nybdc - The 504 Company

Lending Partner
Across
New York State
NYBDC
New York Business Development Corporation
Annual Report 2006
PARTNER
Banks
Adirondack Bank
Adirondack Trust Company
Alliance Bank
Alpine Capital Bank
Amalgamated Bank of New York
American Community Bank
Apple Bank for Savings
Axa Equitable Life Assurance Society
Astoria Federal Savings & Loan
Ballston Spa National Bank
Banco Popular
Bank Hapoalim
Bank of Akron
Bank of America
Bank of Bennington
Bank of Castile
Bank of Cattaraugus
Bank of China
Bank of Greene County
Bank of Holland
Bank of Millbrook
Bank of New York
Bank of Richmondville
Bank of Smithtown
Bank of Tokyo - Mitsubishi UFJ Trust Company
Bank of Utica
Beacon Federal Savings Bank
Berkshire Bank
Bridgehampton National Bank
Canandaigua National Bank
Capital Bank & Trust Company
Carver Federal Savings Bank
Cathay Bank
Cattaraugus County Bank
Cayuga Lake National Bank
Champlain National Bank
Chemung Canal Trust Company
Citibank, N.A.
Citizens Bank
City & Suburban Federal Savings Bank
Commerce Bank
Community Bank
Community Bank of Orange
Community Bank of Sullivan County
Community Capital Bank
Country Bank
Dairylea Cooperative, Inc.
Delaware National Bank of Delhi
Deutsche Bank
Dime Savings Bank of Williamsburgh
Elmira Savings and Loan
Elmira Savings Bank
Empire State Bank
Evans National Bank of Angola
First National Bank of Dryden
First National Bank of Groton
First National Bank of Jeffersonville
First National Bank of Long Island
First National Bank of Scotia
First Niagara Bank
First State Bank
Five Star Bank & Trust
Flushing Savings Bank
Fulton Savings Bank
Genesee Regional Bank
Glens Falls National Bank
Gotham Bank of New York
Gouverneur Savings & Loan
Greater Buffalo Savings Bank
HSBC Bank USA
Habib American Bank
Hamptons State Bank
Hudson United Bank
Hudson Valley Bank
Independence Community Bank
Israel Discount Bank of New York
JPMorgan Chase Bank
Jamestown Savings Bank
KeyBank
Legacy Banks
Lyons National Bank
M&T Bank
Mahopac National Bank
Maple City Savings Bank
Medina Savings and Loan Association
Metropolitan Life Insurance Company
Mitsubishi UFJ Trust & Banking Corp.
NBT Bank
National Bank of Coxsackie
National Bank of Delaware County
National Bank of Stamford
National Bank of Vernon
National Union Bank of Kinderhook
New York Commercial Bank
New York Community Bank
North Fork Bank
Northfield Savings Bank
Oneida Savings Bank
Ontario National Bank of Clifton Springs
Orange County Trust Company
Oswego County National Bank
Partners Trust Bank
PathFinder Bank
Patriot Federal Bank
Peoples National Bank
Pioneer Savings Bank
Provident Bank
Putnam County National Bank of Carmel
Putnam County Savings Bank
Redwood Bank
Rhinebeck Savings Bank
Ridgewood Savings Bank
Riverside Bank
Rome Savings Bank
Rondout Savings Bank
Safra National Bank
Saratoga National Bank
Savannah Bank
Sawyer Savings Bank
Signature Bank
Solvay Bank
State Bank of India
State Bank of Long Island
Sterling National Bank
Steuben Trust Company
Stissing National Bank of Pine Plains
Suffolk County National Bank
TD Banknorth
The Berkshire Bank (NYC)
Tioga State Bank
Tompkins Trust Company
Trustco Bank
Tupper Lake National Bank
Ulster Savings Bank
Union State Bank
United States Trust Company
Upstate National Bank
Valley National Bank
Victory State Bank
Wachovia Bank
Walden Federal Savings & Loan
Walden Savings Bank
Wallkill Valley Federal Savings & Loan
Watertown Savings Bank
Wilber National Bank
REPORT
on Operations
Incredible support from our lending partners
+ Dedicated staff
+ Passion for small business
= Another great year at NYBDC
Patrick J. MacKrell, President and CEO, and
James J. Byrnes, Chairman of the Board, NYBDC
The company continues to benefit from the
•
Loans receivable increased 10.8% to
momentum of years of success and careful
$439,677,751 despite unprecedented
planning. Building on that foundation, during
prepayments.
FY 2006 we explored new partnerships, oppor-
•
Income increased 7% to $8.8 million.
tunities and ways to accomplish our mission.
•
Strong performance of the NYBDC loan
We are pleased to report that there were a
portfolio and management of our problem
number of exciting developments at NYBDC
loans allowed us to reduce our provision
during the year. Among them were: a new
for loan losses and still maintain our
office in Syracuse to serve Central New York;
allowance at record levels.
an additional $100 million loan with the New
•
Our recoveries exceeded write-offs
York State Common Retirement Fund to
by $70,000.
support long-term fixed rate loans; expansion
Our financial success would have little
of our loan activities on Long Island to include
meaning, however, if we could not deploy it to
the SBA 504 program; and expanded staffing
support economic development and access to
in our New York City and Long Island offices.
capital for New York’s small businesses and the
More than $1.9 million in pre-tax revenue
communities they support. In FY 2006 we
represents a 31% increase over last year and a
made a difference with innovative programs,
new record. This result is the product of strong
reductions in fees and support of economic
performance on many fronts, including the
development initiatives, including:
following:
•
•
Payment of the third-party lender fees on
Loan disbursements increased 16.7% to
SBA 504 mortgage loans, resulting in a
$103 million.
substantial reduction in SBA 504 loan fees.
(continued on page 2)
2006 New York Business Development Corp.1
REPORT
on Operations (continued from page 1)
•
•
•
•
A major sponsorship of the Central Upstate
Regional Alliance – Essential Connections.org
including the Broome County Urban League,
Emerging Business Competition – intended
S.C.O.R.E chapters and chambers of commerce
to stimulate job creation, economic develop-
across New York state, New York Wired for
ment and entrepreneurial activity in Central
Education (an inner city literacy pilot), The
New York.
Gateway to Entrepreneurial Tomorrows, the
Implementation of a pilot program to support
Hudson Valley Bankers Association, the Catskill
construction financing for SBA 504 loans in
Area Hospice Hope Foundation and the Long
partnership with our member banks.
Island Partnership.
A major sponsorship of the Albany-Colonie
lender in each of the three SBA districts in New
Competition.
York state and continued its strong support of our
Sponsorship of the Rockland Community
lending partners. Our many enhancements to this
Business Week in partnership with Rockland
program this year included the addition of a loan
Economic Development Corporation.
committee in Long Island to consider SBA 504
Contribution of $108,000 to the NYBDC
loan applications. Across New York state we set
Foundation, a tax-exempt foundation which
the standard for SBA 504 loan processing and
supports economic development and charitable
administration.
None of our goals could be accomplished
A major sponsorship of the New York State
without the support of our lending and community
Economic Development Council Annual
partners. The support extends far beyond loan
Meeting.
referrals and shared risk. We call on our lending
$100
Loan Approvals
Loan Advances
Total (in millions)
102,862,929
$90
$75
$60
Annual Report
$150
$125
$100
$50
$30
$15
$175
Total (in millions)
$75
$45
2
Empire State CDC was the leading SBA 504
Chamber of Commerce Business Plan
organizations through gifts and grants.
•
We also supported many other organizations,
167,132,759
•
2002
2003 2004 2005 2006
$25
2002
2003 2004 2005 2006
partners to participate in our loan committees and
excellence. Whether the task at hand is creative
to provide us with lines of credit to support our
loan structuring or challenging collections activity,
loan programs. Our community partners provide
their performance is noteworthy in all respects.
us with insight on local projects and are valuable
There is no limit to what we can accomplish!
resources to the small businesses we support – all
FY 2007 brings with it many challenges and
with a common goal of promoting the growth of
opportunities. We look forward to the continued
jobs and opportunity in New York.
success of NYBDC and our positive impact on
A special note of thanks to our directors. We
New York.
have had a busy, demanding year addressing
issues, policies and initiatives as we prepare
NYBDC for a successful future. Each director has
unselfishly given time, energy and tremendous
talents to provide the advice, guidance and
direction so essential to our success. This year
Frank Lourenso retired from the NYBDC Board
Patrick J. MacKrell
President & CEO
New York Business
Development Corp.
