Ledyard Financial Group, Inc.
Annual Report 2015

Plain-text annual report

2015 Annual Report C E L E B R A T I N G O U R 2 5 T H A N N I V E R S A R Y May 22, 1991, Ledyard National Bank opens Founding board members seated outside the first branch in Hanover As new branches in Lyme, NH and Norwich, VT open, the Investment & Trust Services division is established A branch dedicated to banking and Investment & Trust Services opens in New London, NH KwikNET, Ledyard’s internet banking service, launches The first drive-up branch opens in Hanover, NH A year of significant growth, a new branch opens in West Lebanon, NH; Ledyardbank.com launches; telephone bill-pay is introduced and PC banking for business clients launches Expansion in the Upper Valley continues with a branch opening in Lebanon, NH Celebrating twenty-five years of serving the community Ledyard Financial Group, Inc. is formed as the Holding Company for Ledyard National Bank. Ledyard stock trades under ticker symbol, “LFGP” 2007 Ledyard Bank tops 100 employees Ledyard rebrands the organization with its Plan Well. Live Well. campaign Private Banking services is introduced Ledyard Financial Advisors reaches $1.1 billion in assets under management and custody The Investment & Trust Services division evolves into Ledyard Financial Advisors and establishes its headquarters in Hanover, NH Business NH Magazine names Ledyard Bank as its Financial Services Business of the Year Ledyard Bank celebrates its 25th anniversary 52Y E A R S C E L E B R A T I N G 2 5 Y E A R S 1 Celebrating twenty-five years of serving the community TO OUR MANY CONSTITUENTS including shareholders, valued clients and other community members Kathryn G. Underwood, President & CEO, Ledyard Financial Group/Ledyard National Bank Dennis E. Logue, Chair, Ledyard Financial Group/ Ledyard National Bank In 2016, Ledyard National Bank will celebrate its twenty-fifth anniversary— a milestone that is a source of pride for the entire Ledyard family. We will celebrate the history, culture and successes that have placed us in a position to serve our clients for a quarter century and made us a profitable investment for our shareholders. Ledyard’s story began twenty-five years ago, when a few visionary residents of the Upper Valley came together to imagine something that hadn’t been here before—a leading, independent resource for accessible and highly personalized banking, owned and operated by citizens of the community. This entrepreneurial group of local business leaders envisioned a financial institution that, unlike the few restrictive and inflexible large banks that dominated the landscape at the time, would be known for delivering the 2 L E D Y A R D F I N A N C I A L G R O U P 2 0 1 5 A N N U A L R E P O R T best products, services and advice that truly met the needs of their clients. Our founders pictured an organization that was guided by a simple motto known as “Banking the Way It Should Be,” a concept that still resonates today. Soon thereafter, they formed Ledyard National Bank…with five employees in the downtown Hanover basement of McLaughry’s Real Estate office! While much has changed since we opened our doors two and a half decades ago, the philosophy of personal, professional service that our employees adhered to on opening day is still the cornerstone of Ledyard’s business. The culture that we nourished through the years is still rooted in relationships, partnerships and client education. Therefore, it was only natural to build upon our strong foundation by introducing the Ledyard tagline, “Plan Well. Live Well.” as part of our twentieth anniversary celebration. Its purpose was to better articulate what we strive to achieve for our clients, while paying respect to the principles that contributed to our past success. We believe that by understanding what’s most important to individuals and their families, we’re perfectly positioned to deliver precisely what they need and want at all stages of their financial lives. “Plan Well. Live Well.” is a promise to our clients. It tells them that we are committed to educating, advising and guiding them, as we plan their financial lives together. A handful of original employees are still with us today. They sometimes talk about the excitement they felt in those first few months, bringing in $1 million per week in deposits and realizing that the mission in which they believed resonated powerfully with the broader community. Even then, it was difficult to foresee what Ledyard would achieve in the coming LETTER FROM THE CEO & BOARD CHAIRyears. With over $400 million in total bank assets and over $1 billion in seek new and innovative ways to improve profitability and assets under management by our Wealth Management division, we’ve truly enhance shareholder value. evolved into a premier financial services company that operates across the Upper Valley, Lake Sunapee Region, nationally and internationally. We