2015 Annual Report Report on Operations (Continued from Page 2)

New York Business Development Corporation 2015 ANNUAL Access to Capital for Small Business www.nybdc.com REPORT Members Adirondack Bank First National Bank of Scotia National Bank of Coxsackie Adirondack Trust Company First Niagara Bank National Bank of Delaware County Alpine Capital Bank Five Star Bank National Union Bank of Kinderhook Amalgamated Bank Flushing Bank NBT Bank American Community Bank Fulton Savings Bank New York Commercial Bank Apple Bank for Savings Northfield Bank Astoria Bank Genesee Regional Bank Northwest Savings Bank Glens Falls National Bank Ballston Spa National Bank & Trust Company Oneida Savings Bank Bank Hapoalim Gold Coast Bank Orange County Trust Company Bank of Akron Gouverneur Savings Bank of America & Loan Association PathFinder Bank Bank of Bennington Greater Hudson Bank Patriot Federal Bank Bank of Castile Peoples Neighborhood Bank Bank of Cattaraugus Habib American Bank People’s United Bank Bank of China Hometown Bank of the Hudson Valley Pioneer Savings Bank Bank of Greene County HSBC Bank, USA Putnam County Savings Bank Bank of Holland Hudson Valley Bank Bank of Millbrook Rhinebeck Savings Bank Bank of Richmondville Ridgewood Savings Bank Bank of Utica NYBDC relies on the financial support of Rondout Savings Bank BankUnited its member banks and the New York State Berkshire Bank Common Retirement Fund to support is Safra National Bank of New York Bridgehampton National Bank operations. In FY 2015, 118 banks and Salisbury Bank and Trust Company Santander Bank the Common Retirement Fund provided Canandaigua National Bank Saratoga National Bank and Trust Co. & Trust Company lines of credit totaling $168.0 million Savannah Bank Capital One Bank which supplemented our equity and Sawyer Savings Bank Carver Federal Savings Bank significantly expanded our capacity to Seneca Savings Catskill Hudson Bank meet the needs of small businesses. The Signature Bank Cattaraugus County Bank support of our member banks and share- Solvay Bank Cayuga Lake National Bank holders (both separately listed in this State Bank of India Champlain National Bank Annual Report) makes NYBDC unique Sterling National Bank Chemung Canal Trust Company Steuben Trust Company and facilitates the accomplishment of our Citibank Suffolk County National Bank Citizens & Northern Bank mission. Citizens Bank TD Bank Community Bank Israel Discount Bank of New York The Berkshire Bank Country Bank Tioga State Bank JPMorgan Chase Bank Tompkins Trust Company Delaware National Bank of Delhi Trustco Bank, New York Deutsche Bank Trust Company KeyBank Americas Ulster Savings Bank Dime Savings Bank of Williamsburgh Lake Shore Savings Bank Upstate National Bank Lyons National Bank USNY Bank East West Bank Elmira Savings Bank M&T Bank Valley National Bank Empire National Bank Mahopac National Bank Victory State Bank Empire State Bank Maple City Savings Bank Evans Bank Medina Savings & Loan Association Walden Savings Bank Metropolitan Commercial Bank Wallkill Valley Federal Savings First National Bank of Dryden Morgan Stanley Bank & Loan Association First National Bank of Groton Watertown Savings Bank First National Bank of Jeffersonville Westchester Bank First National Bank of Long Island Report on Operations Nothing seems constant but change…staying mission focused This year marked the 60th Anniversary of the measure risk and make decisions on all manner of formation of NYBDC. Despite the passage of time, issues that impact our small business applicants and our mission statement remains unchanged…provide borrowers. Finally, we remain relevant and impactful access to capital for creditworthy small businesses by our imaginations! that are unable to access credit at reasonable rates and Over the years, we have accumulated some key terms from conventional sources. We have done this allies and partners who share our belief in the through loan participations with lending partners or importance of promoting change through opportunity direct lending with subordinate or primary financing. including Empire State Development, the New York We have facilitated access to a variety of state and State Small Business Development Centers, the New federal programs intended to encourage expanded York City Department of Small Business Services, credit boxes and address collateral shortfalls. We have the New York State Economic Development Council, participated in roundtables, discussions, meetings the United States Small Business Administration and and events in every corner of our state in an effort the dozens of Community Partners listed elsewhere in to gather information about financing gaps and this report. share information about available resources. We In addition to our work as a lender, we have have supported and complemented the efforts of undertaken other meaningful roles in community our lending partners. All of these efforts are in development and support ranging from our role as furtherance of our mission and focus on a single goal Funds Administrator of the Buffalo Building Reuse – creating