2 0 1 1 A N N U A L R E P O R T
L e d y a r d i s c o m m i t t e d t o b e i n g t h e f i n a n c i a l s e r v i c e s i n s t i t u t i o n o f c h o i c e
b y c o m b i n i n g i n n o v a t i o n w i t h unparalleled per sonalized client ser vice. We
offer our employees a challeng ing and rewarding work exper ience. A s a r e s u l t o f
o u r e f f o r t s , L e d y a r d c l i e n t s r e c e i v e e x c e p t i o n a l f i n a n c i a l s e r v i c e s a n d o u r
s h a r e h o l d e r s e x p e r i e n c e c o n s i s t e n t r e t u r n s .
On the cover: The Ledyard Bridge bears the name of
adventurer, John Ledyard, and crosses the Connecticut River
to connect Hanover, NH to Norwich, VT. (Jon Fox photo)
Interior photography: Tom McNeill and Jon Fox
L E T T E R F R O M T H E C E O & B O A R D C H A I R
Kathryn G. Underwood, President & CEO,
Ledyard Financial Group/Ledyard National Bank
Dennis E. Logue, Chair,
Ledyard Financial Group/Ledyard National Bank
To our many constituents, including shareholders, valued clients and other community members:
Last year’s annual report highlighted Ledyard’s 20th anniversary, giving us an opportunity to
proudly look back on our founding and to share key milestones that shaped our institution over
two decades. Now, as we review 2011, we recognize it as having been yet another significant
year for Ledyard in which we continued to deliver strong value to our many constituents.
PERFORMANCE HIGHLIGHTS
LEDYARD FINANCIAL GROUP
Ledyard Financial Group, Inc., the holding
company for Ledyard National Bank, remains
true to the bank’s founding principles
established in 1991. Those principles include
delivering unparalleled personal service on
every level, developing and maintaining
strong relationships with clients, increasing
value for our shareholders and empowering
employees to fulfill their potential. In spite
of the challenging economic environment
and volatility in the equity markets, 2011 was
another successful year for our organization.
Some of the key highlights were:
n Grew revenue to over $20.2 million –
a new high
n Increased net income to $2.6 million
n Increased earnings per share by $.07 to
$2.54 per share
n Paid $1.24 per share in dividends to
our shareholders – a 49% payout ratio
n Noted improvement in all of the
company’s capital ratios
Ledyard Financial Group’s full year results
reflect the strength of our two basic businesses:
community banking and wealth advisory
services. Both are discussed here.
PERSONAL AND BUSINESS BANKING
Ledyard provides individuals and families with
meaningful and relevant personal financial
advice, particularly in tough economic times.
Our clients look to us for their checking and
savings accounts, mortgages, home equity loans,
business loans and other banking solutions.
Similarly, local businesses partner with us for
the financial services and loans they need to
thrive and create jobs, allowing us to put money
back to work in our communities, in keeping
with our longstanding lending practices. In
2011, we updated and enhanced our Personal
Checking & Savings Account portfolio to
create more distinguishable value between
products, add certain benefits and simplify
the communication of account features.
Daniel P. Emanuele,
Vice President &
Commercial
Relationship Officer
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L E T T E R F R O M T H E C E O & B O A R D C H A I R
portfolio managers, we utilize a framework
of 13 potential wealth management issues
that includes a plan to preserve and grow
wealth that extends far beyond customized
investment management into issues such
as retirement planning, titling of assets, tax
strategies and wealth distribution.
Our positive reputation continues to grow,
as we are hired by over 80% of the prospects
who meet with us. In 2011, we introduced
a Private Banking option for Ledyard
Financial Advisors clientele, deepening those
overall relationships with an unmatched
level of care by offering exclusive services
that create a one-stop shop for all financial
needs. In its first full year of operation, all
Private Banking targets were exceeded,
growing deposit balances by $2.5 million and
generating new loan balances of $2.1 million.
Ledyard Financial Advisors 2011 highlights
include:
n Added 30 clients, representing 90
new accounts and $102 million in
additional assets
n Generated $6.9 million in revenue, a new
high that is a 13.3% increase over 2010
Larry Draper, Senior Financial Advisor & Fiduciary Officer
Gail Broughton, Vice President & Banking Office Manager, Norwich
We improved, as well, on the benefits
associated with the Ledyard Plan, our
relationship banking program, making
deeper connections with Ledyard more
attractive to clients. We also added Identity
Theft Protection to the many benefits
that come with our rewards program,
Generations Gold®. Finally, we added
Business Bill Pay to our online suite of
products for commercial clients, allowing
them greater convenience, customization
and control of their finances.
