A partnership in growth.
TABLE of CONTENTS
1
2
3
Financial Highlights
Letter from the President & Chair
Partnership, Growth & Community
10
Investment & Trust
LLEDYARD NATIONAL BANK’S SENIOR MANAGEMENT TEAM
Gregory D. Steverson, Executive Vice President & Chief Financial Officer
Seated, from left:
Kathryn G. Underwood, President & CEO
14 Management’s Financial Discussion
Back, from left:
17
Independent Auditors’ Report
Darcy D. Rogers, Senior Vice President & Chief Operations Officer
18 Balance Sheets
19
Statement of Condition
22 Notes to Financial Statements
38 Directors, Officers, Boards & Staff
Photography by Jon Gilbert Fox
Martha P. Candon, Senior Vice President & Senior Retail Banking Officer
D. Rodman Thomas, Senior Vice President & Senior Trust Officer
William B. Hamilton, Jr., President, Investment & Trust Services Division
Darlene E. Romano, Senior Vice President, Human Resources & Finance
Mark S. Clough, Senior Vice President & Senior Loan Officer
M
MISSION STATEMENT:
We at Ledyard National Bank are committed to being the financial
services institution of choice in each of the markets we serve by
providing our customers with outstanding products and services.
In order to accomplish this, we must have dedicated and capable
employees for whom we will provide a challenging and rewarding
work environment. As a direct result, we will provide our
shareholders with consistent and superior returns over the long term.
FINANCIAL HIGHLIGHTS
Years-ended December 31,
(dollars in thousands, except per share data)
Financial Condition Data
Assets
Investments
Net Loans, including loans held for sale
Deposits
Federal Home Loan Bank Advances
Shareholders’ Equity
Operating Data
Net Interest Income
Provision for Loan Loss
Non-interest Income
Non-interest Expense
Income Taxes
Net Income
Other Data
Earnings per Share, basic
Dividends per Share
Dividend Payout Ratio
Book Value per Share
Shares Outstanding
Return on Average Assets
Return on Average Equity
Equity to Asset Ratio
Allowance for Loan Losses to Total Loans
2006
2005
2004
2003
2002
$ 268,869
65,467
175,189
227,614
11,981
21,849
$
$
$
$
10,053
325
5,330
10,452
1,593
3,013
3.03
0.91
30%
21.96
994,895
1.20%
14.56%
8.13%
1.35%
$ 242,761
61,005
157,406
205,710
10,493
19,716
$
$
$
$
9,631
340
4,864
9,767
1,578
2,810
2.84
0.85
30%
19.92
990,679
1.17%
14.90%
8.12%
1.31%
$ 233,203
43,030
157,047
203,008
5,000
17,840
$
$
$
$
9,409
525
4,067
9,237
1,384
2,330
2.37
0.73
31%
18.15
983,519
1.06%
13.58%
7.66%
1.53%
$ 320,230
48,278
218,869
271,142
3,214
27,271
$
$
$
$
12,099
525
6,282
11,894
2,176
3,787
3.75
1.08
29%
26.99
1,010,246
1.31%
14.66%
8.52%
1.27%
$ 285,495
60,601
194,893
240,828
8,857
24,391
$
$
$
$
11,486
780
5,834
11,354
1,748
3,439
3.43
0.98
29%
24.16
1,009,746
1.25%
14.85%
8.54%
1.21%
1
Kathryn G. Underwood
President & CEO, Ledyard National Bank
Dennis E. Logue
Chair, Ledyard National Bank
TO OUR FELLOW OWNERS, OUR LOYAL CUSTOMERS and MEMBERS OF OUR COMMUNITIES:
TWe are pleased to report that 2006 was
another record-breaking year for Ledyard
National Bank. We achieved all-time highs
in total net income, earnings per share,
total assets, and book value per share. In
addition, our Investment & Trust Services
Division set new highs in assets under man-
agement, revenue, profit margin, and profits.
These and other positive results – many of
which are detailed elsewhere in this report
– were achieved in spite of an uncertain
environment for the banking industry.
Our goal continues to be to build share-
holder value by providing superior services in
all the communities we serve now and in the
future. We are placing our emphasis on both
growing our businesses organically in our
existing markets and seeking opportunities to
expand into places not yet served by us.
Our strategic plan calls for continuing
emphasis on providing awe-inspiring
service to our clients. This will include
enhancing our technology to provide
greater customer security and convenience
and expanding our product offerings so
as to meet all our customers’ banking
needs. We will also focus on increased
employee training to ensure that, in
assisting and advising our clients, we are
providing them with the best solutions to
their planning needs in an increasingly
complex financial environment.
A significant step in 2006 toward meeting
those goals was the planning and ground-
breaking for the new headquarters for our
Investment & Trust Services Division.
This new facility in downtown Hanover
will greatly enhance our efforts to expand
our product and service offerings for
existing clients and gain the business of
many more individuals and organizations
in and beyond our current markets. The
grand opening for this wonderful new
building is scheduled to occur in the
fourth quarter of 2007.
This major step is a key part of our effort
to continue double-digit growth in our
financial services business through our
current investment and trust programs and
new products and services. These and other
activities will ensure we remain innovative
in the businesses and markets we deem
critical to our future success.
As we have previously reported, we
arranged in 2006 for Ledyard National
Bank stock to be bought and sold through
the NASD-sanctioned “Pink Sheets"
(www.pinksheets.com) under ticker symbol
LYNA. The national market for our stock
will result in increased liquidity for our
present and future shareholders.
During 2006, Gregory D. Steverson
rejoined our senior management team as
Executive Vice President and Chief
Financial Officer. In addition to applying
his considerable financial talents to the
operation of our bank, Greg will be
coordinating our efforts to enhance our
shareholder communications in a number
2
of ways, including increasing the
information available to shareholders
and others on Ledyard’s website. If you
would like to be added to our periodic
e-mail communications, e-mail Greg
at Greg.Steverson@Ledyardbank.com.
Greg is also playing an active role in our
efforts to raise our visibility and market
share in the New London area where he
and his family reside.
We want to thank you for placing your
trust in all of us here at your bank as we
move forward to address future challenges
and opportunities. We will do all in our
power to continue to be deserving of that
trust. While circumstances change, our
goal remains as always: to build value for
our shareholders by providing our present
and future customers with “banking the
way it should be.”
We look forward to seeing many of you at
our Annual Meeting on April 13th and
answering any questions you may have for
us at that time.
KATHRYN G. UNDERWOOD
President & Chief Executive Officer
DENNIS E. LOGUE
Chair
LWe have a saying at Ledyard:
LEDYARD NATIONAL BANK: PARTNERSHIP, GROWTH and COMMUNITY
Our goal is to develop further
“It’s not just banking. It’s banking
partnerships with more people who
the way it should be.” As we celebrate
will discover the benefits of working
our sixteenth anniversary in 2007,
with Ledyard. This means that we will
these words have even greater meaning
work even harder for our existing
with all they imply. They are an
customers. We will always strive
embodiment of our mission to deliver
to "raise the bar" to ensure that
community banking that far exceeds
expectations are continually exceeded
what is expected.
and that new, higher standards are
consistently set.
We firmly believe that our growth
is a direct result of staying true to
We think that the people and
that mission. By building trusted
accompanying photographs featured
relationships. By offering exceptional
in this report will illustrate that
products that evolve based on the
Ledyard is more than just a bank. We
needs of our customers and the
are partners within the community
community. By delivering the kind
who share the same hopes and dreams
of extraordinary personalized service
for success. That is, after all, banking
that we, as customers, would want.
the way it should be.
“
Our mission is to deliver
the extraordinary personalized
service that we, as customers,
would want.
”
3
PICTURED ABOVE:
(from left to right) Martha Richardson of Stave Puzzles;
Gail Broughton, Assistant Vice President and Regional
Manager of Ledyard’s Lyme and Norwich offices;
and Steve Richardson, aka Stave’s “Owner and
Chief Tormentor” surrounded by busy “elves”
in the Stave Puzzles workshop.
4
“
Ledyard is working hard to make
sure that all the financial pieces fit
perfectly together...
”
SSTAVE PUZZLES COUNTS on LEDYARD to FIT the PIECES TOGETHER
Steve Richardson’s official title is “Owner and Chief Tormentor” at Stave Puzzles in Wilder, Vermont.
He and his wife and business partner, Martha Richardson, have been handcrafting delightful and diabolically
clever wooden puzzles since 1974. They have gained a fan base around the world, including such luminaries
as Her Majesty Queen Elizabeth and Bill Gates.
Stave Puzzles has grown over the years as a result of staying true to their craft and by never
compromising on quality. Their designs are developed with hand-drawn illustrations, and each piece
is meticulously hand-cut from fine hardwoods on a saw with delicate blades. Stave’s web site describes
their profession as “world class service from down-home people,” a sentiment with which many of their
customers agree.
According to Steve and Martha, this is the same philosophy they had hoped to find in a bank. When
Ledyard opened an office in Norwich, Vermont, they were definitely intrigued. “A small business like ours needs
a bank that understands who we are,” says Steve. Ultimately, when they began working with Gail Broughton
and her knowledgeable staff in Norwich, this is exactly the kind of bank they discovered. Gail coordinates a team
of experts who work together to deliver financial solutions tailored specifically to their customers.
Today, the Richardsons count on Ledyard for all their business and personal banking needs, including
investment and retirement planning. It’s a true partnership between local, community-based people. Ledyard
is working hard to make sure that all the financial pieces fit perfectly together for them and for their
business – and that the solution is always easy.
5
PICTURED ABOVE:
Terry Appleby, General Manager of the Co-op Food Stores
in Hanover and Lebanon, surrounded by his favorite produce.
6
“
It’s all about working together.
It’s all about community.
”
TTHE CO-OP and LEDYARD: IT’S ALL ABOUT COMMUNITY
The Hanover Consumer Co-operative Society dates back to 1936. Then a small group of
community residents pooled their orders for produce and arranged for discounts on gasoline and fuel oil with local
suppliers for the benefit of the entire group. Seventy years later, the Co-op has grown to over 30,000 members
and operates the Co-op Food Stores in Hanover and Lebanon, as well as an automotive service center in Hanover.
