2013 ANNUAL REPORT
Ledyard is committed to being the financial services institution of choice
by combining innovation with unparalleled personalized client service.
We offer our employees a challenging and rewarding work experience.
As a result of our efforts, Ledyard clients receive exceptional financial
services and our shareholders experience consistent returns.
PHOTOGRAPHY CREDITS
Cover: Sunset on the Connecticut River, Hanover, NH - Matthew Roginski
Interior: Ledyard employees and clients - Jon Gilbert 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
We are pleased to report that 2013 was a year of significant accomplishment, marked by strong
performance and sustained engagement with our clients, prospects and community. Our continued
growth in profitability, as well as our continued improvement in credit, capital and efficiency
demonstrated Ledyard’s resolve to rise to the ever-increasing challenges of the banking industry.
As ever, we are focused on executing our strategic plan to position Ledyard for consistent long-term
profitable growth.
Our commitment to excellence was recognized in early 2013 when Business NH Magazine named
Ledyard National Bank as its “Business of the Year” in the financial services category. Business NH
Magazine and the NH Association of Chamber of Commerce Executives have been celebrating the
NH Businesses of the Year for 22 years. The award is based on a long and rigorous process in which
a panel of judges seeks institutions that are true leaders in their community and industry. The
participation is statewide and attracts significant competition each year. Our selection was based, in
large part, on many of the activities that we’ve shared with you over the years in Ledyard’s year-end
report. The judges cited initiatives that ranged from funding the growth of many local critical businesses
to investing in affordable housing for the community. They were equally impressed with our charitable
giving programs and commitment to invigorate the economic health of the area. We are very proud of
this accomplishment and owe gratitude to our employees, clients, shareholders and community.
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P E R F O R M A N C E H I G H L I G H T S
LEDYARD FINANCIAL GROUP
Ledyard’s steady performance and strong financial position enabled us to further focus on strengthening
relationships with the families, individuals, businesses and communities we serve. The “Ledyard
experience” is built on advising and guiding our clients through all aspects of their financial well-being,
and is rooted in the knowledge that we have been valuable partners in achieving our clients’ goals and
dreams. Our commitment to delivering that level of banking experience contributed to strong top line
growth and our business gained significant financial momentum in the second half of 2013.
Ledyard Financial Group Shareholder Relevant 2013 highlights:
n Increased dividend by 11% to $1.44 per share; due to our strong financial
position, Ledyard has been able to maintain or increase the quarterly dividend
since first declaring one in 1995
n Increased earnings per share by $0.18 to $2.98 per share
n Grew revenue to $20.6 million – a new high
n Increased net income to $3.0 million
n Decreased problem assets by $4.5 million
n Our regulatory capital ratios remained well in excess of the amount needed
to be considered well-capitalized, the highest designation possible
(r) Robert Gallo, Private Banking Officer, Ledyard Financial Advisors, meets with Elliot and
Phyllis Fenander, new residents and clients of the Kendal at Hanover branch, which
opened February 1, 2013.
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L E D Y A R D F I N A N C I A L G R O U P 2 0 1 3 A N N U A L R E P O R T
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
While the majority of our growth was driven by same-branch activity, we are very pleased with
the performance of our newest branch, located at Kendal at Hanover, a continuing care retirement
community located just a few miles from our headquarters. The branch, opened in February, serves
the critical needs of the Kendal residents and is the only financial institution on the premises.
Our Kendal branch employees have truly immersed themselves in the culture and have quickly
become members of the Kendal family.
Ledyard Bank, Lyme Branch
In addition to opening the Kendal banking office, we also turned our attention to updating Ledyard’s
other facilities. In 2013, we renovated the Lyme branch, modernizing the look of the office while
maintaining the warm, community-bank environment for which we’re known. The new design also
created an improved traffic flow and incorporated other adjustments in order to deliver a better
in-branch experience for our clients and staff. In our Hanover branch, we installed a state-of-the-art
ATM that takes convenience to a higher level. Its updated functionality allows clients to make
multiple check deposits in a single transaction and deposit the checks without using envelopes. It
also prints deposit receipts that incorporate a scanned image of the check. In the coming months
and years, we will consider similar upgrades to our other locations.
Ledyard Financial Group’s full-year results reflect the strength of our two basic businesses: wealth
management and personal & business banking. Both are discussed on the following pages.
