New York Business Development Corporation Empire State CDC: The 504 Company Statewide Zone Capital Corporation Lending Partners Across the State Access to capital for creditworthy businesses www.nybdc.com ANNUAL REPORT 2010 Members Adirondack Bank Adirondack Trust Company Alliance Bank Alpine Capital Bank Amalgamated Bank American Community Bank Apple Bank for Savings Astoria Federal Savings Axa Equitable Life Assurance Society of the United States Ballston Spa National Bank 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 Richmondville Bank of Smithtown Bank of Utica Beacon Federal Berkshire Bank Bridgehampton National Bank Canandaigua National Bank & Trust Co. Capital Bank & Trust Company Capital One Bank Carver Federal Savings Bank Catskill Hudson Bank Cattaraugus County Bank Cayuga Lake National Bank Champlain National Bank Chemung Canal Trust Company Citibank Citizens Bank Commerce Bank Community Bank Country Bank Dairylea Cooperative Inc. Delaware National Bank of Delhi Dime Savings Bank of Williamsburgh East West Bank 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 Flushing Savings Bank Fulton Savings Bank Genesee Regional Bank Glens Falls National Bank & Trust Company Gold Coast Bank Gotham Bank of New York Gouverneur Savings & Loan Association Greater Hudson Bank Habib American Bank Hamptons State Bank HSBC Bank, USA Hudson Valley Bank Israel Discount Bank of New York J.P. Morgan Chase Bank KeyBank Lakeshore Savings Bank Legacy Banks Lyons National Bank M&T Bank Mahopac National Bank Maple City Savings Bank Medina Savings & Loan Association Mitsubishi UFJ Trust & Banking Corporation (USA) NBT Bank National Bank of Coxsackie National Bank of Delaware County National Union Bank of Kinderhook New York Commercial Bank Northfield Bank Northwest Savings Bank Oneida Savings Bank Orange County Trust Company PathFinder Bank Patriot Federal Bank Peoples National Bank Pioneer Savings Bank Provident Bank Putnam County National Bank of Carmel Putnam County Savings Bank Rhinebeck Savings Bank Ridgewood Savings Bank Riverside Bank Rome Savings Bank Rondout Savings Bank Safra National Bank of New York Saratoga National Bank & Trust Company Savannah Bank Sawyer Savings Bank Signature Bank Solvay Bank Sovereign 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 Bank The Berkshire Bank Tioga State Bank Tompkins Trust Company Trustco Bank, New York Ulster Savings Bank Upstate National Bank USNY Bank Valley National Bank Victory State Bank Walden Federal Savings & Loan Association Walden Savings Bank Wallkill Valley Federal Savings & Loan Association Watertown Savings Bank Wilber National Bank It has been a challenging few years for small business. Notwithstanding these challenges, many of our small business borrowers report encouraging improvement in revenue in FY 2010 and a growing sense of optimism. Commercial loan demand appears steady, although at a reduced volume; incentives and enhancements to SBA loan programs appear to be having a positive effect on small business lending and our portfolio continues, on balance, to perform well. Our member banks are effectively serving creditworthy borrowers and working with NYBDC to assist potential borrowers access capital if a conventional solution is not available. Despite the overwhelmingly negative views expressed in the media, New York’s small businesses are particularly well served by a creative and committed banking community that has recognized the importance of small business to our economy. Many of the same banks (and their legacy partners) that support NYBDC today were among the group that formed NYBDC more than 55 years ago…as a bank funded alternative for small businesses that are not able to qualify for conventional financing. The leadership of the New York banking community and its commitment to our state and its small businesses are apparent each and every day in communities across our state. Our partnership results in a unique alternative that promotes opportunity and prosperity…going beyond the conventional solution. It is clear that the pace and depth of economic recovery will be largely determined by small businesses as they are expected to create the vast majority of new jobs. If small businesses are indeed the “engine” that drives our economy, the capital provided to these small businesses by NYBDC and our lending partners is the “fuel” necessary to move us forward. During FY 2010, we saw a substantial (38 percent) increase in demand for SBA 504 loans, all in support of capital projects, reversing the decline we experienced in FY 2009. This increase was partially offset by a decline (27 percent) in conventional and SBA 7(a) loan approvals after record-breaking approvals in FY 2009. This decline was the result of increased SBA lending activity by many SBA lenders. Overall, our loan approvals increased $30.8 million or 15.6 percent. On a combined basis, NYBDC and Empire State CDC was again the leading SBA lender in New York State by dollar amount with loan approvals representing more than 25 percent of the total loan approvals. SBA incentives under the American Recovery and Reinvestment Act of 2009 (ARRA), though erratic due to funding issues, provided a boost to small business lending. A similar result is expected from the recently passed Small Business Jobs Act of 2010, which not only provides funding to extend the temporary