According to General Manager Terry Appleby, the Co-op maintains strong relationships with its
members, customers, local vendors and the community. “Our strong ties to the local community fit so well with
Ledyard’s role as a community bank. Doing business with them was a natural,” says Terry. The Co-op has been
banking with Ledyard almost since the Bank’s founding for everything from checking, money market and
overnight investment accounts to business loans and lines of credit.
Since the Co-op generates a high volume of sales, they also require a loan officer who understands their
needs and takes a proactive approach. Mike Sandoe, Vice President and Commercial Loan Officer for Ledyard,
works closely with Terry and his team to deliver just that. Terry adds, “Mike regularly checks in to see how
Ledyard can help our business and is quick to follow up when we have questions or requests.”
Mike believes that Ledyard is uniquely suited to help the Co-op achieve its goals because both
organizations are deeply committed to the communities and the people they serve. It’s a symbiotic relationship
that goes beyond “bottom-line” success. It’s all about working together. It’s all about community.
7
PICTURED ABOVE ON THE FRONT PORCH
OF THE NORWICH INN:
(Seated on the rocking chairs in front) Former Owners
Tim Wilson and Sally Wilson;
(In back, from left to right) Innkeepers Jason Gershon
and Tiffany Gershon; Current Owners Jill Lavin and
Joe Lavin. Also posing nicely for the camera are furry
friends Porter & Mason.
8
“
A lot of hard work was involved to
grow the Inn to 27 rooms, a fine
restaurant and a renowned brewpub.
Ledyard was there for them every
step of the way.
”
TTHE NORWICH INN and LEDYARD WELCOME NEW OWNERS to the NEIGHBORHOOD
When Tim and Sally Wilson, then the owners of The Norwich Inn in Norwich, Vermont, contacted Kevin
Raleigh, they knew a good banker when they met one. Tim was a former banker, and he and Sally had known
Kevin, now Senior Vice President and Senior Commercial Loan Officer at Ledyard, for years. The couple needed
a bank that could help them grow their business into one of Vermont’s most popular historic inns. That Ledyard’s
Norwich office is located directly across the street was just icing on the cake.
Unlike a hotel, an inn is more personal, and Tim and Sally made every guest feel like family. A lot of
hard work was involved to grow the Inn to 27 rooms in three historic buildings (the main building dates back to
1890), a fine restaurant and a renowned brewpub. Ledyard was there for them every step of the way.
Joe Lavin had been a guest many times at The Norwich Inn when he visited his son, a Dartmouth
student. He and wife Jill loved staying at the Inn – so much so, that Joe, a former Marriott International
Executive Vice President, made an offer to buy the business from Tim and Sally. It took a bit of convincing,
and after much thought, the Wilsons agreed.
Joe, along with partner Steve Barrett, wanted to maintain the high standards and fine reputation
of the Inn. They also wanted a knowledgeable, full-service bank that thoroughly understood the nuances of
their business. Whom did they turn to for financing? Kevin Raleigh and Ledyard. Joe recognized the
importance of Ledyard’s ties to the Inn and to the community and found that the entire financing process
couldn’t have been easier.
Today, innkeepers Jason and Tiffany Gershon are carrying on The Norwich Inn tradition of fine
hospitality, making their guests feel at home. They, in turn, feel quite at home at their bank right across Main
Street where their dog, Mason, always gets a treat.
9
William B. Hamilton, Jr.
President,
Investment & Trust Services Division
ITo Our Shareholders:
INVESTMENT & TRUST SERVICES
Ledyard’s Investment & Trust Services
1. We have had very strong investment
Our new facility will include expanded
Division had an outstanding year in 2006.
results.
Our growth and financial performance
have been extraordinary. As of December 31,
2006, the Division held assets with an
aggregate market value of $665 million.
2. We provide individualized investment
planning with a careful eye toward future
income needs, including retirement.
client meeting areas, safe deposit boxes,
an ATM, and ample on-site parking.
We believe that our new headquarters
will be further confirmation of our
dedication to our present and future
This represents an increase of $80 million,
3. We help our clients coordinate their
clients and our commitment to the
or 13.7%, since the end of 2005. This
financial, tax and estate planning.
communities we have the pleasure and
growth was due to a strong flow of new
accounts and stock market appreciation.
The Division's revenue was 15.4%
greater than in 2005, and our net pre-tax
profit in 2006 exceeded our 2005 result
by an impressive 37.9%.
I believe our growth can be attributed
to several key factors:
4. We build warm, long-term relation-
privilege to serve.
ships with our clients – relationships
We in the Investment & Trust Services
that can be especially important to
Division are very proud of our strong
surviving spouses, children and
performance in 2006, and we look
grandchildren.
forward to contributing to Ledyard’s
In late 2006, we announced that our
continued success.
Division will be relocating its headquarters
Thank you for your support.
in the fourth quarter of 2007 to a beautiful
new building currently under construction
at 2 Maple Street in downtown Hanover.
William B. Hamilton, Jr.
President,
Investment & Trust Services Division
10
LLedyard’s Investment & Trust
LEDYARD INVESTMENT and TRUST SERVICES
accurate and comprehensive record
Services Division offers a full com-
keeping, periodic statements, and
plement of investment management,
a comprehensive annual summary
fiduciary and custody services.
of tax information.
As investment managers, we help our
We offer both prospective and current
clients define their investment goals,
clients an unusual and powerful
risk tolerance and time horizon. We
investment tool: a comprehensive
help establish investment strategy,
review of a prospective or current
portfolio design and asset allocation.
client’s total investment picture.
We also provide continuing portfolio
For the prospective client, this
management, including periodic
review represents an excellent first
meetings with account officers.
step toward establishing a successful
As corporate fiduciary, we serve as
trustee or co-trustee for revocable
trusts, irrevocable trusts and Individual
Retirement Accounts. As custodian,
we provide securities safekeeping,
working partnership with our
organization. For the current client,
this review represents a basis for
careful, strategic coordination across
multiple investment accounts.
ASSETS UNDER MANAGEMENT
or CUSTODY
(dollars in thousands)
GROSS REVENUE
(dollars in thousands)
$700,000
600,000
500,000
400,000
300,000
200,000
100,000
$4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
02
03
04
05
06
02
03
04
05
06
11
PICTURED ABOVE:
Chandler and Debra Perkins enjoying the peaceful
tranquility of their New London home along with
their trusty companion, Tucker.
12
“
The trust that brings peace of mind
over the long term is the most
important benefit we can provide
at Ledyard.
”
CCHANDLER and DEBRA PERKINS PLACE THEIR TRUST in LEDYARD
To say that Debra and Chandler Perkins and their extended family are connected to their community is an
understatement. The property where the Perkins have their home in New London, New Hampshire, has been in
the family since 1907. A cottage was built on the spot in 1935. Chandler and Debra also founded the New London
Agency, now the town’s largest and best-known real estate and insurance agency, celebrating its 50th anniversary.
The Perkins certainly understand financial matters, having grown a successful business that their
children now operate. Chandler Perkins also served on the Board of New London Trust where he met Bill
Hamilton, now President of Ledyard’s Investment & Trust Services Division with an office in New London –
another connection.
“They know our family and make the family part of the planning,” says Chandler about Bill, J.T.
Underwood, Jennifer Goin and the Ledyard Investment & Trust staff. That personal connection is important to
them. Equally important, Ledyard has a high level of expertise along with the ability to help them understand the
entire process.
Debra and Chandler say it gives them a good feeling to know that they have someone whom they can trust
to manage their interests. That trust brings peace of mind over the long term, and that is the most important
benefit we can provide at Ledyard.
13
Gregory D. Steverson,
Executive Vice President
& Chief Financial Officer
MReview of Financial Statements
MANAGEMENT’S FINANCIAL DISCUSSION
The discussion and analysis that follows
focuses on the factors affecting the Bank’s
financial condition at December 31, 2006
and 2005 and its results of operations for
the years ended December 31, 2006 and
2005. The Financial Statements and Notes
to the Financial Statements should be read
in conjunction with this review.
Statement of Income
Net income was $3,786,919, or $3.75 per
share for the twelve months ended 2006 as
compared to $3,438,532, or $3.43 per share
for 2005, an increase of $348,387, or 10.13%.
Increased net interest income and higher
Interest and fees on loans totaled
$79,290, or 11.34% for the year ended
$14,185,722 for the year ended December
December 31, 2006 totaling $778,779 as
31, 2006, as compared to $11,523,247 for
compared to $699,489 at December 31,
2005. This increase of $2,662,475, or
2005. This difference was due primarily to
23.11%, was due to an increase in loan
the increase in borrowings from securities
balances and increases in the prime rate
sold under repurchase agreements.
and other rates, which had a positive
impact on adjustable rate loans and resulted
in an overall increase in the yields on
loans. Investment income for the year
ended December 31, 2006, totaled
$2,820,087 as compared to $2,580,510 for
2005, an increase of $239,577, or 9.28%.
The increase was due primarily to higher
average balances in fed funds sold and
certificates of deposit.
During 2006, the Bank added $525,000 to
its provision for loan losses and realized
net charge-offs of $124,234, resulting in
an allowance for loan losses totaling
$2,784,125 on December 31, 2006, or
1.27%, of total loans. The determination
of an appropriate level of allowance for
loan losses (the “allowance”), and subsequent
provision for loan losses, which would
affect earnings, is based on management’s
Investment & Trust Services Division revenue
The Bank’s interest expense on deposits was
judgment of the adequacy of the allowance
accounted for the majority of the change.
$4,127,673 for the year ended December
based on analysis of various economic factors
Net interest income before the provision for
loan loss totaled $12,099,357 for the year
ended December 31, 2006, as compared to
$11,486,166 for the year ended December
31, 2005. The increase of $613,191 or
5.34% was primarily attributable to an
increase in interest income on loans.
