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, 2000
[ ] 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 1, 2000.
Class Outstanding at May 1, 2000
Common Stock, voting, $5.00 par value 1,234,345
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, 2000 and December 31, 1999.............................1-2
Consolidated Statements of Earnings
Three months ended March 31, 2000..................................3
Consolidated Statements of Cash Flows
Three months ended March 31, 2000..................................4
Consolidated Statement of Changes in Stockholder's Equity
Three months ended March 31, 1999..................................5
Consolidated Statement of Changes in Stockholder's Equity
Three months ended March 31, 2000..................................6
Notes to Consolidated Financial Statements.........................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................8-12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings............................................13
Item 2. Changes in Securities........................................13
Item 3. Defaults Upon Senior Securities..............................13
Item 4. Submission of Matters to a Vote of Security Holders..........13
Item 5. Other Information............................................13
Item 6. Exhibits and Reports on Form 8-K.............................14
Signatures............................................................15
Page I
PART I. Item 1. - FINANCIAL INFORMATION
Chesapeake Financial Shares, Inc. March 31, December 31,
Consolidated Balance Sheets 2000 1999
ASSETS (Unaudited)
Cash and due from banks........................ $8,185,703 $8,669,184
Securities available for sale
U.S. Government agencies (book value of
$24,344,498-2000 and $24,199,324-1999)........ 23,794,496 23,727,615
Obligations of state and political subdivisions
(book value of $15,083,505-2000 and
$13,571,303-1999)............................. 15,141,848 13,166,902
Other Securities (book value $2,550,845-2000
and $2,554,862-1999........................... 2,515,150 2,502,150
Loans........................................... 137,550,281 132,893,500
Less: Reserve for loan loss..................... (2,316,111) (2,253,676)
---------------------------
Net loans..................................... 135,234,170 130,639,824
Bank premises and equipment, net................ 5,289,523 5,384,908
Accrued interest receivable..................... 1,509,095 1,337,111
Business Manager Assets......................... 8,730,696 8,791,161
Other assets.................................... 3,050,656 3,216,278
---------------------------
Total assets..................................$203,451,337 $197,435,133
============================
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 2000 1999
LIABILITIES AND SHAREHOLDERS' EQUITY (Unaudited)
Deposits
Noninterest bearing deposits............... $ 26,067,042 $ 27,150,692
Savings and interest bearing deposits...... 66,032,262 67,238,177
Certificates of deposit.................... 82,450,148 80,443,346
---------------------------
Total deposits............................ 174,549,452 174,832,215
Federal funds purchased..................... 10,300,000 4,800,000
Accrued interest payable.................... 287,746 301,247
Other liabilities........................... 1,340,123 1,140,506
Note payable................................ 843,091 847,713
----------------------------
Total liabilities......................... 187,320,412 181,921,681
Commitments and contingent liabilities
Shareholders' equity
Preferred stock, par value $1 per share;
authorized 50,000 shares; none outstanding 0 0
Common stock, voting...................... 6,131,025 6,131,635
Common stock, non-voting.................. 0 0
voting non-voting
3/31/00 12/31/99 3/31/00 12/31/99
-------- -------- ------- --------
Shs. auth.2,400,000 2,400,000 635,000 635,000
Shs. o/s 1,226,205 1,226,327 0 0
Paid in capital............................. 180,678 264,745
Accumulated other comprehensive income...... (348,516) (619,848)
Retained earnings........................... 10,167,738 9,736,920
----------------------------
Total shareholders' equity................ 16,130,925 15,513,452
----------------------------
Total liabilities and Shareholders' equity $203,451,337 $197,435,133
=============================
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,
2000 1999
Interest Income (Unaudited)
Interest and fees on loans................. $ 2,995,157 $ 2,595,407
Interest on federal funds sold............. 1,375 34,960
Interest on time deposits with banks....... 2,692 4,013
Interest on U.S. Treasury securities....... 0 1,025
Interest on U.S. Agency Obligations........ 434,717 343,010
Interest on obligations of state and
political subs............................ 223,322 178,961
-------------------------
Total interest income 3,657,263 3,157,376
Interest Expense
Interest on savings and interest bearing