opportunity. We see opportunity as the Loan Program, a unique private-public partnership to pathway to change and prosperity. We hope that the provide gap funding to support development of mixed opportunities we provide affect both immediate and use property in the City of Buffalo, to our continuing multi-generational benefit to entrepreneurs that reject role in the New York City Hurricane Sandy small a safer path to pursue a dream. We see opportunity as business recovery effort. a way to promote neighborhoods, communities and regions. Each year we like to point to a singular achievement that defines our work and advances our mission. This We have terrific resources at our disposal and enjoy year, it was the final development and launch of the incredible partnerships. SmartLoan™ Program by our affiliate Excelsior Our most important resources are capital, knowledge, Growth Fund. Over the last few years, we have seen discipline, experience and imagination. The New many small businesses journey online to borrow in York State Common Retirement Fund and our 118 search of a fast, transparent and predictable process. member banks provide us with access to sufficient Unfortunately, this space is crowded by high fee, capital to meet the needs of the small businesses we short term providers that facilitate fast access to cash serve, and do so in a way that gives us latitude to under circumstances that often result in dramatic and provide reasonably priced loans for our small business immediate erosion of cash flow resulting from daily customers. We maintain access to these sources of payments and longer term impact on the balance capital through constant application of other resources sheet occasioned by fees which would approximate 50 – knowledge, discipline and experience. We use these percent or more if expressed as an annual percentage resources each and every day to assess opportunities, rate. At first, our response was to provide a means (continued on page 2) New York Business Development Corporation 1 Report on Operations (continued from page 1) to refinance those loans, but this afforded only cash flow relief as the “fee” could KEY PERFORMANCE INFORMATION: not be avoided by prepayment. As we saw this becoming more and more of a • Total non-interest income increased 20% to $14.2 million. problem, we focused on developing an • Total operating income increased 13% to $20.9 million. alternative. Applicants for the SmartLoan™ • Loan approvals increased 30% to $310.4 million. can complete an online application in • Income before provision for income taxes decreased 3.2% to approximately 20 minutes, transfer all $3.80 million. supporting documentation electronically • Managed portfolio increased 10% to $1.4 billion. and expect to receive a decision on the • The three-year return on average equity is 7.85%. application in less than 48 hours. Once • The three-year return on average assets is 105%. approved, a site visit is scheduled and • The three-year average capital ratio is 13.68%. documents are signed; the loan is funded in • The current capital ratio is 14.09%. not more than five days from approval but • The NYBDC Foundation (supported by donations from NYBDC often less. At the root of this program is a and The 504 Company) awarded gifts or grants to 135 not-for- strategy to work with borrowers to make profit organizations. them credit ready for conventional or SBA • The 504 Company continued a national leadership role in both products offered by our lending partners the SBA 504 and Community Advantage Loan Programs and and to facilitate the transition to a long- opened an office in Fort Lee, New Jersey. term, full dominion relationship with their • NYBDC was named the inaugural winner of the Small Business bank of account. Leadership Award for Mission Driven Lenders sponsored by the Opportunity Finance Network and the Surdna Foundation. The The many accomplishments we are proud award included a $75,000 unrestricted grant to Excelsior Growth to report are built on a strong foundation Fund. established by key employees that made a • Loans to minority- or woman-owned businesses make up 40% of huge difference in the evolution of NYBDC. our portfolio. When Chet Sadowski joined NYBDC in • Empire State CDC was recognized by SBA as the “Community 1987 as its seventh employee, the managed Advantage Lender of the Year” in ceremonies held in the Old loan portfolio was $21.4 million and Executive Office Building in Washington, DC. (continued on page 3) 21 2015 Annual Report Report on Operations (continued from page 2) annual operating income was $826.6 thousand. In the him at ease. Last but not least, you could always 28 years since, we have seen the managed portfolio count on Chet for a recommendation for a terrific and annual operating income grow to $1.4 billion and restaurant! Chet will be retiring as of December 31, $20.9 million, respectively. Also during that time, our 2015 and splitting his time between Staten Island, equity grew from $2.5 St. Martin and Arnold million to $30.8 million.

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