will continue to be an organization that prepares its constituents for the future instead of borrowing against it. We report to you, against this backdrop, that 2015 was a year of significant accomplishments marked by record net income for the second consecutive year. Ledyard Financial Group’s 2015 financial highlights include the following: n Increased net income to $4.0 million, an increase of 2.3% and a record high n Grew revenue to $22.9 million, an increase of 1.3% and an all-time high We are proud of our many accomplishments and the people that helped n Increased the dividend to common shareholders by 11.6% to $1.92 per define Ledyard’s history. There are too many, in fact, to list in these pages. share; Ledyard has been able to maintain or increase the quarterly dividend Even more exciting to us than what Ledyard has done up until now, is what since first declaring one in 1995 we will do in the years to come. In many respects, our journey is really just beginning. We understand that it is up to us to write the next chapters of the Ledyard story and build upon our success. Our goals are ambitious, yet attainable—we will help our clients achieve their dreams and reinvent what is possible. We will ensure that those accumulated dreams create a community of inclusivity and opportunity that otherwise would not exist without our help. We will work with non-profit partners to improve lives throughout our region, inspiring others to think about the needs of their fellow citizens. We will continue to be an organization that prepares its constituents for the future instead of borrowing against it. Finally, we will n Increased earnings per share by $0.06 to $3.96 per share n Our regulatory capital ratios remained well in excess of the amount required to be considered well-capitalized, the highest designation possible These full-year results demonstrate the strength of a strategic plan that is based on controlling what is in our power to control and has allowed us to realize steady long-term profitable growth. In May, Ledyard was named in American Banker Magazine’s list of top 200 publicly traded community banks in the United States, based on three-year return on average equity. Inclusion in this exclusive list of banks, along with Ledyard’s C E L E B R A T I N G 2 5 Y E A R S 3 LETTER FROM THE CEO & BOARD CHAIRconsistent financial accomplishments through a multitude of challenging economic environments, is a testament to the soundness of our strategic direction, flexibility to navigate a variety of market dynamics and vision to create long-term value for our shareholders. Our priorities include deepening client relationships, increasing fee income, Critical to our success across all priorities is the capability and security of our information systems, as well as the effectiveness of our internal processes. ourselves from our competitors through client engagement. In the last few months, we’ve accelerated our digital transformation efforts, developing superior mobile and online banking functionality in order to serve the needs of those clients who no longer rely solely on our branches. The result is a brand new responsive design website that is completely improving operating efficiency, reducing us to execute targeted marketing campaigns flexible regardless of device. In other words, exposure to risky investments and expanding and better serve our clients. These tools our website now detects a viewer’s screen market share. Critical to our success across all priorities is the capability and security of our information systems, as well as the effectiveness of our internal processes. The work we’ve undertaken improved our ability to connect the right client with the right product at the right size and orientation and changes the layout accordingly to provide an optimal viewing and time, substantially increasing the relevance interactive experience. Whether viewed from of the specific interaction and the relationship a desktop computer, laptop, mobile phone or as a whole. thus far to improve our technology, enhance While investing in technology has been our data infrastructure and broaden our critical for deepening insights into consumer knowledge base has been the central demands, it has also become an increasingly ingredient enabling us to serve our clients important element in helping us deliver a more efficiently, while providing them with banking experience with exceptional service the products and services they need to meet every time, across every channel. In an their financial objectives. This past year, we industry built around products and services leveraged cutting-edge customer information that are primarily the same from one provider tools to enhance our data analytics, allowing to the next, we’ve sought to differentiate 4 L E D Y A R D F I N A N C I A L G R O U P 2 0 1 5 A N N U A L R E P O R T tablet, our enhanced website is easy to read and navigate with a