Condition or Plan of Operation (Unaudited)
A. Summary - liquidity and capital resources
Sufficient short-term assets are maintained at
Chesapeake Financial Shares to meet cash needs
anticipated by management. Management's primary
sources of liquidity continue to be federal funds sold,
short term borrowing from Federal Home Loan Bank
Atlanta, securities maturing within one year, and
principal payments from mortgage securities. The
repayment and sale of loans also provides liquidity.
The total of federal funds sold, securities maturing
within one year, and estimated principal payments on
mortgage-backed securities within one year at March 31,
1999 was approximately $13,584,000, compared to
$15,729,000 one year ago and $18,072,000 at December
31,1998.
The liquidity ratio at March 31, 1999 was 28.7%,
compared with 33.5% one year ago. This ratio is
arrived at by dividing net liquid assets (sum of total
Cash and Due from Banks, including Federal Reserve,
unpledged and over pledged portions of Investment
Securities at market value, and federal funds sold less
reserves required at the Federal Reserve Bank) by net
liabilities (total liabilities excluding valuation
reserves and capital). Management has found in the
past that 18% represents a sufficient level of
liquidity to meet cash needs.
Management believes capital is adequate to meet
current needs. Unencumbered capital (total capital net
of accumulated other comprehensive income less
intangibles plus reserves) as a percent of total
adjusted assets (total assets less intangibles plus
reserves) was 9.3% at March 31, 1999 and 9.1% at
December 31, 1998, for CFS.
Chesapeake Financial Shares and Chesapeake Bank
must have a ratio of Tier 1 capital (common equity,
retained earnings less certain goodwill) to risk-
adjusted assets of at least 4.0%. At March 31, 1999
and December 31, 1998 the consolidated ratio of Tier 1
risk-based capital to risk-adjusted assets was 11.2%
and 11.3%, respectively. Total risked based capital to
risk weighted assets was 12.4% and 12.6% at March 31,
1999 and December 31, 1998, respectively. Tier one
leverage capital was 8.4% and 8.4% at March 31, 1999
and December 31, 1998, respectively.
Page: 7
PART I. Item 2. - FINANCIAL INFORMATION (cont'd.) 3/99-10QSB
Chesapeake Financial Shares, Inc.
Management's Discussion and Analysis of Financial
Condition or Plan of Operation (Unaudited)
B. Results of operations:
Earnings Summary:
Net income was $421,204 for the three months ended
March 31, 1999, compared with income of $415,111 for
the same period in 1998. On a fully diluted per share
basis, the net profit was $0.33 for the first three
months of 1999. Earnings per share for the first
quarter of 1998 were also $0.33. Net interest income
before provision decreased $20,571 or 1.2% and
noninterest income increased $130,935 or 16.3%. The
Company experienced a net increase in noninterest
expense (which includes other expense) of $117,532 or
6.5%.
Net Interest Income:
Chesapeake Financial Shares' results of operation
are significantly affected by its ability to manage
effectively the interest rate sensitivity and maturity
of its interest-earning assets and interest-bearing
liabilities. At March 31, 1999, the Company's interest-
earning assets exceeded its interest-bearing
liabilities by approximately $16.4 million, compared
with a $19.8 million excess one year ago.
Net interest margins are 4.33% at March 31, 1999
compared to 4.58% at March 31, 1998. The March 97
increase in the New York prime rate had a positive
impact on margins beginning the second quarter of 1997
as prime-adjusted loans repriced at generally higher
levels. Margins have narrowed since early 1998 as our
loan to deposit ratio dropped from over 76% at June,
1997, to under 69% at the end of 1998. Prime also
dropped three times in the last four months of 1998.
Management has reduced deposit rates on all products
during the last twelve months to match the market for
reduced earning asset returns. These changes have
contributed to short term improvement in margins, but
prepayments on mortgage-backed securities during the
first quarter of 1999 had a negative impact on margins.
The record prepayment period was a direct result of the
lower rate environment during the fourth quarter of
1998. Future returns on the mortgaged-backed portfolio
are expected to be well within previous estimates since
prepayment speeds have returned to more normal levels.
There has been significant growth in deposits in
all of the trade areas of the bank. New product
offerings have been very successful in this low
interest rate environment. A significant portion of
this deposit growth has been noninterest bearing. A
large number of interest-bearing deposits are
maturing/repricing at significantly lower rates.
Offsetting this will be the effect of loans with
interest rates that are tied to prime repricing at
lower rates which will negatively impact margins in the
near future
Page: 8
PART I. Item 2. - FINANCIAL INFORMATION (cont'd.) 3/99-10QSB
Chesapeake Financial Shares, Inc.
Management's Discussion and Analysis of Financial
Condition or Plan of Operation (Unaudited)
Provision for Loan Losses:
The loan loss provision is a charge against
earnings necessary to maintain the reserve for loan
losses at a level consistent with management's
evaluation of the credit quality and risk adverseness
of the portfolio. Management makes a quarterly
evaluation as to the adequacy of the current loan loss
reserve. Management's detailed analysis as of March
31, 1999 supports the adequacy of the current loan loss
level of $2.1 million.