fee reductions and guaranty increases contained in ARRA, but also provides some important resources to serve small businesses going forward, including a permanent increase in the maximum loan amount to $5 million and a temporary provision that permits the SBA 504 program to be used to refinance debt on owner occupied property. All are significant tools to help us help small business start, grow or sustain operations. We exceeded our income, closing and portfolio goals while increasing our pipeline of loans on commitment to $247 million. We expanded our assistance to lending and economic development partners by providing processing and underwriting services. We continue to develop exciting partnerships designed to promote access to capital for small business by our lending and community partners. New York Business Development Corporation 1 Report on Operations (continued on page 2) Prepare for the Recovery… Patrick J. MacKrell, President and CEO, and James J. Byrnes, Chairman of the Board, NYBDC 2 2010 Annual Report Significant aspects of our FY 2010 performance include: • Revenue increased 11.7 percent to $12.8 million; • Income before taxes increased 28.9 percent to $2.1 million; • Loans approved in FY 2010 are expected to create or retain 10,336 jobs; and • Loans to minority or women-owned businesses represent approximately 35 percent of our loan portfolio. A key milestone was the increase in our managed portfolio by $286 million (37 percent) to $1.05 billion, driven by strong loan closing activity ($141 million), increased servicing for other lenders and the addition of SBA 504 loan portfolios totaling $180 million that were transferred to Empire State CDC by the SBA. The substantial increase in non-interest income resulting from the growth in our serviced portfolio will support economic development activities across our entire area of operations and will allow us to expand our support of small business. In November 2009, we were challenged by Senator Charles Schumer to develop and fund a “second look” loan program. We received strong support and encouragement from Senator Schumer and the New York Bankers Association. Our member banks responded enthusiastically and generously with loan commitments to facilitate a $10 million loan fund. What is now our Credit for Success – Second Look Program provides a second look at loans that have been declined by the bank of account and includes technical assistance provided by the New York State Small Business Development Centers. This program is a clear example of collaboration with our member banks to craft appropriate and timely responses to the challenges faced by small business. Although there is much still to be done, NYBDC remains able and committed to provide resources not only to New York State’s small businesses but also to other lending and community partners in a way that benefits small business by facilitating access to capital from many and varied sources. We remain optimistic about the future and work each and every day to speed economic recovery through our efforts to provide the opportunity for businesses to start, sustain or grow operations and increase employment and opportunity. We are not just preparing for the recovery…we are doing our part to make it happen! Report on Operations (continued from page 1) Patrick J. MacKrell James J. Byrnes President & CEO Chairman of the Board (in millions) (in millions) (in millions) $141,087,368 $233,551,235 $1,050,656,977 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Loan Advances Total Loan Approvals Total Loan Portfolio Managed Total NYBDC New York Business Development Corp. Board of Directors Ronald M. Bentley President & CEO Chemung Canal Trust Company Elmira, New York G. Gary Berner Executive Vice President First Niagara Bank Buffalo, New York Mary C. Bintz Senior Vice President Bank of America Merrill Lynch Albany, New York Mark C. Boyce Director N.Y. Life Investment Management, LLC New York, New York Bruce W. Boyea Chairman, President & CEO Security Mutual Life Insurance Company Binghamton, New York Dale A. Burnett Manager Real Estate Restructuring AIG Investments New York, New York James J. Byrnes Chairman Tompkins Financial Corporation Ithaca, New York Robert L. Como Senior Vice President JPMorgan Chase Bank White Plains, New York Robert M. Curley Chairman New York Region Berkshire Bank Albany, New York F. Edward Devitt President Devitt Management & Associates Montgomery, New York Linda Dickerson Hartsock Executive Director Center for CleanTech Entrepreneurship Syracuse, New York Hugh Donlon President Northeast Region KeyBank Albany, New York Daryl R. Forsythe Chairman NBT Bancorp Norwich, New York Thomas F. Goldrick, Jr. Retired Chairman State Bank of Long Island Jericho, New York Robert C. Jussen Senior Vice President HSBC Bank USA New York, New York Robert W. Lazar Retired President New York Business Development Corporation Albany, New York Patrick J. MacKrell President & CEO New York Business Development Corporation Albany, New York Brian T. McMahon Executive Director New York State Economic Development Council Albany, New York Carl E. Meyer President & CEO The Solar Energy Consortium Kingston, NY Dennis M. Mullen Commissioner New York State Department of Economic Development Rochester, New York Allen J. Naples Regional President M&T Bank Syracuse, New York Lisa M. Quiroz