minimum of resizing, panning and scrolling. We are applying these same principles to our online banking platform, creating a consistent look and feel for clients accessing their accounts from their desktops, cell phones or other devices. All in all, our digital initiatives are allowing customers to more easily manage money on-the-go and be more productive in their daily lives. LETTER FROM THE CEO & BOARD CHAIRIn addition to concentrating on the client transfer funds from their bank accounts to experience as a primary differentiator, we another individual’s account via the internet also pay careful attention to our product and or mobile phone. Additionally, we are planning service offerings, ensuring that we remain to roll out instant debit card issuance services modern, relevant and competitive with other that will allow us to provide clients with new financial institutions. To that end, we are in or replacement debit cards on the spot, in the process of rolling out several new services our branches. All three of these services are that make banking with Ledyard even easier. examples of how we are making it even more One of those services is called Mobile Remote convenient to do business with Ledyard. It Deposit Capture. In simplest terms, this is important to note that the technology we service allows clients to scan checks with a embrace complements the myriad of other cell phone’s camera and transmit the scanned ways that we interact with clients, ranging images to Ledyard for deposit. A second from in-branch servicing and face-to-face Darcy Rogers, Ledyard’s Senior Vice President and Director of Operations, presented tips on combatting cybercrime to attendees of Ledyard’s Leading Women education program. example is called person-to-person payments, meetings to mobile banking and video better detect and defend Ledyard against or P2P. This technology allows clients to conferencing. The technology we embrace complements the myriad of other ways that we interact with clients, ranging from in-branch servicing and face-to-face meetings to mobile banking and video conferencing. These improvements in technology, designed to deliver unprecedented convenience and efficiency, are balanced against a growing cybersecurity concern. From petty criminals using home computers to organized networks of hackers, cybercrime is a serious threat that demands increased investments in information security hardware, software, services, training and testing. These investments serve to sophisticated electronic attacks that attempt to penetrate the bank’s systems and steal its data, including private client information. In this respect, we long for the days in which bank security primarily involved guards, armored vehicles and steel vaults. Wishful thinking aside, we continue to hone our security protocols. For example, we are in the process of providing our clients with new chip-enabled debit cards that offer greater security against fraud and identity theft. C E L E B R A T I N G 2 5 Y E A R S 5 LETTER FROM THE CEO & BOARD CHAIR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 Another core element of Ledyard’s mission is community support. Our civic involvement is built upon a charitable giving program that allows us to impact our neighbors in ways that go beyond day-to-day business activities. We play an important role in helping local charitable organizations throughout our communities stay vibrant and successful. Working together with our non-profit partners, we help advance the causes of education, contribute to improving human services, such as the health and well-being of children and adults, provide community development resources and advance the arts and humanities. Ledyard is a proud contributor to Northern Stage’s capital campaign, enhancing community theater in the Upper Valley. Pictured at the Hard Hat Tour (l-r) Dennis Mitchell; Rick Roesch, Campaign for Northern Stage co-Chair (and former Ledyard Board Member); Eric Bunge, Northern State Managing Director; and Kathy Underwood. 6 L E D Y A R D F I N A N C I A L G R O U P 2 0 1 5 A N N U A L R E P O R T We help advance the causes of education, contribute to improving human services such as the health and well-being of children and adults, provide community development resources and advance the arts and humanities. A critical component of our charitable giving program is focused on addressing the hardships and challenges faced by our neighbors in need of financial support. Thus, we allocate at least one-third of our total contributions budget to organizations that address the needs of those in the low-to-moderate income segment of our communities. Ledyard’s work in this area reflects the values that the bank was built upon and that we perpetuate to this day. Our largest philanthropic activity of 2015 was, once again, a joint effort with the American Heart Association (AHA). As we reported to you last year, Ledyard began its