CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023 and 2022
With Independent Auditor's Report
Independent Auditor's Report
Board of Directors and Shareholders
Ledyard Financial Group Inc. and Subsidiary
Hanover, NH
Opinion
We have audited the accompanying consolidated financial statements (the ''financial statements'') of Ledyard Financial Group Inc. and Subsidiary (the "Company") which comprise the consolidated balance sheet as of December 31, 2023, and the related consolidated statements of income, comprehensive income (loss), changes in shareholder's equity, and cash flows for the year then ended, and the related notes to the financial statements.
In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America (''GAAP'').
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America ("GAAS"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Prior Period Financial Statements
The financial statements of the Company as of and for the years ended December 31, 2022 were audited by other auditors whose report dated March 24, 2023, expressed an umodified opinion on those statements.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date the financial statements are available to be issued.
1
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Wipfli LLP
Aurora, Illinois
March 22, 2024
2
LEDYARD FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 2023 and 2022
ASSETS
2023 | 2022 | ||||||
Cash and due from banks | $ | 4,816,544 | $ | 5,582,380 | |||
Interest bearing deposits | 22,319,521 | 11,750,492 | |||||
- | |||||||
Total cash and cash equivalents | 27,136,065 | 17,332,872 | |||||
Securities available for sale, | |||||||
amortized cost of- $ | 173,164,544 and $139,955,945 | ||||||
- | 162,840,079 | 127,205,328 | |||||
at December 31, 2023 and 2022, respectively | |||||||
Securities held-to-maturity | 184,638,517 | 175,855,003 | |||||
Nonmarketable equity securities | 4,717,650 | 2,988,750 | |||||
Loans receivable, net of allowance for credit losses of | 415,986,217 | 358,214,130 | |||||
$2,779,907 in 2023 and $3,842,765 in 2022 | |||||||
Accrued interest receivable | 3,904,244 | 3,267,313 | |||||
Premises and equipment, net | 13,116,455 | 13,562,762 | |||||
Bank owned life insurance | 12,175,725 | 11,927,194 | |||||
Other assets | 31,600,039 | 33,111,175 | |||||
Total assets | $ | 856,114,991 | $ | 743,464,527 |
LIABILITIES AND SHAREHOLDERS' EQUITY
2023 | 2022 | ||||||||||
Deposits | |||||||||||
Demand | $ | 214,213,480 | $ | 281,354,863 | |||||||
NOW accounts | 44,194,169 | 59,510,444 | |||||||||
Money market accounts | 112,996,125 | 140,084,636 | |||||||||
Savings | 53,212,879 | 58,087,833 | |||||||||
Time deposits, other | 186,751,023 | 25,082,988 | |||||||||
Time deposits, $250,000 and over | 48,789,315 | 6,211,205 | |||||||||
Total deposits | 660,156,991 | 570,331,969 | |||||||||
Securities sold under agreements to repurchase | - | 219,243 | |||||||||
Borrowed funds | 111,799,137 | 87,977,971 | |||||||||
Subordinated debentures | 17,738,503 | 17,698,065 | |||||||||
Accrued expenses and other liabilities | 10,400,277 | 14,238,041 | |||||||||
Total liabilities | 800,094,908 | 690,465,289 | |||||||||
Shareholders' equity | |||||||||||
Common stock, $0.33 par value; 11,000,000 shares authorized, 3,483,513 | |||||||||||
and 3,464,393 shares issued, 3,367,515 and 3,348,395 shares | 1,154,798 | ||||||||||
outstanding at December 31, 2023 and 2022, respectively | 1,161,171 | ||||||||||
Additional paid in capital | 15,622,989 | 15,167,996 | |||||||||
Treasury | stock, at cost; 115,998 shares at December 31, 2023 and 2022 | (1,644,238) | (1,644,238) | ||||||||
- | |||||||||||
Retained earnings | 55,491,704 | 54,407,449 | |||||||||
Accumulated other comprehensive loss | (14,611,543) | (16,086,767) | |||||||||
Total shareholders' equity | 56,020,083 | 52,999,238 | |||||||||
Total liabilities and shareholders' equity | $ | 856,114,991 | $ | 743,464,527 |
The accompanying notes are an integral part of these consolidated financial statements.
