2019 ANNUAL REPORT 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 TO OUR MANY CONSTITUENTS including shareholders, valued clients and community members Kathryn G. Underwood President && CEO Ledyard Financial Group Ledyard National Bank Margaret M. Rightmire Chair, Ledyard Financial Group Ledyard National Bank We have a great deal to celebrate as we look back on 2019, and we are pleased to report it was another year full of significant accomplishments marked by strong performance and sustained engagement with our clients, prospects and community. Since Ledyard’s founding in 1991, we have stayed true to the bank’s founding principles of delivering unparalleled personal service, developing and maintaining strong relationships with clients, increasing value for our shareholders and empowering employees to fulfill their potential. At the core of Ledyard’s guiding principles is the notion we truly understand the critical role we play in the lives of our clients. We seek to make a difference in their lives by comprehensively supporting their financial needs. Those needs range from buying a new home to sending kids to college, and from starting a new business to planning for retirement. In a nutshell, our mission remains constant, helping our clients achieve what matters to them most! To that end, we worked diligently in 2019 to execute a major component of our strategic plan — a complete overhaul of our organization’s core banking system — ushering in the cutting-edge technology required to deliver a banking experience defined by each client’s unique preferences. A key aspect of this immense upgrade allows us to introduce many new banking products and services that have become increasingly relevant to our clients, and to ensure Ledyard is well- positioned to continue delivering the most sophisticated, technology-based products available. A few examples include the following: • Ledyard CardValet, a mobile phone app that helps clients protect the cards in their wallets. With this security technology, clients can receive mobile alerts whenever their card is used, set customized purchase controls to help manage spending or even disable lost or stolen cards to prevent fraudulent activity. L E D Y A R D N A T I O N A L B A N K 2 0 1 9 A N N U A L R E P O R T • uChoose Rewards®, a new debit card rewards program that offers clients the flexibility to redeem points for travel, gas, groceries, gift cards and more. • eWallet capabilities such as Apple Pay, Google Pay and Samsung Pay that allow clients to pay for purchases via their mobile devices. • A Health Savings Account (HSA) that enables account owners to contribute funds on a pre-tax basis for many out-of-pocket medical expenses. • Ledyard’s Platinum Checking Account, a redesigned flagship checking account product with access to all the best Ledyard has to offer, including special deposit rates and ATM fee refunds. Our work has continued to garner industry and community recognition. For example, for the fifth year in a row, we were recognized by American Banker Magazine as being among the top 200 publicly traded banks with under $2 billion in assets. The rankings, based upon a three-year return on average equity, demonstrated the bank’s ability to use its equity efficiently. As the only New Hampshire community bank on the list, we see it as a true testament to our employees and their unwavering enthusiasm for our core values. Further, we were also recognized as one of the top providers of financial services in the Valley News’ annual Reader’s Choice Awards. Finally, we were named one of Business NH Magazine’s 2019 Best Companies to Work For, and were recognized for creating a workplace that attracts and retains talent by proactively striving to engage employees through meaningful work, seeking opportunities to better its communities and pursuing ways to better ourselves collectively and individually. Ledyard’s commitment to delivering the highest levels of banking expertise, as well as our dedication to clients and community, contributed to record performance and strong momentum entering the new year. Ledyard Financial Group’s 2019 financial highlights include the following: • Increased net income to $5.8 million, an increase of 13% over 2018 and