affiliation with the AHA by promoting a campaign called “Go Red for Women.” Go Red is a movement to help dispel the myths and raise awareness of heart disease as the number one killer of women. Our campaign objectives were to foster that awareness, encourage action to save more lives and share crucial information about heart health, in general. Ledyard adopted this cause for a multitude of reasons, including that the Go Red mission matched perfectly to Ledyard’s inspirational tagline, “Plan well. Live well.” By educating the public 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 about heart disease, we believed that the increased awareness would help members of our community live healthier, longer lives. Our award- winning public relations activities were even honored by the New England Financial Marketing Association, recognizing “companies that went the extra mile and had the courage and vision to move outside the status quo.” Our vision for community wellness did not end with the Go Red campaign. We created and managed the first annual Ledyard Live Well Walking Challenge— a “healthy competition” among local organizations. Understanding the importance of exercise on heart health and realizing that we needed to do Walking Challenge team members on a stroll through Hanover more than simply raise awareness, we invited three local companies to join us in a four-week challenge to determine which company could walk the most steps. The final results were staggering—the 308 participants together walked an astonishing 74,143,179 steps, equal to one and a half times around the earth and lost nearly 1,000 pounds in the process! We can’t wait to launch the second annual walking challenge in the fall of 2016. As a final note regarding our commitment to heart health awareness, we took many steps over the last few years to encourage, motivate and educate our employees about the benefits of living a healthy lifestyle. With leadership from our Wellness Committee, Ledyard met criteria across the lines of physical activity, nutrition, smoking policy and workplace culture. The AHA recently recognized our achievements, awarding us with the official designation of Gold Level Ledyard employees showed their support for the American Heart Association Fit-Friendly Worksite. C E L E B R A T I N G 2 5 Y E A R S 7 LOOKING AHEAD TO 2016 As always, we are energized by the opportunity and potential we have We are one year further into the execution of our strategic plan and, in this organization. A few of our key goals include the following: as we’ve described in the preceding pages, we continue to make 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 Serve the core financial needs of our clients n Introduce new, simple and easy-to-understand products that, together with our current offering, will serve the full spectrum of client needs n Manage risk with appropriate controls, continue to improve credit quality and ensure that risk management capabilities are in line with regulatory expectations n Maintain strong capital and liquidity n Further develop cybersecurity protocols important progress in an increasingly regulated, competitive and dynamic environment. While the banking landscape transitions around us, our strategic goals remain unchanged. We understand that banking is an advice and service business, not a product business. We are supported by great people, powerful relationships, a strong heritage and a relevant brand. We remain focused on the long term and the things we can control, such as reducing expenses, growing loans and attracting new wealth management clients. Our prudent banking policies, strong capital position and sound investment strategy has positioned Ledyard well for the future. Thank you to our shareholders, clients, employees and board members for their trust, support and confidence in our company. You have been, and will continue to be, the key to Ledyard’s success. n Invest in our people so they can reach their full potential, while attracting prospective employees who want to excel and grow KATHRYN G. UNDERWOOD PRESIDENT & CEO LEDYARD FINANCIAL GROUP/ LEDYARD NATIONAL BANK DENNIS E. LOGUE CHAIR LEDYARD FINANCIAL GROUP/ LEDYARD NATIONAL BANK 8 L E D Y A R D F I N A N C I A L G R O U P 2 0 1 5 A N N U A L R E P O R T LETTER FROM THE CEO & BOARD CHAIR 2015 ACHIEVEMENTS Named in American Banker Magazine’s list of TOP 200 publicly traded community banks in the United States Jeff Marks (left), Ledyard’s Senior Vice President & Chief Marketing Officer, accepting the New England Financial MARKETING AWARD for Ledyard’s public relations campaign about heart health Voted winner in the Best Financial Planning Service category Kathy Underwood, President & CEO, accepting the New Hampshire Bankers Association’s Community Banker of the Year Award Recognized by the American Heart Association as a GOLD LEVEL Fit-Friendly organization Voted winner in the BEST FINANCIAL