Showing Our Pride

ANNUAL REPORT

2014

CEO’s Message: a sense of pride

(L to R) Mark Johnston & Andrew Silsby

As long-time ambassadors of Kennebec Savings Bank, we proudly honor

our distinguished history as we pass 145 years of service. Our success

relies on the trust and responsibility our customers instill in us every

day. We don’t take shortcuts with any effort. Our focus for growth remains rooted

in secure and stable practices. We take great pride in our employees’ depth of

experience, collective skills, energy and attitudes. Their pride in belonging to the

KSB team is reflected in this year’s annual report photos.

With the closing of 2014, we are in the midst of celebrating an organizational and

personal milestone. After more than 14 years as the Chief Executive Officer,

22 years with Kennebec Savings Bank, and 40 years in banking altogether, I will

be retiring in June. As part of a carefully planned transition, I am pleased to pass

Bank leadership over to Andrew Silsby.

Andrew has been with the Bank since 1993 and a member of leadership since

2000. Andrew has in-depth knowledge of all the Bank’s functions and every

employee’s role. He has a keen grasp of Bank history and a broad vision. His

lifelong roots and involvement in Central Maine give him a clear sense of the

community’s needs and culture.

We both share the same passion, determination and reverence for the traditions

of Kennebec Savings Bank. I know he will lead the Bank well into the future.

It has been my great honor to serve this fine institution and I leave it with a

great sense of pride.

Sincerely,

Mark L. Johnston CEO

Mark spent his entire professional life in Central Maine; always striving to make it

a better place. Over the past 22 years, Mark led Kennebec Savings Bank through

unprecedented growth in assets from $157 million to over $805 million, increased

the number of employees from 38 to 114, opened six customer locations, and added both

Kennebec Wealth Management and Trust services.

He is a caring and devoted community volunteer. It is not unusual to see him clearing snow off

employees’ vehicles, enthusiastically accompanying choral performances at a keyboard, or at

community events outbidding many of us on charity auction items. Mark will continue to lend his

expertise as a member of the Board of Directors of Kennebec Savings Bank.

Mark leaves a legacy here at Kennebec Savings Bank that is truly extraordinary. He has been

a trusted supervisor, mentor and friend, and his immediate presence will be missed by us all.

2014 was a year of financial strength for us. Our earnings exceeded $6 million. We remain the

premier residential lender in Kennebec Valley and our capital grew to a record high of $103.8 million.

Our Wealth Management and Trust teams grew combined assets under

President’s Message: a fond farewell

management to over $400 million and we continue to retain the

largest market share of deposits within our community.

I am proud and humbled to take the helm as we head toward our

sesquicentennial in 2020. We will build on the successful record of financial

strength led by Mark and the leaders before him to seize on new economic

opportunities that strengthen our Bank and community.

Sincerely,

Andrew E. Silsby President

2014 Snapshots foundation for the future

leadership bench As part of the executive leadership transition, a new team of eight senior vice

presidents has been established. Led by Andrew, the team includes long-term

employees with lots of Bank history, and a few new to KSB who possess

outside perspectives and strong technical skills. Our team is fiercely loyal to our

three groups of stakeholders — Our Customers, Our Communities, and Our

Employees — while working to minimize risks and looking to the future.

In July the depositors voted to make a

structural change to KSB by adding a Mutual

Holding Company. This updated our original

charter from 1870 providing for greater

flexibility. While not changing our day-to-day

operations, any of our customer accounts or

our mission, the new structure puts us in the

best possible position for the future.

(L to R) Jim Lagasse, Cheryl Brandt, Debbie Getchell, Andrew Silsby, Dave Grenier, Craig Garofalo, Sandy Goodwin, Kevin Healey & Dave Roy

(L to R) Cheryl Flewelling, Sam Tippet, Joe Jabar, Dave Veilleux & Ken Viens

$300 million strong Well established as one of the top wealth management firms in the greater central Maine area,

Kennebec Wealth Management brought in over $27 million in new assets and almost 200 new clients

this year. The five-person team now has over $300 million in assets under management

while serving over 2,200 households.

