Ledyard Financial Group Reports Q4 2022 and FY 2022 Earnings

Ledyard Financial Group, Inc. (ticker symbol LFGP), the holding company for Ledyard National Bank, today announced financial results for Q4 2022 and FY 2022, confirming the strength and resiliency of the Company’s core banking and wealth management businesses. The Company remains focused on building and leveraging infrastructure that promotes growth and the pursuit of making life better for its clients, its employees, and the communities it serves.

Net income for Q4 2022 was $1.76 million ($0.54 per share) compared to $2.08 million in Q3 2022 ($0.64 per share) and $2.00 million ($0.62 per share) for the same period in 2021. For the full year, net income totaled $7.96 million ($2.44 per share) compared to $7.77 million ($2.42 per share) for 2021.

Q4 2022 net interest income before provision was $4.93 million, up $429k or 10% from Q3 2022, and up $369k or 8% from Q4 2021. Most of the increase over prior periods is attributable to widening spreads, as deposit costs have increased by only a few basis points and asset yields have benefitted from variable-rate asset repricing and the addition of assets yielding more current (i.e., higher) rates. The difference between the yield on assets and the cost of interest-bearing liabilities was 2.95% in Q4 2022, as compared to 2.67% in Q3 2022 and 2.52% in Q4 2021. For the full year, net interest income before provision was $18.72 million, up $445k or 2% over the $18.28 million recorded in 2021.

With credit quality remaining strong, $3.95 million was released from the ALLL during Q4 2022. Coupled with a $750k release in Q3 2022, releases from the ALLL amounted to $4.70 million during 2022, compared to total releases of $450k during 2021.

Non-interest revenue for Q4 2022 amounted to $3.36 million after excluding a loss of $3.24 million incurred in a securities sale (or $123k with the loss included). For comparison, non-interest revenue totals were $3.43 million and $3.71 million in Q3 2022 and Q4 2021, respectively. For the full year 2022, non-interest revenue amounted to $11.21 million, down $3.82 million from $15.03 million in 2021, but down only $857k if the Q4 2022 securities loss is excluded.

The $3.24 million loss in Q4 2022 arises from an investment portfolio restructuring transaction in which lower-yielding assets were replaced with assets at higher (more current) yields; the benefit of this transaction is elevated net interest income in future periods.
Revenue from Ledyard Financial Advisors amounted to $3.03 million for Q4 2022, down 2.6% and 11.0% from $3.11 million and $3.41 million in Q3 2022 and Q4 2021, respectively. For the full year, financial advisory revenue amounted to $12.78 million, down 3% from $13.17 million in 2021.
- Assets Under Management (AUM) ended the year at $1.70 billion, up 6% for the quarter, but down 14% from $1.97 billion at the prior year-end.
- The Company continues to attract new client relationships and assets; AUM and revenue here has consistently trended in concert with global market asset values.

Non-interest expense in Q4 2022 was $7.08 million compared to $6.49 million in Q3 2022 and $6.71 million in Q4 2021, representing increases of $593k and $370k over Q3 2022 and Q4 2021, respectively. Non-interest expense for all of 2022 was $26.07 million compared to $25.29 million in 2021, an increase of $784k or 3.1%, well below the 6.5% rise in the Consumer Price Index for 2022. Worth noting is that Q4 2022 non-interest expense included some non-recurring items amounting to ~$400k.

Total assets of the Company at December 31, 2022 were $744.6 million, up $15.1 million from the end of Q3 2022 due primarily to growth in loans and borrowings, and down $24.5 million from year-end 2021 due primarily to reductions in the value of investment portfolio securities and the related impact on equity (see discussion below). Loans at December 31, 2022, were $362.0 million, compared to $353.6 million on September 30, 2022 and $362.7 million at the end of 2021. Core deposits at December 31, 2022 were $570.3 million, up $2.6 million over Q3 2022 and down $44.7 million from the end of 2021.

The ALLL totals $2.8 million at December 31, 2022, compared to $6.7 million at the end of Q3 2022 and $7.5 million at the end of 2021. The allowance now provides nearly 2x coverage of non-performing assets.

At December 31, 2022, shareholders’ equity stood at $53.9 million, up $6.6 million from the end of Q3 2022 and down $18.7 million from year-end 2021. These changes include the impact of changes in Accumulated Other Comprehensive Income (AOCI), which moved from an unrealized gain position of $8.1 million at December 31, 2021 to an unrealized loss position of $21.6 million at the end of Q3 2022 before improving to a smaller loss position of $16.1 million at December 31, 2022. These movements directly track interest rate driven changes in the market value of Available-For-Sale securities and derivative contracts used for hedging purposes. From the perspective of overall balance sheet management and valuation, these unrealized losses are offset to a large degree by an increase in the value of the Company’s deposit liabilities, an increase that is not recognized in the financial statements.

All of the Company’s capital ratios are well in excess of the amount required by the Federal Reserve for a bank holding company to be considered well capitalized. At December 31, 2022, the Company’s book value per share excluding AOCI stood at $20.92 compared to $20.55 on September 30, 2022 and $19.25 on December 31, 2021. (Note: AOCI is excluded when calculating regulatory capital ratios).