SERVICES category by Valley Business Journal readers C E L E B R A T I N G 2 5 Y E A R S 9 “ Ledyard Financial advisors is the perfect, complete wealth management firm for me, from overseeing my investments, preparing my tax returns, or even handling those “what do I do with these?” documents. Their first-class service makes me feel secure, supported and valued, allowing me to be confident in living my life as I imagined. I appreciate Ledyard’s educational component, developing and hosting luncheons designed to inform interested female clients about issues relating to everything from estate planning documents we should consider to helping us maintain good health. I don’t know of any other bank that focuses more on the needs of women, without, of course, neglecting the needs of men. Other women, if they are anything like me, feel like Ledyard always treats women as first-class citizens in their own right. In addition, Ledyard is extremely community focused and generous in supporting the local organizations that help our community thrive!” Barb Jones, Financial Advisors client W E A L T H M A N A G E M E N T 1 0 L E D Y A R D F I N A N C I A L G R O U P 2 0 1 5 A N N U A L R E P O R T LETTER FROM THE CEO & BOARD CHAIRLedyard Financial Advisors is the premier wealth THIRTEEN WEALTH MANAGEMENT ISSUES management firm providing integrated investment, tax and wealth management services to affluent individuals and families throughout the Upper Valley and Lake Sunapee Region, with the mission of preserving and enhancing our clients’ wealth. We offer a unique combination of global investment opportunities, asset management strategies, expert financial advice and personal service and support. These services are provided by the area’s largest and most experienced staff of financial advisors and portfolio managers utilizing a framework of potential wealth management issues. Our approach to providing these services is driven by the needs of our clients and their families. It is our only focus and we dedicate the time necessary to evaluate their current situations and family dynamics. Only then Distribution of Wealth Investments Executor/Trustee Retirement Plans & IRAs Titling of Assets Charitable Giving Taxes Banking Family Gifting Financial Planning Durable Power of Attorney Business Succession Insurance LEDYARD FINANCIAL ADVISORS 2015 HIGHLIGHTS: n Generated $8.4 million in revenue, an increase of 3.3% and a record high do we develop a comprehensive program to meet their n Added approximately $114 million in new assets, specific and unique needs, based on thirteen critical resulting in gross new business revenue of $720K wealth issues. n Ended the year with over $1 billion in assets under management and custody for the third year in a row C E L E B R A T I N G 2 5 Y E A R S 11 LETTER FROM THE CEO & BOARD CHAIR“ While managing our dermatology practice and patient responsibilities, we needed to find a bank that we could count on to oversee our finances while understanding our goals. Working with Ledyard’s Private Banking division over the last two years has been the perfect fit. We worked closely with Ledyard to have our mortgage, home equity line of credit, and our investments all in one place. With the first-class service and attention to detail we have grown to expect from Ledyard Private Banking, we have the freedom and peace of mind to focus on our patient care, knowing that they are taking care of us.” Dr. Michael Shane Chapman and Dr. Nicole Pace Private Banking clients P R I V A T E B A N K I N G 1 2 L E D Y A R D F I N A N C I A L G R O U P 2 0 1 5 A N N U A L R E P O R T The Private Banking group is designed to better service PRIVATE BANKING 2015 HIGHLIGHTS: 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 are n Originated $12.4 million in new residential mortgages and $4.3 million in new home equity lines of credit provided a seamless banking experience with a single n Opened 69 demand deposit accounts, collecting point of contact that is designed to holistically match $3.5 million in new retail deposit balances their needs with the right products and services. From coordinating a client’s personal banking and investment strategies to providing the financial tools and guidance to manage the business needs of a professional practice, we strive to exceed our clients’ expectations every day. Our ultimate goal is to provide an experience that is comprehensive, aspirational and responsive in a manner that is tailored to each client’s unique needs. n Originated $1.4 million in new commercial loans n Generated, along with Ledyard Financial Advisors, $7.5 million in new investment assets n Established relationships with 23 new professional clients, their practices and their families C E L E B R A T I N G 2 5 Y E A R S 1 3 “ Since choosing Ledyard as our banking partner five years ago, Ledyard has worked hard to learn about our business, our company and us as individuals. As