31, 2006, as compared to $1,918,102 for
and review of the Bank’s loan portfolio,
the year ended December 31, 2005, an
which may change due to numerous factors.
increase of $2,209,571. This increase was
Non-performing loans are examined on an
the result of rising rates, as well as increases
individual basis to determine the estimated
in deposit volumes, which affected the
probable loss on these loans. In addition,
cost of deposits, primarily money market
the ongoing evaluation process includes
accounts and time deposits. Interest
a formal analysis of the allowance each
expense on borrowed funds increased
quarter. Management believes that the
14
TOTAL ASSETS
(dollars in thousands)
NET LOANS
including loans held for sale
(dollars in thousands)
TOTAL DEPOSITS
(dollars in thousands)
$350,000
300,000
250,000
200,000
150,000
100,000
50,000
$350,000
300,000
250,000
200,000
150,000
100,000
50,000
$350,000
300,000
250,000
200,000
150,000
100,000
50,000
02
03
04
05
06
02
03
04
05
06
02
03
04
05
06
MANAGEMENT’S FINANCIAL DISCUSSION (continued)
allowance at December 31, 2006 was
Financial Condition
maturities and paydowns of available-
appropriate given the current economic
conditions in the Bank’s service area.
At year-end, total assets were $320,229,558
compared to $285,495,434 at December
for-sale securities and held-to-maturity
securities totaling $20,114,484.
Non-interest income totaled $6,282,237 in
31, 2005, an increase of $34,734,124, or
The Bank provides loans to customers
2006 as compared to $5,834,064 in 2005,
12.17%. The change in assets consisted
primarily located within its geographic
an increase of $448,173, or 7.68%. Income
primarily of an increase of $23,975,934 in
market area. Net loans, including loans
from the Bank’s Investment & Trust
net loans, including loans held for sale and
held for sale, totaled $218,868,531 at
Services Division totaled $4,410,810, up
by a $13,172,126 increase in fed funds
December 31, 2006, a $23,975,934, or a
from $3,821,071 in 2005, an increase of
sold, certificates of deposit and investment
12.30% increase from a year ago. This
$589,739, or 15.43%. This increase was
securities (“investments”).
reflects the strong loan growth experienced
primarily attributable to increases in assets
under management and market conditions.
Service fees decreased slightly by $38,454
as the Bank continued to see growth in its
free checking NOW account product.
The Bank maintains investments in fed
funds sold, certificates of deposit and
in the commercial and residential real
estate loan portfolios.
investment securities in order to diversify
Commercial loans consist of (i) loans
its revenue, as well as to provide interest
secured by various corporate assets,
rate and credit risk diversification. These
(ii) loans to provide working capital in
Non-interest expense totaled $11,894,164
investments also provide for liquidity and
the form of secured and unsecured lines
for 2006 as compared to $11,353,708 in
funding needs. As mentioned above, total
of credit, and (iii) commercial real estate
2005, an increase of $540,456, or 4.76%.
investments increased $13,172,126, or
loans secured by income-producing
Salaries and benefits expense increased as
19.26%. This increase consisted of
commercial real estate. The Bank focuses
the Bank continued to realize expenses
increases to fed funds sold of $2,870,426,
on lending to financially sound small-
associated with its management reorgani-
certificates of deposit of $22,000,000,
and medium-sized business customers
zation. Occupancy and equipment
securities available for sale of $6,706,810
within its geographic marketplace. Total
decreased slightly, and other general and
and a decrease in securities held to maturity
commercial loans increased by $6,905,425,
administrative expenses increased by 3.68%
of $18,405,110. During 2006, the Bank
or 5.64%, during 2006.
due to various third-party expenses.
purchased $8,318,601 of available-for-sale
securities and realized proceeds from
15
BOOK VALUE
PER SHARE
(in dollars)
NET INCOME
(dollars in thousands)
EARNINGS PER SHARE
(in dollars)
$30
25
20
15
10
5
$4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
$4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
02
03
04
05
06
02
03
04
05
06
02
03
04
05
06
MANAGEMENT’S FINANCIAL DISCUSSION (concluded)
Residential real estate loans consist of
Deposits continue to represent the Bank’s
the investment portfolio and residential
loans secured by one- to four-family
primary source of funds. In 2006, total
loan portfolio provide a significant amount
residences. The Bank usually retains
deposits increased by $30,314,589, or
of contingent liquidity that could be accessed
adjustable-rate mortgages in its portfolio
12.59% over 2005, ending the year at
in a reasonable time period through sales if
and will generally sell fixed-rate mortgages.
$271,142,194. Comparing year-end
needed. The Bank believes that the level of
Residential real estate loans increased by
balances in 2006 to 2005, demand deposits
liquidity is sufficient to meet current and
$14,099,819, or 20.93%, in 2006. During
increased by $1,663,997, certificates of
future funding requirements.
2006, the Bank sold approximately $19
deposit increased by $12,280,476, money
million of fixed-rate residential mortgage
market and savings accounts increased
loans into the secondary market.
by $25,385,157 and NOW accounts
Consumer loans are originated by the
decreased by $9,015,041.
Shareholders’ equity was $27,270,995 on
December 31, 2006 compared to
$24,391,136 on December 31, 2005, an
increase of $2,879,859. The increase was
Bank for a wide variety of purposes
Borrowings supplement deposits as a
primarily attributable to net income of
designed to meet the needs of its
source of liquidity. In addition to borrowings
$3,786,919 less $1,090,526 in cash
customers. Consumer loans include
from the Federal Home Loan Bank
dividends to the Bank’s shareholders. The
overdraft protection, automobile, boat,
(FHLB), the Bank purchases federal funds,
Bank’s book value on December 31, 2006
recreational vehicles, home equity, and
and sells securities under agreements to
was $26.99 per share based on 1,010,246
secured and unsecured personal loans.
repurchase. Total borrowings were
shares outstanding, an increase of $2.83
Consumer loans increased by $2,555,065,
$20,603,624 at December 31, 2006
per share, or 11.71% from a year earlier.
or 38.23%, in 2006.
compared to $19,116,913 at December 31,
Premises and equipment totaled
$8,644,308 at December 31, 2006 as
compared to $8,878,154 at December 31,
2005. The net decrease of $233,846, or
2.63%, can be attributed to depreciation
during 2006.
2005, an increase of $1,486,711. The
majority of the borrowings were related
to securities sold under agreements to
repurchase followed by advances from
the FHLB. In addition to the liquidity
sources discussed above, the Bank believes
16
I
INDEPENDENT AUDITORS’ REPORT
To the Board of Directors & Shareholders of Ledyard National Bank:
We have audited the accompanying
auditing standards. Those standards
presentation. We believe our audits
balance sheets of Ledyard National Bank
require that we plan and perform the
provide a reasonable basis for our opinion.
as of December 31, 2006 and 2005, and
audit to obtain reasonable assurance
In our opinion, the financial
the related statements of income, changes
about whether the financial statements
statements referred to above present fairly,
in shareholders’ equity and cash flows for
are free of material misstatement. An
in all material respects, the financial
the years then ended. These financial
audit includes examining, on a test basis,
position of Ledyard National Bank as of
statements are the responsibility of the
evidence supporting the amounts and
December 31, 2006 and 2005, and the
Bank’s management. Our responsibility
disclosures in the financial statements.
results of its operations and its cash flows
is to express an opinion on these financial
An audit also includes assessing the
for the years then ended in conformity
statements based on our audits.
accounting principles used and significant
with U.S. generally accepted accounting
We conducted our audits in accor-
estimates made by management, as well as
principles.
dance with U.S. generally accepted
evaluating the overall financial statement
Berry, Dunn, McNeil & Parker
Portland, Maine
February 15, 2007
17
BALANCE SHEETS
December 31, 2006 and 2005
ASSETS
Cash and due from banks
Federal funds sold
Certificates of deposit
Total cash and cash equivalents
Securities available-for-sale
Securities held-to-maturity
Nonmarketable equity securities
Loans held for sale
Loans receivable, net of allowance for loan losses of $2,784,125
in 2006 and $2,383,359 in 2005
Accrued interest receivable
Bank premises and equipment, net
Other assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Demand
NOW accounts
Money market accounts
Savings
Time, $100,000 and over
Other time
Total deposits
Securities sold under agreements to repurchase
Advances from Federal Home Loan Bank
Accrued expenses and other liabilities
2006
2005
$
7,269,808
12,375,208
22,000,000
$
8,735,319
9,504,782
–
41,645,016
18,240,101
19,704,071
27,480,904
1,092,650
1,602,750
12,997,261
45,886,014
1,717,850
862,750
217,265,781
194,029,847
1,081,957
8,644,308
1,712,121
1,099,791
8,878,154
1,783,666
$ 320,229,558
$
285,495,434
$
42,854,164
46,961,342
104,629,163
13,562,961
26,176,118
36,958,446
271,142,194
17,389,539
3,214,085
1,212,745
$
41,190,167
55,976,383
76,624,027
16,182,940
24,352,485
26,501,603
240,827,605
10,259,834
8,857,079
1,159,780
Total liabilities
292,958,563
261,104,298
Commitments and contingencies (Notes 5, 11, 12, 13, 14 and 15)
Shareholders’ equity
Common stock, $1.00 par value; 5,500,000 shares authorized;
1,010,246 and 1,009,746 shares issued and outstanding
in 2006 and 2005, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total shareholders’ equity
The accompanying notes are an integral part of these financial statements.
18
1,010,246
9,279,378
17,066,764
(85,393)
1,009,746
9,214,466
14,370,371
(203,447)
27,270,995
24,391,136
$ 320,229,558
$
285,495,434
STATEMENTS of INCOME
Years Ended December 31, 2006 and 2005
Interest and dividend income
Interest and fees on loans
Investment securities
Other interest-earning assets
Total interest and dividend income
Interest expense
Deposits
Borrowed funds
Total interest expense
Net interest income
Provision for loan losses
2006
2005
$
14,185,722
2,049,556
770,531
$
11,523,247
2,348,439
232,071
17,005,809
14,103,757
4,127,673
778,779
4,906,452
1,918,102
699,489
2,617,591
12,099,357
11,486,166
525,000
780,000
Net interest income after provision for loan losses
11,574,357
10,706,166
4,410,810
1,407,541
463,886
6,282,237
6,385,375
1,884,207
3,624,582
3,821,071
1,445,995
566,998
5,834,064
5,969,382
1,888,213
3,496,113
11,894,164
11,353,708
5,962,430
2,175,511
3,786,919
3.75
3.73
1,009,788
$
$
$
$
$
$
5,186,522
1,747,990
3,438,532
3.43
3.41
1,002,958
Noninterest income
Trust department income
Service fees
Other
Total noninterest income
Noninterest expense
Salaries and employee benefits
Occupancy and equipment
Other general and administrative
Total noninterest expense
Income before income taxes
Income tax expense
Net income
Basic earnings per share
Diluted earnings per share
Weighted average numbers of shares outstanding
The accompanying notes are an integral part of these financial statements.