100 quarters top-rated Kennebec Savings Bank has reached 25 years as a five-star rated financial institution by BauerFinancial, Inc.

This designation signifies consistent outstanding performance in several categories. The rating puts KSB in

premier status among the top 4% of banks nationwide and reflects our strong earnings and capital position.

(L to R) Gary Lapierre & Bill Hill

(L to R) Mark Stebbins, Katie Vickers, & Brent Hall

2014 Snapshots

open for business Our commercial lending department

had another year of strong growth –

this year we brought on $29.8 million

in new commercial loan volume.

We have an experienced team of

lenders who also live within the

communities where they work. KSB

employees are dedicated to keeping

the community vibrant while meeting

a wide range of financial needs within

our neighborhoods.

local advantage Our residential lenders will see a customer through the entire process

from application to the closing. We don’t sell any of our loans – keeping

us nimble and sensitive to customer needs. Our team has over 205

years of lending experience right here in Kennebec Valley.

expanding opportunities In July of 2014, we opened a new Operations Center on Civic Center

Drive in Augusta. The Bank utilizes 6,000 square feet of the facility

and leases the remaining 15,000 square feet to offset expenses.

The space gives us the opportunity for improved functional

efficiency, team collaboration and a little elbow room to grow.

bring to our work.

(L to R) Craig Garofalo, Jess Norton & Natusha Fate

(L to R) Travis Rowell & Zach Nichols

talent and training Through our Management Training

Program, Kennebec Savings Bank

continues to invest in our employees,

developing skills from within our existing

talent. Travis Rowell trained with loan

processing and is now working directly

with loan applicants. Zachary Nichols is

learning the fields of branch operations,

deposit operations and loan processing.

These two embody the KSB spirit,

pride and sense of fun we all

tools of convenience KSB continues to implement

new technologies that keep us

competitive and efficient, while

providing convenience and options

for customers. In August, we launched

our mobile deposit feature for

smartphone and tablet users allowing

customers to deposit checks anytime,

anywhere. We have boosted the number

of paperless statements by 1,800

this year. For the end user, statements

are always readily available and

environmentally-friendly.

standing out in a crowd 2014 Snapshots

(L to R) Mary Hammond & Jill Johnson

We don’t just measure our success or worth in milestones or financial

performance indicators, but also by our community connections and

commitments. We pride ourselves on encouraging collaborative

energy that sustains area efforts and organizations. We utilize our

financial resources to keep our community dynamic and strong.

In 2014, Kennebec Savings Bank invested approximately 10% of our

income in the communities we serve. Our employees also give of their

personal time, collectively volunteering thousands of hours supporting

causes and multiple not-for-profit organizations in Kennebec County.

KSB employees were proud to wear pink and walk among 1,100

participants in the 2014 MaineGeneral Walk For Hope that raised

$143,000 for local breast cancer awareness and support programs.

The KSB team, comprised of 37 people, ranked second in total

fundraising among all the teams participating.

Our Mission

Directors (seated L to R) Mary Denison, Bill Mitchell (standing L to R) Andrew Silsby, Mark Johnston, Dick O’Connor, Diane Hastings, Doug Reinhardt, Bill Sprague, Norm Elvin, & Chuck Hays, Jr.

Kennebec Savings Bank is committed to excellence in operating a profitable, responsible and customer-focused community bank that:

• Serves as the primary bank of individuals, families, professionals and businesses in our markets with great service, products and technology;

• Positively contributes to the quality of life in our Kennebec Valley communities;

• Offers a challenging and rewarding work environment to the KSB team of employees.