Financial highlights of 2011 include:
n Grew transaction accounts by more
than $6.9 million, an increase of 6.21%
n Increased home equity loans by
$2.3 million, for growth of 18.15%
WEALTH MANAGEMENT
Ledyard Financial Advisors is the premier
firm providing integrated investment, tax
and other vital wealth management services
to families throughout the Dartmouth and
Lake Sunapee Region, with the mission
of preserving and enhancing our clients’
wealth. Possessing the area’s largest and most
experienced staff of financial advisors and
L E D YA R D F I N A N C I A L G R O U P 2 0 1 1 A N N U A L R E P O R T
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L E T T E R F R O M T H E C E O & B O A R D C H A I R
n Provided risk & fraud analytics for our
commercial clients with online ACH
(Automated Clearing House) capabilities;
the tool enables Ledyard to mitigate
fraud risk by monitoring transactions
for atypical behavior and proactively
responding to them in real time, with the
ability to suspend suspicious transactions
pending further investigation
Valerie Nevel,
Senior Financial
Advisor
n Grew assets under management and
custody to $895 million
n Maintained a 99% client retention rate
We have reaffirmed our commitment
to building long-term value for our
shareholders and clients, even in the
most difficult times.
n Introduced time-saving and convenient
services such as interbank transfers that
enable clients to initiate transfers between
their Ledyard accounts and accounts at
other financial institutions for which they
have the authority to conduct transactions
BUILDING LONG-TERM VALUE
As we emerge from an environment of slow
economic recovery, record-low interest rates
and significant new regulatory demands,
we have reaffirmed our commitment
to building long-term value for our
shareholders and clients, even in the most
difficult times. By that measure, we were
successful in 2011, with achievements
that resulted in part from making multiple
changes that improved our ability to serve
clients, including:
n Rolled out Ledyard Link, our new online
personal financial management tool,
which allows clients to see each of
their accounts from all other financial
institutions in one concise online
statement, with a budgeting component
that allows tracking of their expenditures
n Developed new financial planning tools
for our Ledyard Financial Advisors
clients that contain a full range of
capabilities, allow clients to better
understand their own financial needs
and help Ledyard advisors engage them
in more productive planning discussions
Larry Draper, Senior Financial Advisor & Fiduciary Officer
Karen Zurheide, Regional President, New London;
John O’Dowd, Senior Vice President & Senior Wealth Consultant
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L E T T E R F R O M T H E C E O & B O A R D C H A I R
estate planning, appraising commercial
real estate and matching Small Business
Administration programs to borrowers.
Several Ledyard Financial Advisors
employees completed the Boston University
Center for Professional Education CFP
(Certified Financial Planner) program,
while another received an Accreditation of
Trust Operations Professional designation,
adding to Ledyard’s expertise in trusts,
operations and audits. Another notable
training effort utilized Ledyard’s new
mortgage processing and underwriting
software, helping our lending team more
efficiently manage the loan process from
origination through closing.
In addition to a focus on educating our
staff, we work to make our clients more
informed partners in our journey together,
as we can provide the greatest value to those
who are financially knowledgeable. Ledyard
offers a number of public seminars each year
on the critical financial issues of the day, the
majority of which are crafted and presented
by our own expert employees. Occasionally
we present seminars in partnership with
external experts that complement material
covered in earlier presentations. In 2011,
n Offered “tokens” to commercial clients
with online banking capabilities, creating
additional security and verification
procedures pertaining to fund transfers
into or out of Ledyard
Even with these many important
technological advancements, the strides
we made in 2011 reminded us once
again that our highly trained and engaged
workforce remains our most important
asset. Ultimately, Ledyard’s success hinges
on our people, which is why we continue
to hire and develop exceptional talent
that we believe will make a difference in
delivering financial products of today in
an efficient and profitable manner.
Our highly trained and engaged workforce
remains our most important asset.