a result, the relationship has grown and developed in a way that allows Ledyard to better support our efforts and contribute to the growth and success of our business. We recently expanded our lending relationship with the bank, enabling us to purchase three state-of-the-art pieces of equipment for our manufacturing facility in West Lebanon, New Hampshire. This new equipment has brought our production capabilities to the next level, has allowed us to significantly reduce our energy consumption and improve our efficiency, while decreasing waste and improving our bottom line. Ledyard is committed to helping us succeed and we look forward to our ongoing relationship with them as our business evolves.” Steve and Scott Tassinari, Owners, Moto Tassinari Personal and Business Banking clients P E R S O N A L A N D B U S I N E S S B A N K I N G 1 4 L E D Y A R D F I N A N C I A L G R O U P 2 0 1 5 A N N U A L R E P O R T Building relationships is central to the activities of established a better understanding of local needs. This Ledyard’s Personal and Business Banking teams. We type of background knowledge is a valuable ingredient invest in local families and businesses, while making a in providing solutions that work best for both parties. difference in the communities where we live and work. It helps us assess the challenges and opportunities Individuals and families alike have come to rely on Ledyard’s Personal Banking group to provide the most relevant financial advice, to offer customized solutions to help attain their goals, or even to coordinate the overall management of their finances. Others rely on us for their mortgages, home equity loans, checking and savings accounts and other banking solutions. Local businesses look to Ledyard’s Business Banking team for the loans and financial services they need to thrive and create jobs, allowing us to put money back to work in our local communities. Our experienced Business Bankers are not just “lenders,” rather they are true partners in growth and focus on strong underwriting and credit management practices. Our team is adept at guiding clients through financial booms as well as through struggling economies. By residing and working in the same community, we’ve that the partnership will bring and strategize ways to achieve success. PERSONAL AND BUSINESS BANKING 2015 HIGHLIGHTS: n Grew commercial loans outstanding by $3.9 million, an increase of 2.6% n Grew deposits by $7.8 million, an increase of 2.2% n Grew net interest income by $102.2K, an increase of 0.8% C E L E B R A T I N G 2 5 Y E A R S 1 5 “ There are no words to describe how pleased we are with our mortgage at Ledyard. We found their team to be very helpful and prompt with follow up during the process, and the experience was absolutely wonderful and exceptional in every way. Due to the responsiveness of Ledyard’s mortgage department, we are in the midst of moving all of our personal banking needs to Ledyard and have become their community ambassadors. Keep up the great work!” Melanie Isett, Mortgage client M O R T G A G E S A N D C O N S U M E R L E N D I N G 1 6 L E D Y A R D F I N A N C I A L G R O U P 2 0 1 5 A N N U A L R E P O R T Ledyard’s Mortgage and Consumer Lending Team We also serve as knowledge providers to our clients, strives to provide clients with the best possible advice ensuring that they understand what to expect and solutions that meet their financing needs. The throughout the loan process. MORTGAGE AND CONSUMER LENDING 2015 HIGHLIGHTS: n Closed 169 mortgages, totaling $35.1 million, an increase of 2% n Closed 59 Home Equities, totaling $9.2 million, an increase of 25% team’s expertise, along with Ledyard’s local decision- making process, produces an incredibly easy and fast experience for our clients. Our monthly customer and realtor surveys, designed to garner critical feedback on our mortgage process, have been invaluable tools to help us better define our overall service delivery and communication standards. In the last year, we incorporated survey suggestions that enhanced our brand, complemented many of our other products and created powerful connections with clients for whom a home purchase will likely be the most important financial transaction of their lives. We are committed to finding the best solutions for our clients and exhaust all efforts to match each client with the right products for his or her needs. In order to do so, we listen carefully. We proactively communicate with our clients and realtor partners to ensure the service experience is beyond their expectations. M O R T G A G E S A N D C O N S U M E R L E N D I N G C E L E B R A T I N G 2 5 Y E A R S 1 7 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, 2015 2014 2013 2012 2011 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 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 Assets under management and custody (millions) Equity-to-asset ratio Allowance for