3
LEDYARD FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Income
Years Ended December 31, 2023 and 2022
2023 | 2022 | |||||||||
Interest and dividend income | ||||||||||
Interest and fees on loans | $ | 17,677,245 | $ | 12,968,366 | ||||||
Investment securities | 10,299,945 | 7,540,799 | ||||||||
Other interest earning assets | 508,070 | 249,441 | ||||||||
Total | interest and dividend income | 28,485,260 | 20,758,606 | |||||||
- | ||||||||||
Interest expense | ||||||||||
Deposits | 6,643,748 | 609,721 | ||||||||
Borrowed funds | 3,846,519 | 886,737 | ||||||||
Subordinated debt | 760,439 | 576,329 | ||||||||
Total interest expense | 11,250,706 | 2,072,787 | ||||||||
Net interest income | 17,234,554 | 18,685,819 | ||||||||
Provision for (reduction in) credit losses | 666,999 | (3,634,494) | ||||||||
Net interest income after provision for credit losses | 16,567,555 | 22,320,313 | ||||||||
Non-interest income | ||||||||||
Ledyard Financial Advisors division income | 12,655,777 | 12,778,651 | ||||||||
Service fees | 979,769 | 949,880 | ||||||||
Net loss on sales of securities | (15,236) | (2,966,353) | ||||||||
Other | 507,013 | 451,244 | ||||||||
Total non-interest income | 14,127,323 | 11,213,422 | ||||||||
Non-interest expense | ||||||||||
Salaries and employee benefits | 16,500,650 | 16,070,916 | ||||||||
Occupancy and equipment | 6,226,197 | 5,699,380 | ||||||||
Federal Deposit Insurance Corporation (FDIC) insurance fees | 327,717 | 198,497 | ||||||||
Other general and administrative | 4,852,039 | 4,068,222 | ||||||||
Total non-interest expense | 27,906,603 | 26,037,015 | ||||||||
Income before income taxes | 2,788,275 | 7,496,720 | ||||||||
Income tax (benefit) expense | (376,919) | 515,468 | ||||||||
Net income | $ | 3,165,194 | $ | 6,981,252 | ||||||
Basic earnings per share | $0.96 | $2.14 | ||||||||
Diluted earnings per share | $0.96 | $2.13 | ||||||||
Weighted average numbers of shares outstanding | 3,296,358 | 3,261,499 |
The accompanying notes are an integral part of these consolidated financial statements.
4
LEDYARD FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Comprehensive Income (Loss)
Years Ended December 31, 2023 and 2022
2023 | 2022 | |||||||||
Net income | $ | 3,165,194 | $ | 6,981,252 | ||||||
Other comprehensive income (loss), net of tax | ||||||||||
Securities: | ||||||||||
Changes in net unrealized gains (losses) on securities | ||||||||||
available for sale, net of income tax expense (benefit) of $326,927 | 940,233 | (29,139,130) | ||||||||
and $ | (10,131,935) in 2023 and 2022, respectively | |||||||||
- - | ||||||||||
Reclassification adjustment for net losses on sales of | ||||||||||
securities available for sale, net of income tax benefit | 11,305 | |||||||||
of $3,931 and $ | 765,319 in 2023 and 2022, respectively | 2,201,034 | ||||||||
- - | ||||||||||
Reclassification adjustment for unrealized holding losses included in accumulated | ||||||||||
other comprehensive income from the transfer of securities from available-for- | ||||||||||
sale to held-to-maturity, adjusted for amortization, net of income tax benefit of | 1,137,860 | 838,579 | ||||||||
$395,650 and $291,514 in 2023 and 2022, respectively | ||||||||||
Total securities | 2,089,398 | (26,099,517) | ||||||||
Derivative Contracts: | ||||||||||
Unrealized (losses) gains on cash flow hedges, net of income tax (benefit) expense of | ||||||||||
$(213,554) and $633,049 in 2023 and 2022, respectively | (614,174) | 1,820,631 | ||||||||
Total other comprehensive income (loss) | 1,475,224 | (24,278,886) | ||||||||
Total comprehensive income (loss) | $ | 4,640,418 | $ (17,297,634) | |||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
LEDYARD FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Shareholders' Equity
Years Ended December 31, 2023 and 2022
Accumulated | |||||||||||||||||
Additional | Other | ||||||||||||||||
Common | Paid-in | Treasury | Retained | Comprehensive | |||||||||||||
Stock | Capital | Stock | Earnings | (Loss) Income | Total | ||||||||||||
Balance, December 31, 2021 | $ | 1,155,787 | $ | 14,768,380 | $ | (1,654,724) | $ | 50,244,036 | $ | 8,192,119 | $ | 72,705,598 | |||||
Net income | - | - | - | 6,981,252 | - | 6,981,252 | |||||||||||
Other comprehensive loss, | |||||||||||||||||
net of tax effect | - | - | - | - | (24,278,886) | (24,278,886) | |||||||||||
Total comprehensive loss | - | - | - | 6,981,252 | (24,278,886) | (17,297,634) | |||||||||||
Cash dividends paid, $0.84 per share | - | - | - | (2,817,839) | - | (2,817,839) | |||||||||||
Stock awards issued from treasury | |||||||||||||||||
(740 shares) | - | 5,890 | 10,486 | - | - | 16,376 | |||||||||||
Stock-based compensation expense | - | 947,569 | - | - | - | 947,569 | |||||||||||
Restricted stock issued, | |||||||||||||||||
net of shares returned | (554,832) | ||||||||||||||||
to cover taxes (-2,967 shares) | (989) | (553,843) | - | - | - | ||||||||||||