19
STATEMENTS of CHANGES in SHAREHOLDERS’ EQUITY
Years Ended December 31, 2006 and 2005
BALANCE, DECEMBER 31, 2004
$
994,895 $ 8,951,476 $ 11,916,367 $
(14,081) $ 21,848,657
COMMON
STOCK
ADDITIONAL
PAID-IN
CAPITAL
ACCUMULATED
OTHER
RETAINED COMPREHENSIVE
LOSS
EARNINGS
TOTAL
Comprehensive income
Net income
Change in unrealized loss on interest
rate protection agreement, net
of tax of $10,371
Change in net unrealized appreciation
on securities available-for-sale, net
of tax of $107,921
Total comprehensive income
Cash dividends paid, $0.98 per share
–
–
–
–
–
–
–
–
–
–
3,438,532
–
3,438,532
–
–
20,131
20,131
(209,497)
(209,497)
3,438,532
(189,366)
3,249,166
(984,528)
–
–
( 984,528)
277,841
Stock warrants exercised, 14,851 shares
14,851
262,990
–
BALANCE, DECEMBER 31, 2005
$ 1,009,746 $ 9,214,466 $ 14,370,371 $
(203,447) $ 24,391,136
Comprehensive income
Net income
Change in net unrealized depreciation
on securities available-for-sale, net
of tax of $60,815
Total comprehensive income
Cash dividends paid, $1.08 per share
Fair value of stock warrants vested
during the year
–
–
–
–
–
Stock warrants exercised, 500 shares
500
–
3,786,919
–
3,786,919
–
118,054
118,054
3,786,919
118,054
3,904,973
–
–
–
(1,090,526)
–
–
–
(1,090,526)
56,487
8,925
56,487
8,425
–
–
BALANCE, DECEMBER 31, 2006
$ 1,010,246 $ 9,279,378 $ 17,066,764 $
(85,393) $ 27,270,995
The accompanying notes are an integral part of these financial statements.
20
STATEMENTS of CASH FLOWS
Years Ended December 31, 2006 and 2005
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization
Provision for loan losses
Deferred income tax (benefit) expense
Fair value of stock warrants vested during the year
Decrease (increase) in accrued income receivable
Increase in accrued expenses and other liabilities
Decrease (increase) in other assets
Net (increase) decrease in loans held for sale
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from maturities of securities available-for-sale
Proceeds from maturities and paydowns of securities
held-to-maturity
Purchase of securities held-to-maturity
Net redemption (purchase) of FHLB stock
Purchase of securities available-for-sale
Net increase in loans to customers
Purchase of bank premises and equipment
Net cash used by investing activities
Cash flows from financing activities
Net increase in deposits
Proceeds from long-term FHLB borrowings
Repayment of long-term FHLB borrowings
Net increase in securities sold under agreements
to repurchase
Proceeds from exercise of stock warrants
Cash dividends paid on common stock
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplementary cash flow information:
Interest paid on deposits and borrowed funds
Income taxes paid
The accompanying notes are an integral part of these financial statements.
21
2006
2005
$
3,786,919
$
3,438,532
709,015
525,000
(163,200)
56,487
17,834
52,965
173,930
(740,000)
4,418,950
554,223
780,000
53,900
–
(157,247)
4,495
(497,238)
832,218
5,008,883
1,776,694
2,156,552
18,337,790
–
625,200
(8,318,601)
(23,760,934)
(393,882)
(11,733,733)
30,314,589
2,000,000
(7,642,995)
7,129,705
8,925
(1,090,526)
30,719,698
20,433,674
(12,960,555)
(7,149)
(4,973,848)
(21,316,049)
(200,024)
(16,867,399)
13,213,955
2,000,000
(5,123,772)
3,989,623
277,841
(984,528)
13,373,119
23,404,915
1,514,603
18,240,101
16,725,498
$
41,645,016
$
$
4,817,250
2,355,371
$
$
$
18,240,101
2,579,413
1,326,000
NOTES to FINANCIAL STATEMENTS
December 31, 2006 and 2005
NATURE OF BUSINESS
Ledyard National Bank (the Bank) is headquartered in Norwich, Vermont and provides a variety of financial services to individual
and business customers through its office locations in central New Hampshire and Vermont. The Bank’s principal business activity
is retail and commercial banking and investment and trust services which are provided through its seven branch locations in New
Hampshire and Vermont.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the Bank are in conformity with U.S. generally accepted accounting principles and general practices with-
in the banking industry. The following is a description of the more significant policies.
Use of Estimates
In preparing financial statements in conformity with U.S. generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance
for loan losses and the valuation of other real estate owned. In connection with the determination of the allowance, management
obtains independent appraisals for collateral securing significant loans. Accordingly, the ultimate collectibility of a substantial por-
tion of the Bank’s loan portfolio is susceptible to changes in local market conditions.
While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based
on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodi-
cally review the Bank’s allowance for losses on loans. Such agencies may require the Bank to recognize additions to the allowance
based on their judgments about information available to them at the time of their examination.
Significant Group Concentrations of Credit Risk
The Bank’s operations are affected by various risk factors, including interest rate risk, credit risk, and risk from geographic
concentration of lending activities. Management attempts to manage interest rate risk through various asset/liability management
techniques designed to match maturities of assets and liabilities. Loan policies and administration are designed to provide assurance
that loans will only be granted to creditworthy borrowers, although credit losses are expected to occur because of subjective factors
beyond the control of the Bank. Although the Bank has a diversified loan portfolio and economic conditions are stable, most of its
lending activities are conducted within the geographic area where it is located. As a result, the Bank and its borrowers may be
especially vulnerable to the consequences of changes in the local economy. In addition, a substantial portion of the Bank’s loans are
secured by real estate.
Cash and Cash Equivalents
For purposes of the statements of cash flows, cash and cash equivalents include cash and due from banks, federal funds sold and
certificates of deposit.
The Bank’s due from bank accounts, at times, may exceed federally insured limits. The Bank has not experienced any losses in such
accounts. The Bank believes it is not exposed to any significant risk on cash and cash equivalents.
Investment Securities
Debt securities that management has the positive intent and ability to hold to maturity are classified as held-to-maturity and carried at
cost, adjusted for amortization of premiums and accretion of discounts over the period to call or maturity using methods approximating
the interest method. Securities not classified as held-to-maturity, including equity securities with readily determinable fair values,
22
NOTES to FINANCIAL STATEMENTS
December 31, 2006 and 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Investment Securities (concluded)
are classified as available-for-sale and are carried at fair value. Nonmarketable equity securities, consisting of stock in the Federal
Home Loan Bank and Federal Reserve Bank, are carried at cost and evaluated for impairment. Unrealized gains and losses on
securities available-for-sale are reported as a net amount in other comprehensive income or loss, net of tax. Cost of securities is
recognized using the specific identification method.
Loans Held for Sale
Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate.
Net unrealized losses, if any, are recognized through a valuation allowance by charges to income.
Loans
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are stated at the
amount of unpaid principal, reduced by deferred loan fees and an allowance for loan losses.
Loans past due 30 days or more are considered delinquent. Management is responsible to initiate immediate collection efforts to
minimize delinquency and any eventual adverse impact on the Bank.
In general, consumer loans will be charged off if the loan is delinquent for 120 consecutive days. Commercial and real estate loans
are charged off in part or in full if they are considered uncollectible.
Loans considered to be impaired are reduced to the present value of expected future cash flows or to the fair value of collateral, by
allocating a portion of the allowance for loan losses to such loans. If these allocations cause the allowance for loan losses to require
an increase, such increase is reported as provision for loan losses. Small balance homogeneous loans are collectively evaluated
for impairment.
Loan interest income is accrued daily on the outstanding balances. Accrual of interest is discontinued when a loan is specifically
determined to be impaired or management believes, after considering collection efforts and other factors, that the borrower’s
financial condition is such that collection of interest is doubtful. Any unpaid interest previously accrued on those loans is reversed
from income. Interest income is generally not recognized on specific impaired loans unless the likelihood of further loss is remote.
Interest payments received on such loans are generally applied as a reduction of the loan principal balance. Interest income on other
nonaccrual loans is recognized only to the extent of interest payments received. Loans are returned to accrual status when all the
principal and interest amounts contractually due are brought current and future payments are reasonably assured.
Loan origination and commitment fees and certain direct origination costs are being deferred and the net amount amortized as an
adjustment of the related loan’s yield. The Bank is generally amortizing these amounts over the contractual life
Allowance for Loan Losses
The allowance for loan losses is maintained at a level which, in management’s judgment, is adequate to absorb credit losses inherent
in the loan portfolio. The amount of the allowance is based on management’s evaluation of the collectibility of the loan portfolio,
including the nature of the portfolio, credit concentrations, trends in historical loss experience, specific impaired loans, and economic
conditions. Allowances for impaired loans are generally determined based on collateral values or the present value of estimated cash
flows. The allowance is increased by a provision for loan losses, which is charged to expense, and reduced by charge-offs, net of recoveries.
Credit Related Financial Instruments
In the ordinary course of business, the Bank has entered into commitments to extend credit, including commitments under credit
card arrangements, commercial letters of credit and standby letters of credit. Such financial instruments are recorded when they
are funded.
23
NOTES to FINANCIAL STATEMENTS
December 31, 2006 and 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Other Real Estate Owned
Real estate properties acquired through or in lieu of loan foreclosure are initially recorded at the lower of the Bank’s carrying amount
or fair value less estimated selling cost at the date of foreclosure. Any write-downs based on the asset’s fair value at the date of
acquisition are charged to the allowance for loan losses.
After foreclosure, these assets are carried at the lower of their new cost basis or fair value less cost to sell. Costs of significant
property improvements are capitalized, whereas costs relating to holding property are expensed. Valuations are periodically
performed by management, and any subsequent write-downs are recorded as a charge to operations, if necessary, to reduce the car-
rying value of a property to the lower of its cost or fair value less cost to sell.