James J. Byrnes
Chairman of the Board
New York Business
Development Corp.
of Directors with our thanks and gratitude for
many years of service to our company. We also
welcomed Robert Como, Michael Orsino and
Robert Curley to our board and look forward to
their participation in our future.
Before closing, we must recognize the
tremendous contributions of our staff. They are
passionate about our mission and committed to
Loan Portfolio Managed
$500
Total (in millions)
471,030,172
$400
$300
$200
$100
2002
2003 2004 2005 2006
2006 New York Business Development Corp.
3
EXCELLENCE
Service, Professionalism
New York Business Development Corp. continues to earn its reputation for excellence, service
and professionalism. The borrowers on this and the following pages are a sample of the wide range
of industries and businesses that benefit from NYBDC loans in partnership with banks.
These companies are growing in New York state, retaining or creating jobs here and providing
products and services that add to the economic health of their communities and the state. They are
industrial companies, service businesses and professional firms in urban neighborhoods, rural towns
and all kinds of communities in between.
The SBA 504 program, administered through NYBDC’s affiliate, Empire State CDC, continues
to be the major revenue driver for the company. It also provides a major opportunity to share the risk
with banks in financing deserving companies. As is evident by their comments in this annual report,
bankers recognize that Empire State CDC lenders are very knowledgeable about all aspects of the
SBA 504 program and are a valuable, creative resource to help structure deals.
Rite Price Gas & Food Mart, Inc.
Rome, New York
“Everyone at Empire State
CDC is professional and
competent. I have worked
with John King on a
couple of transactions, and
he is very good to work
with. I work with a number
of CDCs throughout the
East Coast, and Empire
State CDC continues to be
one of my favorites to
work with.”
Hector DaCosta
Bank of America
Satwant Bhatti and Harjinder Bhatti (in photo), father and son, sought to purchase a
Sunoco franchise gas station and convenience store at 1600 East Dominick Street in
Rome. It would operate under the name Rite Price Gas & Food Mart. Bank of
America provided $371,500 and Empire State CDC provided SBA 504 financing of
$222,900 for purchase of the real estate, purchase and installation of two underground
gasoline tanks and other equipment.
4
Annual Report
PARTNERING
Effectively with Banks
Jody (in photo below) and Mark McHale formed Beautiful Reflections, Inc. to provide upscale salon and spa
services in rural Springfield, and looked for a strategic location that would provide high retail traffic and space
to expand. They found it at 13 East Main Street, two doors from the most upscale restaurant in town and
within walking distance of a local bed and breakfast. NYBDC and HSBC Bank provided the $167,700 first
mortgage through an SBA 7(a) loan that covered purchase of the building and some renovations. HSBC also
provided $232,000 for renovations, supplies and inventory, a sound system and advertising.
Beautiful Reflections, Inc.
Springfield, New York
“Mike Taylor got involved
from the outset, and it was
really helpful. . . . There’s
nobody better in terms of
SBA programs. . . . We
could not have financed
this deal on our own, and
with the NYBDC partnership, we were able to do
it. They were tremendous.”
Steve Swanson
HSBC Bank
Infinite Care
Albany, New York
“When we have a
situation where we can
sell the 504 product to the
client, any of the NYBDC
lenders are extremely
helpful in making the
client comfortable with
that transaction. . . . We
have each other’s cell
phone numbers and are
very comfortable about
calling at any point.”
Heather Ford
KeyBank
Recognizing an important need in the community, Demetris Barrett (in center of photo)
established Infinite Care, a start-up day care center, to care for children considered at risk.
She sought financing to purchase and renovate a building at 43 Quail Street in a lowincome neighborhood of Albany, and to buy equipment and supplies. KeyBank and
Empire State CDC helped her get started. KeyBank financed a first mortgage of $74,000
and Empire State CDC a $51,800 SBA 504 loan for building purchase and renovation.
NYBDC and KeyBank also provided an SBA 7(a) loan of $60,000 for new equipment.
2006 New York Business Development Corp.
5
BUILDING
Loan Volume Together
Ithaca Materials Research & Testing, Inc.
Lansing, New York
Our loan officers are adept at properly structuring loan
packages to allow businesses to utilize economic development
programs to their maximum potential. Ithaca Materials Research
& Testing, Inc., an independent testing laboratory owned by
Stephen Ruoff (at right), is an excellent example. The company’s
real estate expansion at the Lansing Business and Technology Park
was financed by a Tompkins Trust first mortgage for $950,000
and an Empire State CDC SBA 504 second mortgage for
$320,000. Equipment was financed by the Broome County IDA,
Tompkins County and Empire State Development (New York’s
economic development agency). Empire State CDC developed
the loan structure and coordinated the underwriting for all
groups to minimize the time required by the customer to process
multiple applications. In so doing, Empire State CDC not only
provided second mortgage financing but also a cohesive economic
development benefits package and delivery system to retain a
successful small business in New York.
“Jim Conroy has been extraordinarily helpful in putting projects
together. He makes the process easier because he’s so very well
organized. . . . We think very highly of NYBDC as an organization.”
Paul Banfield
Tompkins Trust Co.
Vermont Timber Frames, Inc.
Cambridge, New York
“Curt Solomon is very
knowledgeable about
SBA loan programs. He
always goes above and
beyond to be accommodating, supportive and
responsive in getting
projects closed. I
thoroughly enjoy
working with Curt.”
Mike O’Connell
TD Banknorth
6
Annual Report
NYBDC’s Community Partners are valuable
referral sources across the state. Washington
County Local Development Corp. (LDC), for
example, referred Vermont Timber Frames, Inc.
in 2002. The company, owned by Paul Martin and
Tom Harrison (left to right), had always cut
joinery for its timber frame structures by hand, a
process that took four people six weeks. With a
long backlog of orders, however, the owners
identified state-of-the-art automated production
equipment that would fabricate the same joinery
with two people in eight hours. NYBDC and
TD Banknorth provided a $500,000 SBA 7(a)
term loan, and the Washington County LDC
provided an additional $89,000 so the company
could purchase the new equipment, positioning it
for rapid growth. That growth occurred, and the
company was ready for new expansion in just
a few years. TD Banknorth, NYBDC and
Empire State CDC came through again and
approved loans for the company’s planned
expansion in 2007.
PROVIDING
SBA 504 Expertise
Progressive Medical Associates, P.C.
New York, New York
Cardiologists Marc Nolan and John
Minutillo (left to right) had been
practicing as Progressive Medical
Associates, P.C., when they decided to
establish a permanent home for their
practice and to expand their services.
They wanted to purchase the condo they
were leasing at 84th Street and East End
Avenue in Manhattan, and they hoped to
buy and renovate the neighboring condo
in the same building. Citibank provided a
$907,000 first mortgage, while Empire
State CDC provided a $700,000 SBA 504
second mortgage. The purchases will
make it possible to add 15 employees to
the practice.
Carabie Corporation
Mount Vernon, New York
“NYBDC made it possible for Progressive Medical Associates to
purchase and renovate two medical condos as their practice
outgrew their space. They are wonderful when it comes to closings,
and we have a great working relationship. Overall, we have a great
partnership with NYBDC.”
Nancy Savis
Citibank, N.A.
Carabie Corporation provides commercial and industrial
painting services, focusing on the painting of rehabilitated
steel used in bridges and tunnels in metropolitan New York.
After being in business for 30 years, Ernest Sanchez and his
daughters, JoAnn Miano (at left) and Linda Bautista (at
right), formed a realty company to acquire commercial
property located in an Empire Zone at 216 South Terrace
Avenue, Mount Vernon. Purchase of the buildings and land
was possible through a $1,072,500 first mortgage from
JPMorgan Chase Bank and an $858,000 SBA 504 second
mortgage through Empire State CDC.
“My experience with several loan officers at Empire
State CDC is that they are always professional,
thoughtful and supportive. We’ve always had a good
relationship . . . interacting with our clients, as well as
each other.”
Bruce Vaughan
JPMorgan Chase Bank
2006 New York Business Development Corp.
7
HELPING
Companies Expand in New York State
Pyramid Floor Covering, Inc., is a family business owned by three brothers. The company works
with every type of flooring underlayment as well as with the entire spectrum of finish flooring
products (e.g. wood, carpet, tile, linoleum). The recent expansion of the underlayment division
required more space to house additional equipment and materials. The company purchased a
21,820-square-foot industrial building at 81 Seaview Boulevard in Port Washington. State Bank of
Long Island provided $1,515,000 and Empire State CDC provided an SBA 504 loan of $1,127,000.