For example, in July we welcomed Karen
Zurheide as our New London/Lake
Sunapee area Regional President. In this
newly created position, Karen leads our
efforts to strengthen our profile and to
develop new business for our banking and
wealth management divisions. As a graduate
of Dartmouth’s Tuck School of Business,
a New London resident, and a former
Executive Director of The Fells in nearby
Newbury, Karen provides extensive insight
into this market. We are confident that she
will achieve much success at Ledyard in
the coming years.
Our commitment to developing excellence
in our staff is reflected in the fact that in
2011, employees trained in areas such as
L E D YA R D F I N A N C I A L G R O U P 2 0 1 1 A N N U A L R E P O R T
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L E T T E R F R O M T H E C E O & B O A R D C H A I R
we conducted nine financial seminars,
reaching nearly 400 community members
on topics ranging from “Talking to Your
Adult Children about Money” to “Titling
Assets – Why Smart People Make Big
Mistakes.” Another element of our client
education initiative is our monthly wealth
management newsletter which is sent
to Ledyard Financial Advisors clients via
email and addresses topics ranging from
investments and taxes to structuring wealth
and retirement planning.
With up-to-date technology, top-notch
highly trained people and educated clients,
we at Ledyard continue to help others plan
well financially so they can live well, with
personalized banking, borrowing and
investing services as unique as they are.
COMMUNITY SUPPORT
Ledyard’s commitment to community support
encompasses all that we do as bankers and as
citizens responsible for the growth and vitality
of the areas we serve. Our civic involvement is
built upon a well-defined ongoing charitable
giving program that allows us to impact our
neighbors in ways that go beyond day-to-day
business activities. Through both in-kind and
cash donations, we help nonprofit organizations
throughout the Upper Valley and Lake Sunapee
Region succeed.
As a community bank, Ledyard is aware of the
hardships and challenges facing individuals,
businesses and nonprofits. Thus our charitable
donations support organizations that address
the needs of those in the low-to-moderate
income segment of our communities, as
we allocate at least one-third of our total
contributions budget for this purpose. For
example, we give to the Upper Valley Hostel
that provides temporary housing for people
being treated at Dartmouth-Hitchcock Medical
Center who cannot afford other area housing.
As important as such regular monetary giving
is for recipient organizations and the individuals
and communities they serve, this is just part of
our involvement. The following efforts further
supported our communities in 2011:
SERVING THE HOMELESS
To address the needs of the hungry and
homeless, Ledyard developed a new program
in partnership with The Upper Valley Haven,
an organization that offers food and shelter
to those in dire need. Ledyard provides a line
of credit to The Haven which allows them
to make small loans to individuals requiring
a “jump start” to cover expenses of housing,
utilities or transportation. The program makes
a significant difference in the lives of those
trying to get back on their feet and again
contribute to the community.
VOLUNTEERISM
Our people serve on many boards and are
immersed in dozens of volunteer activities.
A local realtor commented recently that while
other financial institutions also give money,
“Ledyard’s people show up” in support of the
efforts of area nonprofits. These efforts by our
employees and board members amount to
thousands of volunteer hours each year.
For the last few years we have joined forces
with the Granite United Way and Dartmouth
College to offer an annual volunteer “Day
of Caring” in the Upper Valley. The event
promotes the spirit and value of volunteerism
and increases awareness of local human
service agencies. In 2011, we participated in
five projects that ranged from helping area
nonprofits weatherize their facilities to painting
buildings and conducting fall clean-ups.
5
L E T T E R F R O M T H E C E O & B O A R D C H A I R
LEADING WOMEN SEMINARS
Furthering our commitment to “educate and
advise,” we regularly gather women business
owners and managers for education on topics
that help them more effectively run their
businesses. Through speaker and panelist
presentations on topics pertinent to women
in business, the program provides a unique
forum in which to experience the Ledyard
ideal of “Plan well. Live well.”
Topics include:
n High-Impact, Low-Cost Marketing Tips
n Important Insurance Tips for Business
Owners
n Achieving Work-Life Balance
n Health Care Changes and How They
Affect Your Business
ADVERTISING ASSISTANCE
In partnership with certain nonprofit organiz-
ations such as these, we created radio advertising
that enhanced their community profiles:
n More Than Wheels – informing of help
available to needy people to gain control
of their personal finances and to obtain
reliable, fuel-efficient cars
n Vermont Institute of Natural Science –
educating listeners on how to better
protect the environment
n Dartmouth-Hitchcock Medical Center’s
“Healthy Highlights” – offering health tips
for the community
n Upper Valley Humane Society – sharing
tips to help listeners create safer, more
enjoyable environments for their pets
Additionally, we developed public service
announcements for community partners
that aired on TV and radio. Our most recent
effort was for an organization whose mission
is to support the growth of local businesses in
our area.