Chesapeake Bank's management maintains a reserve
for loan loss that they feel represents a conservative
estimate of potential losses in the Bank's loan
portfolio. The methodology incorporates subjective
factors into the evaluation of the adequacy of the ALLL
such as:
The effect of volume and trends in
delinquencies and nonaccrual loans.
The effect of trends in portfolio volume,
maturity, and composition.
An estimate of future loss on all significant
loans and assessment of underwriting and lending policies
and procedures including those for charge off,
collection and recovery.
Experience, ability and depth of lending
management and staff.
The effect of national and local economic conditions and
downturns in specific industries.
Concentrations of credit that might affect loss experience
across one or more components of the portfolio.
The results of any independent reviews of the portfolio.
The loan loss reserve is 1.8% of gross loans as of
March 31, 1999 and December 31, 1998.
Noninterest Income:
Noninterest income is up 16.3% or $130,935 from
the same period last year. Chesapeake Bank's Business
Manager product generated $262,738 in gross revenue for
the first three months ended March 31, 1999, compared
to the same period last year of $170,985. Managed
assets in the business manager program were $7,294,938
at March 31, 1999, and $4,248,994 at March 31, 1998.
The merchant card program has generated $141,767
or 34.6% more in gross revenue through March of this
year than in the same period last year due to an
increased customer base.
The ATM fee income to date is $48,227, up 10.2%,
or $43,778 of one year ago. The Bank has 13 ATMs
operational as of the end of March, 1999. The Bank
charges a nominal fee for use of its ATMs by non-
customers.
Page: 9
PART I. Item 2. - FINANCIAL INFORMATION (cont'd.) 3/99-10QSB
Chesapeake Financial Shares, Inc.
Management's Discussion and Analysis of Financial
Condition or Plan of Operation (Unaudited)
Noninterest Expenses:
Employee salary expense amounted to $751,985 and
$688,451 for the three months ended March 31, 1999 and
1998, respectively. Management opened regional
financial services center in the City of Williamsburg
(the Lafayette Street Office) in June of 1998. This is
the third Chesapeake banking office in the
Williamsburg/James City County area. In addition to the
Chesapeake Investment Services Investment Manager
resident in that office, management employed an
Investment Advisor for the Chesapeake Financial Group.
Benefits expense is down 5.2% or $8,157 from March 31,
1998.
Occupancy expenses are up 7.0% or $24,671 from
March 31, 1998 primarily due to maintenance expenses at
branches, including the Lafayette Street Financial
Center, and the acquisition/development and maintenance
of the School Street property in Kilmarnock. This
Operations Center was occupied on the first of October.
The School Street Operations Center houses the Loan
Processing Center, Administrative Support, and Data
Processing/Operations. Equipment maintenance as well
as insurance costs have also increased.
Page: 10
PART I. Item 2. - FINANCIAL INFORMATION (cont'd.) 3/99-10QSB
Chesapeake Financial Shares, Inc.
Management's Discussion and Analysis of Financial
Condition or Plan of Operation (Unaudited)
Assets and Loans:
At March 31, 1999, Chesapeake Financial Shares had
total assets of $183.0 million, up 0.7% from $181.9
million at December 31, 1998 and up 7.2% from $170.8
million of one year ago. Management has budgeted for a
2.0% growth in total assets for 1999.
Total loans (gross) at March 31, 1999 were $116.2
million, representing an increase of 4.3% from December
31, 1998, when loans were $111.4 million. Chesapeake
Bank's loan quality is good as the following table
shows. Management is confident that no serious
delinquency trends are developing.
3/31/99 12/31/98
Nonaccrual loans $ 324,506 $ 202,434
90 days past due 4,331 3,815
Restructured loans 0 0
------- -------
Totals $ 328,837 $ 206,249
Management is also confident there will be no loss
incurred as the Bank is well secured on these assets.
There are no impaired loans outstanding at the end of
either period.
There were no charge offs through March 31, 1999
or March 31, 1998. Recoveries through March 31, 1999
were $1,203 as compared to $671 as of March 31, 1998.
Concentrations of credit in loans are compiled
quarterly by management and reviewed with the Board of
Director's Loan Review Committee. There have been no
material changes in the concentrations of credit within
the past three months that would warrant above average
additions to the reserve. The Bank's only
concentrations of credit greater than 70% of capital
are individual consumer (137% of capital), residential
real estate (98% of total capital), and the hospitality
sector (72% of total capital). Bank management feels
that the current levels are consistent with the
objectives of the Bank and do not represent unwarranted
risk.
The Bank's Other Real Estate Owned (OREO)
portfolio currently has two properties with a total
carrying value of $185,000. Bank management is
currently marketing these properties. The Bank also has
no repossessed assets.
Deposits:
Deposits are essentially unchanged at $ 164.7
million at March 31, 1999 and $164.6 million at
December 31, 1998. Deposits were $164.7 million and
$154.3 million at March 31, 1999 and March 31, 1998,
respectively. The Bank's mix of deposit dollars has
changed from one year ago with net increases in
noninterest bearing and lower interest bearing
balances. During the same period total certificates
dollars have decreased. It is management's opinion that
this is due to product offerings and the lower interest
rate environment.