From left to right: Richard J. O’Brien, first vice president, State Bank of Long Island; Brian
DeGaray, principal, Pyramid Floor Covering, Inc.; and James J. Goldrick, vice president, NYBDC.
“NYBDC turns
proposals fast.
They are very
service oriented
and have proven to
be a solid partner
with us. . . . We got
them involved and,
in a short time, they
made contact and
visited the site. Then
we had a continuous
open dialog with all
three parties.”
Richard O’Brien
State Bank of
Long Island
Pyramid Floor Covering, Inc.
Port Washington, New York
To expand their business, McAllister Sign, Inc., Mark and
Christine McAllister (in photo at right) wanted to
purchase the building at 1194 Ridge Road in Webster
where they were leasing space. This would allow them to
spread out and make use of the full 3,100 square feet in
the two buildings on the site. Empire State CDC and
M&T Bank teamed up to provide financing for the real
estate purchase, with M&T Bank financing 50 percent
($162,500) and Empire State CDC – through the SBA 504
program – 40 percent ($130,000).
“Empire State CDC paying the Third-Party
Lender Fee on this 504 deal was ‘make or
break’ for the deal. . . . Any time I work with
them, they respond immediately to my calls,
and I’ve never waited as long as 24 hours.”
8
Annual Report
Michael Richards
M&T Bank
McAllister Sign, Inc.
Webster, New York
NYBDC
Team
From left, front row: Richard Amsterdam, Daisy Osorio, Daniel Vaccaro, Stanley Grochocki, Chet Sadowski,
Deborah Mercora, Richard Grant, Kevin O’Leary, James Goldrick and Linda Zou. Row 2: Diane McDonald, David
Terrenzio, Janna Czernicki, Patrick MacKrell, Rachel Aiello, Kathleen Russom, Joanne Karmazyn, Curt Solomon
and Peter Van Nostrand. Row 3: Kathleen VanAnden, Amy Esposita, Colleen Miller, Allison Kowalski, Michael
Taylor, Marlies Capobianco, Nancy Reinhart, Sabrina Morton, Renee Williams, Thomas Reynolds and Lynda
DeBell. Row 4: Thomas Green, Shelley Smith, Lisa Lundquest, Andrew Linehan, Jill O’Dell, Cedric Carter,
Michael Kinum and Owen Burns. Row 5: Steven Willard, John King, Steven Smith, Thomas McHale, James
Conroy and Michael Zihal.
2006 New York Business Development Corp.
9
NYBDC
New York Business Development Corp.
Board of Directors
Howard M. Applebaum
Sanford A. Belden
Consultant
Community Bank
Dewit, New York
Executive Vice President
& Chief Lending Officer
First Niagara Bank
Buffalo, New York
Senior Vice President
& Market Manager
Bank of America
Albany, New York
Mary Bintz
Mark C. Boyce
James J. Byrnes
F. Edward Devitt
Linda Dickerson
Hartsock
Executive Vice President
Sterling National Bank
New York, New York
G. Gary Berner
Chairman & CEO
Tompkins Trustco Inc.
Ithaca, New York
Robert L. Como
Senior Vice President
JPMorgan Chase Bank
New York, New York
Robert Curley
Chairman
Citizens Bank
Albany, New York
President
Devitt Management
& Associates
Montgomery, New York
Daryl R. Forsythe
Chairman
NBT Bancorp
Norwich, New York
Charles A. Gargano
Commissioner
New York State Department
of Economic Development
New York, New York
Thomas F. Goldrick, Jr.
Daniel J. Hogarty, Jr.
Patrick J. MacKrell
Brian T. McMahon
Carl E. Meyer
Allen J. Naples
President & CEO
New York Business
Development Corp.
Albany, New York
President
New York State Economic
Development Council
Albany, New York
Michael P. Smith
George Strayton
President & CEO
New York Bankers Association
New York, New York
10
Annual Report
President & CEO
Provident Bank
Montebello, New York
Chairman
State Bank of Long Island
Jericho, New York
President & COO
Central Hudson Gas
& Electric Corporation
Poughkeepsie, New York
Christopher J. Taylor
Executive Vice President & COO
Hudson Valley Bank
Yonkers, New York
The Troy Savings Bank
Charitable Foundation
Troy, New York
Regional President
M&T Bank
Syracuse, New York
Nina Tyzik
Division General Manager
HSBC Consumer Lending
New York State
Latham, New York
Director
N.Y. Life Investment
Management, LLC
New York, New York
Executive Director
Cortland County Business
Development Corporation
Cortland, New York
Hugh A. Johnson
Chairman
Johnson Illington
Advisors, LLC
Albany, New York
Michael Orsino
President, Capital Region
KeyBank N.A.
Albany, New York
Maryann M. Winters
Certified Public Accountant
Sirchia & Cuomo, LLP
East Syracuse, New York
Bruce W. Boyea
Chairman, President & CEO
Security Mutual Life
Insurance Company
Binghamton, New York
Hugh Donlon
Managing Director
U.S. Business Banking
Citibank, N.A.
Long Island City, New York
Robert W. Lazar
Executive-in-Residence
University at Albany
Albany, New York
Walter Rich
President & CEO
New York, Susquehanna and
Western Railway Corporation
Cooperstown, New York
EMPIRE STATE CDC
Empire State Certified Development Corporation
Board of Directors
Debbie Bogdanski
Vice President, Orange County Chamber
of Commerce
Newburgh, New York
Jeffrey Bray
Executive Vice President, Fulton County EDC
Johnstown, New York
John Chiaramonte
Partner, Teal, Becker & Chiaramonte, CPAs
Albany, New York
SZCC
Herbert G. Chorbajian
Slingerlands, New York
Peter K. Cosgrove
Senior Vice President, First Niagara Bank
Albany, New York
Bruce E. Ferguson
Administrative Director, Suffolk County
Industrial Development Agency
Hauppauge, New York
Jeffrey M. Levy
Mark D. Morrison
Kelly A. Lovell
James E. Murphy
Capital Region President, NBT Bank
Albany, New York
President, Center for Economic Growth
Albany, New York
Alfred F. Luhr, III
Senior Vice President, M&T Bank
Amherst, New York
John E. Mack III
Hilton Head Island, South Carolina
Senior Vice President, KeyBank
Albany, New York
Vice President, JPMorgan Chase Bank
Albany, New York
Madeline B. Taylor
President, Albany-Colonie Regional
Chamber of Commerce
Albany, New York
Statewide Zone Capital Corporation
Board of Directors
Henry H. Auffarth
Managing Director, Senior Vice President
Citibank
Harrison, New York
Michael P. Brassel
Anne Conroy
President, Dutchess County Economic
Development Corporation
Poughkeepsie, New York
William D. Danko, Ph.D.
