First Shore Federal had an excellent year in 2018 and continued to build on its legacy of financial strength and service.
As the association enters 2019 with total capital of more than $46.7 million and a net worth/capital ratio of 15.45%. Both of these key measures are at record levels, continuing the positive trends of many years as is displayed in the attached chart.
First Shore once again earned a 5-star rating, the highest rating awarded for financial stability, from BauerFinancial, a leading independent bank and credit union rating and research firm. Moreover, the association's capital ratio as of September 2018, as published by a local accounting firm, was the strongest of any banking institution headquartered on the Eastern Shore.
The association also achieved growth in a variety of important areas.
President, Martin T. Neat
For the second time in our history, earnings exceeded $2 million - an impressive increase of more than 40% over 2017.
New loans originated totaled nearly $45.7 million for the year and First Shore remains highly competitive in today's environment. As a result, the association had strong growth in key areas of our loan portfolio including commercial loans, equity loans, mobile home and manufactured housing loans and share loans - i.e. loans secured by certificates of deposit.
Growth continued to be tempered, however, as the low interest rate environment of recent years and our own prudent management dictated that the association continue to manage its growth in fixed rate loans and investments. This strategy has served the association well as First Shore's historically strong capital position continued to grow as displayed in the attached chart.
While prudent from a management of risk perspective, the limited growth strategy of recent years is not one that we relish. That's why we have been encouraged to see the Federal Reserve increase short term rates over the past several years. While ultra-low rates benefit certain sectors of the economy, such as home buyers, savings customers have borne a particularly heavy load in that environment. And while First Shore has continued to pay a fair rate for its deposits, the rates available for savings customers have been limited.
We have been pleased over the past year, therefore, to increase rates on various certificates of deposit. And, as a result, the association grew deposits for the year with certificates of deposit up nearly $8.3 million. In fact, interest paid on all deposits increased by 9.98%.
Looking ahead, we will seek to make 2019 a year of strong growth for First Shore and the communities we serve. Growth helps to fund new products and services to our customers. It enables us to continue to pay attractive interest rates and to afford other operating expense to fulfill our mission. And it allows us to support the communities that are so good to First Shore in return.
With our strong capital level, we are in a fortunate position to be able to grow without creating capital adequacy concerns. That's why we are particularly pleased with the increases in key sectors of our portfolio. Home equity loans, commercial loans, manufactured housing loans, and share loans are all products that consumers need and that place the association in a strong position for future success.
We use an advertising theme of "Community Minded - Just Like You". As such, community service continues to be an important part of our mission. The association has been recognized as a leading community citizen for many years, holding a rating of "outstanding" for community reinvestment from federal regulators for nearly 20 years in succession.
We're proud to report progress there as well. First Shore continued to support numerous community groups and projects during 2018. Our directors, officers and staff are involved in numerous community efforts - in many cases, in a leadership position.
As we enter our 66th year of service to the Lower Shore, we do so with a continued sense of enthusiasm.
We'll continue to expand our services and make improvements to the association's branches, products and services.
We will also continue to evolve and to invest in technology and services that will meet our customers' needs while being safe and profitable for the association.
We enter 2019 with very good operating margins, the strongest capital position in our history, an appropriate reserve for any loan problems that do arise, an excellent reputation in the communities we serve, a dedicated and experienced staff and a continued commitment to customer service and making First Shore the best it can be.
We thank our employees for their dedication, our outstanding board of directors for its wisdom, oversight and direction, and our valued customers, our members, for their confidence and support.