loan losses to total loans Net charge-offs (Recoveries) Non-performing assets Allowance for loan losses to non-performing assets Texas Ratio $ 446,070 141,598 276,673 (5,706) 270,967 372,937 14,000 15,085 44,048 $ 12,827 8,437 1,722 22,986 0 17,811 5,174 1,113 4,061 $ 434,289 129,070 274,324 (5,744) 268,580 365,682 14,000 12,595 42,012 $ 12,725 8,170 1,789 22,684 0 17,619 5,065 1,096 3,969 $ 409,516 137,826 245,097 (5,564) 239,534 342,245 15,029 14,072 38,170 $ 11,490 7,579 1,479 20,548 0 16,626 3,922 913 3,009 $ 401,800 143,966 231,705 (5,656) 226,049 337,294 9,551 16,928 38,028 $ 11,155 6,990 2,292 20,437 0 16,794 3,643 803 2,840 $ 390,442 140,755 216,496 (5,707) 210,789 312,526 19,859 21,088 36,970 $ 11,442 6,856 1,991 20,289 675 16,260 3,354 745 2,609 $ $ 3.96 1.92 48% 42.81 1,028,780 0.93% 9.26% 77.41% 60.00 46.25 49.88 1,071 9.55% 2.06% $ 37,335 $ 2,497,494 228% 5.59% $ $ $ $ $ $ 3.90 1.72 44% 41.19 1,019,888 0.94% 9.90% 77.58% 50.50 39.59 44.16 1,093 9.17% 2.09% ($ 179,903) $ 2,254,786 255% 4.90% $ $ $ $ $ $ 2.98 1.44 49% 37.65 1,013,684 0.74% 7.90% 80.79% 42.00 34.35 38.30 1,064 8.99% 2.27% $ 92,030 $ 2,510,089 222% 5.84% $ $ $ $ $ $ 2.80 1.30 46% 37.72 1,008,271 0.72% 7.57% 82.05% 34.95 27.25 31.82 902 8.74% 2.44% $ 50,900 $ 2,298,030 246% 5.56% $ $ $ $ $ $ 2.56 1.24 49% 36.20 1,021,227 0.66% 7.40% 80.14% 36.00 29.00 31.78 895 9.48% 2.64% $ 1,275,000 $ 5,267,024 108% 13.08% $ $ $ $ 1 8 Complete Ledyard Financial Group 2015 audited financial statements can be found under “Investor Relations” at ledyardbank.com. S E N I O R M A N A G E M E N T T E A M As of Februar y 1, 2016 Front Row (l-r): Jeffrey H. Marks Senior Vice President & Chief Marketing Officer Kathryn G. Underwood President & Chief Executive Officer Dennis B. Mitchell, CFP® President & Managing Director, Ledyard Financial Advisors Back Row (l-r): Reginald E. Greene Jr. Executive Vice President & Director, Lending and Credit Gregory D. Steverson Executive Vice President, Chief Operating Officer & Chief Financial Officer Kevin D. Kober Senior Vice President & Senior Consumer/Mortgage Lending Officer Barbara S. Graf Senior Vice President & Human Resources Director Darcy D. Rogers Senior Vice President, Chief Information Officer & Director of Operations C E L E B R A T I N G 2 5 Y E A R S C E L E B R A T I N G 2 5 Y E A R S 1 9 1 9 B O A R D O F D I R E C T O R S As of Februar y 1, 2016 Front Row (l-r): Dennis E. Logue Steven Roth Professor of Management Emeritus, Tuck School of Business, Dartmouth College; Chair, Ledyard Financial Group Kathryn G. Underwood President and Chief Executive Officer, Ledyard Financial Group Bayne Stevenson President, Bayson Company Margaret M. Rightmire Consultant and Community Volunteer Back Row (l-r): Richard W. Couch, Jr. Chairman of the Board, Hypertherm, Inc. Andrew A. Samwick Professor of Economics and Director, Nelson A. Rockefeller Center at Dartmouth College Robert O. Wetzel Retired, Senior Partner, Accenture plc Bruce P. King President & Chief Executive Officer, New London Hospital Cotton M. Cleveland President, Mather Associates Douglas G. Britton Retired President, Britton Lumber Company, Inc.; Secretary, Ledyard Financial Group James W. Varnum Retired President, Dartmouth-Hitchcock Alliance, Mary Hitchcock Memorial Hospital; Co-Vice Chair, Ledyard Financial Group Adam M. Keller Chief of Strategy and Operations, The Dartmouth Institute for Health Policy and Clinical Practice; Co-Vice Chair, Ledyard Financial Group 2 0 L E D Y A R D F I N A N C I A L G R O U P 2 0 1 5 A N N U A L R E P O R T Cover: Features imagery from past annual report covers (various sources previously credited) in honor of our 25th anniversary Interior: Jon Gilbert Fox, Zak Gourley, Ben DeFlorio, Northern Stage, Ledyard employees and courtesy photos PHOTOGRAPHY CREDITS 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: Features imagery from past annual report covers (various sources previously credited) in honor of our 25th anniversary Interior: Jon Gilbert Fox, Zak Gourley, Ben DeFlorio, Northern Stage, Ledyard employees and courtesy photos L EDYA RD NATI ON AL B AN K HANOVER 38 S. MA IN S TRE ET 603.643.2244 LOBBY, WALK - U P & ATM LEBA NON STREET AT PARK S TREE T 603.643.7457 LOB BY, DRIV E- UP & ATM LEBANON ROUTE 120 AT OL D E TNA ROA D 603.448.2220 LOBBY, DRI VE -U P & ATM LYME ON THE G REEN 603.795.2288 LOBBY & ATM NEW LONDON 178 COUNTY ROAD 603.526.7725 LOBBY, DRIV E- U P & ATM NORWICH, VERMONT 320 MAI N STREET 8 02.649.2050 L OB BY, DRI V E- U P & ATM WEST LEBANON 67 MAI N STREE T 603.298.9 44 4 LOBBY, DRI V E- UP & ATM KWIKNET INTERNET BANKING ledyardbank.com KWIKTEL PHONE BANKING 1.888.KW IKTE L (1.88 8. 59 4.5835 ) EQUAL HOUSING LENDER MEMBER FDIC L EDYA RD FINA N CIA L A DVI SOR S HANOVER 2 MAP LE STREE T 6 03 .6 43 .0 04 4 NEW LONDON 178 COUNTY ROAD 603.526.9251 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. 

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