Administrative Vice President
Glens Falls National Bank
Glens Falls, New York
Associate Professor of Marketing
SUNY Albany School of Business
Albany, New York
President & CEO, TD Banknorth
Glens Falls, New York
Senior Vice President, Alliance Bank
Cortland, New York
Daniel Burke
Michael Claisse
Vice President, The Bank of New York
New York, New York
NYBDC
Corporate Officers
Carl A. Florio
Regional President, First Niagara Bank
Hudson, New York
Carl Hum
Director, Mayor’s Office of Industrial &
Manufacturing Businesses
New York, New York
Brian E. Keating
Kathie Davis
Executive Vice President, HSBC Bank USA
Buffalo, New York
Walter Dixie
President & CEO
New York Business Development Corporation
Albany, New York
Executive Director, South West Economic
Business Resource Center
Syracuse, New York
Patrick J. MacKrell
John E. Mack, III
Hilton Head Island, South Carolina
Deborah H. McAtee
Business Banking Account Representative
M&T Bank
Watertown, New York
Richard W. Merzbacher
President, State Bank of Long Island
Jericho, New York
Robert W. Schwartz
President, Schwartz, Heslin Group
Latham, New York
Stephan von Schenk
Executive Vice President
The Adirondack Trust Company
Saratoga Springs, New York
James J. Byrnes
Michael G. Zihal
Kevin G. O’Leary
Richard A. Amsterdam
Bruce W. Boyea
Michael L. Kinum
Shelley D. Smith
Marlies M. Capobianco
Chairman of the Board
Vice Chairman
Patrick J. MacKrell
President & CEO
David A. Terrenzio
Executive Vice President
and Senior Loan Officer
Andrew M. Linehan
Senior Vice President
Nancy A. Reinhart
Senior Vice President
Vice President and General Counsel
Peter Van Nostrand
Vice President and Treasurer
James J. Conroy III
Vice President
James J. Goldrick
Vice President
Stanley F. Grochocki
Vice President
Senior Vice President
John T. King
Senior Vice President
Vice President
Chet Sadowski
Vice President
Thomas K. McHale
Vice President
Assistant Vice President
Vice President
Assistant Vice President
Curt V. Solomon
Cedric A. Carter
Vice President
Assistant Vice President
Michael A. Taylor
Timothy C. Larson
Vice President
Assistant Vice President
Daniel Vaccaro
Thomas L. Reynolds
Vice President
Assistant Vice President
Steven M. Willard
Steven L. Smith
Vice President
Linda Zou
Vice President
Assistant Vice President
Kathleen M. Russom
Deborah A. Mercora
Assistant Secretary
Secretary
2006 New York Business Development Corp.
11
NYBDC
Regional Loan and Advisory Committees
Binghamton Region
Elmira Region
Vice President, Partners Trust Bank
Binghamton, New York
Vice President & Regional Manager, M&T Bank
Endicott, New York
Vice President, NBT Bank
Vestal, New York
Senior Vice President
Chemung Canal Trust Company
Elmira, New York
Ronald Lesch *
Ronald G. Goodwin
Douglas Gulotty
President & CEO, Wilber National Bank
Oneonta, New York
Ralph Kelsey
Senior Vice President, Tioga State Bank
Spencer, New York
Glenn Small
President-Southern Division, M&T Bank
Binghamton, New York
Capital DistrictChamplain Region
Anthony Lanzillo *
Senior Vice President, KeyBank
Albany, New York
Thomas Amell
Senior Vice President, Citizens Bank
Albany, New York
Mary Bintz
Senior Vice President & Market Manager
Bank of America
Albany, New York
Peter Clemente
Richard Carr
Robert Fisher
President & CEO, Tioga State Bank
Spencer, New York
Stephen Hoyt
Senior Vice President, Tompkins Trust Company
Ithaca, New York
Mid-Hudson Region
Michael H. Graham *
Vice President, M&T Bank
Fishkill, New York
Robert Ambrose
Vice President, Walden Savings Bank
Montgomery, New York
Paul Calogerakis
Senior Vice President, KeyBank Corporate
Banking
White Plains, New York
James Davenport
Vice President, Rondout Savings Bank
Kingston, New York
Gerald J. Klein, Jr.
Mohawk Valley Region
Beth Muthersbaugh
Vice President, First Niagara Bank
Albany, New York
Jeffrey Rivenburg
Executive Vice President, TD Banknorth
Latham, New York
Mark Noto
Vice President, Rome Savings Bank
Rome, New York
Vice President, The Adirondack Trust Company
Saratoga Springs, New York
Vice President, M&T Bank
Albany, New York
James F. Sullivan
Thomas Savoldy *
Senior Vice President, HSBC Bank USA
Albany, New York
James Jednak
Robert Jussen
Senior Vice President
Partners Trust Bank
Utica, New York
Executive Vice President, Chief Lending Officer
Mahopac National Bank
Brewster, New York
Richard Ferguson
David Manzelmann
John R. Bradley *
Ben Ziskin
Vice President, First Niagara Bank
Amsterdam, New York
Nassau-Suffolk Region
John Garvey *
Senior Vice President, North Fork Bank
Melville, New York
Doug Asofsky
Senior Vice President, Citibank, N.A.
Uniondale, New York
Frederick C. Braun, III
Executive Vice President
State Bank of Long Island
Jericho, New York
Steven P. Cavaluzzo
Vice President, The Bank of New York
Garden City, New York
Brian A. Foster
First Vice President, Business Banking Division
Independence Community Bank
Melville, New York
Theresa Kelly
Senior Vice President, Flushing Savings Bank
Lake Success, New York
Robert Stromberg
Vice President, JPMorgan Chase
New Hyde Park, New York
New York City Region
Henry H. Auffarth *
Senior Vice President & Executive Credit Officer
HSBC Bank USA
New York, New York
Senior Vice President, Banco Popular
New York, New York
Niagara-Southwestern
Region
Alfred F. Luhr, III *
Senior Vice President, M&T Bank
Amherst, New York
John Cinquino
First Vice President, Commercial Corporate
Banking, First Niagara Bank
Buffalo, New York
Brian D. Donahue
Senior Vice President, Chief Credit Officer
Community Bank
Olean, New York
Dennis P. Farrell
Senior Vice President, HSBC Bank USA
Buffalo, New York
William R. Glass
Senior Vice President, Evans National Bank
Hamburg, New York
Sharon Lochocki
Senior Vice President, KeyBank
Buffalo, New York
Northern Region
Michelle D. Pfaff *
Vice President, Community Bank
Watertown, New York
Thomas G. Cesta
Vice President, HSBC Bank USA
Watertown, New York
Bradley Clark
Executive Vice President, NBT Bank
New Hartford, New York
Senior Vice President & Managing Director
Citibank, N.A.
Harrison, New York
Executive Vice President
Adirondack Bank
Utica, New York
Senior Vice President, Market Manager
Small Business Banking, Bank of America
New York, New York
Vice President, Commercial Loan Officer
Gouverneur Savings & Loan
Alexandria Bay, New York
Vice President, Flushing Savings Bank
Bayside, New York
Vice President, KeyBank
Watertown, New York
Rocco F. Arcuri, Sr.
Peter A. Appello
Kevin Kent
Richard Eng
Vice President, Community Bank
Boonville, New York
President, Watertown Savings Bank
Watertown, New York
Thomas Penn
Steven M. Pierce
(continued on next page)
12
Annual Report
Rochester Region
Syracuse Region
Westchester-Rockland Region
Senior Vice President, Canandaigua National Bank & Trust Co.
Canandaigua, New York
Senior Vice President, HSBC Bank USA
Syracuse, New York
Senior Vice President, HSBC Bank USA
Nyack, New York
Administrative Vice President
M&T Bank
Syracuse, New York
Senior Vice President, Provident Bank
Montebello, New York
Robert L. Lowenthal, Jr. *
Walter Roman
Vice President, HSBC Bank USA
Rochester, New York
Richard H. Ferrari
Vice President, First Niagara Bank
Rochester, New York
Deborah A. Urtz
Vice President, First Niagara Bank
Rochester, New York
David Watson
Corporate Risk Manager, Five Star Bank
Warsaw, New York
Russell Williamson
Senior Vice President, Ontario National Bank
Clifton Springs, New York
NYBDC
F. Mathew Zlomek *
Lee De Amicis
John F. Devlin
Vice President, PathFinder Bank
Oswego, New York
James V. Finochio, Jr.
Senior Vice President & Chief
Lending Officer, Solvay Bank
Solvay, New York
Alison K. Miller
Vice President, First Niagara Bank
Fayetteville, New York
Patrick Doulin *
Carl A. Capuano
Daniel Harris
Executive Vice President, Hudson Valley Bank
Yonkers, New York
James O. Harte
Senior Vice President, The Bank of New York
White Plains, New York
Thomas Linehan
Area Manager, Citibank, N.A.
Harrison, New York
* Denotes Committee Chairman
Agricultural Loan and Advisory Committee
Richard H. Porter
Edward Coates
Hans Kunze
Vice President, HSBC Bank USA
Watertown, New York
Vice President, Agricultural Lending, NBT Bank
Norwich, New York
Vice President, Five Star Bank
Warsaw, New York
Executive Vice President, Lyons National Bank
Lyons, New York
Senior Vice President, Bank of Castile
Perry, New York
President, Agri-Edge Development, Dairylea Cooperative, Inc.
Syracuse, New York
Patrick J. MacKrell
Christopher J. Taylor
Clair J. Britt, Jr.
NYBDC
Charitable Foundation
Board of Directors
Herbert G. Chorbajian
Slingerlands, New York
Thomas F. Goldrick, Jr.