Bank Premises and Equipment
Land is carried at cost. Bank premises and equipment are stated at cost, less accumulated depreciation. The provision for depreciation
is computed over the estimated useful life of the related asset, principally by the straight-line method. Improvements to leased
property are amortized over the lesser of the term of the lease or life of the improvements.
Income Taxes
The Bank recognizes income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are
established for the temporary differences between the book bases and the tax bases of the Bank’s assets and liabilities at enacted tax
rates expected to be in effect when the amounts related to such temporary differences are realized or settled. Adjustments to the
Bank’s deferred tax assets are recognized as deferred income tax expense or benefit based on management’s judgment relating to the
realizability of such assets.
Earnings Per Share
Basic earnings per share data is computed based on the weighted average number of the Bank’s common shares outstanding during
the year. Potential common stock is considered in the calculation of weighted average shares outstanding for diluted earnings per
share, and is determined using the treasury stock method.
Stock Warrant Plans
In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 123
(revised 2004), Share-Based Payment. SFAS No. 123(R) requires entities issuing stock options in exchange for services to measure the
fair value of the options at the grant date and to recognize the fair value of those options as expense, generally over the period in
which they vest. On January 1, 2006 the Bank adopted the provisions of SFAS No. 123(R) using a modified prospective application.
Using this application, SFAS No. 123(R) applies to options granted or modified in periods beginning after December 15, 2005.
Additionally, compensation cost for the portion of outstanding options for which requisite service has not been rendered as of the
effective date shall be recognized as the service is rendered on or after the effective date. The proforma effect of expensing stock
warrants in 2005 would have been to reduce net income by $30,077.
Trust Assets and Fees
Assets held by the trust department, other than trust cash on deposit at the Bank, are not included in these financial statements
because they are not assets of the Bank. Trust fees are recorded on the accrual basis.
Derivative Financial Instruments
The Bank uses an interest rate protection agreement (cap) as a cash flow hedge to eliminate the cash flow exposure of interest rate
movements on borrowings. The premium paid for the cap is amortized over its life. Any cash payments received are recorded as an
24
NOTES to FINANCIAL STATEMENTS
December 31, 2006 and 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (concluded)
Derivative Financial Instruments (concluded)
adjustment to net interest income. The cap is designated and qualifies as a cash flow hedge, and thus is recorded at fair value. Changes
in fair value are recorded as a component of comprehensive income. The notional amount of the Bank’s cap was $5,000,000 and the
fair value was $0 at December 31, 2005. The cap matured in 2006.
Comprehensive Income
Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although
certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities and the interest rate
protection agreement, are reported as a separate component of the equity section of the balance sheet, such items, along with net
income, are components of comprehensive income.
Reclassifications
Certain amounts in the 2005 financial statements have been reclassified to conform to the 2006 presentation.
2. CASH AND DUE FROM BANKS
The Bank is required to maintain certain reserves of vault cash or deposits with the Federal Reserve Bank. The amount of this
reserve requirement, included in cash and due from banks, was approximately $138,000 and $385,000 as of December 31, 2006
and 2005, respectively.
3. SECURITIES
The amortized cost and fair value of securities, with gross unrealized gains and losses, follow:
Securities Available-for-Sale
U.S. Government agencies and corporations
Mortgage-backed securities
State and municipal
Total securities available-for-sale
Securities Held-to-Maturity
U.S. Government agencies and corporations
State and municipal
Collateralized mortgage obligations
Mortgage-backed securities
2006
AMORTIZED
COST
GROSS
UNREALIZED
GAINS
GROSS
UNREALIZED
LOSSES
FAIR
VALUE
$
$
$
$ 9,093,883
10,111,278
628,293
$ 19,833,454
$ 1,982,429
2,629,817
853,923
22,014,735
23,863
42,454
3,456
69,773
–
8,000
–
10,589
$
$
$
(33,244)
(165,912)
–
$ 9,084,502
9,987,820
631,749
(199,156)
$ 19,704,071
(19,506)
(2,557)
(27,308)
(599,579)
$ 1,962,923
2,635,260
826,615
21,425,745
Total securities held-to-maturity
$ 27,480,904
$
18,589
$
(648,950)
$ 26,850,543
25
NOTES to FINANCIAL STATEMENTS
December 31, 2006 and 2005
3. SECURITIES (continued)
Securities Available-for-Sale
U.S. Government agencies and corporations
Mortgage-backed securities
Total securities available-for-sale
Securities Held-to-Maturity
U.S. Government agencies and corporations
State and municipal
Collateralized mortgage obligations
Mortgage-backed securities
2005
AMORTIZED
COST
GROSS
UNREALIZED
GAINS
GROSS
UNREALIZED
LOSSES
FAIR
VALUE
$
$
$
$
4,981,879
8,323,634
$ 13,305,513
$ 14,455,872
3,140,986
1,030,747
27,258,409
–
–
–
–
15,022
–
19,901
$
$
$
(55,779)
(252,473)
$ 4,926,100
8,071,161
(308,252)
$ 12,997,261
(95,261)
(9,763)
(28,616)
(765,364)
$ 14,360,611
3,146,245
1,002,131
26,512,946
Total securities held-to-maturity
$ 45,886,014
$
34,923
$
(899,004)
$ 45,021,933
At December 31, 2006 and 2005, securities with a carrying value of $29,883,423 and $18,616,355, respectively, were pledged to
secure public deposits and for other purposes required or permitted by law.
The amortized cost and fair value of debt securities by contractual maturity at December 31, 2006 follow:
Within one year
Over one year through five years
Over five years through ten years
Over ten years
Collateralized mortgage obligations and
AVAILABLE-FOR-SALE
HELD-TO-MATURITY
AMORTIZED
COST
FAIR
VALUE
AMORTIZED
COST
FAIR
VALUE
$ 3,996,743
5,097,140
628,293
–
9,722,176
$ 3,972,432
5,112,070
631,749
–
9,716,251
$
550,000
3,322,683
237,656
501,907
4,612,246
$
550,180
3,308,511
240,142
499,350
4,598,183
mortgage-backed securities
10,111,278
9,987,820
22,868,658
22,252,360
$ 19,833,454
$ 19,704,071
$ 27,480,904
$ 26,850,543
There were no sales of securities available-for-sale or securities held-to-maturity during 2006 and 2005.
26
NOTES to FINANCIAL STATEMENTS
December 31, 2006 and 2005
3. SECURITIES (concluded)
Information pertaining to securities with gross unrealized losses at December 31, 2006 and 2005, aggregated by investment category
and length of time that individual securities have been in a continuous loss position, follows:
December 31, 2006
U.S. Government
agencies and
corporations
State and municipal
Collateralized mortgage
obligations
Mortgage-backed securities
LESS THAN 12 MONTHS
12 MONTHS OR GREATER
TOTAL
FAIR VALUE
GROSS
UNREALIZED
LOSSES
FAIR VALUE
GROSS
UNREALIZED
LOSSES
FAIR VALUE
GROSS
UNREALIZED
LOSSES
$
– $
– $
6,921,359 $
(52,750) $ 6,921,359 $
499,350
(2,557)
–
–
499,350
(52,750)
(2,557)
–
1,782,153
–
(12,136)
826,615
25,209,709
(27,308)
(753,355)
826,615
26,991,862
(27,308)
(765,491)
Total
$ 2,281,503 $
(14,693) $ 32,957,683 $
(833,413) $ 35,239,186 $
(848,106)
December 31, 2005
U.S. Government
agencies and
corporations
State and municipal
Collateralized mortgage
obligations
Mortgage-backed securities
LESS THAN 12 MONTHS
12 MONTHS OR GREATER
TOTAL
FAIR VALUE
GROSS
UNREALIZED
LOSSES
FAIR VALUE
GROSS
UNREALIZED
LOSSES
FAIR VALUE
GROSS
UNREALIZED
LOSSES
$ 14,360,464 $
729,928
(85,138) $
(9,763)
4,926,247
–
$
(65,902) $ 19,286,711 $
–
729,928
(151,040)
(9,763)
1,002,131
9,511,176
(28,616)
(208,789)
–
21,558,237
–
(809,048)
1,002,131
31,069,413
(28,616)
(1,017,837)
Total
$ 25,603,699 $
(332,306) $ 26,484,484
$
(874,950) $ 52,088,183 $ (1,207,256)
Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when
economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the
fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of
the Bank to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.
These unrealized losses related principally to current interest rates for similar types of securities. In analyzing an issuer’s financial
condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades
by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. As management has the ability
to hold debt securities until maturity, or for the foreseeable future if classified as available-for-sale, no declines are deemed to be
other-than-temporary.
27
NOTES to FINANCIAL STATEMENTS
December 31, 2006 and 2005
4. LOANS
The composition of net loans at December 31 is as follows:
Commercial
Commercial real estate
Residential real estate
Consumer
Subtotal
Allowance for loan losses
Net deferred loan costs (fees)
Loans, net
2006
2005
$
60,389,111
68,908,833
81,451,996
9,238,971
$
51,823,665
70,568,854
67,352,177
6,683,906
219,988,911
196,428,602
(2,784,125)
60,995
(2,383,359)
(15,396)
$ 217,265,781
$
194,029,847
At December 31, 2006 and 2005, nonaccrual loans were $520,528 and $343,061, respectively. There were no loans 90 days past due
and still accruing interest at December 31, 2006 and 2005.
An analysis of the allowance for loan losses follows:
Years Ended December 31,
2006
2005
Balance at beginning of year
Provision for loan losses
Loans charged off
Recoveries of loans previously charged off
Balance at end of year
The following is a summary of information pertaining to impaired loans:
Impaired loans with a valuation allowance
Total impaired loans
Valuation allowance related to impaired loans
$
$
2,383,359
525,000
(128,915)
4,681
2,391,187
780,000
(831,260)
43,432
$
2,784,125
$
2,383,359
2006
2005
$
$
$
520,528
520,528
130,132
$
$
$
343,061
343,061
171,530
Years Ended December 31,
2006
2005
Average investment in impaired loans
$
595,211
$
304,387
No interest income was recognized on impaired loans during 2006 and 2005. No additional funds are committed to be advanced in
connection with impaired loans.