an all-time high • Grew revenue to $28.7 million, an increase of 3.9% over the prior year and a record high • Increased earnings per share by $0.19 to $1.85 per share • Raised our dividend to shareholders by $0.04 to $0.74 per share; we’ve maintained or increased the quarterly dividend since first declaring one in 1995 • Ledyard Financial Advisors’ revenue grew by 3.6% to $10.9 million, an all-time high • Ledyard Financial Advisors’ Assets Under Management && Custody totaled $1.7 billion, an increase of $264 million over 2018 and a record high • Our regulatory capital ratios remained well in excess of the amounts required to be considered well-capitalized, the highest designation possible 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 2020, we are incredibly optimistic about Ledyard’s future. This is an exciting time for us as we work diligently to continue our leadership role in the financial services industry. As we build upon our unique value proposition, strong culture and technology-driven banking platform, Ledyard continues to offer the best in relationship banking and wealth management services. We feel more certain than ever our strategic plan is coming to fruition as our initiatives build upon each other and deliver the revenue and profitability we forecasted. For instance, we are currently targeting mid-2020 for the opening of our first full-service branch in Concord, New Hampshire. This addition to the Concord, New Hampshire community will complement the existing Ledyard Financial Advisors office we opened in 2017. This new full-service branch will be located only a short distance from Ledyard’s wealth management office and will feature an innovative design that removes the traditional barriers between clients and branch personnel. Cutting-edge technologies and an Interactive Teller Machine will combine with expanded hours and the highest level of personalized service to enhance the banking experience. In summary, we are better positioned than ever to address the ever-increasing needs of our personal, business and wealth management clients through education, advice, guidance, technology and product set. The following is a sampling of key goals that remain consistent with years past: • Continue to improve key financial metrics and increase profitability • Remain focused on growing core revenue and improving efficiency • Grow our dividend steadily and share Ledyard’s success with our shareholders • Serve the core financial needs of our clients • Maintain strong capital and liquidity • Manage risk with appropriate controls, continue to improve credit quality and ensure risk management capabilities are in line with regulatory expectations • Invest in our brand • Invest in technology and cybersecurity • Invest in our people Thank you to our shareholders, clients, employees and board members for your trust, support and confidence in our company. You have been, and will continue to be, the key to Ledyard’s success. KATHRYN G. UNDERWOOD President & CEO Ledyard Financial Group/Ledyard National Bank MARGARET M. RIGHTMIRE Chair Ledyard Financial Group/Ledyard National Bank L E D Y A R D N A T I O N A L B A N K 2 0 1 9 A N N U A L R E P O R T T E C H N O L O G Y A SEAMLESS CLIENT EXPERIENCE eWALLET Pay simply and securely from your phone with: INTERACTIVE ATMS Access tellers via live video at ATMs. ONLINE & TELEPHONE BANKING Bank however is easiest for you. E-SIGNATURE Seamlessly open a new account online with a digital signature. PERSON-TO-PERSON PAYMENTS Securely transfer funds on your computer or mobile device. uCHOOSE REWARDS Flexible reward points you can redeem at hundreds of merchants. MONEYMAP Effortlessly manage your finances in one place. MOBILE & APP BANKING Get alerts, check balances, make transfers and more with your phone. CARDVALET Use the mobile app to control and protect the cards in your wallet. 