Unlike many of the other banks, we’re coming off the best year in the 109-year history of Chesapeake Financial Shares. Though the current economic environment is ripe with challenges, today, we have been successfully navigating the various curveballs thrown to us. The largest of these curveballs is the FDIC special assessment to help replenish the Bank Insurance Fund. The initial proposal that was floated approximately three months ago would have erased 1/5 of our projected net income for the entire year. The final ruling that came down will be costing us approximately a quarter of a million dollars that was unknown at the beginning of the year. I fully anticipate another special assessment being levied against the banks before the end of the year. It is important to note that bank bailouts cost the taxpayers nothing. All the costs of bank failures are entirely borne by the premiums contributed by the banks supporting the FDIC system. In these recessionary times, the effect of additional FDIC assessments has a pro cyclical effect on banks already having difficulty with earnings. Using the old adage “hindsight is 20/20,” strengthening of the Bank Insurance Fund in more profitable times looks like the way to go.
With the turmoil the financial services industry is undergoing right now, I don't think I should have any shortage of topics on which to blog. I do think it's important to point out that Chesapeake Bank was voted among the top 200 community banks in the United States for the second year in a row! This year we came in at number 64. This list is compiled by US Banker magazine and is reflective of the three-year average return on equity of each of the institutions. Out of the 7000+ community banks included in this population, we’re very proud of this fact.
I'd be interested in any comments you have on the above or topics or any that you would like to see me cover in the future.
Recent Comments