Ledyard Financial Group, Inc.
Annual Report 2021

Plain-text annual report

ENERGIZING RELATIONSHIPS. EMBRACING TECHNOLOGY. EXPANDING OPPORTUNITY. 2021 ANNUAL REPORT LETTER FROM THE CEO & BOARD CHAIR 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 As another year of historic and unprecedented circumstances draws to a close and we slowly begin to adapt to the Covid-19 pandemic, we hope that you and your families are healthy and safe. It’s fair to say that the global health crisis has continued to challenge us, both personally and professionally. What we’ve navigated together is nothing short of extraordinary. Despite the complexities presented by the unknown, it has been a year of hope and increased optimism. We’re incredibly proud of our employees, leadership team and board of directors as they demonstrated, once again, their dedication to our clients, partners, each other, Ledyard’s values and its “Plan well. Live well.” philosophy. Their care and compassion did not go unnoticed! Our team of banking professionals adjusted to an ever-changing operating environment, with many working remotely or employing a hybrid structure, splitting time between the office and home. We’re proud of all our employees who consistently went the extra mile for their clients, whether at the desk, the branch drive-up or even the kitchen table! Our employees, once again, proved that they are flexible, adaptable, and creative in the ways they seamlessly took care of Ledyard’s clients — just one more extension of the “Plan well. Live well.” mindset. For all the disruption that the pandemic has wrought, last year’s record performance demonstrates that our financial position remains strong and our core businesses continue to thrive in a difficult operating environment. LEDYARD FINANCIAL GROUP’S 2021 FINANCIAL HIGHLIGHTS: ◆ Increased net income to $7.77 million, an increase of 15.4% over 2020 and a record high ◆ Grew revenue to $33.3 million, an increase of 4.7% over the prior year and an all-time high ◆ Increased earnings per share by $0.29 to $2.42 per share ◆ Our dividend to shareholders increased by $0.04 to $0.80 per share; we’ve maintained or increased the quarterly dividend since first declaring one in 1995 ◆ Ledyard Financial Advisors revenue grew by 13.4% to $13.2 million, an all-time high ◆ Our regulatory capital ratios remained well in excess of the amounts required to be considered well-capitalized LEDYARD NATIONAL BANK 2021 ANNUAL REPORTLETTER FROM THE CEO & BOARD CHAIR From the moment I met Ledyard Bank’s Commercial team, I knew that Lakes Media had a partner in our business that truly took interest in our success. One very valuable lesson I learned about life was from my mom: She used to say “Dirk, you don’t really know someone till you’ve been through GOOD times and BAD times.” Well, during the Covid crisis things weren’t good until Ledyard proactively reached out to me to suggest I apply for PPP funding. They were always accessible and there for me! While many busi- nesses around us suffered because their banks didn’t return phone calls, Ledyard overcommunicated and swiftly handled our PPP funding giving us the ability to continue operating. It’s in these moments you truly learn about people and institutions. I’m a lifelong Ledyard customer because they’ve earned my deepest respect. Dirk Nadon, Owner & General Manager Lakes Media New Hampshire WWLK-FM / Lakes FM 101.5 WLKZ-FM / 104.9 The Hawk Some say that the best relationships are forged during chal- lenging times, and we’ve experienced that sentiment many times in the last few years. Notably, our Commercial Banking team’s commitment to helping our business clients under- stand the SBA’s PPP process helped them utilize the program to its maximum benefit and, most importantly, survive and thrive. Their perseverance and tireless efforts helped our clients keep their restaurants open, store shelves stocked, medical practices running and day-care facilities open. To add additional perspective, in 2021 Ledyard produced over 190 PPP loans totaling $17 million and saving more than 1,700 jobs. These results come on top of our outstanding PPP accomplishments of 2020 when we disbursed over $40 million into the local economy. 