Chairman, State Bank of Long Island
Jericho, New York
Robert W. Lazar
Executive-in-Residence
University at Albany
Albany, New York
David De La Vergne
President & CEO, NYBDC
Albany, New York
John E. Mack, III
Thomas M. Shephard
Executive Vice President & COO, Hudson Valley Bank
Yonkers, New York
Hilton Head Island, South Carolina
Walter Rich
President & CEO, New York, Susquehanna and Western
Railway Corporation
Cooperstown, New York
2006 New York Business Development Corp.
13
SBA
Pinnacle Award
Recently, the U.S. Small Business Administration awarded its FY 2006 Pinnacle Award to Empire State
CDC as the lender that approved the most SBA 504 loans in the New York City District, which covers
New York City, Long Island and the lower Hudson Valley. Empire State CDC approved 82 loans totaling
$54,762,000. Pictured below are from left: Steven Preston, SBA Administrator; David A. Terrenzio,
Executive Vice President and Senior Loan Officer, NYBDC; Chet Sadowski, Senior Vice President,
NYBDC; and William Manger, Jr., SBA Regional Administrator.
“The New York Bankers
Association, in cooperation with
its member banks throughout the
state, are proud partners with the
New York Business Development
Corporation. This partnership is
playing a vital role in preserving and enhancing
the economic vitality of the business community,
thereby making New York state a better place to
live and work.”
– Michael P. Smith
President & CEO
New York Bankers Association
14
Annual Report
“NYBDC is an important partner in
economic development throughout New York
state. Its lending services help small
businesses realize their dreams, create jobs
and contribute to the quality of life in their
communities. The effectiveness and
continued growth of NYBDC’s programs are a reflection of
its employees and leaders. The New York State Economic
Development Council and our members strongly value our
partnership with NYBDC.”
– Brian McMahon
President, New York State Economic
Development Council
NYBDC
Stockholders 2006
Adirondack Trust Company
Bank of America
Bank of Castile
Bank of Greene County
Economic Development
Council of the Southern
Tier, Inc.
Elmira Savings Bank
Bank of New York
Federal Deposit Insurance
Corp. (FDIC)
Barclays Bank
Finch, Barbara L.S.
Cattaraugus County Bank
First Albany Corporation
Central Hudson Gas &
Electric Corporation
First Niagara Bank
Chamber of Commerce of
Orange County
Fulton Savings Bank
Chemung Financial
Corporation
Flushing Savings Bank
Glens Falls National Bank
& Trust Company
KeyBank
Procter & Gamble
Pharmaceuticals, Inc.
KeyCorp
KeySpan Corporation
M&T Bank
Mohawk Valley Chamber
of Commerce
Montgomery County
Chamber of Commerce
MONY Financial Services
National Bank of Stamford
NatWest Equity Corporation
NBT Bancorp, Inc.
ReliaStar Life Insurance
Company of New York
Rochester Gas & Electric
Corporation
Security Mutual Life
Insurance Company of
New York
Shults, David A.
Starwood Hotels & Resorts
Worldwide, Inc.
State Bank of Long Island
Global Crossing
North America, Inc.
New York Life Insurance
Company
Greater Rochester Metro
Chamber of Commerce
New York State Electric &
Gas Corporation
Columbian Mutual Life
Insurance Company
Guardian Life Insurance
Company of America
Niagara Mohawk, a
National Grid Company
HSBC Bank USA
North Fork Bank
Combined Life Insurance
Company of New York
Homestead Financial
Services
Northeastern New York
Community Trust
Community Bank
Hope Gas, Inc.
Council of Industry
Independence Community
Bank
Orange County Trust
Company
Ulster Savings Bank
Partners Trust Bank
Union State Bank
JPMorgan Chase Bank
PathFinder Bank
Verizon Communications
JPMorgan Community
Development Corporation
Phoenix Home Life Mutual
Insurance Company
Wachovia Bank
Jeffersonville Bancorp
Pleasant Valley Wine
Company
Chenango County
Chamber of Commerce
Citizens Bank
Citizen’s Communications
Courtland Investments, Inc.
Delaware and Hudson
Railway Company
Delaware National
Bank of Delhi
Drof & Company
Joseph Davis, Inc.
“It is always a pleasure to work with the
dedicated staff of NYBDC to create good
jobs with our small business partners.
Although it is fun to ‘hit home runs’ with
employers like AMD, most of the jobs that
are produced to meet the needs of our
citizens come from ‘hitting singles’ with small business
deals like the ones we do with NYBDC.”
– Kenneth A. Green
President
Saratoga Economic Development Corporation
Steuben Trust Company
TD Banknorth
Teachers Insurance &
Annuity Association of
America
Tioga State Bank
Tompkins Trust Company
Tupper Lake National Bank
Washington Mutual Bank
Wilber National Bank
“We at SBA share NYBDC’s goals of adding
jobs and enriching our communities through
assistance to small business. We appreciate
NYBDC’s, and its affiliate Empire State
CDC’s, participation in SBA’s 7(a) and 504
programs in 2006, and their commitment to
spur economic development in New York.”
– B. J. Paprocki
Syracuse District Director
U.S. Small Business Administration
2006 New York Business Development Corp.
15
Combined Statements of Financial Condition
September 30, 2006 and 2005
Assets
Loans receivable, net
Cash
Restricted cash
Accrued interest receivable
Deferred tax benefits
Other assets
Total assets
Liabilities and Equity
Liabilities
Notes payable:
Members
New York State Common Retirement Fund
Bank lines of credit
Bank term loans
Other obligations
Total notes payable
Accrued interest payable
Accrued expenses and other liabilities
Total liabilities
Equity
Capital stock, no par value, authorized 500,000 shares; issued and outstanding 218,872;
$5 stated value per share
Paid-in capital
Retained earnings
Accumulated other comprehensive items
Total stockholders’ equity
Net assets of Empire State Certified Development Corporation
Total equity
Total liabilities and equity
2006
2005
$ 116,386,894
189,006
762,500
740,638
2,619,309
2,139,542
$ 122,837,889
$ 102,469,422
503,625
2,067,763
640,143
3,035,642
3,518,978
$ 112,235,573
$
$
8,500,000
59,918,829
19,500,000
10,412,866
4,913,570
103,245,265
476,327
2,349,915
106,071,507
1,094,360
3,673,098
11,552,147
(17,400)
16,302,205
464,177
16,766,382
$ 122,837,889
8,500,000
56,238,898
21,000,000
1,729,216
5,073,496
92,541,610
404,199
3,527,839
96,473,648
1,094,360
3,673,098
10,660,021
12,516
15,439,995
321,930
15,761,925
$ 112,235,573
See Notes to Combined Financial Statements.
Combined Statements of Operations
Years Ended September 30, 2006 and 2005
Interest income
Interest expense
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Fees and other income
Income before operating expenses
Operating expenses:
Salaries and employee benefits
Other expenses
Total operating expenses
Income before provision for income taxes
Provision for income taxes
Net income
16
Annual Report
$
$
2006
9,215,893
5,550,019
3,665,874
150,000
3,515,874
5,154,242
8,670,116
4,537,450
2,200,474
6,737,924
1,932,192
734,299
1,197,893
$
$
2005
8,312,995
4,678,550
3,634,445
600,000
3,034,445
4,576,830
7,611,275
4,652,770
1,459,946
6,112,716
1,498,559
743,901
754,658
See Notes to Combined Financial Statements.
Combined Statements of Changes in Equity
Capital
Stock
Balance at September 30, 2004
$ 1,149,400
Comprehensive income:
Net income:
New York Business
Development Corporation
–
Empire State Certified
Development Corporation
–
Total net income
Other comprehensive items
Unrealized gain on investments,
–
net of taxes
Total comprehensive income
Redemption of capital stock (11,058 shares) (55,290)
Issuance of capital stock (50 shares)
250
Balance at September 30, 2005
$ 1,094,360
Comprehensive income:
Net income:
New York Business
Development Corporation
–
Empire State Certified
Development Corporation
–
Total net income
Other comprehensive items
Unrealized loss on investments,
net of taxes
–
Total comprehensive income
Dividends declared
–
Balance at September 30, 2006
$ 1,094,360
Paid-in
Capital
Retained
Earnings
$ 4,363,960 $10,059,095
Accumulated
Other
Comprehensive
Items
$
4,058
Years Ended September 30, 2006 and 2005
$
Total
Stockholders’
Equity
15,576,513
ESCDC
Net
Assets
Total
Equity
$168,198 $ 15,744,711
–
600,926
–
600,926
–
600,926
–
–
–
–
153,732
153,732
754,658
–
–
8,458
8,458
–
8,458
(694,000)
3,138
–
$ 3,673,098 $10,660,021
$
–
12,516
$
609,384
(749,290)
3,388
15,439,995
153,732
763,116
–
(749,290)
–
3,388
$321,930 $15,761,925
–
1,055,646
–
1,055,646
–
1,055,646
–
–
–
–
142,247
142,247
1,197,893
–
–
(29,916)
–
(163,520)
$ 3,673,098 $11,552,147
–
$ (17,400)
Note 1. Organization and Significant Accounting Policies
Organization: In 1955, by a special act, the New York State Legislature created New York Business
Development Corporation (NYBDC). In 1981, Empire State Certified Development Corporation (ESCDC),
an affiliate of NYBDC through common management, was organized, pursuant to Section 402 of the Notfor-Profit Laws of the State of New York, to assist business concerns through financings under the U.S.