Senior Vice President Corporate Responsibility Time Warner New York, New York Marjorie Rovereto President & CEO Ulster Savings Bank Kingston, New York Michael P. Smith President & CEO New York Bankers Association New York, New York George Strayton President & CEO Provident Bank Montebello, New York Mark E. Tryniski President & CEO Community Bank DeWitt, New York Maryann M. Winters Certified Public Accountant Sirchia & Cuomo, LLP East Syracuse, New York Lewis Yevoli Retired New York State Assemblyman Old Bethpage, New York John Rhea Chairman New York City Housing Authority New York, New York Hugh A. Johnson Chairman Hugh Johnson Advisors, LLC Albany, New York New York Business Development Corporation 3 4 2010 Annual Report For years, Douglas Oakland had been looking for a way to expand his successful restaurant and marina in Hampton Bays, Oakland’s Restaurant and Marina. Then, last year, he learned that the owner of an adjacent restaurant and marina on Shinnecock Inlet was looking to retire and had put his business on the market. Oakland knew this was just the right opportunity for him and his customers. The adjacent business sat on two and a half acres and consisted of two buildings, a 3,000-square-foot restaurant that seats 107 inside and another 80 on the deck and a building that serves marina customers. By purchasing the business, Oakland was able to accomplish his goal of expansion, and eliminate direct competition for his business. With the help of Chris Van Bell and Mike Quigley at M&T Bank, Oakland was put in touch with Richard Amsterdam, vice president at NYBDC. Through the collective efforts of M&T Bank and NYBDC, Oakland was able to secure financing to make the purchase. M&T Bank provided the $1.417 million first mortgage financing and Empire State CDC: The 504 Company provided another $859,000 in financing. M&T Bank also provided a $1.022 million separate mortgage on an affiliate property to complete the transaction at the agreed upon purchase price. With that, Sunday’s on the Bay Restaurant and Marina was created. “Since he operated the adjacent restaurant and marina, Sunday’s on the Bay was a logical transaction for Doug,” said Amsterdam. “The transaction limited direct competition and provided Doug, Oakland's Restaurant and Marina and Sunday's on the Bay with the opportunity to utilize economies of scale and symmetries to grow and expand his business.” “Rich and Chris were great to work with,” said Oakland. “There was a lot of work involved, but there was nothing we couldn’t handle. This is a great program and we got some great rates.” Sunday’s on the Bay is a full-service restaurant and marina, drawing customers from the local area, as well as vacationers and commercial fishermen. The restaurant offers mid-priced seafood entrées and caters to families. Open from early spring to late fall, the marina has 40 slips with the average size boat docked there being 30 feet in length. In addition, Sunday’s on the Bay offers diesel and gas to customers and has a large-scale ice generating machine used by both sport and commercial fishermen. With the purchase of the new venture Oakland was able to retain 15 individuals employed by the former owner and add another 20 new jobs. These positions include wait and bus staff, bartenders, kitchen workers and marina staff. In addition, Oakland employs 90 at Oakland’s Restaurant and Marina. Oakland has what he calls “high expectations” for the new business he owns, with plans for upgrades in the restaurant and expansions to the fuel dock and the sport fishing marina. Empire State CDC: The 504 Company • The 504 Company is authorized by the SBA to offer the SBA 504 loan program in New York State. The SBA 504 loan program facilitates financing up to 90% of project costs for acquisition and/or improvement of owner-occupied commercial real estate, machinery and equipment. The 504 Company is managed by NYBDC. By purchasing adjacent business, restaurant and marina owner meets expansion goal and eliminates competition Sunday’s on the Bay Hampton Bays, New York New York Business Development Corp. 5 Chris Van Bell of M&T Bank, Douglas Oakland of Sunday’s on the Bay and Rich Amsterdam of NYBDC. 6 2010 Annual Report Within only two years of its founding, Premier Flooring Yonkers and Premier Flooring Liquidators’ owner John Posimato was faced with the fact that his businesses were growing so fast that they had outgrown the 6,500-square-foot warehouse facility in Elmsford from which they operated. In order for the businesses to continue on its growth trajectory, Posimato knew that he needed to plan for an expansion. The companies had been operating in very cramped space with no showroom and minimal warehouse space. In addition, the location was in an industrial park with no road frontage, difficult access and limited parking. Expansion was a must and so Posimato purchased property on Saw Mill River Road, a busy thoroughfare in Elmsford, approximately a third of a mile from the original facility, and began construction of an 11,000-square-foot commercial building. Premier Flooring Yonkers has three separate divisions: builder, commercial and residential. Its clients include Elizabeth Arden, Trump Park Residence and Gateway Condominiums. The company installs laminate, carpet, ceramic and vinyl flooring and flooring accessories such as custom runners and elegant stair