deposits.................................. 540,982 446,044
Interest on certificates of deposit........ 1,072,221 1,074,948
Interest on federal funds purchased........ 77,820 3,240
Other interest expense..................... 7,760 8,007
-------------------------
Total interest expense 1,698,783 1,532,239
-------------------------
Net interest income........................ 1,958,480 1,625,137
Provision for loan losses.................. 65,124 56,675
-------------------------
Net interest income after provision for
loan losses............................... 1,893,356 1,568,462
-------------------------
Noninterest Income
Income from fiduciary activities........... 222,910 224,558
Service charges on deposit accounts........ 161,677 140,892
Merchant card income....................... 182,826 141,767
ATM income................................. 56,357 48,227
Cash management income.................... 353,352 262,738
Other income............................... 149,070 115,771
-------------------------
Total noninterest income 1,126,192 933,953
-------------------------
Noninterest Expense
Salaries................................... 852,293 751,985
Employee benefits.......................... 174,439 149,845
Occupancy expenses......................... 393,756 377,519
Merchant card expense...................... 159,308 136,321
ATM expense................................ 60,618 62,328
Cash management expense.................... 176,097 89,135
Other expenses............................. 491,420 367,822
-------------------------
Total noninterest expense............. 2,307,931 1,934,955
-------------------------
Income before income taxes................. 711,617 567,460
Income taxes............................... 170,144 146,256
-------------------------
Net income............................ $ 541,473 $ 421,204
=========================
Earnings per share, basic.................. $0.44 $0.34
Earnings per share, assuming dilution...... $0.42 $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,
2000 1999
(Unaudited)
Cash flows from operating activities:
Net income..................................... $ 541,473 $ 421,204
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization................. 203,785 220,580
Provision for loan losses..................... 65,124 56,675
Provision for cash management account losses.. 71,250 7,500
(Accretion) of discount and amortization of
premiums, net................................ 72,538 208,237
Changes in assets and liabilities:
Decrease (increase) in accrued interest
receivable.................................. (171,984) (24,401)
Decrease (increase) in other assets.......... 36,186 790,194
Increase (decrease) in accrued interest payable (13,501) (3,993)
Increase (decrease) in other liabilities..... 199,617 95,733
------------------------
Net cash provided by (used for) operating
activities................................... 1,004,488 1,771,729
------------------------
Cash flows from investing activities:
Purchases of securities available for sale..... (2,992,015) (6,228,189)
Proceeds from maturities of securities available
for sale...................................... 1,265,418 5,459,934
Origination of loans available for sale........ (321,500) (2,286,650)
Proceeds from sale of loans available for sale. 321,500 2,286,650
Net (increase) decrease in loans outstanding... (4,659,470) (4,715,786)
Net (increase) decrease in business manager
assets........................................ (10,785) (95,773)
Other capital expenditures..................... (108,400) (941,046)
Net cash provided by (used for) investing
activities.................................... (6,505,252) (6,520,860)
Cash flows from financing activities:
Net increase (decrease) in demand accounts,
interest bearing demand deposit accounts
and savings deposits.......................... (2,289,565) 4,057,001
Net increase (decr) in certificates of deposit. 2,006,802 (4,041,199)
Net increase (decr) in federal funds purchased. 5,500,000 500,000
Cash dividends................................. (110,655) (98,995)
Proceeds from issuance of voting common stock.. 44,790 60,000
Acquisition of voting common stock............. (129,467) (26,433)
Curtailment of long-term borrowings............ (4,622) (4,376)
------------------------
Net cash provided by (used for) financing
activities.................................... 5,017,283 445,998
Net (decrease) increase in cash and federal
funds sold.................................... (483,481) (4,303,133)
Cash and federal funds sold at beginning of
period........................................ 8,669,184 12,937,686
------------------------
Cash and federal funds sold at end of period... $ 8,185,703 $ 8,634,553
========================
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 60,00 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
<TABLE>
Statement of Changes in Stockholder's Equity
Chesapeake Financial Shares, Inc.