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WEALTH MANAGEMENT
Ledyard Financial Advisors 2013 highlights:
n Grew assets under management and custody to $1.06 billion
n Generated $7.6 million in revenue, a record high
n Added $90 million in additional assets
Larry Draper, Senior Financial Advisor, Fiduciary Officer, Ledyard Financial Advisors;
Melanie Hart, Account Administrator, Ledyard Financial Advisors
Ledyard Financial Advisors, the premier wealth management firm in the Upper Valley and Lake
Sunapee Region, provides integrated investment, tax and wealth management services to families
who live locally, as well as to those who reside throughout the United States and abroad. We offer a
unique combination of global investment strategies, expert financial advice and personal service and
support. These factors, and many others, helped us reach a new and significant milestone in the wealth
management industry. In the fourth quarter of 2013, Ledyard Financial Advisors surpassed the
$1 billion mark in assets under management and administration. This achievement confirms our
conviction that Ledyard’s wealth management model delivers the results and experience that
resonate with our clients and community, and suggests outstanding growth prospects.
Our mission of preserving and enhancing our clients’ wealth is carried out by the area’s largest and
most experienced staff of investment managers, analysts, accountants, advisors and attorneys, located
in Hanover and New London. Our 30 financial advisors, averaging 25 years of financial services
industry experience, have established a strong local presence and provide our services in person.
By developing deep relationships and learning about each client’s distinct needs, our team can
expertly create and execute individualized plans that fit that unique situation.
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L E D Y A R D F I N A N C I A L G R O U P 2 0 1 3 A N N U A L R E P O R T
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
For example, in 2013 we recognized a growing trend that was becoming more important to our
clients – socially responsible investing. It is a growing trend around the globe in which individuals
and institutions are being proactive in investing in companies that have strong fundamentals –
environmental, social and/or governance – and can have a positive impact on society for this and
future generations. Our strategy to help our clients interested in this type of investing is to seek
companies that have a strong probability of generating attractive financial returns and have
demonstrated strength in one or more of the factors noted above.
Our approach to providing these services is driven by our clients’ needs, which we take time to
understand before developing an individualized comprehensive plan based on their particular
situations and family dynamics, to deliver optimal results. We utilize a framework of potential
wealth management issues that focuses on 13 key areas ranging from investments and tax planning
to titling of assets, retirement planning and wealth distribution.
Our team is regularly asked to speak on topics related to these 13 issues and we’ve developed seminars
to address those requests. In June, we provided several important sessions to the visiting alumni of the
Dartmouth Class of ’63. It was gratifying to know that the attendees took time out of their 50th
reunion festivities to hear our expert speakers discuss topics such as “Generating Income in a Low-Yield
World” and “Planning Your Legacy”. Other seminars we’ve presented throughout the year include topics
such as “What to do After the Loss of a Loved One” and “2013 Federal Tax Law Changes” and “Year
End Tax Planning”. We believe that providing this level of education to our clients, prospects and
community make for informed partners and long term relationships.
PERSONAL AND BUSINESS BANKING
Personal and Business Banking 2013 highlights:
n Grew commercial loans outstanding net of commercial construction by
$16.4 million, an increase of 14.2%.
n Closed new commercial loans totaling $43.8 million, an increase of 24.8%
n Closed 150 mortgages, totaling $38.3 million in loan volume
n Grew transaction accounts by $5.9 million, an increase of 2.3%
Individuals and families choose Ledyard for their checking and savings accounts, mortgages, home
equity loans and other banking solutions. Perhaps more importantly, they also choose Ledyard to
provide them the most relevant personal financial advice. While we prefer the face-to-face contact
that is our hallmark, we continue to build our electronic infrastructure to allow clients to bank with
us as they see fit. Ease-of-use enhancements include upgrades to our mobile platform as well as new
capabilities in processing mortgage applications. The mobile upgrades allow clients to conduct their
online banking using tablets in addition to their cell phones, while new mortgage processing capabilities
allow clients or prospects to apply for a Ledyard mortgage online. The latter also allows our mortgage
team to more efficiently process the application, generate the required forms and deliver a better
overall customer experience. This improvement to our mortgage capabilities builds upon the vision
we established for the department in 2012. In utilizing monthly surveys to evaluate and improve our
performance and adhering to the service level commitments we established for the end-to-end client
experience, Ledyard is moving closer to its goal of becoming a major player in the Upper Valley and
Lake Sunapee region’s mortgage servicing landscape.