rods. Flooring Liquidators purchases bulk flooring products that are close-out items from major manufacturers and sells them to its customers at prices that are often lower than those of Posimato’s competitors as a result of his contacts in the industry. Posimato credits Tony Palmesi at Mahopac National Bank, his business banker, with introducing him to Empire State CDC and the SBA 504 loan program. Together with Mahopac National Bank, NYBDC Senior Vice President Tom McHale was able to put together financing that enabled Posimato to purchase the property and construct the new building, which was designed with LEED certified materials. Mahopac National Bank provided a first mortgage of $1.5 million and Empire State CDC: The 504 Company provided a second mortgage in the amount of $1.2 million. Now, Premier Flooring has a 3,000-square-foot showroom with room for 50 to 60 wood floor displays, and Flooring Liquidators has its own 6,000-square-foot showroom. The new facility has excellent road frontage and parking. This increased visibility has allowed Posimato to significantly reduce his advertising expenses. He estimates that he has saved at least $30,000 in advertising costs over last year. “The relocation to a new, much larger facility was an aggressive move for John after only two years of operations,” said McHale. “Mahopac National Bank, as his relationship bank, was very familiar with John and his business and recognized early on that the 504 program was a good fit for the transaction. The use of the SBA 504 program allowed the business to retain its cash for working capital purposes, which was necessary given its rate of growth.” “My experience with Tom McHale and NYBDC was great,” Posimato said. “He was very diligent and told me what we needed to do; I got it done and everything went very smoothly.” The relocation to the new facility and expansion have helped revenues grow to almost double what they were prior to the move and fostered the creation of more than 10 jobs. Empire State CDC: The 504 Company • The Small Business Jobs Act of 2010 increased the SBA 504 loan amount to $5 million and created the opportunity to use the program to refinance debt on certain projects. Flooring companies’ expansion and move to high-traffic location results in significant increases in sales Premier Flooring Yonkers, Inc. and Flooring Liquidators Inc. Elmsford, New York Tom McHale of NYBDC, Kim Arco of Mahopac National Bank and John Posimato of Premier Flooring. 8 2010 Annual Report Since the 1930s, Mercer’s Dairy has been a familiar name in Upstate New York. Located in the rural community of Boonville, a region dominated by dairy farming and other agri-businesses, Mercer’s Dairy had its beginnings as a traditional milk bottling and delivery service. Yet, all along, Mercer’s has had a history of reinvention. In 1952, Earl Mercer began ice cream production. In the first year, Mercer’s produced nearly 5,000 gallons of ice cream. During the late ‘50s and early ‘60s, Mercer continued expanding his business and opened stores throughout the area. Through a succession of owners, Mercer’s Dairy continued to offer high quality dairy products, and by 2001 was producing 150,000 gallons of ice cream annually. In 2002, Quality Dairy Farms, Inc., a collective of nine farm families from Lewis and Jefferson counties, acquired Mercer’s in an effort to help shore up its longstanding role in the community and provide the leverage and inspiration needed for it to grow and compete with larger companies. For several years, the farm families struggled to support the company as it faced stiff competition from the major ice cream brands. They were convinced that they needed to create a unique product that could bolster and become synonymous with their company brand. In 2007, Mercer’s created a true wine ice cream, a formula that contains five percent alcohol and is protected by trade secrets. Working with state and federal agencies to create a new category of food product and driving the passage of special legislation, Mercer’s expanded its commitment to its agricultural roots by additionally supporting New York State wine growers and opening new avenues for the distribution of its traditional and new product lines. Mercer’s Dairy was not able to secure financing from conventional lenders to initiate a marketing plan for the new product and turned to Thomas Reynolds, vice president of NYBDC, for a financing solution. “After several years of funding product development, the company found itself in a position where it had a great product and a way to sell it, but lacked sufficient working capital to go out and market it,” said Reynolds. “NYBDC used the SBA 7(a) program and brought in Adirondack Economic Development Corporation to provide additional funding for working capital to help Mercer’s restructure its debt so that it could free up the necessary working capital to market its products.” Mercer’s has grown to offer a wide variety of dairy products including milk; hard, soft and organic ice creams; fat-free, no-sugar-added ice cream; frozen yogurt and sherbet that are now sold to retail and food service markets outside of New York State. Distributorships have been established on the East Coast as far south as Florida and out west to California. Because of this growth, the company has expanded its full-time production workforce