CORPORATORS P. Nicholas Alberding Michelle B. Ayotte Bragg Laura J. Benedict Brian S. Berry John D. Blouin Nona O. Boyink Amos M. Byron John T. Christie David A. Cosgrove Philip W. Davidson Scott L. Davis Cathy A. DeMerchant Mary A. Denison Steven E. Diaz, MD George W. Diplock, Jr. William E. Dowling Daniel J. Dubord Matthew W. Dwyer Norman S. Elvin John V. Finnegan Mark A. Ford Maurice G. Fortin Michael J. Fortin Thomas E. Foster Linda M. Gagne Phyllis Gardiner Craig J. Garofalo Debra A. Getchell Linda B. Gifford David A. Grenier Daren S. Hachey Brent L. Hall Gary L. Hammond Diane F. Hastings Charles W. Hays, Jr. Kevin M. Healey Bradley A. Hendrickson William S. Hill Charles L. Hippler III Kathleen B. Hounsell Mark L. Johnston Roger J. Katz Earle R. Kenney Dr. H. Winston Kipp

Patricia P. Ladd Donald O. Lagace, Jr. James R. Lagasse Joseph M. Lajoie R. Howard Lake James S. LaLiberty Gary Lapierre Margaret A. Lord Andrew B. MacLean Robert M. Marden Todd J. Mattson Walter F. McKee Peter E. Meulendyk William E. Mitchell Robert M. Moore Mary L. Morrison Stacey L. Morrison L. Michael Murphy Michael A. Napolitano, Jr. Richard D. O’Connor Timothy R. O’Donnell Mary Kathleen O’Halloran Gary R. Peachey Reginald E. Perry Daniel S. Petersen Gregory R. Piper Donald J. Plourde Lynn Roberts Reed Douglas E. Reinhardt David J. Roy H. Allen Ryan Jeffrey A. Shostak Stephen H. Shuman Andrew E. Silsby William W. Sprague, Jr. Ingrid Stanchfield D. Mark Stebbins Paul D. Stein Barton J. Stevens Robin M. Struck Jonathan R. Tardiff Eben A. Thomas Katie C. Vickers Dorothy S. Weeks P. Kevin Wellenius

Dennis W. Wheelock Stephen J. Wood

HONORARY CORPORATORS Stephen W. Albison Cecile A. Bouffard Leo W. Caron Richard A. Coleman Carole T. Fryover Moira H. Fuller Robert C. Hutchinson Warren C. Kessler Donald O. Lagace, Sr. Normand R. Lapointe Dennis W. Matthews Robert A. Moriarty Leo J. Murphy Byron B. Nichols Raymond D. Pepin Carolyn B. Perry William H. Perry Donald S. Rodrigue Jack D. Smart Stanley E. Sproul Susan S. Thomas Peter G. Thompson Thomas A. Trafton Leo J. Violette Sumner A. Webber, Sr.

DIRECTORS Richard D. O’Connor, Chairman William W. Sprague, Jr., Vice Chairman Mark L. Johnston, Clerk Mary A. Denison Norman S. Elvin Diane F. Hastings Charles W. Hays, Jr. William E. Mitchell Douglas E. Reinhardt Andrew E. Silsby