5
Our reputation in the commercial banking community is just as strong, with local businesses looking to
us for the loans and financial services they need to thrive and create jobs. Adhering to our longstanding
lending practices, we put money back to work in our communities. Because we work and reside in
the same community as our business clients, we share and understand their needs. Further, we realize
that sometimes the greatest value we deliver is not by providing a loan, but by being a non-credit
resource, acting as a professional sounding board, helping them consider strategies that best address
their unique situations. For example, in addition to collaborating with a client on tactics to maintain
adequate working capital and manage cash flow, we can also help them with risk management issues
in order to improve the business’ long-term viability. We also help small business owners with often
neglected concerns such as succession planning and retirement planning. The former requires that we
help the owner create a vision that will endure in a way that seamlessly transitions operations to the
next generation. The latter requires our expertise in developing the financial plans that clients use as
roadmaps to realizing their long-term goals.
(l-r) Patty and Marc Milowsky, Owners, Blue Sky Restaurant Group;
Jason Achmoody, Vice President & Commercial Relationship Manager, Ledyard National Bank
‘‘
Our family business is proud to have served Upper Valley guests since 1976. Over
the years, our partnership with Ledyard National Bank has contributed to the
growth and success of our restaurants. Ledyard has helped us finance numerous
projects, both business and personal. Their commitment to customer service and
personal relationships has been exemplary. It means a lot to us to be partners
with a local bank that really cares about its clients and their businesses.
‘‘
Marc Milowsky, President, Blue Sky Restaurant Group
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L E D Y A R D F I N A N C I A L G R O U P 2 0 1 3 A N N U A L R E P O R T
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
Expanding Services & Products to Match Community Needs
Enduring client relationships are the cornerstone of our business, and our high level of client care has
always differentiated us from our competitors. With this in mind, we invested thoughtfully in projects,
products and services that were designed to enhance the effectiveness, convenience and overall banking
experience we deliver every day. These initiatives directly improved our ability to deliver outstanding
service across all channels and allowed us to deepen client relationships.
Daniel P. Emanuele, Senior Vice President, Commercial Relationship Manager; Alicia Willette, DDS
As we mentioned in last year’s report, we embarked on a mission to develop a new Private Banking
division. Our first step was to conduct a series of focus groups that served to shape our vision of the
division’s purpose and goals. Armed with that knowledge, we then developed a business plan to guide
the execution of the program with a planned launch in the second quarter of 2014. The new group will
better service our largest and most complex professional clients, many of whom have atypical banking
requirements specific to their profession. These doctors, dentists, professors, attorneys and other
professionals will experience seamless banking with a single point of contact that is designed to
holistically match their needs with the right products and services. With this concierge approach,
we will be available to offer solutions outside of normal banking hours, making Private Banking
the go-to resource for the professional’s lifestyle expectations.
We’ve also taken a close look at the needs of many community members on the opposite end of the
spectrum from Private Banking. We have long been a supporter of non-profit organizations that help
the lower income segments of the population. So, this past year, we made the decision to develop new
products that target low to middle income clients or prospects, offering them more affordable options
for cash or credit. Examples of these products include:
7
n KwikCash - A loan product secured by a mortgage, with a highly competitive
fixed rate, shorter term and $10,000 maximum loan amount. KwikCash has
proven to be a very effective tool for lower income clients as they address some
of the unexpected or smaller expenses that they encounter from time to time
n Manufactured Home Loan – A loan to purchase or refinance a manufactured
home, with a competitive rate and multiple terms from which to choose
n Equity Builder – As a participant in the Federal Home Loan Equity Builder
Program, we offered first time homebuyers with low-to-moderate income up to
$15,000 in closing costs and down payment assistance
In our discussion of Wealth Management, we highlighted an initiative related to socially responsible
investing – one of those factors being environmental. Over the years, Ledyard has engaged in many
activities to support a clean environment, and we continued to look for ways to make an impact in
2013. One such example is our “Think Green. Save a Tree” campaign. We asked our clients to consider
converting monthly paper statements and sign up for electronic statements. In return, we offered to
plant a tree in the community for each new e-statement opened. The program resulted in hundreds
of trees donated to our neighborhoods, as well as the knowledge that we are continuing our own
conservation efforts. Another example involves our employee volunteer work, taking personal time
to join projects such as the Source to Sea Cleanup, coordinated by the Connecticut River Watershed
Council to help restore the Connecticut River, remove trash, catalog it and dispose of it. These cleanups
removed tons of debris from the river and stream banks in our backyards.
