NH Municipal Bond Bank 2006 Audit

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New Hampshire Municipal Bond Bank Basic Financial Statements and Management’s Discussion and Analysis Year Ended June 30, 2006 With Independent Auditors’ Report NEW HAMPSHIRE MUNICIPAL BOND BANK BASIC FINANCIAL STATEMENTS AND MANAGEMENT’S DISCUSSION AND ANALYSIS For the Year Ended June 30, 2006 TABLE OF CONTENTS Independent Auditors’ Report 1 Management’s Discussion and Analysis 2 Basic Financial Statements: Balance Sheets 6 Statements of Revenues, Expenses and Changes in Fund Equity 8 ents of Cash Flows 10 Notes to Financial Statements 14 INDEPENDENT AUDITORS’ REPORT Board of Directors New Hampshire Municipal Bond Bank We have audited the accompanying basic financial statements, consisting of the State Guaranteed Fund Group, Non-State Guaranteed Fund Group, Pinkerton Academy Fund Group and Coe-Brown Northwood Academy Fund Group, of New Hampshire Municipal Bond Bank as of and for the year ended June 30, 2006, as listed in the accompanying table of contents. These financial statements are the responsibility of the Bond Bank’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial ...

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• Publié par: Orki
• Nombre de lectures: 32
• Langue: English

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New Hampshire Municipal Bond Bank   Basic Financial Statements and Managements Discussion and Analysis   Year Ended June 30, 2006 With Independent Auditors Report

NEW HAMPSHIRE MUNICIPAL BOND BANK   BASIC FINANCIAL STATEMENTS AND MANAGEMENTS DISCUSSION AND ANALYSIS   For the Year Ended June 30, 2006

TABLE OF CONTENTS

   

          Independent Auditors Report   Managements Discussion and Analysis   Basic Financial Statements:  Balance Sheets  Statements of Revenues, Expenses and Changes in Fund Equity  Statements of Cash Flows    Notes to Financial Statements  

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6 8 10 14

INDEPENDENT AUDITORS REPORT

                      Board of Directors New Hampshire Municipal Bond Bank     We have audited the accompanying basic financial statements, consisting of the State Guaranteed Fund Group, Non-State Guaranteed Fund Group, Pinkerton Academy Fund Group and Coe-Brown Northwood Academy Fund Group, of New Hampshire Municipal Bond Bank as of and for the year ended June 30, 2006, as listed in the accompanying table of contents. These financial statements are the responsibility of the Bond Banks management. Our responsibility is to express an opinion on these financial statements based on our audit.   We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.   In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of New Hampshire Municipal Bond Bank at June 30, 2006, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.   The Managements Discussion and Analysis on pages 2  5 is not a required part of the basic financial statements, but is supplementary information required by accounting principles generally accepted in the United States of America. The supplementary information is the responsibility of the Bond Banks management. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it.           Manchester, New Hampshire August 11, 2006

 