Balance, December 31, 2022 | |||||||||||||||||
1,154,798 | 15,167,996 | (1,644,238) | 54,407,449 | (16,086,767) | 52,999,238 | ||||||||||||
Net income | - | - | - | 3,165,194 | - | 3,165,194 | |||||||||||
Other comprehensive gain, | - | - | - | - | 1,475,224 | 1,475,224 | |||||||||||
net of tax effect | |||||||||||||||||
Total comprehensive income | - | - | - | 3,165,194 | 1,475,224 | 4,640,418 | |||||||||||
Cumulative effect of change in | - | - | - | 745,758 | - | 745,758 | |||||||||||
accounting principle (See Note 1) | |||||||||||||||||
Cash dividends paid, $0.84 per share | - | - | - | (2,826,697) | - | (2,826,697) | |||||||||||
Stock-based compensation expense | - | 616,489 | - | - | - | 616,489 | |||||||||||
Restricted stock issued, | |||||||||||||||||
net of shares returned | 6,373 | (161,496) | - | - | - | (155,123) | |||||||||||
to cover taxes (19,120 shares) | |||||||||||||||||
Balance, December 31, 2023 | $ | 1,161,171 | $ | 15,622,989 | $ | (1,644,238) | $ | 55,491,704 | $ | (14,611,543) | $ | 56,020,083 | |||||
The accompanying notes are an integral part of these consolidated financial statements.
6
LEDYARD FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years Ended December 31, 2023 and 2022
Cash flows from operating activities | 2023 | 2022 | ||||||||||||
$ | 3,165,194 | |||||||||||||
Net income | $ | 6,981,252 | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||||||
Provision for (reduction in) credit losses | 666,999 | (3,634,494) | ||||||||||||
Depreciation of premises and equipment | 1,004,502 | 939,162 | ||||||||||||
Net amortization (accretion) of securities | 197,302 | (921,538) | ||||||||||||
Net losses on securities | 15,236 | 2,966,353 | ||||||||||||
Deferred income tax benefit | (1,504,240) | (774,869) | ||||||||||||
Amortization of limited partnerships | 1,152,656 | 1,098,716 | ||||||||||||
Stock based compensation | 616,489 | 947,569 | ||||||||||||
Fair | value of stock awards | issued from treasury | ‐ | 16,376 | ||||||||||
- | ||||||||||||||
Increase in accrued interest receivable | (636,931) | (17,634) | ||||||||||||
Decrease in other assets | 194,580 | 156,777 | ||||||||||||
Decrease in right of use assets | 209,374 | 439,353 | ||||||||||||
Decrease in | loans held for sale | ‐ | 114,400 | |||||||||||
- | - | |||||||||||||
Decrease in operating lease liabilities | (212,042) | (438,058) | ||||||||||||
Decrease in accrued expenses and other liabilities | (2,602,943) | (331,229) | ||||||||||||
Net cash from operating activities | 2,266,176 | 7,542,136 | ||||||||||||
Cash flows from investing activities | ||||||||||||||
Proceeds from sales, calls, maturities and paydowns of securities available for sale | 19,400,465 | 30,293,514 | ||||||||||||
Purchase of securities available for sale | - - | (53,525,979) | (27,610,493) | |||||||||||
and paydowns of securities held‐to‐maturity | 2,001,925 | 2,607,852 | ||||||||||||
Proceeds from calls, maturities - - | ||||||||||||||
Purchase of securities held‐to‐maturity | (10,040,625) | ‐ | ||||||||||||
Purchase of non‐marketable equity securities | (1,728,900) | (1,802,800) | ||||||||||||
Low‐income housing investment | (1,796,665) | (1,769,759) | ||||||||||||
Net change in loans to customers | (56,660,134) | 514,176 | ||||||||||||
Purchase of premises and equipment | (558,195) | (1,877,719) | ||||||||||||
Net cash from investing activities | (102,908,108) | 354,771 | ||||||||||||
Cash flows from financing activities | 89,825,022 | |||||||||||||
Net change in deposits | (104,750,491) | |||||||||||||
Proceeds from short term borrowings | 2,170,105,000 | 612,601,000 | ||||||||||||
Repayment of short‐-term borrowings | (2,171,205,000) | (531,300,000) | ||||||||||||
Proceeds from long‐term borrowings | 25,000,000 | 1,122,000 | ||||||||||||
Repayment of long term borrowings | (78,834) | (72,333) | ||||||||||||
Proceeds from | issuance of subordinated debt | ‐ | 18,000,000 | |||||||||||
- | ||||||||||||||
Decrease in securities sold under agreements to repurchase | (219,243) | (731,560) | ||||||||||||
Restricted stock issued, net of repurchase for tax withholdings and tax benefit | (155,123) | (554,832) | ||||||||||||
Cash dividends paid on common stock | (2,826,697) | (2,817,839) | ||||||||||||
Net cash from financing activities | 110,445,125 | (8,504,055) | ||||||||||||
Net change in cash and cash equivalents | 9,803,193 | (607,148) | ||||||||||||
Cash and cash equivalents, beginning of year | 17,332,872 | 17,940,020 | ||||||||||||
Cash and cash equivalents, end of year | $ | 27,136,065 | $ | 17,332,872 | ||||||||||
Supplemental disclosure of cash flow information: | ||||||||||||||
Interest paid on deposits and borrowed funds | $ | 10,427,423 | $ | 1,743,740 | ||||||||||
Income taxes refunded | ||||||||||||||
$ | (200,000) | $ | (615,390) | |||||||||||
Supplemental disclosure of non‐cash investing activities: | ||||||||||||||