2 0 1 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, 2019 2018 2017 2016 2015 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 Allowance for loan losses to non-performing assets Texas Ratio $ 500,391 137,621 $ 488,062 $ 476,630 142,798 143,306 $ 476,306 147,337 $ 446,070 141,598 325,268 (5,213) 310,776 (5,215) 300,608 (5,510) 294,866 (5,700) 276,673 (5,706) 320,055 393,011 305,561 409,066 295,098 401,498 289,166 401,984 270,967 372,937 $ 29,783 21,463 56,134 16,076 10,887 1,803 28,766 0 22,102 6,664 848 5,816 $ $ 16,433 14,071 48,493 15,484 10,512 1,682 27,678 0 21,752 5,927 775 5,152 13,966 14,523 46,643 14,481 9,437 1,427 25,345 0 20,137 5,208 1,363 3,845 $ $ 20,000 11,433 42,889 13,257 8,315 2,038 23,610 0 18,474 5,136 1,008 4,128 14,000 15,085 44,048 12,827 8,437 1,722 22,986 0 17,811 5,174 1,113 4,061 $ $ $ 1.85 0.74 40% 17.19 $ $ $ 1.66 0.70 42% 15.02 $ $ $ 1.25 0.65 52% 14.63 $ $ $ 1.34 0.64 48% 14.03 $ $ $ 1.32 0.64 48% 14.27 3,265,475 1.15% 10.99% 76.81% 25.00 19.10 21.05 $ $ $ 3,328,532 1.06% 10.82% 78.51% 24.00 21.05 22.17 $ $ $ 3,188,075 0.78% 8.38% 79.45% 22.99 17.78 20.16 $ $ $ 3,057,978 0.89% 9.10% 78.25% 18.33 $ 15.33 $ 16.13 $ 3,086,430 0.93% 9.26% 77.49% 20.00 15.42 16.63 $ $ $ $ 1,723 10.74% $ 1,459 10.11% $ 1,513 9.47% $ 1,157 9.30% $ 1,071 9.55% 1.60% 1.68% 1.83% 1.93% 2.06% 446% 2.18% 153% 6.76% 266% 4.31% 213% 5.76% 228% 5.59% * Adjusted for 3-for-1 stock split. Complete Ledyard Financial Group 2019 audited financial statements can be found under “Investor Relations” at ledyardbank.com. Certain reclassifications have been made to the prior period information to conform to the current period presentation. N E W B R A N C H OPENING 2020 Ledyard National Bank, Concord Branch, 74-76 South Main Street We’re excited to announce the opening of our newest branch in Concord, New Hampshire this summer. This addition to the Concord community will complement Ledyard’s existing regional office that opened in 2017 at One Pillsbury Street. Located at 74-76 South Main Street, the new full-service branch will feature an innovative design that removes the traditional barriers between clients and branch personnel. Cutting- edge technologies and an Interactive Teller Machine will combine with expanded hours and the highest level of personalized service to enhance the banking experience. We’re thrilled to be expanding further into Concord, New Hampshire. As a community bank, we look forward to offering even more services in Concord and meeting the personal and business banking needs of the community, helping to support local businesses and contributing to the economic growth of the area. S E N I O R M A N A G E M E N T T E A M * B O A R D O F D I R E C T O R S * Kathryn G. Underwood President && Chief Executive Officer Margaret M. Rightmire Chair, Ledyard Financial Group Gregory D. Steverson Executive Vice President, Chief Operating Officer && Chief Financial Officer Bruce P. King President && Chief Executive Officer, New London Hospital; Co-Vice Chair, Ledyard Financial Group Dennis B. Mitchell, CFP® President && Managing Director, Ledyard Financial Advisors Susan A. Fernald Senior Vice President && Senior Banking Operations Officer Barbara S. Graf Senior Vice President && Human Resources Director William E. Kidder Jr. Senior Vice President && Senior Lending Officer William R. Logan, CWS® Senior Vice President && Private Banking Manager Andrew A. Samwick Professor of Economics at Dartmouth College; Co-Vice Chair, Ledyard Financial Group Kathryn G. Underwood President and Chief Executive Officer, Ledyard Financial Group Mark Beliveau Partner, Gallagher, Flynn && Company, LLP Jay Benson CEO, Simon Pearce US Douglas G. Britton Retired, former President, Britton Lumber Company, Inc.; Secretary, Ledyard Financial Group Jeffrey H. Marks Senior Vice President && Chief Marketing Officer Cotton M. Cleveland President, Mather Associates Willemien Dingemans Miller Director, Downs Rachlin Martin, PLLC Teresa Rhodes Rosenberger President, Devine Strategies Robert O. Wetzel Retired, Senior Partner, Accenture plc Michael M. Parisi Senior Vice President && Senior Retail Banking Officer Darcy D. Rogers Senior Vice President, Chief Information Officer && Director of Operations Paul W. St. Martin Senior Vice President && Chief Technology Officer Michael T. Urnezis Senior Vice President, Senior Consumer && Mortgage Lending Officer * A s o f D e c e m b e r 31, 2019 LEDYARDBANK.COM 888.746.4562 CONCORD | HANOVER | LEBANON | LYME | NEW LONDON | NORWICH, V T | WEST LEBANON 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. Follow us on EQUAL HOUSING LENDER MEMBER FDIC