We are proud to report that First Shore Federal built on its legacy of financial strength, quality service and progress during 2016.
While not a year of record profit, earnings exceeded $1.5 million and increased by 13.9% over 2015. And the association saw improvements in a variety of important areas.
Significant growth was achieved in our deposit accounts including an increase of nearly 9% in savings and checking accounts. Operating improvements were made to our debit card program, account statements, timing and security.
Our corporate headquarters in Salisbury underwent major renovations. Our Millsboro branch ended its first year of operation and we are pleased to report that more than 40% of our loan volume was in Sussex County.
President, Martin T. Neat
New loans originated totaled more than $32.5 million for the year. While this growth was balanced by loan payoffs and refinances by customers taking advantage of the low interest rate environment, First Shore saw good growth in key sectors of our loan portfolio including commercial loans and mobile home loans.
Overall, in recognition of a soft regional economy, particularly an ongoing ultra-low interest rate environment that has now stretched nearly a decade, prudent management required that First Shore continue to manage its growth in fixed rate loans and investments.
The strategy has served the association well. In fact, First Shore ended 2016 with total capital of more than $43 million and a net worth ratio which exceeded 14%. Both are at record levels, have grown significantly in recent years, and continued an upward trend in 2016 as displayed in the attached chart.
Credit quality remained good and in fact continued to improve in key areas. The association’s share of real estate owned (REO), that is property held as a result of foreclosure or other legal action, continued to decline – ending the year down more than 50% from 2015.
We do look forward to 2017 with the anticipation that interest rates will moderate and that the association can grow as the economy continues to recover. That’s why we’re heartened by numerous indications of an improving economy and by the Federal Reserve Open Market Committee’s recent moves to normalize interest rates.
While ultra-low rates benefit certain sectors of the economy, such as home buyers, it is important to recognize that savings customers in particular have borne a heavy load in the economic recovery. And while First Shore has continued to pay a fair rate for its deposits, the rates available for savings customers have been limited. That’s why we are hopeful that 2017 will provide a more balanced interest rate environment that will reward savings customers and allow the association to grow at a more robust level.
We do think that the future looks bright.
As First Shore enters its 64th year of service to the Lower Shore, we do so with a sense of enthusiasm and confidence. We will continue to expand our services and make improvements to the association’s technology, products and services to meet our customers’ needs while being safe and profitable for the association.
We enter 2017 with 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 members, our valued customers for their confidence and support in First Shore Federal.