28
NOTES to FINANCIAL STATEMENTS
December 31, 2006 and 2005
5. BANK PREMISES AND EQUIPMENT
A summary of the cost and accumulated depreciation of premises and equipment follows:
Land and improvements
Buildings and improvements
Equipment
Accumulated depreciation
2006
2005
$
$
1,922,993
7,223,330
3,695,403
12,841,726
(4,197,418)
1,922,993
7,224,431
4,578,202
13,725,626
(4,847,472)
$
8,644,308
$
8,878,154
Depreciation, included in occupancy and equipment expense, amounted to $627,729 and $656,469 for the years ended December
31, 2006 and 2005, respectively.
Pursuant to the terms of noncancelable lease agreements in effect at December 31, 2006, pertaining to premises and equipment,
future minimum rent commitments under various operating leases are as follows:
2007
2008
2009
2010
2011
$
$
154,547
120,047
118,547
109,747
21,916
524,804
The leases contain options to extend for periods from three to ten years. The cost of such extensions is not included above. Total
rent expense for the years ended December 31, 2006 and 2005 amounted to $160,654 and $155,741, respectively.
6. DEPOSITS
At December 31, 2006, the scheduled maturities of time deposits are as follows:
2007
2008
2009
2010
2011
Thereafter
$
52,805,636
10,000,979
25,819
23,706
217,086
61,338
$
63,134,564
Deposit accounts with related parties were $4,981,000 and $4,866,000 at December 31, 2006 and 2005, respectively.
7. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Securities sold under repurchase agreements mature within twelve months and are collateralized by securities in the Bank’s
investment portfolio.
The maximum amount of repurchase agreements outstanding at any month-end during 2006 and 2005 was $25,951,442 and
$21,803,899, respectively. The average amount of repurchase agreements outstanding during 2006 and 2005 was $13,647,735 and
$8,130,256, respectively. The weighted average interest rate on repurchase agreements outstanding at December 31, 2006 and 2005
was 3.94% and 2.62%, respectively.
All securities collateralizing the repurchase agreements are under the Bank’s control.
29
NOTES to FINANCIAL STATEMENTS
December 31, 2006 and 2005
8. ADVANCES FROM FEDERAL HOME LOAN BANK
The Bank’s fixed-rate advances with the Federal Home Loan Bank (FHLB) of $3,214,085 at December 31, 2006 mature through
2013. At December 31, 2006 and 2005, interest rates of fixed-rate advances ranged from 2.90% to 4.33%.
Outstanding FHLB borrowings are secured by a blanket lien on qualified collateral consisting primarily of loans with first mortgages
secured by one to four family properties, certain unencumbered investment securities, and other qualified assets.
The contractual maturities of advances are as follows:
2006
2007
2008
2009
2013
Total
2006
2005
$
$
–
1,000,000
500,000
1,349,393
364,692
5,000,000
1,000,000
500,000
1,947,592
409,487
$
3,214,085
$
8,857,079
9. INCOME TAXES
Allocation of federal and state income taxes between current and deferred portions is as follows:
Current tax expense
Federal
State
Deferred tax expense (benefit)
Federal
State
2006
2005
$
2,025,630
313,081
2,338,711
$
1,574,090
120,000
1,694,090
(123,200)
(40,000)
(163,200)
58,800
(4,900)
53,900
$
2,175,511
$
1,747,990
The income tax provision differs from the expense that would result from applying federal statutory rates to income before income
taxes, as follows:
Computed tax expense
Increase (reduction) in income taxes resulting from:
Tax exempt income
State taxes, net of federal benefit
(Income) expense from life insurance
Incentive stock options
Other
30
2006
2005
$
2,027,226
$
1,763,419
(41,143)
141,831
24,517
19,206
3,874
(40,177)
57,552
(36,690)
–
3,886
$
2,175,511
$
1,747,990
NOTES to FINANCIAL STATEMENTS
December 31, 2006 and 2005
9. INCOME TAXES (concluded)
The components of the net deferred tax asset, included in other assets, are as follows:
Deferred tax assets
Net unrealized loss on securities available-for-sale
Allowance for loan losses
Employee benefit plans
Other
Deferred tax liabilities
Depreciation
Other
2006
2005
$
$
44,000
903,100
213,200
42,700
104,800
731,000
261,300
30,200
1,203,000
1,127,300
264,700
126,300
391,000
291,400
126,300
417,700
Net deferred tax asset
$
812,000
$
709,600
10. EARNINGS PER SHARE
The following sets forth the computation of basic and diluted earnings per share for 2006 and 2005:
2006
2005
Net income, as reported
$
3,786,919
$
3,438,532
Weighted-average shares outstanding
Effect of dilutive employee stock options
Effect of unvested stock grant
Adjusted weighted-average shares and assumed conversion
Basic earnings per share
Diluted earnings per share
1,009,788
4,740
1,000
1,015,528
1,002,958
4,186
–
1,007,144
$
$
3.75
3.73
$
$
3.43
3.41
11. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs
of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments
to extend credit, standby and commercial letters-of-credit, and interest rate caps and floors written on adjustable rate loans. Such
instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance
sheets. The contract or notional amounts of those instruments reflect the extent of involvement the Bank has in particular classes of
financial instruments.
The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments
to extend credit and standby letters-of-credit is represented by the contractual notional amount of those instruments. The Bank uses
the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. For interest
rate caps and floors written on adjustable rate loans, the contract or notional amounts do not represent exposure to credit losses.
31
NOTES to FINANCIAL STATEMENTS
December 31, 2006 and 2005
11. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (concluded)
The Bank generally requires collateral or other security to support financial instruments with credit risk.
At December 31, 2006 and 2005, the following financial instruments were outstanding whose contract amounts represent credit risk:
Commitments to grant loans
Commercial and standby letters-of-credit
CONTRACT AMOUNT
2006
2005
$
$
53,149,638
11,551,895
$
$
41,462,409
11,165,024
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.
The commitments for equity lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not
necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Bank, is based on
management’s credit evaluation of the customer.
Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the
counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income-
producing commercial property.
Standby letters-of-credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party.
Those guarantees are primarily issued to support private borrowing arrangements. The credit risk involved in issuing letters-of-
credit is essentially the same as that involved in extending loan facilities to customers.
At times, the Bank places interest rate caps and floors on loans written by the Bank to enable customers to transfer, modify, or reduce
their interest rate risk.
12. LEGAL CONTINGENCIES
Various legal claims arise from time to time in the normal course of business which, in the opinion of management, will have no
material effect on the Bank’s financial statements.
13. MINIMUM REGULATORY CAPITAL REQUIREMENTS
The Bank is restricted as to the amount of dividends which can be paid. Dividends declared by national banks that exceed the net
income (as defined) for the current year plus retained net income for the preceding two years must be approved by the Office of the
Comptroller of the Currency (OCC). Regardless of formal regulatory restrictions, the Bank may not pay dividends that would result
in its capital levels being reduced below the minimum requirements discussed below.
The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory frame-
work for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and
classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
32
NOTES to FINANCIAL STATEMENTS
December 31, 2006 and 2005
13. MINIMUM REGULATORY CAPITAL REQUIREMENTS (concluded)
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and
ratios (set forth in the following table, dollars in thousands) of total and Tier 1 capital to risk-weighted assets and of Tier 1 capital
to average assets as these are defined in the regulations. Management believes, as of December 31, 2006 and 2005, that the Bank met
all capital adequacy requirements to which it is subject.
As of December 31, 2006, the most recent notification from the OCC categorized the Bank as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum total risk-
based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following tables. There are no conditions or events since the
notification that management believes have changed the Bank’s category. The Bank’s actual capital amounts and ratios as of
December 31, 2006 and 2005 are also presented in the table.
ACTUAL
MINIMUM
CAPITAL
REQUIREMENT
MINIMUM
TO BE WELL
CAPITALIZED UNDER
PROMPT CORRECTIVE
ACTION PROVISIONS
AMOUNT
RATIO
AMOUNT >
RATIO >
AMOUNT >
RATIO >
(dollars in thousands)
30,140
13.3%
$ 18,149
8.0%
$ 22,687
10.0%
27,356
12.1%
$
9,075
4.0%
$ 13,612
6.0%
27,356
8.8%
$ 12,405
4.0%
$ 15,506
5.0%
26,976
13.0%
24,594
11.9%
24,594
8.8%
$
$
$
16,602
8.0%
8,301
4.0%
11,124
4.0%
$
$
$
20,752
10.0%
12,451
6.0%
13,905
5.0%
December 31, 2006
Total Capital to
Risk-Weighted Assets
Tier 1 Capital to
Risk-Weighted Assets
Tier 1 Capital to
Average Assets
December 31, 2005
Total Capital to
Risk-Weighted Assets
Tier 1 Capital to
Risk-Weighted Assets
Tier 1 Capital to
Average Assets
$
$
$
$
$
$
14. EMPLOYEE BENEFITS
The Bank sponsors a 401(k) profit sharing plan which covers all employees who are at least 21 years of age and who have completed
one year of employment. Eligible employees contribute a percentage of their annual compensation to the 401(k) plan and the Bank
matches a certain portion of employee contributions. In addition, the Bank may make discretionary contributions on behalf of
employees under the plan. For the years ended December 31, 2006 and 2005, expense attributable to the plan amounted to $501,738
and $427,284, respectively.
Included in accrued expenses and other liabilities in the balance sheets at December 31, 2006 and 2005 are liabilities established
pursuant to deferred compensation agreements with certain officers of the Bank of $538,376 and $659,738, respectively. An
adjustment was made in 2006 to reflect a reduction of benefits to a former officer. Deferred compensation expense (benefit) related
to these plans amounted to $(121,362) and $95,593 for the years ended December 31, 2006 and 2005, respectively.
33
NOTES to FINANCIAL STATEMENTS
December 31, 2006 and 2005
15. WARRANTS
Warrants to purchase shares of the Bank’s common stock at various exercise prices have been granted to certain members of the
organizing group, key management, and employees of the Bank prior to April 2006. The warrants vest in three years and expire ten
years from the date the warrant was granted.
On April 19, 2006, the shareholders of the Bank approved the 2006 Stock Option and Incentive Plan (the “current plan”). The
maximum number of shares of stock reserved and available for issuance under this Plan is 50,000 shares. Awards may be granted in
the form of incentive stock options and restricted stock, or any combinations of the preceding, and the exercise price shall not be less
than 100% of the fair market value on the date of grant. No stock options are exercisable more than ten years after the date the stock
option is granted.