1,731 JOBS SAVED 192 LOANS $17MM PPP LOANS CLIENTS ACROSS 7 STATES While politics and the pandemic garnered so much of the past year’s headlines, Ledyard quietly strengthened its foundation through significant investments in technology, products/processes and people. In August, Dennis Mitchell, Ledyard’s head of the Wealth Management division for the previous decade, retired and passed the baton to Michael Hakoun, our new Managing Director of Ledyard Financial Advisors. We thank Dennis for his immense contribution to our organization and wish him joy and relaxation in his retirement. At the same time, we welcome Michael with enthusiasm and look forward to the many advancements the Financial Advisors will undergo during his tenure. One of these leaps forward incorporates the use of advanced tech- nology that complements the personal relationships we’ve built with our clients. LEDYARD NATIONAL BANK 2021 ANNUAL REPORTLETTER FROM THE CEO & BOARD CHAIR Ledyard’s new Live Well Planning Tool allows our advisors and portfolio managers to better plan across the client life cycle, addressing needs as they evolve. This digital tool enhances the interactive and collaborative processes and fosters a deeper understanding of clients’ goals, including how to achieve them. OUR FOCUS IS ON MAKING THE BANKING EXPERIENCE MORE RELEVANT, MORE CONVENIENT AND SAFER THAN EVER. The Live Well Planning Tool is just one example of how the bank, across its many divisions, helps clients strategize and implement a plan to accomplish the things they truly care about. Our approach focuses on future needs and aspirations, leveraging scenario planning exercises to help pre-experience the potential outcomes such as selling a business, buying a second home, financing a child’s education or retiring. The power that clients experience by having their full financial “picture” in one place is comforting, instructive and immeasurable. It’s important to understand that the ways in which we use client information offers a stark contrast to Financial Technology companies such as Robinhood. While most Fintechs are narrowly focused, they do not “put it all together” comprehensively the way Ledyard does. It’s often the simple questions that matter most — “what’s important to you?” or “what are your goals and challenges?” And because we know our clients, their families and their aspirations we can even address less obvious questions such as, “how do I navigate Medicare and Social Security?” As we noted above, the technology must complement the people in order to be most effective, and we believe we’ve hit the right balance to maximize client outcomes. This type of insight is core to Ledyard’s focus on making the banking experience more relevant, more convenient and safer than ever. For example, in addition to enhancements that improved our online banking platform or streamlined our online consumer loan application process, we also introduced a more sophisticated Personal Financial Management tool for our clients called MoneyMap. This PFM tool securely provides clients with a seamless ability to view all their data in a single platform and enables them to maintain or achieve financial wellness via tools that range from account aggregation to debt management. Ultimately, our digital offerings will help us provide better assistance to those that seek our expertise. Building upon our discussion above, we believe that no asset is more necessary or strategic than data itself. Recently, International Data Corporation, the premier global provider of market intelligence for the informa- tion technology market, forecasted that global data creation and replication will experience a compound annual growth rate of 23% over the next few years. Therefore, having a strategy to handle and interpret this deluge of facts and figures is critical to the success of our business. In the last year, we’ve made significant progress in this area by carefully considering ways in which we can leverage our core-system information in order to provide the best service and advice. We are working diligently to put in place necessary processes and resources required to extract, segment and translate the data we have into actionable insight and action that best matches a client’s financial needs to Ledyard’s product and service solutions. By regularly reaching out to our customers and proactively providing them with intelligent financial options, we’ll undoubtedly develop even deeper relationships that are predicated on trust, shared experiences and thoughtful data-driven guidance. LEDYARD NATIONAL BANK 2021 ANNUAL REPORTLETTER FROM THE CEO & BOARD CHAIR As we mentioned earlier, it’s very gratifying to witness the ways in which Ledyard’s hard work and commitment to its neighbors have made a lasting, positive impact on the areas we serve. In addition to our work as bankers, we also enthusiastically immersed ourselves in community activities, partnering with local nonprofit organizations to help those most in need. For example, a team of employees volunteered at the Willing Hands garden at Cedar Circle Farm & Education Center in East Thetford, Vermont, where they prepared nearly 400 lbs. of cabbage, peppers and onions for distribution. The food was distributed to area food pantries. Another team came together at Whitman Brook Orchard to harvest a record-breaking 2630 POUNDS of