Small Business Administration's Certified Development Company (Sections 503 and 504) Program.
NYBDC is also associated with Statewide Zone Capital Corporation of New York (Statewide), a
privately-owned loan and investment fund, organized in 2000, whose capital is available to promote the
expansion and growth of businesses in New York’s participating Empire Zones. The operations of
Statewide are managed by NYBDC, which also owns approximately 1.5% of Statewide’s outstanding
common stock. NYBDC’s investment in Statewide is accounted for under the cost method of accounting.
Together, NYBDC, ESCDC and Statewide act as a complement to banks in providing long-term working
capital, equipment, and real estate loans to a variety of businesses located in New York State, either in participation with, or as an adjunct to, the banking industry. NYBDC’s loans are generally disbursed in
amounts up to $1.5 million and are secured by borrowers' assets and, in some instances, U.S. Small
Business Administration (SBA) guarantees. A borrower's creditworthiness is evaluated on a case-by-case
basis, with the amount of collateral obtained based upon management's credit evaluation of the borrower.
Interest rates are either fixed or variable, and maturities range up to 15 years, depending upon the purpose
of the loan.
Reporting Policy: The combined financial statements include the accounts of NYBDC and ESCDC (collectively referred to as the “Company”). The combined financial statements do not include the accounts of
Statewide. All material intercompany accounts and transactions have been eliminated.
Loans and Allowance for Loan Losses: Loans receivable are stated at the amount of unpaid principal,
reduced by an allowance for loan losses. Interest on loans is calculated utilizing the simple interest
method. Accrual of interest is discontinued on a loan at such time as management believes, after considering economic/business conditions and collection efforts, that the borrowers' financial condition is such that
collection of interest is doubtful. Impaired loans, or loans in which it is probable the Company will be
unable to collect all contractual principal and interest payments due in accordance with the loan agreement,
are generally recorded at the present value of expected future cash flows, discounted at the loan's effective
interest rate, or the fair value of the collateral. Interest payments received on such loans are generally
applied as a reduction of the loan principal balance. A portion of the loan portfolio is designated as a
Portfolio Collateral Account and is pledged against certain borrowings (see Note 3).
The allowance for loan losses is an amount that management believes will be adequate to absorb
losses on existing loans that may become uncollectible, based on evaluations of the collectibility of loans
and prior loan loss experience. The evaluations take into consideration such factors as changes in the
$
(29,916)
1,025,730
(163,520)
16,302,205
–
(29,916)
142,247
1,167,977
–
(163,520)
$464,177 $16,766,382
See Notes to Combined Financial Statements.
nature and amount of the loan portfolio, overall portfolio quality, review of specific problem loans, current
economic conditions that may affect the borrowers' ability to pay, and the extent of SBA guarantees.
Restricted Cash: Restricted cash, which is principally comprised of money market cash equivalents, is
comprised of net draw downs and borrower loan payments pending disbursement under the New York
State Common Retirement Fund Loan (see Note 3). Such cash is designated as the Uninvested Collateral
Account and pledged against these borrowings.
Fees and Other Income: Fees and other income are principally derived from servicing and processing
fees earned by ESCDC (approximating $3,917,000 and $3,495,000 in the fiscal years ending September
30, 2006 and 2005, respectively), fees paid by Statewide (approximating $234,000 and $215,000 in the
fiscal years ending September 30, 2006 and 2005, respectively), and certain closing fees (approximating
$366,000 and $268,000 in the fiscal years ending September 30, 2006 and 2005, respectively).
Income Taxes: Income taxes are provided for the tax effects of transactions reported in the financial
statements and consist of taxes currently due and deferred taxes (see Note 4). Deferred taxes are
recognized for differences between the basis of assets and liabilities for financial statement and income tax
reporting purposes. These differences, which primarily relate to the future tax benefits associated with
recording loan losses, also include amounts attributable to certain employee benefits and deferred compensation. Deferred tax benefits (an asset account) represent the net future tax return consequences of those
differences, which will either be deductible or taxable when the assets and liabilities are recovered or
settled.
Other Assets: Other assets include both non-marketable equity investments and marketable securities
approximating $1,147,000 and $2,377,000 at September 30, 2006 and 2005, respectively. Other assets
also include furniture and equipment, prepaids, and certain other assets. With respect to unrealized gains
and losses on investment securities, such items, net of tax, are classified as other comprehensive items.
When applicable, impairment losses, other than temporary declines in the fair value of investment
securities, are charged to earnings.
Use of Estimates and Assumptions: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial statements. Estimates also affect the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from
those estimates.
Reclassifications: Certain items in the 2005 financial statements have been reclassified to conform with
the current year presentation.
2006 New York Business Development Corp. 17
Combined Statements of Cash Flows
Cash Flows From Operating Activities
Net income
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation
Provision for loan losses
Deferred tax benefits
Changes in:
Other assets
Other liabilities
Net cash provided by (used in) operating activities
Cash Flows From Investing Activities
Loans disbursed, net of participations
Loan payments received
Change in restricted cash
Purchase of furniture and equipment
Net cash (used in) provided by investing activities
Cash Flows From Financing Activities
Net (repayments) advances on borrowings
Issuance of capital stock
Redemption of capital stock
Net cash provided by (used in) financing activities
Net change in cash
Cash, beginning of year
Cash, end of year
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest
Income taxes
Note 2. Loans Receivable and Allowance for Loan Losses
Loans receivable, as presented on the combined statements of financial condition, consist of the
following:
September 30
2006
2005
Loans receivable
$ 122,837,225 $ 108,699,857
Less allowance for loan losses
(6,450,331)
(6,230,435)
Loans receivable, net
$ 116,386,894 $ 102,469,422
The allowance for loan losses account is increased by a provision for loan losses, which is charged
to expense, and reduced by losses, net of recoveries. Because of uncertainties inherent in the
estimation process, management’s estimate of credit losses in the loan portfolio and the related
allowance is subject to change. The amount of such change is not reasonably possible to estimate.
A schedule of the changes in the allowance for loan losses account follows:
Balance, beginning of year
Provision for loan losses
Recoveries credited to the allowance
Losses charged to the allowance
Balance, end of year
$
$
September 30
2006
6,230,435 $
150,000
235,654
(165,758)
6,450,331 $
2005
5,828,145
600,000
55,569
(253,279)
6,230,435
Loans on which the accrual of interest has been discontinued approximated $1,893,000 and
$2,833,000 September 30, 2006 and 2005, respectively.
Loans serviced for others are not included in the accompanying statements of financial condition.
The unpaid principal balances of these loans are summarized as follows:
September 30
2006
2005
ESCDC loans funded by SBA
$ 288,237,974 $ 263,103,885
Bank participations
47,340,973
37,587,923
$ 335,578,947 $ 300,691,808
18
Annual Report
Years Ended September 30, 2006 and 2005
2006
2005
$ 1,197,893
$ 754,658
126,245
150,000
396,390
120,867
600,000
(223,088)
1,287,274
(1,269,316)
1,888,486
(447,788)
(1,174,509)
(369,861)
(64,438,020) (48,183,138)
50,370,548 50,451,890
1,305,263
(80,375)
(144,551)
(19,705)
(12,906,760)
2,168,672
10,703,655
(940,247)
–
3,388
–
(749,290)
10,703,655 (1,686,149)
(314,619)
112,662
503,625
390,963
$ 189,006 $ 503,625
$ 5,477,891
$ 337,880
$ 4,653,101
$ 931,954
See Notes to Combined Financial Statements.