In addition to the ongoing programs noted
above, we undertook these special 2011
community initiatives:
NATURAL DISASTER RELIEF THROUGH
“FILL THE VANS” CAMPAIGN
As a community bank built upon local
relationships, we were eager to help those in
our area hit hardest by Hurricane Irene. So
we conducted a drive to collect necessities
for the many who suffered devastating losses.
Commercial clients generously supplied vans to
deliver thousands of donated items to two local
food pantries, following a week-long collection
at all of our locations of food, toiletries,
cleaning supplies and more for hundreds
of needy neighbors across our region.
FUNDING AND COMMUNITY
AWARENESS OF NONPROFITS
THROUGH CHARITABLE CONTEST
In the spring, Ledyard kicked off a charitable
giving campaign that was our thank-you to
the community for allowing us to serve their
financial needs. We asked the community to
L E D YA R D F I N A N C I A L G R O U P 2 0 1 1 A N N U A L R E P O R T
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L E T T E R F R O M T H E C E O & B O A R D C H A I R
vote via our website among five different
nonprofit organizations (each serving the
low-to-moderate income segment of the
population), choosing the organization they
would most like to see receive a financial
contribution from Ledyard. At the same time,
we worked with each charity to better define
its mission for communication to interested
listeners and to develop a comprehensive
media plan to increase its community
exposure. This education-oriented effort
had a positive impact on the organizations
themselves and the larger community. In
response to over 53,000 votes during the
five-week campaign, we increased our
intended donation amounts to mirror
such impressive community enthusiasm.
LOOKING AHEAD TO 2012
Ledyard is well positioned for continued
success in tomorrow’s increasingly competitive
environment. Our optimism is grounded in a
mission defined by our “Plan well. Live well.”
tagline and driven by a commitment to what
we do best – help individuals and businesses in
our market areas make smart financial decisions.
Going forward, the focus of our strategic plan
addresses the following objectives:
n Achieve strong financial performance
n Establish ourselves as the premier
relationship bank in our markets
n Continue to provide the premier wealth
management services in the region
n Grow and diversify our loan portfolio
n Continually train staff for high-touch
client service
n Realize excellence in electronic delivery
of products and services
We will continue to enhance our retail
banking business, paying special attention to
developing products and services that make
the banking experience easier, less time
consuming and more valuable. We will focus
our lending efforts on aggressively managing
credit exposure and seeking new borrowers of
the highest quality. We will continue to build
upon our competitive advantage in wealth
management as we approach a milestone of
$1 billion in assets under management and
custody at Ledyard Financial Advisors.
On a final note, many readers of our annual
report will notice that the number of pages in
the printed version has been decreased. Our
complete financial report can be found in
the Investor Relations section of the Ledyard
website, www.ledyardbank.com. We have
chosen to reduce our output of printed material
in order to establish a more eco-friendly
approach to sharing our annual performance
results and better aligning ourselves with efforts
to sustain the environment.
We thank our shareholders, clients, employees
and board members for their trust and
support, and we look forward to strengthening
those partnerships in 2012.