apples that was distributed throughout the Upper Valley to help feed the hungry. As an extension of our community work, Ledyard received meaningful acknowledgments from our industry and community. For the second year in a row, Ledyard was named by American Banker as One of the Best Banks to Work For in 2021. We were also ranked among the Top 200 publicly traded banks and thrifts under $2 billion in assets in the United States by American Banker Magazine for the seventh year in a row. And finally, Ledyard was voted Business with the Friendliest Employees in the Valley News Reader’s Choice Awards, a designation that inspires us to continue finding ways to invest in our employees, create meaningful jobs and offer a workplace that allows our staff to fully utilize their talents and abilities. IN THE END, WELL OVER TWO THOUSAND VOTES WERE CAST TO HELP US DONATE $30,000. Against this backdrop, Ledyard celebrated its 30-year anniversary in the fall. As we’ve done to celebrate large milestones in the past, we integrated our community-giving philosophy into our 30th anniversary celebration. We kicked off a charitable giving campaign that served as our thank-you to the community for allowing us to serve its financial needs. We asked community members to vote via Ledyard’s Facebook page for the nonprofit organiza- tion they would most like to see receive a financial contribution from Ledyard. Each of the 10 nonprofits created a short video that explained what “community” meant to them. We worked closely with each charity and created a broad media plan to increase community exposure and awareness of their missions. In the end, well over two thousand votes were cast to help us donate $30,000 to these impressive organizations, and we look forward to working with them in the future. As part of the bank’s 30th anniversary celebration, Ledyard employees proudly present community recognition awards to Concord Coalition to End Homelessness, LISTEN, Hartford Dismas House, West Central Behavioral Health (L to R). LEDYARD NATIONAL BANK 2021 ANNUAL REPORTLETTER FROM THE CEO & BOARD CHAIR Ledyard National Bank and Willing Hands Come Together in Recognition of NH Bank’s Give Back Willing Hands recovers fresh food from farms, grocery stores, restaurants and wholesalers, and delivers it year-round, for free, to 80 social service organizations across the Upper Valley of Vermont and New Hampshire. Their work is made possible by a strong and wide network of volunteers, food donors and recipient organizations. Together, they serve 30,000 individuals annually with 4 million servings while mitigat- ing nearly 1 million pounds of carbon dioxide emissions from food that would have other- wise gone to waste. On Thursday, October 7th, Ledyard National Bank’s team of eight volunteers came together at the beautiful, hillside Whitman Brook Orchard to harvest a record-breaking 2630 POUNDS of apples. These apples are now in the refrigerated storage at the Willing Hands facility in Norwich, Vermont, and will be distributed throughout the Upper Valley to our neighbors in need. Whitman Brook Orchard has donated apples to Willing Hands for the past 12 years. And on Saturday, October 9th, another Ledyard National Bank team of five, including Kathy Underwood, Ledyard’s CEO, and her husband, John, worked at Cedar Circle Farm and Education Center in East Thetford, Vermont, where they prepared nearly 400 lbs. of cabbage, peppers and onions for distribution. All of the food grown in this 2-acre vegetable garden is done so under volunteer power and is distributed to many area food pantries through Willing Hands. Our combined efforts build a stronger community in so many ways. LEDYARD NATIONAL BANK 2021 ANNUAL REPORTLETTER FROM THE CEO & BOARD CHAIR WE HAVE A CLEAR PLAN FOR GROWTH, A STRONG BALANCE SHEET AND NEW CAPABILITIES. With the current pace of change, it’s difficult to look too far into the crystal ball. Yet, since our inception 30 years ago, our long-term thinking has enabled us to grow stronger. We will continue employing that strategy, seeking solutions for tomorrow’s challenges and endeavoring to enrich the lives of our clients, col- leagues and communities. Interestingly, the immense disruptions we’ve encountered have presented us with new opportunities for growth, ranging from the ways we use data to the manner in which we serve clients. The investments we make now will allow us to better introduce new products and services, offer the most relevant financial advice and, ultimate- ly, drive growth. In the end, our culture will determine how far we go, and we couldn’t be more optimistic about the ways in which we encourage continuous learning, creative thinking, constant curiosity and a growth mindset. These last few years have afforded us the opportunity to see how