Our partnership with the Watershed Council merely scratches the surface of Ledyard’s volunteerism. As
we’ve reported for years, our employee and board member activities amount to thousands of volunteer
hours each year. One of our largest efforts to date, the “adoption” of the Upper Valley Haven, has been a
great success. The Haven is a non-profit organization that provides temporary shelter, food, clothing and
education to anyone in need. We spent the year executing a volunteer plan that addressed a wide array
of issues faced by the Haven. We donated time to perform activities that included delivering financial
literacy seminars to their customers and planned giving seminars to their board members, leading food
and clothing drives, cooking dinner for residents and assisting with fund raisers. While we are continuing
our strong partnership with the Haven, we will have a new “adopted” partner in 2014 – the Grafton
County Senior Citizens Council, an organization that has worked for the last 40 years to ensure that
older adults in our community have access to programs and services that support and enhance their
health, well-being, dignity and independence. The Ledyard volunteer committee is looking forward to
the opportunity to help where needed and learn more about the people and organizations at the heart
of our community.
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L E D Y A R D F I N A N C I A L G R O U P 2 0 1 3 A N N U A L R E P O R T
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
LOOKING AHEAD TO 2014
As we prepare for 2014, we are confident that we are on the right path for continued success. Aligned
with our broader strategic plan, the following is a sampling of a few key future goals and initiatives:
n Continue to improve key financial metrics and increase profitability
n Remain focused on growing core revenue and improving efficiency
n Grow our dividend steadily and share Ledyard’s success with our shareholders
n Improve our communication capabilities to clients and prospects in order to
share information, disseminate educational material and create greater awareness
of Ledyard’s products and services. For example, we are developing sophisticated
e-newsletters for the Wealth Management division that will allow them to present
material in a targeted manner, identifying the topics that are most interesting to
each individual reader and customizing content to match their unique preferences
n Focus on cross-selling opportunities across the organization. By recognizing and
uncovering the myriad of banking requirements sought by our clients, we can
better deliver a comprehensive financial services experience, while establishing
ourselves as their primary resource
n Roll out a new customer information system that will provide our organization
with unprecedented insight into our clients’ needs and behaviors. The system will
enable us to provide better service, generate sales, improve our product pricing
capabilities and support our strategic planning efforts
n Continue to leverage evolving technology to enhance client services and
streamline internal processes. For example, we are investigating several exciting
opportunities, including Virtual Desktop Integration. VDI will eliminate the
need to continually deploy and refresh PCs as they age. Instead, we will be able
to streamline maintenance and support, increase security and reliability, as well
as facilitate mobility
n Continue to evaluate the banking needs in our area and develop new products
that address existing gaps
n Identify new and innovative ways to provide our clients and neighbors with
the attention, care and personalized service that only a true community bank
can provide
We thank our shareholders, clients, employees and board members for their trust and support,
and we look forward to strengthening those partnerships in 2014.
KATHRYN G. UNDERWOOD
PRESIDENT & CEO
LEDYARD FINANCIAL GROUP/
LEDYARD NATIONAL BANK
DENNIS E. LOGUE
CHAIR
LEDYARD FINANCIAL GROUP/
LEDYARD NATIONAL BANK
9
F I N A N C I A L H I G H L I G H T S
(dollars in thousands, except “OTHER DATA”)
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
2013
2012
2011
2010
2009
$ 409,516 $ 401,800 $ 390,442 $ 394,785 $ 393,615
152,473
203,939
(6,346)
197,593
320,129
24,718
15,685