Note 3. Notes Payable
Member Borrowings
Members consist principally of banks which have applied for membership and have been accepted
by NYBDC’s Board of Directors. Many members are also stockholders of NYBDC. Funds are obtained
from members who, at the time they become members, agree to lend money to NYBDC upon call,
subject to limits provided in the basic legislation establishing NYBDC. The loan limit available from
members was $61.1 million at September 30, 2006.
Calls on members are made for maturities of one year with the September 30, 2006 outstanding loan
balances maturing August 1, 2007. Interest is payable twice a year, on February 1 and August 1.
Member borrowings generally provide for interest at the lowest prime commercial rate or 50 to 150 basis
points above the 30 day LIBOR (London Interbank Offered Rate). All member loans are unsecured.
New York State Common Retirement Fund Borrowings
NYBDC has entered into loan agreements with the New York State Common Retirement Fund (the
"Fund") under which the Fund has made available to NYBDC an aggregate principal amount not to
exceed $200,000,000. The proceeds of these loans may be used by NYBDC to extend credit to small
businesses operating in the State of New York.
Under the agreements, borrowings under the loans bear interest at the following annual rate: (i) the
aggregate of the 30-day net yield on the “Vision Treasury Money Market Fund” on uninvested funds and
(ii) between 0.75% and 1.50% (principally dependent upon the nature of the SBA involvement) over the
applicable treasury note rate for comparable original maturities, on the principal amount of each outstanding loan (the Portfolio Collateral Account).
At September 30, 2006 and 2005, the outstanding balance on these loans were $59,918,829 and
$56,238,898, respectively. The principal payments on the loans generally parallels the underlying loan
between NYBDC and its borrower, over a maximum of 15 years.
The loans are collateralized by NYBDC’s right, title and interest in both the Uninvested Collateral
Account and the Portfolio Collateral Account. In addition, the loan agreements provide for various restrictive covenants, such as restrictions on incurring new secured indebtedness or liens (except for certain
office equipment and furniture), restrictions on the declaration or payment of dividends, and restrictions
on providing any guarantees.
Bank Line of Credit Borrowings
NYBDC has available lines of credit with various banks (including members) totaling $56 million at
September 30, 2006. The amounts outstanding on these lines at September 30, 2006 and 2005
were $19,500,000 and $21,000,000, respectively. The line of credit agreements, all of which are
unsecured, are renewed annually and generally provide for interest at a LIBOR based index rate.
Bank Term Borrowings
NYBDC has entered into agreements with two financial institutions, both of which are members
and stockholders, providing for term borrowings of up to $17.5 million. Interest on the borrowings are
determined based on a spread over the applicable Treasury note rate (approximating 5.65% at
September 30, 2006). The amounts outstanding under the term agreements were $10,412,866 and
$1,729,216 at September 30, 2006 and 2005, respectively. The agreements provide for annual
principal reduction payments, dependent upon the amount of borrowings, which currently approximates $663,000.
New York State Teachers’ Retirement System Borrowings
NYBDC has entered into a loan agreement with the New York State Teachers’ Retirement System
(the “System”) under which the System would make available to NYBDC an aggregate principal
amount not to exceed $50,000,000. The proceeds of this loan are to be used by NYBDC to extend
credit to small businesses operating in New York State.
Under the agreement, any advances under the loan will bear interest at 1.8% to 2.2% (dependent
on the ratio of loan to secured value) above a treasury note yield, adjusted to a constant maturity of
ten years. As of September 30, 2006, there were no borrowings under this agreement.
Other Obligations
Other obligations principally include advances from Statewide relating to the funding requirements
of Statewide loans of approximately $3.4 million and $2.1 million at September 30, 2006 and 2005,
respectively. Such advances bear interest and provide for repayment terms which generally parallel
the underlying loan receivable terms.
Other obligations also include term notes with New York Small Business Venture Fund, LLC, a
privately held economic development company. This unsecured obligations, in the amount of $1.5
million and $3.0 million, at September 30, 2006 and 2005, respectively, bear interest at fixed rates
of 5.73% and 1.34%, respectively. The agreements provides for monthly interest payments and
the payment of principal at maturity. The $3.0 million advance was repaid at its maturity in
November 2005.
Note 4. Income Taxes
The components of the provision for income taxes are as follows:
Current taxes
Federal
State and city
Deferred tax (benefit)
Net provision
$
$
2006
382,441
76,469
275,389
734,299
2005
$
$
772,669
194,320
( 223,088)
743,901
As of September 30, 2006 and 2005, deferred tax assets recognized for deductible temporary differences approximated $2,619,000 and $3,055,600, respectively, and deferred tax liabilities
recognized for taxable temporary differences approximated $0 and $20,000, respectively. Deferred
tax assets and liabilities are offset for financial reporting purposes and are included as an asset in the
combined statements of financial condition.
The differences between income taxes computed under federal statutory rates and effective rates
is primarily attributable to state and city taxes and in 2005 the tax reporting status of ESCDC. In this
regard, during 2003, ESCDC filed an application for recognition of exemption under Section 501(c)(3)
of the Internal Revenue Code that, if approved by the Internal Revenue Service, would have allowed
ESCDC to operate as a tax exempt organization effective October 1, 2003. As of September 30,
2004, the application was pending final action by the Internal Revenue Service and, as such, no
income taxes were recorded during 2004. During the fiscal year ending September 30, 2005, ESCDC
withdrew its application, thus providing for taxable status for the corporation. As a result, the
provision for income taxes for 2005 includes income taxes attributable to ESCDC of approximately
$143,000 for the 2005 year and $66,000 for the 2004 year.
Note 5. Employee Benefit Plans
NYBDC maintains a salary reduction (401-k) plan, a Supplemental Executive Retirement Plan
(SERP), and a defined benefit pension plan.
The salary reduction (401-k) plan allows employees to defer and contribute up to 10% of their
salary into the plan with the employer matching approximately 80% of the employees' contributions
up to 6%, subject to certain limitations imposed by the Internal Revenue Services. The plan is funded
on a current basis. The expense for the plan was approximately $148,000 and $144,000 for the years
ended September 30, 2006 and 2005, respectively.
The SERP, which is unfunded and non-qualified, is intended to provide supplemental retirement
benefits due to limitations imposed under the Internal Revenue Code. The computed benefit, which
approximates the accrued benefit under the SERP, is based on actuarial calculations and approximated $45,000 and $1,141,000 at September 30, 2006 and 2005, respectively. The expense for the
SERP was approximately $178,000 and $389,000 for the years ended September 30, 2006 and
2005, respectively. A significant portion of the obligation under the SERP, approximating $1,270,000,
was paid during the fiscal year ending September 30, 2006 and funded by the Company’s liquidation
of certain marketable securities designated for this purpose.
The defined benefit pension plan, a multiple-employer plan, with the New York State Bankers
Retirement System, covers all eligible employees. NYBDC uses a September 30 measurement date
for the plan. The following table sets forth the plan’s estimated funded status and amounts
recognized in the accompanying financial statements.
Projected benefit obligation
Fair value of plan assets
Funded status
Net periodic pension cost
Employer contributions
Benefits paid
Accumulated benefit obligation
Prepaid (accrued) pension cost recognized in the
statement of financial condition
Weighted average assumptions used to determine
both the benefit obligation and the net benefit
cost for the years ended September 30:
Discount rate
Expected return on plan assets
Rate of compensation increase
$
$
$
$
$
$
$
September 30
2006
2005
(2,657,478)
$ (2,439,686)
2,534,926
1,787,021
( 122,552)
$ ( 652,665)
230,019
$
223,827
546,443
$
220,753
55,243
$
13,468
2,062,648
$ 1,886,512
128,082
6.00%
7.50%
3.50%
$
(206,342)
5.50%
8.00%
3.00%
Plan Assets: The Plan’s weighted average asset allocations, by asset category, are as follows:
September 30
Asset Category
2006
2005
Equity securities
59.8%
58.8%
39.9%
41.2%
Debt securities
Other
0.3%
0.0%
Total
100.0%
100.0%
Investment Policies: The New York State Bankers Retirement System (the “System”) was established in 1938 to provide for the payment of benefits to employees of participating banks. The System
is overseen by a Board of Trustees who set the investment policy guidelines.
The System utilizes two investment management firms. The System’s investment objective is to
exceed the investment benchmarks in each asset category. Each firm operates under a separate
written investment policy designed to achieve an allocation approximating 60% invested in equity
securities and 40% invested in debt securities.