KATHRYN G. UNDERWOOD
PRESIDENT & CEO
LEDYARD FINANCIAL GROUP/LEDYARD NATIONAL BANK
DENNIS E. LOGUE
CHAIR
LEDYARD FINANCIAL GROUP/LEDYARD NATIONAL BANK
7
F I N A N C I A L H I G H L I G H T S
(dollars in thousands, except per share data)
2011
2010
2009
2008
2007
$ 390,442 $ 394,785 $ 393,615 $ 363,188 $ 325,805
53,706
232,139
(3,360)
228,779
276,933
1,551
16,668
30,517
144,577
209,603
(6,306)
203,297
308,059
26,915
26,279
33,533
94,015
231,331
(4,926)
226,405
295,586
21,868
16,451
31,283
140,755
216,496
(5,707)
210,789
312,526
19,859
21,088
36,970
152,473
203,939
(6,346)
197,593
320,129
24,718
15,685
33,082
YEARS-ENDED DECEMBER 31,
FINANCIAL CONDITION DATA
Assets
Investments
Gross loans, including loans held-for-sale
Allowance for loan loss
Net loans, including loans held-for-sale
Deposits
Federal Home Loan Bank advances
Other borrowings and liabilities
Shareholders’ equity
OPERATING DATA
Net interest income
Ledyard Financial Advisors income
Other non-interest income
Total revenue
Provision for loan loss
Non-interest expense
Pre-tax income
Income taxes
Net income
$
11,442 $
6,856
1,991
20,289
675
16,260
3,354
745
2,609
12,066 $
6,052
1,941
20,059
450
16,143
3,466
937
2,529
12,515 $
5,125
2,086
19,726
2,250
15,130
2,346
565
1,780
12,892 $
4,895
1,674
19,461
3,123
13,270
3,068
1,040
2,028
12,480
5,027
1,727
19,234
705
12,306
6,223
2,361
3,862
$
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
Efficiency ratio
Stock price - high
- low
- average
Assets under management
and custody (millions)
Equity to asset ratio
Allowance for loan losses to total loans
Net charge-offs
Non-performing assets
Allowance for loan losses to
non-performing assets
Texas ratio
2.54 $
1.24
49%
33.87 $
2.47 $
1.24
50%
32.71 $
1.74 $
1.24
71%
32.37 $
1.99 $
1.24
62%
30.61 $
$
1,021,227
0.67%
7.71%
80.14%
1,017,415
0.63%
7.38%
80.48%
1,016,431
0.45%
5.53%
76.70%
$
$
$
36.00 $
29.00 $
31.78 $
35.00 $
30.00 $
32.02 $
40.99 $
30.05 $
32.51 $
1,021,510
0.60%
6.68%
68.19%
52.00
$
35.00 $
$
44.61
3.80
1.16
31%
29.95
1,018,996
1.16%
13.37%
63.98%
60.00
43.95
50.58
$
884 $
801 $
895 $
9.48%
2.64%
705
9.37%
1.45%
$ 1,275,000 $ 490,000 $ 830,000 $ 1,557,000 $ 129,000
$ 5,267,024 $ 4,804,756 $ 5,535,866 $ 3,702,128 $ 1,433,668
612
8.57%
2.13%
8.40%
3.11%
8.56%
3.01%
$
108%
13.08%
131%
12.20%
115%
15.26%
133%
10.69%
234%
4.45%
A complete Ledyard Financial Group 2011 audit report can be found under “Investor Relations” at ledyardbank.com.
8
B O A R D O F D I R E C T O R S
As of Februar y 18, 2012
Top row (l-r)
Richard W. Couch, Jr.
Chairman, President and Chief Executive Officer,
Hypertherm, Inc.
Adam M. Keller
Director of Education, The Dartmouth Institute for
Health Policy and Clinical Practice
Frederick A. Roesch
Retired, Senior Vice President, Citigroup/Citibank
Co-Vice Chair, Ledyard Financial Group
Andrew A. Samwick
Professor of Economics and Director,
Nelson A. Rockefeller Center at Dartmouth College
Margaret M. Rightmire
Consultant and Community Volunteer
Board Chair, Montshire Museum of Science
Board President, Crossroads Academy
Cotton M. Cleveland
President, Mather Associates
Deirdre Sheerr-Gross, AIA
Principal, Sheerr and White Residential Architecture
Douglas G. Britton
President, Britton Lumber Company, Inc.
Secretary, Ledyard Financial Group
James W. Varnum
Retired, President, Dartmouth-Hitchcock Alliance
and Mary Hitchcock Memorial Hospital
Co-Vice Chair, Ledyard Financial Group
Bottom row (l-r)
Bayne Stevenson
President, Bayson Company
Kathryn G. Underwood
President and Chief Executive Officer,
Ledyard Financial Group
Dennis E. Logue
Steven Roth Professor of Management Emeritus,
Tuck School of Business, Dartmouth College
Chair, Ledyard Financial Group
A complete Ledyard Financial Group 2011 audit report can be found under “Investor Relations” at ledyardbank.com.
9
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Personal and business banking relationships within the retail bank are subject to FDIC insurance
coverage limits. Investment, tax and wealth management services offered by Ledyard Financial Advisors
are not insured by the FDIC, are not deposits or other obligations of, or guaranteed by the Bank or any
affiliate, and are subject to investment risk including the possible loss of principal amount invested.