The Company has significant liquidity resources available to support operations, including good standing as a borrower at the Federal Reserve and at the Federal Home Loan Bank of Boston, extensive portfolios pledged at these same institutions to facilitate easy access to funding, and the ability to access wholesale deposit sources previously deployed but untapped as of December 31, 2022.

Ledyard Financial Group, Inc., headquartered in Hanover, New Hampshire, is the holding company for Ledyard National Bank, founded in 1991. Ledyard National Bank is a full-service community bank offering a broad range of banking, investment, and wealth management services. Ledyard Financial Group, Inc. shares can be bought and sold through the NASD sanctioned OTC Markets under the trading symbol LFGP. For additional information about the company, stock activity, or financial results please visit the Investor Relations section of bank’s website ( www.ledyard.bank ), or contact the Company’s Chief Financial Officer, Peteris J. Sprudzs.

	For the Three Months Ended
Income Statement ($000s)	12/31/2022		9/31/2022		12/31/2021
Net interest income before provision	4,929		4,500		4,560
Provision for loan losses	(3,950	)	(750	)	(500	)
Net interest income after provision	8,879		5,250		5,060

Ledyard Financial Advisors revenue	3,030		3,112		3,406
Securities gains (losses)	(3,239	)	-		(108	)
Other non-interest income	332		322		415
Total non-interest income	123		3,434		3,714

Non-interest expense	7,083		6,490		6,713
Pre-tax income	1,919		2,194		2,060
Tax expense	160		115		63
Net income	$1,759		$2,079		$1,997

Earnings per common share, basic	$0.54		$0.64		$0.62
Earnings per common share, diluted	$0.54		$0.63		$0.61

	For the Twelve Months Ended
Income Statement ($000s)	12/31/2022		12/31/2021
Net interest income before provision	18,722		18,277
Provision for loan losses	(4,700	)	(450	)
Net interest income after provision	23,422		18,726

Ledyard Financial Advisors revenue	12,779		13,169
Securities gains (losses)	(2,966	)	168
Other non-interest income	1,398		1,696
Total non-interest income	11,210		15,033

Non-interest expense	26,070		25,286
Pre-tax income	8,562		8,473
Tax expense	605		708
Net income	$7,957		$7,765


	For the Twelve Months Ended
Other Operating Metrics	12/31/2022		12/31/2021
Earnings per common share, basic	$2.44		$2.42
Earnings per common share, diluted	$2.43		$2.38
Dividends per common share	$0.84		$0.80

Return on assets	1.07	%	1.07	%
Return on equity	14.71	%	10.95	%
Efficiency ratio	87.10	%	75.91	%

Stock price - high	25.70		27.25
Stock price - low	17.80		18.99
Stock price - average	21.12		24.13

Balance Sheet ($000s)	12/30/2022		9/30/2022		12/31/2021

Investments & interest-bearing deposits	$317,800		$317,304		$356,836
					-
Gross loans	362,057		353,551		362,677
Allowance for loan loss	2,777		6,720		7,469
Net loans	359,280		346,831		355,208

Premises, equipment & other assets	67,485		65,344		$57,062
Total assets	$744,564		$729,479		$769,106


Core Deposits	570,332		567,746		615,074
Brokered Deposits	-		-		60,009
Borrowings	91,270		87,434		11,421
Subordinated debt	18,000		18,000		-
Other liabilities	10,987		8,901		9,897
Total liabilities	690,589		682,081		696,401
					-
Capital	71,706		70,561		66,168
Other comprehensive income	(16,087	)	(21,519	)	8,192
Treasury stock	(1,644	)	(1,644	)	(1,655	)
Total shareholder's equity	53,975		47,398		72,706
					-
Total liabilities and equity	$744,564		$729,479		$769,106


Other Metrics (as of stated date)	12/30/2022		9/30/2022		12/31/2021
Book value per share (excluding OCI)	$20.92		$20.55		$19.25
Book value per share (including OCI)	$16.12		$14.13		$21.70

Leverage ratio	9.58	%	9.46	%	8.35	%
Risk based capital ratio	19.75	%	19.99	%	15.60	%

Allowance to total loans	0.77	%	1.90	%	2.06	%
Texas ratio	1.73	%	3.58	%	2.04	%
Allowance for loan losses to non-performing assets	188	%	212	%	526	%

Assets under management (billions)	$1.705		$1.598		$2.024

Shares of common stock issued	3,464,393		3,470,127		3,467,362
Treasury shares	115,998		115,998		116,738

Forward-Looking Statements: Statements concerning future performance, developments or events, expectations for growth and income forecasts, and any other guidance on future periods constitute forward-looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to, loan production, competitive pressure in the banking industry, balance sheet management, net interest margin variations, the effect of changes in equity prices on assets under management, the ability to control costs and expenses, changes in the interest rate environment, financial policies of the United States government, and general economic conditions. The Company disclaims any obligation to update any such factors.

Note: Certain reclassifications have been made to the prior period information to conform to the current period presentation.