KENNEBEC SAVINGS BANK OFFICERS Mark L. Johnston, Chief Executive Officer

Andrew E. Silsby, President & Chief Operating Officer

M. Cheryl Brandt, Senior Vice President & Chief Retail Banking Officer

Craig J. Garofalo, Senior Vice President & Chief Operations Officer

Debra A. Getchell, Senior Vice President, Chief Financial Officer & Treasurer

Sandra P. Goodwin, Senior Vice President & Chief Loan Officer

David A. Grenier, Senior Vice President & Chief Commercial Banking Officer

Kevin M. Healey, Senior Vice President & Chief Human Resources Officer

James R. Lagasse, Senior Vice President & Chief Technology Officer

David J. Roy, Senior Vice President & Chief Risk Officer

William S. Hill, Regional Vice President

Amos M. Byron, Vice President & Trust Officer

Marie M. Charest, Vice President, Compliance Officer & CRA Officer

George W. Diplock Jr., Vice President & Collections Officer

Matthew W. Dwyer, Vice President & Branch Manager

Brent L. Hall, Vice President & Commercial Banking Officer

Gary Lapierre, Vice President & Loan Officer

D. Mark Stebbins, Vice President & Commercial Banking Officer

Katie C. Vickers, Vice President & Business Banking Officer

Tracy L. Warren, Vice President & Loan Officer

Erin N. Bechard, Assistant Vice President & BSA Officer

Tracy L. Farrell, Assistant Vice President & Branch Manager

Kelley J. Madore, Assistant Vice President & Risk and Security Officer

Michelle L. Richardson, Assistant Vice President & Branch Manager

Mary A. Hammond, Human Resources Officer

Tamara Hillman-Tardiff, Loan Operations Officer

Heather O. Knowles, Controller

Nicolas G. Patenaude, Financial Analyst & Finance Officer

Anthony W. Rhoades, Branch Manager & Loan Officer

Front cover (L to R) Dayna Sylvester, Patsy Wing, Amy Abbott, Debbie Coulombe, Marie Charest, Seth Abbott, Diane Miller-Schrader, Chris Daly Back Cover (L to R) Lauri DuBois, Hollee Black, Justin Lindie, Amanda Stratton, Andy Rhoades

Kennebec Savings, MHC, Parent of Kennebec Savings Bank Consolidated Summary Balance Sheet and Consolidated Summary Statement of Income

BALANCE SHEET STATEMENT OF EARNINGS

Assets 12-31-2014 12-31-2013 Year Ended

12-31-2014 Year Ended 12-31-2013

Cash and Cash Equivalents $26,295,605 $15,879,554 U.S. Government and Agencies 47,363,745 47,768,570 Interest on Loans $28,560,000 $29,274,904 Other Bonds 22,095,013 24,002,749 Interest and Dividends onCorporate Stock 38,425,549 32,794,317 Investments 2,328,718 1,921,014 Real Estate Loans 489,651,490 491,527,161 Commercial Loans 146,639,730 147,185,226 Total Interest Income 30,888,718 31,195,918 Other Loans 4,696,769 4,284,975 Allowance for Loan Losses (4,226,530) (4,007,864) Interest and Dividends Bank Premises and Equipment 18,176,344 16,864,993 Paid on Deposits and Retail Funding (4,169,553) (4,847,455)Other Assets 16,001,092 21,109,878 Interest Paid on Wholesale Funding (3,794,319) (4,647,471)

Total Interest Expense (7,963,872) (9,494,926)Total Assets $805,118,807 $797,409,559

Net Interest Income 22,924,846 21,700,992 Liabilities & Capital

12-31-2014 12-31-2013 Provision for Loan Losses (600,000) (660,000)

Checking Deposits $132,838,421 $123,181,322 Other Operating Income 4,058,040 3,391,111 Savings Deposits 203,515,413 209,750,059 Security Gains/(Losses) 1,423,580 1,988,793 Certificates of Deposit 183,643,088 198,887,805 Operating Expenses (20,024,129) (19,143,531)Other Retail Funding 27,659,429 23,019,574 Wholesale Funding 143,506,976 135,511,883 Earnings BeforeOther Liabilities 9,994,923 7,213,670 Income Taxes 7,782,337 7,277,365 Equity Capital 103,960,557 99,845,246 Income Taxes (1,712,411) (2,203,011)

Total Liabilities and Capital $805,118,807 $797,409,559 Net Income $6,069,926 $5,074,354

unaudited unaudited

2015

www.kennebecsavings.com 150 State Street • Augusta • 622-5801 | 226 Main Street • Waterville • 872-5563 84 Main Street • Winthrop • 377-5801 | 1 Northern Avenue • Farmingdale • 588-5801 24 Hour Electronic Banking Centers: 150 State Street • Augusta | 1 Northern Avenue • Farmingdale 902 Western Avenue • Manchester | 316 Civic Center Drive • Augusta ATM: 117 Riverside Drive • Augusta | Alfond Center for Health, MaineGeneral • Augusta