RD205 - Virginia Small Business Financing Authority Management’s Discussion and Analysis and Basic Financial Statements and Supplementary Information for the Years Ending June 30, 2010 and 2009


Executive Summary:
FINANCIAL HIGHLIGHTS

The following information represents a comparative analysis of key financial aspects of the Authority’s operations between the years ended June 30, 2010 and June 30, 2009.

• Cash and investments decreased $1M (-6%).

• Loans receivable increased $715K (5%).

• Restricted assets associated with the CAP programs decreased $701K (-28%).

• Charges for service income increased $170K (55%).

• Interest on loans decreased $32K (6%).

• Other income was down $54K (-70%).

• Interest earned on cash balances decreased $54K (-21%)

• Transferred $235K from VSBFA to VCAP to keep the program operational.

• Received $250K from Tobacco Commission as final funding for TCAP.

• Salary expense increased $38K (10%).

• CAP matching fees were down $146K (-69%)

• Charge–offs of $516K occurred for two EDLF loans. We expect to get a recovery of about $150K on one of the charge-offs in the immediate future and the other charge-off is making interest payments on the debt as they restructure personal debt in bankruptcy court. We do expect some level of recovery on that debt.

• Allowance for bad debts of $686,871 (5% of notes receivable outstanding). This is a new entry for 2010 and will continue in future reporting.

• Reflected a loss for the year of $203K due to the two charge-offs and the allowance for bad debt.

Primary factors that contributed to these changes were as follows:

• Funded loans in the amount of $2,860,570 brought cash balances down.

• Bank enrollment activity in the CAP programs was down and claims were up.

• Some sizable 501C3 bonds had their first annual fee billing.

• Other income decreased because recoveries and claw back activity was down.

• Income from cash was down due to reduced cash balances and lower interest rates.

• Overall income was down due to the significant fall in interest on cash and the fact that there was no claw back activity in 2010 and we had two charge-offs and began expensing for an allowance for bad debt.

• Salary expense was up due to the fact that VSBFA did not receive any financial assistance from VDBA in 2010.