New York Business Development Corporation Empire State CDC: The 504 Company Statewide Zone Capital Corporation

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 Report on Operations Prepare for the Recovery… 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. Patrick J. MacKrell, President and CEO, and James J. Byrnes, Chairman of the Board, NYBDC 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. (continued on page 2) New York Business Development Corporation 1 Report on Operations (continued from page 1) 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 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! Bankers Association. Our member banks responded enthusiastically and generously with loan commitments to facilitate a $10 million loan fund. What is now our Credit Patrick J. MacKrell President & CEO James J. Byrnes Chairman of the Board Loan Advances Total Loan Approvals Total Loan Portfolio Managed Total 2006 2006 2006 2007 2007 2007 2008 2008 2008 2009 2009 2009 2010 $141,087,368 2010 $233,551,235 2010 $1,050,656,977 (in millions) (in millions) (in millions) 2 2010 Annual Report NYBDC New York Business Development Corp. Board of Directors Ronald M. Bentley President & CEO Chemung Canal Trust Company Elmira, New York James J. Byrnes Chairman Tompkins Financial Corporation Ithaca, New York Daryl R. Forsythe Chairman NBT Bancorp Norwich, New York Brian T. McMahon Executive Director New York State Economic Development Council Albany, New York Marjorie Rovereto President & CEO Ulster Savings Bank Kingston, New York G. Gary Berner Executive Vice President First Niagara Bank Buffalo, New York Robert L. Como Senior Vice President JPMorgan Chase Bank White Plains, New York Thomas F. Goldrick, Jr. Retired Chairman ... - --nqh--