RD176 - Annual Report of the Virginia Small Business Financing Authority


Executive Summary:
This section of the Virginia Small Business Financing Authority’s (the “Authority”) annual financial report presents management’s discussion and analysis of the VSBFA’s financial performance during the fiscal years that ended June 30, 2005 and 2004. Please read it in conjunction with the Authority’s financial statements, which follow this section. The annual financial report consists of three parts, management’s discussion and analysis, the footnotes and the basic financial statements.

FINANCIAL HIGHLIGHTS

Fiscal Year 2005

The following information represents a comparative analysis of key financial aspects of the Authority’s operations between the years ended June 30, 2005 and June 30, 2004. M = million K = thousand

• Total assets increased $3M (9%)

• Loans receivable increased $3.6M (34%)

• Restricted assets associated with the CAP programs increased $527K (26%)

• Received $250K from Tobacco Commission to add to TCAP program

• Received $300K from General Assembly for VCAP

• Received $27,405 from DEQ for ECAF

• Total liabilities increased $3M (73%)

• Total net assets increased $488K (1%)

• Investments held in the LGIP increased $2M (138%)

• Investment income from interest earned on cash balances decreased $6K (1%)

• Interest and other operating income increased $493K (127%)

Primary factors that contributed to these changes were as follows:

• Total assets increased $3M due to the additional funding of $577K from General Assembly, Tobacco Commission and DEQ, the increase in CAP reserve accounts $527K, increase in notes receivable $3.6M and the increase in operating revenues of $493K.

• Total liabilities increased $3M due to the increase in Other Liabilities associated with the increased funding of the Capital Access Programs reserve accounts held at the participating banks to fund their loan loss reserve pools and the increase in Obligations related to the Security Lending Program.

• Total Net assets increase $488K due to the increase in funding from the three sources listed in the first bullet listed above.

Fiscal Year 2004

The following information represents a comparative analysis of key financial aspects of the Authority’s operations between the years ended June 30, 2004 and June 30, 2003.

• Total assets decreased $1,004M (2%)

• Total liabilities increased $228M (6%)

• Total net assets decreased $1,232M (3.8%)

• Investments held in the LGIP increased $1,050M (27%)

• Investment income from interest earned on cash balances decreased $516M (56%)

• Loans receivable increased $1,901M (22%)

• Restricted assets associated with the CAP programs increased $299M (18%)

• Interest and other operating income decreased $297M (43%)

Primary factors that contributed to these changes were as follows:

• Total assets decreased 2% due to the charge-off of two large loans receivable ($1,733M) and the associated accrued interest ($227M). This reduction in assets was partially offset by the transfer of $500M from the Tobacco Commission for the initial funding of their new Southside Tobacco Region Capital Access Program administered by the Authority (fund 0900). Investment Income decreased $516M due to the decrease in cash balances (12%) and the Operating Interest Income was decreased due to the write-off of accrued interest as discussed above.

• Total liabilities increased 6% due to the increase in Other Liabilities associated with the increased funding of the Capital Access Programs reserve accounts held at the participating banks to fund their loan loss reserve pools.

• The increase in LGIP holdings was due in part to the collections under the Child Day Care Program which were greater than new loans funded ($335M) and an increase in the VSBFA/Loan Guaranty Program (LGP) balances of $694M, due primarily to the $600M transfer from the State RLF (0921) to the LGP to allow for the increase in activity under the guaranty program.