the commitment of Ledyard’s people, as well as the trust of our clients and shareholders, have resulted in record earnings and even greater prospects for the future. We are emerging from the pandemic more resilient and aligned than ever before. We enter the new year with a clear plan for growth, a strong balance sheet and new capabilities that make us very optimistic! LEDYARD NATIONAL BANK 2021 ANNUAL REPORTLETTER FROM THE CEO & BOARD CHAIR As we noted in last year’s report, we are better positioned than ever to address the 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 past years: ◆ 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 tools that maximize our data management and targeting capabilities ◆ Invest in our brand ◆ Invest in technology and cybersecurity ◆ Invest in our people 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. KATHRYN G. UNDERWOOD President & CEO Ledyard Financial Group/Ledyard National Bank Margaret M. Rightmire Chair Ledyard Financial Group/Ledyard National Bank LEDYARD NATIONAL BANK 2021 ANNUAL REPORT2021 FINANCIAL HIGHLIGHTS (dollars in thousands, except “Other data”) YEARS-ENDED DECEMBER 31, 2021 2020 2019 2018 2017 FINANCIAL CONDITION DATA Assets $ 771,143 $ 684,707 $ 500,391 $ 488,062 $ 476,630 Investments & interest bearing deposits 364,650 276,594 137,621 143,306 142,798 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 Net gain (loss) on sale of securities 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* 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 362,677 (7,469) 355,208 675,082 5,627 17,728 72,706 371,916 (7,958) 363,958 589,512 6,729 21,582 66,884 325,268 (5,213) 320,055 393,011 29,783 21,463 56,134 310,776 (5,215) 305,561 409,066 16,433 14,071 48,493 300,608 (5,510) 295,098 401,498 13,966 14,523 46,643 $ 18,274 $ 16,762 $ 16,076 $ 15,484 $ 14,481 13,169 1,699 168 33,310 (450) 25,287 8,473 708 7,765 11,614 2,023 1,431 31,830 2,700 21,838 7,292 563 6,729 10,887 1,843 (40) 28,766 0 22,102 6,664 848 5,816 10,512 1,682 0 27,678 0 21,752 5,927 775 5,152 9,437 1,388 39 25,345 0 20,137 5,208 1,363 3,845 $ $ $ 2.42 0.80 21.70 $ $ $ 2.13 0.76 20.14 $ $ $ 1.85 0.74 17.19 $ $ $ 1.66 0.70 15.02 $ $ $ 1.25 0.65 14.63 3,350,624 3,323,110 3,265,475 3,328,532 3,188,075 1.07% 10.95% 75.91% 1.11% 10.97% 68.59% 1.15% 10.99% 76.81% 1.06% 10.82% 78.51% $ $ $ 27.25 18.99 24.13 $ $ $ 26.00 15.16 18.75 $ $ $ 25.00 19.10 21.05 $ $ $ 24.00 21.05 22.17 $ $ $ $ 1,976 $ 1,709 $ 1,723 $ 1,459 $ 8.35% 8.78% 10.74% 10.11% 0.78% 8.38% 79.45% 22.99 17.78 20.16 1,513 9.47% 2.06% 2.14% 1.60% 1.68% 1.83% 526% 2.04% 543% 2.36% 446% 2.18% 153% 6.76% 266% 4.31% * Adjusted for 3-for-1 stock split. Complete Ledyard Financial Group 2021 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. SENIOR MANAGEMENT TEAM* BOARD OF DIRECTORS* Kathryn G. Underwood President & Chief Executive Officer Gregory D. Steverson Executive Vice President, Chief Operating Officer & Chief Financial Officer Michael Hakoun Executive Vice President & Managing Director Ledyard Financial Advisors Katie-Lee P. Blake Vice President & Regional Retail Manager Bliss Dayton, CRCM Senior Vice President & Compliance Officer Mark Beliveau Partner, Gallagher, Flynn & Company, LLP Jay Benson CEO, Simon Pearce US Cotton M. Cleveland President, Mather Associates Bruce P. King Retired, President & Chief Executive Officer, New London Hospital Co-Vice Chair, Ledyard Financial Group Judith M. Maloy Director & CEO, Polaris Direct Susan Fernald Senior Vice President & Senior Banking Operations Officer Wilhelmina Dingemans Miller Director, Downs Rachlin Martin, PLLC Barbara S. Graf Senior Vice President & Human Resources Director William E. Kidder, Jr. Senior Vice President & Senior Lending Officer Scott Laughinghouse Senior Vice President & Market Executive Jeffrey H. Marks Senior Vice President & Chief Marketing Officer Michael M. Parisi Senior Vice President & Director of Sales and Product Development Paul W. St. Martin Senior Vice President & Chief Technology Officer Michael T. Urnezis Senior Vice President & Senior Mortgage and Consumer Lending Officer Margaret M. Rightmire Chair, Ledyard Financial Group Teresa Rhodes Rosenberger Senior Advisor, Bernstein Shur Andrew A. Samwick Professor & Chair, Department of Economics, Dartmouth College Co-Vice Chair, Ledyard Financial Group Kathryn G. Underwood President & Chief Executive Officer, Ledyard Financial Group Robert O. Wetzel Retired, Senior Partner, Accenture plc * As of December 31, 2021 LEDYARDBANK.COM CONCORD | HANOVER | LEBANON | LYME | NEW LONDON | NORWICH, VT | WEST LEBANON 888.746.4562 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 Photo on page 4 by David Swillum. Photo on page 7 by Sue Bean. Photo on page 8 by Jerry Bergen. 

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