A Letter to Our Shareholders
From President Dean K. Young
Changes were an ongoing theme during the 2019 year. Whether those changes involved executive management, technology, products and services, or community reinvestment, our commitment to increase shareholder value has never been more evident. The reported consolidated financial results of Romney Bankshares, Inc. and its subsidiary, The Bank of Romney, provided record highs in net income, assets, and shareholder return.
Consolidated net income broke the three million dollar barrier for the first time in our history. Net income of $3,309,111 was an increase of $516,940 or 18.5% over the $2,792,171 net income for 2018. The increase in net income can be largely attributed to the $668,620 increase in net interest income, an over $250,000 increase in security gains, a reduction of $140,000 in benefit costs, and a decrease of $100,000 in loan loss and other real estate costs.
Our net loan balances increased by over $9.2 million or 4.4% to a record breaking end of year level of $218,480,000 over the 2018 balance of $209,230,644. Total consolidated asset levels surpassed the 300 million dollar point during parts of 2019, but settled at the year ending record amount of $295,142,612, which is a modest $7,384,625 or 2.6% higher than the prior year asset level.
Shareholder returns during 2019 have been diverse in nature as well as exceptional in substance. The cash dividend rate paid in 2019 of $1.40 equaled the dividend rate paid in 2018. In addition, a special 5% stock dividend was declared by the board during the 4th quarter of 2019. Each shareholder received one share of Romney Bankshares, Inc. stock for every 20 shares owned. The cash dividend, stock dividend, and price increase from $55 to $58 per share by year-end represented multiple benefit rewards for our shareholders during 2019.
The Bank of Romney Apple Club checking product has been a popular product for decades. Apple Club accounts were improved without any additional cost to club members. All current benefits are still provided including popular benefits such as free checks and accidental life insurance. An added benefit of cell phone protection was provided for all apple club accounts as an enhancement during 2019.
The Bank of Romney has been approved to participate in the Mortgage Partnership Finance (MPF) Program through the Federal Home Loan Bank of Pittsburgh. The MPF Program allows the Bank to offer mortgage rates comparable to those offered in the Secondary Market to qualified loan customers, while retaining the servicing for those mortgages. Our loan officers are excited to offer this new product knowing our customers will continue to receive the high level of customer service they expect and deserve, for the life of their loan, from their community bank.
For an excess of 30 years, The Bank of Romney has maintained an outstanding rating from our regulators for the Community Reinvestment Act (CRA). A CRA outstanding rating is an accomplishment few banks receive, so to receive an outstanding rating over 30 years straight shows how The Bank of Romney values our customers and local community, especially over such an extended period of time. The rating involves investment in the infrastructure of our community, economic involvement and providing opportunities to low and moderate income individuals. During 2019, we took a large step within the community by promising to contribute over 50% to the renovation and implementation of the football field and track at Hampshire High School. The turf field and track project is designed with community use in mind as well as hosting sporting events for any of our county schools.
The $841,000 donation from The Bank of Romney is to occur over a 15-year period and will be combined with continuous donations from many generous individuals and local businesses. The renovations are scheduled to begin in the summer of 2020 to allow the enjoyment and use of the facility as soon as possible.
As reported last year, the planned retirement of Lawrence E. Foley occurred as of April 30, 2019. President Foley represented only the fifth president in the 130 plus year history of The Bank of Romney. Former Executive Vice President and CFO, Dean K. Young began a seamless transition into his new role as the sixth President and CEO on May 1, 2019, as planned by the Bank’s Board of Directors.
As of May 1, 2019, Rebecca Ward, the former Controller and longtime talented accountant of The Bank of Romney, has capably filled the role of CFO. Becky has a degree in Accounting from Shepherd College and began her banking career in 1993 in various back office roles. She moved into a financial analysis position in 1999 and became Controller in 2011. She has long been an instrumental part of the Corporation’s success and will continue her leadership in an elevated role well into the future.
Political decisions and government actions for our country during 2020 will play a role in our banking industry and especially in our economy. Rate changes fluctuate regularly in the wake of decisions made on a global scale or even with a threat of a contagious virus. Federal Reserve predictions over a year ago indicated slow rising rates, but the actual occurrence was slowly declining rates during 2019. The Bank of Romney remains well positioned in any rate change environments with our balanced asset/liability management. Our efforts will continue to focus on our community, the customers we serve, and our employees who are our most valued assets. We appreciate our shareholders and always strive to provide a consistent return for their dedicated support.