$ | ‐ | $ | 194,144,720 | |||||||||||
Transfer of securities from available‐for‐sale to held‐to‐maturity | ||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
7
LEDYARD FINANCIAL GROUP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 2023 and 2022
Nature of Business
Ledyard Financial Group, Inc. (the Company) is headquartered in Hanover, New Hampshire and, as a bank holding company, it provides financial services to its customers through its wholly-owned bank subsidiary, Ledyard National Bank (the Bank). The Bank provides retail and commercial banking and wealth advisory services through its office locations in New Hampshire and Vermont.
1. Summary of Significant Accounting Policies
The accounting policies of the Company are in conformity with U.S. generally accepted accounting principles (U.S. GAAP) and general practices within the banking industry. The following is a description of the more significant policies.
Basis of Presentation
The Company follows accounting standards as set by the Financial Accounting Standards Board (FASB). FASB sets U.S. GAAP that management follows to consistently report the Company's financial condition, results of operations and cash flows.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned bank subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
In preparing financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses. In connection with the determination of the allowance, management obtains independent appraisals for significant properties and collateral securing significant loans. Accordingly, the ultimate collectability of a substantial portion of the Company's loan portfolio is susceptible to changes in local market conditions.
While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company's loan portfolio. Such agencies may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.
8
LEDYARD FINANCIAL GROUP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 2023 and 2022
1. Summary of Significant Accounting Policies (continued) Significant Group Concentrations of Credit Risk
The Company's operations are affected by various risk factors, including interest rate risk, credit risk, and risk from geographic concentration of lending activities. Management attempts to manage interest rate risk through various asset/liability management techniques designed to match maturities of assets and liabilities. Loan policies and administration are designed to provide assurance that loans will only be granted to creditworthy borrowers, although credit losses are expected to occur because of subjective factors beyond the control of the Company. Although the Company has a diversified loan portfolio, most of its lending activities are conducted within the geographic area where it is located. As a result, the Company and its borrowers may be especially vulnerable to the consequences of changes in the local economy. In addition, a substantial portion of the Company's loans are secured by real estate.
Cash and Cash Equivalents
For purposes of the statements of cash flows, cash and cash equivalents include cash and due from banks, and interest-bearing deposits.
The Company's due from bank accounts and interest-bearing deposits, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant risk on cash and cash equivalents.
Investment Securities
Securities that management has the positive intent and ability to hold to maturity are classified as held-to-maturity and carried at cost, adjusted for amortization of premiums and accretion of discounts over the period to call or maturity using methods approximating the interest method. Securities not classified as held-to-maturity are classified as available-for-sale and are carried at fair value. Nonmarketable equity securities, consisting of stock in the Federal Home Loan Bank (FHLB), Federal Reserve Bank (FRB), and Connecticut On-Line Computer Center (COCC) are carried at cost, subject to adjustments for any observable market transactions on the same or similar instruments of the investee. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Unrealized gains and losses on securities available-for-sale are reported as a net amount in other comprehensive income or loss, net of tax. Gains and losses on the sale of securities are recorded on the trade date and determined using the specific-identification method.
Prior to January 1, 2023, declines in fair value of securities that were deemed to be other than temporary, if applicable, were reflected in earnings as realized losses. In estimating other-than- temporary impairment losses, management considered the length of time and the extent to which fair value had been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.
9
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Ledyard Financial Group Inc. published this content on 16 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 April 2024 15:25:08 UTC.