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Ledyard Financial Group Reports Revised Q4 2022 and FY 2022 Earnings

Ledyard Financial Group, Inc. (ticker symbol LFGP), the holding company for Ledyard National Bank, today announced revised financial results for Q4 2022 and FY 2022.

As illustrated in the tables below, the revision relates entirely to the magnitude of the reduction in the Company’s allowance for loan losses (ALLL) in Q4 and a related reduction in tax expense. The Company continuously assesses the appropriateness of its ALLL balance, and ALLL reductions in 2022 were driven primarily by changes to the qualitative factors relating to the dissipation of pandemic-driven concerns. The revision reflects an evolved view of the current economic environment, with the net result of a larger ending reserve balance and a correspondingly smaller reduction of reserves than previously reported. The revision is not a response to concerns about any individual credit, or groups of credits. All other components of net income are unchanged, 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.

 
12/31/2022
Balance Sheet (unaudited, $000s)* As Reported Revised Change
Cash and Investments

317,800

 

317,800

 

-

 

Gross Loans

362,057

 

362,057

 

-

 

ALLL

2,777

 

3,843

 

1,066

 

Net Loans

359,280

 

358,214

 

(1,066

)

Other Assets

67,485

 

67,485

 

-

 

Total Assets

744,564

 

743,498

 

(1,066

)

 
Total Liabilities

690,589

 

690,499

 

(90

)

Equity

53,975

 

52,999

 

(976

)

Total Liabilities and Equity

744,564

 

743,498

 

(1,066

)

 
For the Three Months Ended 12/31/2022
Income Statement (unaudited, $000s)* As Reported Revised Change
Net interest income before provision

4,929

 

4,929

 

-

 

Provision for loan losses

3,950

 

2,884

 

(1,066

)

Net interest income after provision

8,879

 

7,813

 

(1,066

)

 
Securities gains / (losses)

(3,239

)

(3,239

)

-

 

Other non-interest income

3,362

 

3,362

 

-

 

Non Interest Expense

7,083

 

7,083

 

-

 

Pre Tax Income

1,920

 

854

 

(1,066

)

Tax expense

160

 

70

 

(90

)

Net Income

1,760

 

784

 

(976

)

 
For the Twelve Months Ended 12/31/2022
Income Statement (unaudited, $000s)* As Reported Revised Change
Net interest income before provision

18,722

 

18,722

 

-

 

Provision for loan losses

4,700

 

3,634

 

(1,066

)

Net interest income after provision

23,422

 

22,356

 

(1,066

)

 
Securities gains / (losses)

(2,966

)

(2,966

)

-

 

Other non-interest income

14,177

 

14,177

 

-

 

Non Interest Expense

26,070

 

26,070

 

-

 

Pre Tax Income

8,563

 

7,497

 

(1,066

)

Tax expense

605

 

515

 

(90

)

Net Income

7,956

 

6,982

 

(976

)

 
*Tables include rounding differences
 

Net income for Q4 2022 was $784k ($0.24 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 $6.98 million ($2.14 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 higher-yielding assets. 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, $2.88 million was released from the ALLL during Q4 2022. Coupled with a $750k release in Q3 2022, releases from the ALLL amounted to $3.63 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, this transaction is expected to yield 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 approximately $400k.

Total assets of the Company at December 31, 2022 were $743.5 million, up $14.0 million from the end of Q3 2022 due primarily to growth in loans and borrowings, and down $25.6 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 totaled $3.8 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 ALLL at 12/31/2022 now provides 2.6x coverage of non-performing assets.

At December 31, 2022, shareholders’ equity stood at $53.0 million, up $5.5 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 economic value of the Company’s deposit liabilities, an increase that is not recognized in the financial statements.

All of the Bank’s and Company’s capital ratios are well in excess of the amount required by applicable banking regulators to be considered well capitalized. At December 31, 2022, the Company’s book value per share excluding AOCI stood at $20.63 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 (unaudited, $000s) 12/31/2022 9/30/2022 12/31/2021
Net interest income before provision

 

4,929

 

 

4,500

 

4,560

 

Provision for loan losses

 

2,884

 

 

750

 

500

 

Net interest income after provision

 

7,813

 

 

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

 

854

 

 

2,194

 

2,060

 

Tax expense

 

70

 

 

115

 

63

 

Net income

$

784

 

$

2,079

$

1,997

 

 
Earnings per common share, basic

$

0.24

 

$

0.64

$

0.62

 

Earnings per common share, diluted

$

0.24

 

$

0.63

$

0.61

 

 
For the Twelve Months Ended
Income Statement (unaudited, $000s) 12/31/2022 12/31/2021
Net interest income before provision

 

18,722

 

 

18,277

 

Provision for loan losses

 

3,634

 

 

450

 

Net interest income after provision

 

22,356

 

 

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

 

7,497

 

 

8,473

 

Tax expense

 

515

 

 

708

 

Net income

$

6,982

 

$

7,765

 

 
For the Twelve Months Ended
Other Operating Metrics 12/31/2022 12/31/2021
Earnings per common share, basic

$

2.14

 

$

2.42

 

Earnings per common share, diluted

$

2.13

 

$

2.38

 

Dividends per common share

$

0.84

 

$

0.80

 

 
Return on assets

 

0.94

%

 

1.07

%

Return on equity

 

12.77

%

 

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 (unaudited, $000s) 12/31/2022 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

 

3,843

 

 

6,720

 

 

7,469

 

Net loans

 

358,214

 

 

346,831

 

 

355,208

 

 
Premises, equipment & other assets

 

67,485

 

 

65,344

 

$

57,062

 

Total assets

$

743,498

 

$

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

 

10,897

 

 

8,901

 

 

9,897

 

Total liabilities

 

690,499

 

 

682,081

 

 

696,401

 

 

-

 

Capital

 

70,730

 

 

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

 

52,999

 

 

47,398

 

 

72,706

 

 

-

 

Total liabilities and equity

$

743,498

 

$

729,479

 

$

769,106

 

 
 
Other Metrics (as of stated date) 12/31/2022 9/30/2022 12/31/2021
Book value per share (excluding OCI)

$

20.63

 

$

20.55

 

$

19.25

 

Book value per share (including OCI)

$

15.83

 

$

14.13

 

$

21.70

 

 
Leverage ratio

 

9.44

%

 

9.46

%

 

8.35

%

Risk based capital ratio

 

19.70

%

 

19.99

%

 

15.60

%

 
Allowance to total loans

 

1.06

%

 

1.90

%

 

2.06

%

Texas ratio

 

1.73

%

 

3.58

%

 

2.04

%

Allowance for loan losses to non-performing assets

 

260

%

 

212

%

 

526

%

 
Assets under management (billions)

$

1.705

 

$

1.598

 

$

2.024

 

 
Shares of common stock issued

 

3,464,393

 

 

3,469,490

 

 

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.

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