Three Months Ended March 31, 2000
<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 $15,513,452 $ $9,736,920 $(619,848) $6,131,635 $264,745
Comprehensive Income:
Net Income 541,473 541,47 541,473
Other comprehensive
income, net of tax:
Unrealized gain on
securities available
for sale: 271,332 271,332 271,332
---------- -------- ---------
Total comprehensive
income, net of tax $ 812,805
========
Acquisition of common
stock (129,466) (33,010) (96,457)
Issuance of common stock 44,790 32,400 12,390
Dividends declared (110,655) (110,655)
---------- --------- ---------- --------- -------
Ending balance $16,130,926 $10,167,738 $(348,516) $6,131,025 $180,678
========== ========== ========== ========= =======
</TABLE>
Page 6
PART I. Item 1. - FINANCIAL INFORMATION (cont'd.) 3/00-10QSB
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. and Chesapeake Financial
Group, Inc. (CFG). 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 1999 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.
March 31, 2000 March 31, 1999
Weighted average number of common
shares, basic 1,227,755 1,232,136
Effect of dilutive stock options 47,279 58,056
--------- ---------
Weighted number of common shares
and dilutive potential common stock
used in diluted EPS 1,275,034 1,290,202
========= =========
Page: 7
PART I. Item 2. - FINANCIAL INFORMATION (cont'd.) 3/00-10QSB
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 borrowings 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, 2000 was
approximately $5,109,000, compared to $13,584,000 one year ago and
$6,334,000 at December 31,1999.
The liquidity ratio at March 31, 2000 was 25.3%, compared with 28.7% 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 9.1% at March 31, 2000 and 9.2%
at December 31, 1999, 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, 2000 and December 31,
1999 the consolidated ratio of Tier 1 risk-based capital to risk-adjusted
assets was 10.3% and 10.4%, respectively. Total risked based capital to
risk weighted assets was 11.6% and 11.7% at March 31, 2000 and December 31,
1999, respectively. Tier one leverage capital was 8.3% and 8.3% at March 31,
2000 and December 31, 1999, respectively.
Page: 8
PART I. Item 2. - FINANCIAL INFORMATION (cont'd.) 3/00-10QSB
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 $541,473 for the three months ended March 31, 2000, compared
with income of $421,204 for the same period in 1999. On a fully diluted per
share basis, the net profit was $0.42 for the first three months of 2000.
Earnings per share for the first quarter of 1999 were $0.33. Net interest
income before provision increased $333,343 or 20.5% and noninterest income
increased $192,239 or 20.6%. The Company experienced a net increase in
noninterest expense (which includes other expense) of $372,976 or 19.3%.
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, 2000, the Company's interest-earning assets exceeded its
interest-bearing liabilities by approximately $17.9 million, compared with
a $16.4 million excess one year ago.
Net interest margins are 4.67% at March 31, 2000 compared to 4.33% at March
31, 1999. 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
reduced deposit rates during the last half of 1998 on all products to match
the market for reduced earning asset returns. These changes produced short
term improvements in margins, but prepayments on mortgage-backed securities
during the last quarter of 1998 and the first quarter of 1999 had a negative
impact on margins. The record prepayment period was a direct result of the
lower rate environment in 1998. Returns on mortgage-backed investment
securities improved quickly as rates increased at the end of 1999. Current
and near term 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 trade areas of the
bank. New product offerings have been very successful in maintaining market
share as interest rates have started to increase. A significant portion of
past deposit growth has been noninterest bearing. Management expects this
favorable trend to stop. Large banks are currently buying market share in
the current rising rate environment. A large number of interest-bearing
deposits are maturing/repricing at higher interest rates. Offsetting this
will be the effect of loans with interest rates that are tied to prime
repricing at slightly higher rates which will positively impact margins in
the near future. However, with prime plus 1% currently at 10%, loan demand
will begin to weaken. This will have negative impact on margins if rates
remain at these levels.
Page: 9
PART I. Item 2. - FINANCIAL INFORMATION (cont'd.) 3/00-10QSB
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, 2000
supports the adequacy of the current loan loss level of $2.3 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 1.7% of gross loans as of March 31, 2000 and
December 31,1999.
Noninterest Income:
Noninterest income is up 20.6% or $192,239 from the same period last year.
Chesapeake Bank's Business Manager product generated $353,352 in gross
revenue for the first three months ended March 31, 2000, compared to the
same period last year of $262,738. Managed assets in the business manager
program were $8,941,946 at March 31, 2000, and $7,294,938 at March 31, 1999.