Equities: The target allocation percentage for equity securities is 60%, but may vary from 50% - 70%
at the investment manager’s discretion.
Fixed Income: The target allocation percentage for debt securities is 40%, but may vary from 30% 50% at the investment manager’s discretion.
Expected Long-Term Rate of Return: The expected long-term rate of return on plan assets reflects
long-term earnings expectations on existing plan assets and those contributions expected to be
received during the current year. In estimating that rate, appropriate consideration is given to
historical returns earned by plan assets in the fund and the rates of return expected to be available
for reinvestment. Average rates of return over the past 1, 3, 5, and 10 year periods were determined
and subsequently adjusted to reflect current capital market assumptions and changes in investment
allocations.
Contributions: The estimated employer contributions expected to be paid to the plan during the
fiscal year ending September 30, 2007 approximates $43,000.
Termination of Plan: Effective December 31, 2006, the accrual of benefits under the defined benefit
pension plan will be discontinued and the plan will be terminated. Future actuarial reports, and
NYBDC’s related future pension expense, may be impacted by the termination of the plan.
Estimated Future Benefit Payments: The estimated future benefits expected to be paid during 2007
approximate $2,632,000.
The total expense for all NYBDC employee benefit plans was approximately $542,000 and
$760,000 for the years ended September 30, 2006 and 2005, respectively.
Note 6. Fair Value of Financial Instruments
Under generally accepted accounting principles, the Company is required to disclose the estimated
fair value of its financial instruments. A financial instrument is cash, evidence of an ownership interest
in an entity, or a contract which imposes on one entity a contractual obligation to deliver cash or other
financial instruments to a second entity which has comparable contractual rights.
The fair value of a financial instrument is the current amount that would be exchanged between
willing and unrelated parties. Fair value is best determined based upon quoted market prices.
However, in many instances, there are no quoted market prices for the Company’s various financial
instruments. In cases where quoted market prices are not available, fair values are based on
management’s estimates using present value or other valuation techniques. Those techniques are
significantly affected by the assumptions used, including the discount rate and estimates of future
cash flows.
The following methods and assumptions were used by the Company’s in estimating fair value disclosures for financial instruments:
Cash and Restricted Cash: The fair value of cash and restricted cash approximates the recorded
amounts.
Loans Receivable: For variable-rate loans that reprice frequently and with no significant change in
credit risk, fair values are based on carrying values. Fair values for other loans are estimated using
discounted cash flow analyses, using interest rates currently being offered for loans with similar terms
to borrowers of similar credit quality. Fair values for non-performing loans are estimated using
discounted cash flow analyses or underlying collateral values, where applicable.
2006 New York Business Development Corp.
19
Notes Payable: The fair values of the Company’s long-term fixed-rate borrowings are estimated using
discounted cash flow analyses based on the Company’s current incremental borrowing rates for similar
types of borrowing arrangements. The fair value of variable-rate, fixed-term borrowings approximate their
recorded amounts.
Accrued Interest: The fair value of accrued interest approximates the recorded amounts.
The estimated fair values and related recorded amounts of the Company’s financial instruments are as
follows (dollars in thousands):
Financial assets:
Loans receivable, net
Cash
Restricted cash
Accrued interest receivable
Financial liabilities:
Notes payable
Accrued interest payable
September 30
2005
2006
Recorded
Fair
Recorded
Fair
Value
Amount
Value
Amount
$117,949
189
763
741
$119,401
189
763
741
$102,469
504
2,068
640
$106,151
504
2,068
640
103,245
476
99,478
476
92,542
404
90,666
404
Note 7. Commitments and Contingencies
Commitments with Off-Balance-Sheet Risk
In the normal course of business, NYBDC provides commitments to extend credit in order to meet the
financing needs of its customers. These commitments involve, to varying degrees, elements of credit risk in
excess of the amount recognized in the statements of financial condition.
Loan commitments are as follows at September 30, 2006:
Loans authorized, but not fully disbursed
to borrowers
Less estimated bank participations on loan
commitments
Net outstanding loan commitments
Number of Loans
Amount
81
$
50,702,000
81
$
(24,825,000)
25,877,000
Commitments to extend credit represent obligations to lend to a customer as long as there is no
violation of any condition established under the loan approval. Commitments generally have fixed
expiration dates or other termination clauses. Since commitments may expire without being drawn upon,
the total commitment amounts do not necessarily represent future cash requirements.
Operating Lease Commitments
The Company occupies office facilities and leases certain office equipment under various operating
lease agreements. Terms of the leases range from a month-to-month tenancy to a ten year commitment.
At September 30, 2006, future rental payments due under leases with terms in excess of one year approximate $811,000. Substantially all of this commitment, or approximately $200,000 annually (through 2010),
relates to NYBDC’s office facility in Albany, New York. Total occupancy costs were approximately $316,000
and $274,000 for the years ended September 30, 2006 and 2005, respectively.
Concentration of Credit Risk
The Company’s loan portfolio consists primarily of real estate and similarly secured loans to small
business borrowers throughout New York State. The borrower's ability to honor their contracts is, in part,
dependent upon the State's economy.
Report of Independent Auditors
Board of Directors and Stockholders
New York Business Development Corporation
We have audited the accompanying combined statements of
financial condition of New York Business Development Corporation
as of September 30, 2006 and 2005, and the related combined
statements of operations, changes in equity, and cash flows for the
years then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
20
Annual Report
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the combined financial statements referred to
above present fairly, in all material respects, the financial position
of New York Business Development Corporation as of September
30, 2006 and 2005, and the results of their operations and their
cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
Albany, New York
October 19, 2006
COMMUNITY
Partners Provide Loan Referrals to NYBDC
Adirondack Economic Development
Albany-Colonie Regional Chamber
of Commerce
Albany Local Development
Amherst Industrial Development
Bronx Overall Economic Development
Brooklyn Economic Development
Broome County Industrial Development
Catskill Watershed
Cattaraugus Economic Development Zone
Clinton County Area Development
Cortland County Business Development
County of Chautauqua Industrial Development
County of Otsego Industrial Development
Development Authority of the North Country
Dutchess County Economic Development
East Williamsburg Valley Industrial
Development
Erie County Industrial Development
Essex County Industrial Development
Genesee County Economic Development
Hudson Development
Livingston County Industrial Development
Local Development Corporation of East
New York
NYBDC
Finance Centers
Local Development Corporation of Laurelton,
Rosedale and Springfield Gardens
Mohawk Valley Chamber of Commerce
Montgomery County Chamber of Commerce
Montgomery County Economic Opportunity
and Development
Morris Park Local Development
NFC Development
Ontario County Industrial Development
Orange County Business Development
Putnam County Economic Development
Queens County Overall Economic
Development
REDEC Relending
Rensselaer County Industrial Development
Rensselaer Gateway Development
Rockaway Development and Revitalization
Rockland Economic Development
Rome Industrial Development
Saratoga Economic Development
Schenectady Economic Development
Schoharie County Planning and Development
Schuyler County Partnership for Economic
Development
Seneca County Industrial Development
Albany
Long Island
New York City
Buffalo
50 Beaver Street
Albany, N.Y. 12207
518-463-2268
Fax 518-463-0240
633 Third Avenue
New York, N.Y. 10017
212-803-3672
Fax 212-803-3675
48 South Service Road
Melville, N.Y. 11747
631-465-2193
Fax 631-465-2195
300 International Drive
Williamsville, N.Y. 14221
716-626-3423
Fax 716-626-3001
Visit our Web site at www.nybdc.com
Southern Tier Economic Growth
Southwest Brooklyn Industrial Development
Sullivan County Chamber of Commerce
Sullivan County Partnership for Economic
Development
The Business Council of Westchester
The County of Orleans Industrial Development
Tier Information and Enterprise
Resources, Inc.
Tioga County Economic Development
& Planning
Tompkins County Area Development, Inc.
Ulster County Development
Warren County Economic Development
Washington County Local Development
Wayne Economic Development
West Brighton Community Local Development
Westchester County Association, Inc.
Wyoming County Industrial Development
Yates County Industrial Development
Yonkers Industrial Development
Syracuse
290 Elwood Davis Road
Liverpool, N.Y. 13088
315-453-8195
Fax 315-453-8197
New York Business Development Corporation
50 Beaver Street
Albany, New York 12207
www.nybdc.com