On January 1, 2006, the Bank adopted the provisions of SFAS No. 123(R) for the incentive stock option grants relating to the
current plan and previous plans. In accordance with the provisions of SFAS No. 123(R), the Bank recorded approximately $56,000
of compensation expense during 2006. Total compensation expense related to nonvested awards not yet recognized at December 31,
2006 is $63,773 and these awards vest over the next 3 years.
Under the current plan, the Bank granted 1,000 shares of restricted stock in 2006 with a fair value of $42.00 at grant date. This grant
comprises the Bank’s nonvested stock awards at December 31, 2006.
The fair value of warrants granted during 2006 and 2005 was $6.75 and $6.56, respectively. The fair value of each warrant granted
is estimated on the date of grant using the Black-Scholes options-pricing model with the following weighted-average assumptions:
Dividend yield
Risk-free interest rate
Expected life
Expected volatility
2006
2.70%
4.64%
10 Years
9.75%
2005
2.30%
4.50%
10 Years
N/A
A summary of warrant activity as of December 31, 2006, and changes during the year then ended is presented below:
Outstanding at beginning of year
Granted
Exercised
Forfeited or expired
Outstanding at December 31, 2006
Exercisable at December 31, 2006
WEIGHTED
AVERAGE
EXERCISE
PRICE
WEIGHTED
AVERAGE
REMAINING
CONTRACTUAL
LIFE
AGGREGATE
INTRINSIC
VALUE
35.98
40.00
17.85
35.25
36.51
36.42
$
$
$
12,575
547,102
455,382
5.0 years
5.2 years
SHARES
58,666
4,500
(500)
(5,000)
57,666
40,333
$
$
$
34
NOTES to FINANCIAL STATEMENTS
December 31, 2006 and 2005
15. WARRANTS (concluded)
Information pertaining to warrants outstanding at December 31, 2006 is as follows:
WARRANTS OUTSTANDING
WARRANTS EXERCISABLE
RANGE OF
EXERCISE PRICES
NUMBER
OUTSTANDING
WEIGHTED
AVERAGE
REMAINING
CONTRACTUAL LIFE
WEIGHTED
AVERAGE
EXERCISE PRICE
NUMBER
EXERCISABLE
WEIGHTED
AVERAGE
EXERCISE PRICE
$15.95 - $17.85
$32.00 - $41.84
Outstanding at
end of year
2,916
54,750
0.4 years
5.3 years
57,666
5.0 years
$
$
17.85
37.51
36.51
2,916
38,917
41,833
$
$
17.85
36.41
35.11
The remaining number of warrants available to be granted was 44,500 and 699 at December 31, 2006 and 2005, respectively.
16. OTHER NONINTEREST INCOME AND EXPENSES
The components of other noninterest income and expenses which are in excess of 1% of total revenues (total interest and
dividend income and noninterest income) and not shown separately in the statements of income are as follows for the years
ended December 31:
Income
Gain on sale of loans
Expenses
Credit card charges
Advertising
2006
2005
$
$
$
238,571
767,767
371,532
1,139,299
$
$
$
204,038
678,445
335,816
1,014,261
35
NOTES to FINANCIAL STATEMENTS
December 31, 2006 and 2005
17. RELATED PARTY TRANSACTIONS
The Bank has had, and may be expected to have in the future, banking transactions in the ordinary course of business with directors,
principal officers, their immediate families and affiliated companies in which they are principal shareholders (commonly referred to
as related parties), all of which have been, in the opinion of management, on the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with others. Loans granted to related parties amounted to $1,715,808 and
$1,614,808 at December 31, 2006 and 2005, respectively.
18. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced
liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted
market prices for the Bank’s various financial instruments. In cases where quoted market prices are not available, fair values are based
on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an
immediate settlement of the instrument. SFAS No. 107, Disclosure About Fair Value of Financial Instruments, which prescribes fair value
disclosures, excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the
aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Bank.
The following methods and assumptions were used by the Bank in estimating fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amounts of cash and short-term instruments approximate fair values.
Securities: Fair values for securities, excluding Federal Home Loan Bank stock and Federal Reserve Bank stock, are based on quoted
market prices. The carrying value of Federal Home Loan Bank Stock and Federal Reserve Bank stock approximate fair value based on
the redemption provisions of the Federal Home Loan Bank and Federal Reserve Bank.
Loans held for sale: Fair values of loans held for sale are based on commitments on hand from investors or prevailing market prices.
Loans receivable: For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based
on carrying values. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates
currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values for nonperforming loans are
estimated using discounted cash flow analyses or underlying collateral values, where applicable.
Deposit liabilities: The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and
certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their
carrying amounts). The carrying amounts of variable-rate, fixed-term money market accounts and certificates of deposit approximate
their fair values at the reporting date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow
calculation that applies interest rates currently being offered on certificates to a schedule of aggregate expected monthly maturities
on time deposits.
36
NOTES to FINANCIAL STATEMENTS
December 31, 2006 and 2005
18. FAIR VALUE OF FINANCIAL INSTRUMENTS (concluded)
Securities sold under agreements to repurchase: The carrying amounts of borrowings under repurchase agreements maturing
within ninety days approximate their fair values.
Advances from Federal Home Loan Bank: The fair values of these borrowings are estimated using discounted cash flow analyses
based on the Bank’s current incremental borrowing rates for similar types of borrowing arrangements.
Accrued interest: The carrying amounts of accrued interest approximate fair value.
Off-balance-sheet instruments: The Bank’s off-balance-sheet instruments consist of loan commitments. Fair values for loan
commitments have not been presented as the future revenue derived from such financial instruments is not significant.
The estimated fair values, and related carrying or notional amounts, of the Bank’s financial instruments are as follows:
Financial assets
Cash and cash equivalents
Securities available-for-sale
Securities held-to-maturity
Federal Home Loan Bank and
Federal Reserve Bank stock
Loans and loans held for sale, net
Accrued interest receivable
Financial liabilities
Deposits
Repurchase agreements
Advances from Federal Home
Loan Bank
Accrued interest payable
2006
2005
CARRYING
AMOUNT
FAIR
VALUE
CARRYING
AMOUNT
FAIR
VALUE
$ 41,645,016
19,704,071
27,480,904
$ 41,645,016
19,704,071
26,850,543
$ 18,240,101
12,997,261
45,886,014
$ 18,240,101
12,997,261
45,021,933
1,092,650
218,868,531
1,081,957
1,092,650
219,551,650
1,081,957
1,717,850
194,892,597
1,099,791
1,717,850
195,709,366
1,099,791
271,142,194
17,389,539
272,900,503
17,389,539
240,827,605
10,259,834
241,301,815
10,259,834
3,214,085
209,221
3,373,807
209,221
8,857,079
120,019
8,817,962
120,019
37
BOARD of DIRECTORS, SENIOR MANAGEMENT and OFFICERS
Ledyard National Bank
BOARD OF DIRECTORS
Douglas G. Britton
President, Britton Lumber Co., Inc.
Cary P. Clark
Retired General Counsel,
Dartmouth College
Cotton M. Cleveland
President, Mather Associates
Richard W. Couch, Jr.
Chairman, President and Chief Executive Officer,
Hypertherm, Inc.
William B. Hamilton, Jr.
President, Investment & Trust Services Division,
Ledyard National Bank
SENIOR MANAGEMENT
Kathryn G. Underwood
President and Chief Executive Officer
William B. Hamilton, Jr.
President, Investment & Trust Services Division
Gregory D. Steverson
Executive Vice President and Chief Financial Officer
OFFICERS
Constance B. Aldrich
Assistant Trust Officer
and Investment Support Manager
Margie L. Arbuckle-Morrill
Vice President and Trust Officer
Donna L. Batchelder
Trust Operations Officer
Betty J. Benson
Assistant Vice President
and Central Operations Officer
Gail M. Broughton
Assistant Vice President
and Regional Office Manager, Lyme & Norwich
Alison A. Bruce
Compliance Administration Officer
Terri L. Crate
Assistant Vice President
and Loan Administration Officer
Debra J. Curtis
Personal Banking Officer
and Office Manager, West Lebanon
Judith B. Dionne
Vice President and Trust Operations Officer
Claudette M. Duhamel
Assistant Vice President
and Office Manager, New London
L. Joyce Hampers
Attorney, Former U.S. Assistant Secretary
of Commerce and President, Joymark, Inc.