The merchant card program has generated $182,826 or 29.0% more in gross
revenue through March of this year than in the same period last year due to
an increased customer base.
The Other Income category was $149,070, up 28.8%, or $33,299 from one year
ago. The Bank sold several pieces of mechanical equipment at gains and had
a nonrecurring recovery of $8,482 from a billing error in a previous period.
Service Charges on deposit accounts were up 14.8%, or $20,785, from one year
ago due to increased account volume.
Page: 10
PART I. Item 2. - FINANCIAL INFORMATION (cont'd.) 3/00-10QSB
Chesapeake Financial Shares, Inc.
Management's Discussion and Analysis of Financial
Condition or Plan of Operation (Unaudited)
Noninterest Expenses:
Employee salary expense amounted to $852,293 and $751,985 for the three
months ended March 31, 2000 and 1999, respectively. Benefits expense is up
16.4% or $24,594 from March 31, 1999. These increases are directly related
to new hires as market share has increased and due to cost increase in the
human resource and benefits areas. In addition, the Williamsburg market has
been highly competitive due to the higher growth rate that the community is
experiencing.
Other expenses are up 33.6%, or $123,598, over the same period last year due
in part to a $21,000 loss on property owned. There was also a $15,000
expense incurred for the removal of the James City County (JCC) Winn-Dixie
Supermarket banking unit. The JCC branch was closed on January 31, 2000.
The rental expense associated with that facility ends April 20, 2000. Other
increases in expenses are associated with increased level of business
activity.
Cash management expense was $176,097 for the three months ended March 31,
2000, up 97.6% from the same period one year ago. This increase is
associated with additional business activity.
Page: 11
PART I. Item 2. - FINANCIAL INFORMATION (cont'd.) 3/00-10QSB
Chesapeake Financial Shares, Inc.
Management's Discussion and Analysis of Financial
Condition or Plan of Operation (Unaudited)
Assets and Loans:
At March 31, 2000, Chesapeake Financial Shares had total assets of $203.5
million, up 3.1% from $197.4 million at December 31, 1999 and up 11.2% from
$183.0 million of one year ago. Management has budgeted for a 7.0% growth
in total assets for 2000.
Total loans (gross) at March 31, 2000 were $137.6 million, representing an
increase of 3.5% from December 31, 1999, when loans were $132.9 million.
Chesapeake Bank's loan quality is good as the following table shows.
Management is confident that no serious delinquency trends are developing.
3/31/00 12/31/99
Nonaccrual loans $231,951 $155,520
90 days past due 5,865 3,554
Restructured loans 0 0
________ ________
Totals $237,816 $159,074
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.
Charged off loans through March 31, 2000, amounted to $4,393. There were no
charge offs through March 31, 1999. Recoveries through March 31, 2000 were
$1,704 as compared to $1,203 as of March 31, 1999.
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 (188% of capital) and residential real estate (83% 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 $ 174.5 million at March 31, 2000 and
$174.8 million at December 31, 1999. Deposits were $174.5 million and
$164.7 million at March 31, 2000 and March 31, 1999, respectively. The
Bank's mix of deposit dollars has changed from March 31, 1999 with net
increases in noninterest bearing and lower interest bearing balances.
During the same period total certificates dollars have increased slightly.
It is management's opinion that this trend will reverse itself in the
current interest rate environment.
Page: 12
PART II. Item l. - OTHER INFORMATION 3/00-10QSB
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 14, 2000 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 89% of the
shareholders were represented at the meeting in person or by proxy with
over 87% voting in favor of the proposals 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. The Bank and Holding Company completed a safety and soundness
examination in the fall of 1999, performed by the Bureau of Financial
Institutions, Virginia State Corporation Commission.
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.
Page: 13
PART II. Item 6. - OTHER INFORMATION 3/00-10QSB
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: 14
SIGNATURES
Chesapeake Financial Shares, Inc. SEC 10-QSB 3/00
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)
05/08/00
(Date (Signature)
Douglas D. Monroe, Jr.
Chairman and Chief Executive Officer
05/08/00
(Date) (Signature)
John H. Hunt, II
Secretary and Chief Financial Officer
Page: 15
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
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0
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