Page: 11
PART II. Item l. - OTHER INFORMATION 3/99-10QSB
Chesapeake Financial Shares, Inc.
Legal Proceedings
- -----------------
None to report
PART II. Item 2. - OTHER INFORMATION
Chesapeake Financial Shares, Inc.
Changes in Securities
- ---------------------
None to report.
PART II. Item 3. OTHER INFORMATION
Chesapeake Financial Shares, Inc.
Default Upon Senior Securities
- ------------------------------
None to report.
PART II. Item 4. - OTHER INFORMATION
Chesapeake Financial Shares, Inc.
Submission of Matters to a Vote of Security Holders
- ---------------------------------------------------
Chesapeake Financial Shares' annual meeting of
shareholders was held on Friday, April 2, 1999 in
Irvington, Virginia. We have previously forwarded to
the Commission copies of the letter to shareholders,
the notice of the meeting, the proxy statement, and the
proxy. Over 84% of the shareholders were represented
at the meeting in person or by proxy with over 83%
voting in favor of the proposal submitted.
PART II. Item 5. - OTHER INFORMATION
Chesapeake Financial Shares, Inc.
Other Information
- -----------------
As of May 30, 1998, the Bank and Holding Company
completed a safety and soundness examination, an
Information Systems examination, a Phase II Y2K
examination, and a Trust examination, performed by the
Federal Reserve Bank of Richmond.
As a result of these examinations management is
not aware of any current recommendations of the
regulatory authorities which, if they were implemented,
would have a material effect on liquidity, capital
resources or operations of the Bank or Holding Company.
As previously reported, Chesapeake Financial
Shares' Board of Directors declared a stock dividend
effected in the form of a stock split at their regular
meeting in July, 1998. The 6 for 5 stock dividend was
issued to shareholders of record on October 1, 1998. It
was paid on October 15, 1998. As a result 202,154
shares were issued and $2,230.20 was paid in cash as a
result of fractional shares.
Page: 12
PART II. Item 6. - OTHER INFORMATION 3/99-10QSB
Chesapeake Financial Shares, Inc.
Exhibits and Reports on Form 8-K
(Unaudited)
(a) Exhibit 2 Plan of acquisition, reorganization, arrangement,
liquidation or succession N/A
Exhibit 4 Instruments defining the rights of security
holders, including indentures N/A
Exhibit 10 Material contracts N/A
Exhibit 11 Statement re: computation of earnings per share N/A
Exhibit 15 Letter re: unaudited interim financial information N/A
Exhibit 18 Letter re: change in accounting principles N/A
Exhibit 19 Report furnished to security holders N/A
Exhibit 22 Published report regarding matters submitted
to vote of security holders Previously Filed
Exhibit 23 Consents of experts and counsel N/A
Exhibit 24 Power of attorney N/A
Exhibit 27 Financial Data Schedule Attached
Exhibit 99 Additional exhibits N/A
(b) No filings were made on Form 8-K for the period.
Page: 13
SIGNATURES
Chesapeake Financial Shares, Inc. SEC 10-QSB 3/99
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Chesapeake Financial Shares, Inc.
(Registrant)
05/12/99
(Date) (Signature)
Douglas D. Monroe, Jr.
Chairman and Chief Executive Officer
05/12/99
(Date) (Signature)
John H. Hunt, II
Secretary and Chief Financial Officer
Page: 14
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 5,434,553
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 3,200,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 43,382,896
<INVESTMENTS-CARRYING> 42,770,622
<INVESTMENTS-MARKET> 43,382,896
<LOANS> 116,162,782
<ALLOWANCE> 2,081,630
<TOTAL-ASSETS> 183,049,873
<DEPOSITS> 164,655,003
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,510,834
<LONG-TERM> 870,198
0
0
<COMMON> 6,184,755
<OTHER-SE> 8,925,160
<TOTAL-LIABILITIES-AND-EQUITY> 183,049,873
<INTEREST-LOAN> 2,595,407
<INTEREST-INVEST> 527,009
<INTEREST-OTHER> 34,960
<INTEREST-TOTAL> 3,157,376
<INTEREST-DEPOSIT> 1,520,992
<INTEREST-EXPENSE> 1,532,239
<INTEREST-INCOME-NET> 1,625,137
<LOAN-LOSSES> 56,675
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,934,955
<INCOME-PRETAX> 567,460
<INCOME-PRE-EXTRAORDINARY> 567,460
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 421,204
<EPS-PRIMARY> .34
<EPS-DILUTED> .33
<YIELD-ACTUAL> 4.24
<LOANS-NON> 324,506
<LOANS-PAST> 4,331
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 515,212
<ALLOWANCE-OPEN> 2,023,752
<CHARGE-OFFS> 0
<RECOVERIES> 1,203
<ALLOWANCE-CLOSE> 2,081,630
<ALLOWANCE-DOMESTIC> 2,081,630
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