from 15 to 23, not including expanded seasonal employment. Offered in six flavors – Ala Port, Cherry Merlot, Chocolate Cabernet, Peach White Zinfandel, Red Raspberry Chardonnay, Royal White Riesling – Mercer’s Wine Ice Cream was awarded the 2007 Winner of Best New Product at The Great American Dessert Expo and the 2008 American Masters of Taste Gold Medal Endorsement from California Wine Country. Mercer’s will soon be introducing a special limited-edition seasonal flavor – Holiday Spiced Wine Ice Cream featuring a sweet red wine steeped with herbs and spices from Brotherhood Winery in Washingtonville, N.Y. Statewide Zone Capital Corporation (SZCC) • Statewide Zone Capital Corporation of New York (SZCC), is a privately owned loan fund committed to supporting the growth of jobs and economic opportunity in New York’s Empire Zones by providing capital for new and existing businesses. This program provides flexible, creative and low cost financing for businesses located in Empire Zones. This capital access program is available for working capital, acquisition and/or improvement of real property and equipment. A one-of-a-kind product reinvigorates a traditional industry, changes laws and introduces a close-knit community to the world Quality Dairy Farms Inc. dba Mercer’s Dairy Boonville, New York [...]... Financial Corporation Ithaca, New York Retired Director Charter One Financial Corporation Albany, New York Retired Chairman State Bank of Long Island Jericho, New York Retired President New York Business Development Corporation Albany, New York Capital Region President NBT Bank Albany, New York President & CEO New York Business Development Corporation Albany, New York Lenders of the Year Each of these... Trust Company Elmira, New York Deputy Director Albany Local Development Corporation Albany, New York Senior Vice President Alliance Bank Cortland, New York Certified Public Accountant Albany, New York President The Development Corporation Plattsburgh, New York President & CEO New York Business Development Corporation Albany, New York Executive Director Town of Islip Economic Development Islip, New York. .. Chase Bank Albany, New York President Celtic Tours Albany, New York Regional President TD Bank Latham, New York Senior Vice President HSBC Bank USA New York, New York State Director Capital Region President Deputy Director & CFO New York State Small Business NBT Bank Town of Hempstead Development Center Albany, New York Industrial Development Agency Albany, New York Hempstead, New York Chairman’s Leadership... 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 1999, whose capital is available to promote the expansion and growth of businesses in New York s Empire Zones... Financial Statements 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 Not-for-Profit Laws of the State of New York, ... Islands) The New York Bankers Association is proud to be an active partner with the New York Business Development Corporation in support of its critical role meeting the credit needs of the State s small businesses Most recently, we have joined with the NYBDC and its innovative ‘Second Look – Credit for Success Program The program, as it continues to ’ roll out across New York State, provides small business. .. New York Empire Zone Amsterdam, New York “NYBDC is a critical partner in providing access to capital for New York s small businesses Since the beginning of the fiscal crisis, NYBDC has been a consistent resource in meeting the financial needs of creditworthy small businesses We applaud NYBDC and its stakeholders for sustained excellence as a small business lender ” James L King State Director New York. .. Department of Economic Development and Planning Owego, New York Senior Vice President Bank of America Merrill Lynch Albany, New York Retired Economic Development Executive Schenectady, New York President Glens Falls Region NBT Bank Glens Falls, New York Robert J Camoin Michael Claisse Principal Vice President Camoin Associates Bank of New York Mellon Saratoga Springs, New York New York, New York James E Corey,... York Business Development Corporation We have audited the accompanying combined statements of financial condition of New York Business Development Corporation and affiliate as of September 30, 2010 and 2009, 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 Corporation' s management Our... M&T Bank Albany, New York President Schwartz, Heslin Group Latham, New York Executive Vice President The Adirondack Trust Company Saratoga Springs, New York Chairman Dunkirk-Sheridan Empire Zone Sheridan, New York Vice President Community Engagement and Economic Development Syracuse University Syracuse, New York Richard W Merzbacher Frederick H Quist Retired Director Zone Coordinator State Bank of Long . New York Business Development Corporation Empire State CDC: The 504 Company Statewide Zone Capital Corporation Lending Partners Across the State Access to capital for creditworthy businesses www.nybdc.com. & CEO New York Business Development Corporation Albany, New York Lenders of the Year Community Partner of the Year NYBDC Lender of the Year Greg Emminger Empire State CDC: The 504 Company Lender. expectations” for the new business he owns, with plans for upgrades in the restaurant and expansions to the fuel dock and the sport fishing marina. Empire State CDC: The 504 Company • The 504 Company is