33,082
143,966
231,705
(5,656)
226,049
337,294
9,551
16,928
38,028
144,577
209,603
(6,306)
203,297
308,059
26,915
26,279
33,533
140,755
216,496
(5,707)
210,789
312,526
19,859
21,088
36,970
137,826
245,097
(5,564)
239,534
342,245
15,029
14,072
38,170
$
$
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
OTHER DATA
Earnings per share, basic
Dividends per share
Dividend payout ratio
Tangible book value per share
Shares outstanding, net of treasury
Return on average assets
Return on average equity
Efficiency ratio
Stock price - high
- low
- average
11,490 $
7,579
1,479
20,548
0
16,626
3,922
913
3,009
11,155 $
6,990
2,292
20,437
0
16,794
3,643
803
2,840
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
2.98 $
1.44
49%
37.65 $
2.80 $
1.30
46%
37.72 $
2.56 $
1.24
49%
36.20 $
2.49 $
1.24
50%
32.96 $
$
1,013,684
0.74%
7.90%
80.79%
1,008,271
0.72%
7.57%
82.05%
1,021,227
0.66%
7.40%
80.14%
$
$
$
42.00 $
34.35 $
38.30 $
34.95 $
27.25 $
31.82 $
36.00 $
29.00 $
31.78 $
1,017,415
0.64%
7.59%
80.48%
$
35.00
$
30.00
32.02 $
1.75
1.24
71%
32.55
1,016,431
0.47%
5.53%
76.70%
40.99
30.05
32.51
$
902 $
Assets under management
801
and custody (millions)
8.40%
Equity-to-asset ratio
3.11%
Allowance for loan losses to total loans
$
Net charge-offs
$ 830,000
$ 2,510,089 $ 2,298,030 $ 5,267,024 $ 4,804,756 $ 5,535,866
Non-performing assets
Allowance for loan losses to
non-performing assets
Texas Ratio
884
8.56%
9.48%
8.74%
2.44%
3.01%
2.64%
50,900 $ 1,275,000 $ 490,000
1,064 $
8.99%
2.27%
92,030 $
108%
13.08%
131%
12.20%
115%
15.26%
246%
5.56%
222%
5.84%
895 $
$
Complete Ledyard Financial Group 2013 audited financial statements can be found under “Investor Relations”
at ledyardbank.com.
10
S E N I O R M A N A G E M E N T T E A M
As of Februar y 18, 2014
Back Row, L-R:
Jeffrey H. Marks, Senior Vice President and Chief Marketing Officer
Kevin D. Kober, Senior Vice President and Chief Retail Banking Officer
Reginald E. Greene, Jr., Senior Vice President and Senior Lending Officer
Darcy D. Rogers, Senior Vice President and Chief Operations Officer
Front Row L-R:
Barbara S. Graf, Senior Vice President and Human Resources Director
Gregory D. Steverson, Executive Vice President and Chief Financial Officer
Kathryn G. Underwood, President and Chief Executive Officer
Dennis B. Mitchell, CFP ®, President and Managing Director, Ledyard Financial Advisors
11
B O A R D O F D I R E C T O R S
As of Februar y 18, 2014
Back Row L-R:
Richard W. Couch, Jr.
Chairman of the Board and Chief Executive Officer
Hypertherm, Inc.
Margaret M. Rightmire
Consultant and Community Volunteer
Andrew A. Samwick
Professor of Economics and Director
Nelson A. Rockefeller Center at Dartmouth College
Frederick A. Roesch
Retired, Senior Vice President, Citigroup/Citibank
Co-Vice Chair, Ledyard Financial Group
James W. Varnum
Retired President, Dartmouth-Hitchcock Alliance
Mary Hitchcock Memorial Hospital
Co-Vice Chair, Ledyard Financial Group
Douglas G. Britton
President, Britton Lumber Company, Inc.
Secretary, Ledyard Financial Group
Deirdre Sheerr-Gross, AIA
Principal, Sheerr and White Residential Architecture
Adam M. Keller
Director of Education
The Dartmouth Institute for Health Policy and
Clinical Practice
Front Row L-R:
Dennis E. Logue
Steven Roth Professor of Management Emeritus
Tuck School of Business, Dartmouth College
Chair, Ledyard Financial Group
Cotton M. Cleveland
President, Mather Associates
Kathryn G. Underwood
President and Chief Executive Officer,
Ledyard Financial Group
Bayne Stevenson
President
Bayson Company
12
LEDYARD NATIO NA L BA NK
HANOVER
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LEBA NO N STREET AT PARK S TREET 603.643.7457 L OBBY, DRI VE -UP & ATM
DA R TM OU TH C OLL EG E COLLI S CENT ER ATM
LEBANON
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LYME
O N T HE G RE EN 603.795.2288 LOBBY & ATM
NEW LONDON
178 COU NTY ROA D 603.526.7725 L OBBY, DRIV E- U P & ATM
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INTE RNET BANK ING
ledyardbank.com
KWIKTEL PHONE BANKING
1.888.KWI KT EL (1 .8 88 .5 94 .5835)
EQUAL HOUSING LENDER
MEMBER FDIC
LEDYARD FINANCI AL A DV ISO RS
HANOVER
2 M A PLE ST RE ET 603.643.0044
NEW LONDON
1 7 8 C OU N TY RO A D 6 03 .5 26 .9251
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.
2013 ANNUAL REPORT