Adam M. Keller
Executive Vice President,
Finance and Administration, Dartmouth College
Dennis E. Logue
Steven Roth Professor of Management Emeritus,
Tuck School of Business, Dartmouth College
and Chair, Ledyard National Bank
Frederick A. Roesch
Retired, Senior Vice President, Citigroup/Citibank
and Co-Vice Chair, Ledyard National Bank
Andrew A. Samwick
Professor of Economics and Director,
Nelson A. Rockefeller Center at Dartmouth College
Deirdre Sheerr-Gross, AIA
Principal, Sheerr and White,
Residential Architecture
Bayne Stevenson
President, Bayson Company
Kathryn G. Underwood
President and Chief Executive Officer,
Ledyard National Bank
James W. Varnum
Retired President, Dartmouth-Hitchcock Alliance
and Mary Hitchcock Memorial Hospital and
Co-Vice Chair, Ledyard National Bank
Martha P. Candon
Senior Vice President
and Senior Retail Banking Officer
Mark S. Clough
Senior Vice President and Senior Loan Officer
Darcy D. Rogers
Senior Vice President and Chief Operations Officer
Grady L. M. George
Trust Officer
Jennifer J. Goin
Trust Officer
William R. Hatch
Vice President and Commercial Loan Officer
Michelle M. LeClair
Commercial Loan Officer
Katherine J. Lucier
Assistant Vice President and Regional Office Manager,
Lebanon & West Lebanon
Robin A. Mazejka
Regional Office Manager, Hanover Main Street
and Lebanon Street Offices
Jon E. Molesworth
Vice President and Trust Investment Officer
Catherine E. Murray
Vice President and Mortgage Loan Officer
Valerie J. Nevel
Vice President and Trust Officer
Christopher C. Ng
Vice President and Trust Investment Officer
D. Rodman Thomas
Senior Vice President and Senior Trust Officer
Darlene E. Romano
Senior Vice President, Human Resources and Finance
Victoria L. Peiffer
Trust Administrative Officer
Kevin J. Raleigh
Senior Vice President and Senior Commercial
Loan Officer
Michael K. Sandoe
Vice President and Commercial Loan Officer
Debra W. Sias
Vice President and Commercial Loan Officer
David C. Skewes
Mortgage Loan Officer
Donna J. St. Peter
Personal Banking Officer
Edmund R. Taylor
Senior Vice President and Chief Investment Officer
Gail E. Trottier
Assistant Vice President and Personal Banking Officer
Joel T. Underwood
Senior Vice President and Trust Investment Officer
As of February 9, 2007
38
STAFF
Ledyard National Bank
FULL-TIME STAFF
Stacey A. Alexander
Teller, Customer Service Representative
Karrie L. Longley
Head Teller
Arleen A. Berry
Customer Service Representative
Vicky C. Lorden
Customer Service Representative
Thomas M. Berry
Data Processing and Information Systems Manager
Amy L. Martin
Customer Service Representative
Robin M. Cantlin
Commercial Loan Processor
Stephanie J. Chase
Office Supervisor
Deborah J. McDanolds
Customer Service Representative
Cynthia L. McSpadden
Head Teller
Julie A. Courtemanche
Trust Investment Support Specialist
Gregory J. Monmaney
Customer Service Representative
Cara J. Dyke
Office Supervisor
Lisa Kathleen Murch
Mortgage Loan Processor
Deborah J. Farnsworth
Finance Specialist and Training Coordinator
Patricia M. Neily
Head Teller
Michelle J. Fellows
Commercial Loan Processor
Anna M. Gayhart
Teller, Customer Service Representative
Danielle L. Gohlke
Customer Service Representative
Stephanie Gordon
Customer Service Representative
Carrie Anne Hamel
Customer Service Receptionist
Doreen J. Holmes
Head Teller
Rebecca L. Newhall
Customer Service Representative
Cortney Ann Nichols
Central Operations Assistant
Tammy L. Norway
Trust Operations Assistant
Lillian R. Olsen
Customer Service Representative
Robin L. Olsen
Customer Service Representative
Erica C. Paronto
Proof Operations Assistant
Zvonko Ilic
Assistant Branch Manager
Sandra Jean Pike
Customer Service Representative
Jeanine M. Leathe
Administrative Assistant, Investment & Trust
Services Divisiion
Tracy W. Lombardi
Community Relations and Assistant
Marketing Coordinator
Betty J. Renault
Wire Transfer and Operations Assistant
Roxanne M. Russell
Trust Operations Assistant
39
Sarah S. Salo
Administrative Assistant, Sales and Marketing
Coordinator and Office Manager
Staci R. Sargent
Customer Service Representative
Victoria L. Schettino
Deposit Operations Assistant
Brett A. Smith
Finance Manager
Michelle R. Stewart
Technical Support Manager
Alexis L. Swain
Loan Operations Assistant
Jessica L. Taylor
Customer Service Representative
Monica M. Tuckerman
Operations and Administrative Assistant
Michelle L. Whitcomb
Office Supervisor
Loretta V. Zuger
Trust Administrative Assistant
PART-TIME STAFF
Linda P. Bedford
Commercial Loan Credit Administrator
Kathryn S. Walker
Trust Administrative Assistant
As of February 9, 2007
ADVISORY BOARDS
Ledyard National Bank
FOUNDING ADVISORS
Richard W. Birnie, Ph.D.
Professor of Earth Sciences,
Dartmouth College
Douglas G. Britton
President, Britton Lumber Co., Inc.
Dorothy M. Byrne
President, The Byrne Foundation
Robert L. Callender
Private Investor
Fred P. Carleton
Real Estate Management
Brian H. Cole
Owner/President, Cole Electric, Inc.
and Owner, Vermont Alpaca Company
Paul Danos
Dean, Tuck School of Business at Dartmouth
and Laurence F. Whittemore Professor
of Business Administration
Joseph F. Daschbach, Esq.
Daschbach, Csatari & Young, PLLC
Bradley Dewey, Jr.
Retired
INVESTMENT
ADVISORY BOARD
Robert Z. Aliber, Ph.D.
Professor Emeritus, Graduate School of Business,
University of Chicago
William B. Hamilton, Jr., J.D.
President, Investment & Trust Services Division,
Ledyard National Bank
L. Joyce Hampers, J.D., L.L.M.
Attorney, Former U.S. Assistant Secretary
of Commerce and President, Joymark, Inc.
S. Whitney Dickey
Retired Banker
Donald Carpenter Goss
Retired Advertising Agency Partner
Charles M. Hebble, Jr.
Retired Chairman and Chief Executive Officer,
Creonics, Inc.
Dennis E. Logue, M.B.A., Ph.D.
Steven Roth Professor of Management, Emeritus,
Tuck School of Business, Dartmouth College
and Chair, Ledyard National Bank
Mado R. Macdonald
Executive Officer, Emerita,
Tuck School of Business, Dartmouth College
J. Jeffrey Maloney, CLU, ChFC
Abacus Consulting, LLC
Ann D. McLaughry
Vice President, McLaughry Associates, Inc.
and President, Upper Valley Real Estate Services
Robert D. McLaughry
Chairman, McLaughry Associates, Inc.
Nancy Hayward Mitchell
Retired Chairman, Dartmouth Travel
John S. North
Retired Chief Operating Officer,
New England Telephone
James E. Porath, C.P.A.
Partner, Tonneson and Co.
Alfred T. Quirk
Dean of Admissions and Financial Aid,
Emeritus, Dartmouth College
Frank E. Sands II
Chairman, King Arthur Flour Co., Inc.
Edward M. Scheu, Jr.
Retired Chairman and Chief Executive Officer,
Luminescent Systems, Inc.
Geraldine Searles
President, Ruggles Mine, Inc.
Richard H. Showalter, Jr., C.P.A.
Chief Financial Officer, Dartmouth-Hitchcock
Richard S. Shreve, M.B.A.
Adjunct Professor of Business Ethics,
Tuck School of Business, Dartmouth College
Joseph C. Stevens, M.D.
Dennis E. Logue, M.B.A., Ph.D.
Steven Roth Professor of Management, Emeritus,
Tuck School of Business, Dartmouth College and
Chair, Ledyard National Bank
Andrew A. Samwick
Professor of Economics and Director,
Nelson A. Rockefeller Center at Dartmouth College
Deirdre Sheerr-Gross, AIA
Principal, Sheerr and White,
Residential Architecture
Richard S. Shreve, M.B.A.
Adjunct Professor of Business Ethics,
Tuck School of Business, Dartmouth College
Edmund R. Taylor, C.F.A.
Senior Vice President and Chief Investment Officer,
Ledyard National Bank
D. Rodman Thomas, J.D.
Senior Vice President and Senior Trust Officer,
Ledyard National Bank
Kent Womack, M.B.A., Ph.D.
Associate Professor of Finance, Tuck School
of Business, Dartmouth College
As of February 9, 2007
40
NORWICH
COMMUNITY BOARD
Terry P. Appleby
General Manager,
Hanover Cooperative Society, Inc.
Perrine McConnel
Co-owner, Norwich Bookstore, Inc.
Bruce “Buff” McLaughry
President, McLaughry Associates, Inc.
Steve Richardson
President, Chief Tormentor,
Stave Puzzles, Inc.
Sally J. Wilson
Retired
COMMUNITY BOARDS
Ledyard National Bank
HANOVER
COMMUNITY BOARD
LYME
COMMUNITY BOARD
Julia N. Griffin
Town Manager, Town of Hanover
Martha E. Diebold
Martha E. Diebold Real Estate
David Laurin
Managing Partner, Banwell Architects
Nancy S. Dwight
Chairman, Dwight Partners, Inc.
Bruce Pacht
Executive Director, Twin Pines Housing Trust
Lloyd G. Nichols
Tarm USA, Inc.
Barry C. Schuster, Esq.
Schuster, Buttrey & Wing, P.A.
LEBANON
COMMUNITY BOARD
William Babineau
Managing Member,
Vermont Mailing Systems, LLC
Terri Dudley
Talk Show Host and Former Mayor
Patrick E. Flanagan
Patrick E. Flanagan Real Estate Broker
Barry C. Schuster, Esq.
Schuster, Buttrey & Wing, P.A.
Bruce M. Waters, CCIM
McLaughry Commercial Associates, Inc.
John S. North
Retired Chief Operations Officer,
New England Telephone
Norman C. Wakely
Co-Director, Grant Brook
Educational Services
NEW LONDON
COMMUNITY BOARD
Thomas J. Brennan
Superintendent,
Kearsarge Regional School District
Laurie T. DiClerico
Diana Doheny
Realtor, Gale & Associates
Lawrence Dufault, Esq.
Dufault & Dufault
Bruce P. King
Chief Executive Officer, New London Hospital
Gail Matthews
Jeff Milne
Principal, Milne/Currier Associates
Andrea F. Steel
President and CEO,
Lake Sunapee Region Visiting Nurse Association
Ellen D. Winkler
Principal Designer, Chief Executive Officer,
Ellen’s Interiors
As of February 9, 2007
LLedyard National Bank Offices:
HANOVER
38 Main Street | 603-643-2244
Lobby, Walk-Up and ATM
Investment & Trust Services | 603-643-0044
Lebanon Street at Park Street | 603-643-7457
Lobby, Drive-Up and ATM
Dartmouth College | Collis Center ATM
LEBANON
Route 120 at Old Etna Road | 603-448-2220
Lobby, Drive-Up and ATM
Centerra Park/River Valley Club ATM
LYME
On The Green | 603-795-2288
Lobby and ATM
NEW LONDON
178 County Road | 603-526-7725
Lobby, Drive-Up and ATM
Investment & Trust Services | 603-526-9251
NORWICH, VERMONT
320 Main Street | 802-649-2050
Lobby, Drive-Up and ATM
WEST LEBANON
67 Main Street | 603-298-9444
Lobby, Drive-Up and ATM
Powerhouse Mall ATM
WHITE RIVER JUNCTION, VERMONT
Gateway Motors | Sykes Avenue ATM
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www.ledyardbank.com
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