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Limited Liability Company

NEW HAMPSHIRE MUNICIPAL BOND BANK   MANAGEMENTS DISCUSSION AND ANALYSIS   June 30, 2006

    As financial management of the New Hampshire Municipal Bond Bank (the Bond Bank), we offer readers of these financial statements this narrative, overview and analysis of the financial activities of the Bond Bank for the fiscal year ended June 30, 2006. This discussion and analysis is designed to assist the reader in focusing on the significant financial issues and activities of the Bond Bank and to identify any significant changes in financial position. We encourage readers to consider the information presented here in conjunction with the basic financial statements as a whole.   Financial Highlights   •   Bank were $41,603,880 for fiscal year 2006, a decrease of $2,315,713Revenues for the Bond or 5.27% below fiscal year 2005. This decrease was caused primarily by the net decrease in the fair value of investments between fiscal year 2005 and 2006.   Investments are recorded at fair value to comply with GASB rules. The Bond Bank generally holds investments until maturity to pay reserve fund bonds as they become due, so fluctuations in the fair value of the investments have a minimal long-term effect. •    AtBond Bank decreased $3,387,018 in fiscal year 2006. June 30, 2006,Fund equity of the the Bond Bank had fund equity of $15,582,884, a decrease of 17.85% from the prior year. •   The Bond Banks bonds outstanding at June 30, 2006 of $922,012,598 represent a net increase of $57,556,819 from the balance at June 30, 2005. This increase was primarily due to the net result of issuing three new series of bonds totaling $135,970,000, less the scheduled 2006 debt service principal payments of $79,419,109. •The Bond Bank provided loans to local governmental units during fiscal year 2006 totaling   $126,890,910 which was a 33.22% increase from the loans provided in fiscal year 2005.   Overview of the Bond Bank   The Bond Bank was created in 1977 by an Act of the New Hampshire Legislature, RSA:35-A, is a public body corporate and politic and is constituted as an instrumentality exercising public and essential governmental functions of the State. The Bond Bank was established to issue bonds for the purpose, among other things, of providing funds to enable it to lend money to counties, cities, towns, school districts or other districts (the governmental units) within the State of New Hampshire. The provision of funds is accomplished by the direct purchase from such governmental units of their bonds, notes or evidence of debt payable from taxes, charges for services or assessments.   As the result of the Bond Bank issuing tax-exempt debt, it is required to prepare arbitrage rebate calculations for each series of bonds outstanding and remit payment to the Internal Revenue Service every five years. The Bond Banks policy is to prepare and review the calculations annually for financial statement purposes.   The Bond Bank has hired an outside firm to calculate arbitrage rebate liability and payments.  

 

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Since its inception, the Bond Bank issued bonds for its non guaranteed program pursuant to a General Resolution adopted on December 1, 1978, as amended from time to time (the 1978 Resolution). Over the years, the 1978 Resolution had grown increasingly obsolete. On July 14, 2005, the Bond Bank adopted a new General Resolution (the 2005 Resolution). While substantially similar to the 1978 Resolution, the 2005 Resolution contains a number of improvements, including a flexible reserve fund sizing requirement, wholesale changes in permitted investments, the ability to meet its reserve fund requirement with surety bond policies and other credit facilities, and a streamlined approach to calling bonds for early redemption. In managements view, the 2005 Resolution will enhance the Bond Banks ability to market its bonds and streamline the administration of its program. Bonds issued under the 2005 Resolution are separately secured from all other bonds of the Bond Bank, including those issued under the 1978 Resolution. The adoption of the 2005 Resolution is not expected to result in any substantive change to the Bond Banks overall program.   The Bond Bank has issued two series of bonds under the terms of the 2005 Resolution, $47,505,000 of 2005 Series D Bonds, delivered on July 21, 2005 and $53,630,000 of 2006 A Bonds, delivered July 20, 2006.   Overview of the Financial Statements   This discussion and analysis is intended to serve as an introduction to the Bond Banks financial statements, which is comprised of the basic financial statements and the notes to the financial statements. Since the Bond Bank operates under four separate bond resolutions, the financial statements reflect individual fund activity.   Basic Financial Statements   The basic financial statements are designed to provide readers with a broad overview of the Bond Banks finances, in a manner similar to a private-sector business.   The financial statements present information on all of the Bond Banks assets and liabilities, with the difference between the two reported as fund equity. Over time, increases or decreases in fund equity may serve as a useful indicator of whether the financial position of the Bond Bank is improving or deteriorating. Fund equity increases when revenues exceed expenses. Increases to assets without a corresponding increase to liabilities, result in increased fund equity, which may indicate an improved financial position.   The statements of revenues, expenses, and changes in fund equity present information showing how the Bond Banks fund equity changed during the fiscal year. Changes in fund equity are generally reported as soon as the underlying event occurs, regardless of timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future periods.   Notes to the Financial Statements   The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the basic financial statements.   Financial Analysis   Fund equity may serve, over time, as a useful indicator of a governments financial position. In the case of the Bond Bank, assets exceeded liabilities by $15,582,884 at June 30, 2006. This represents a decrease of $3,387,018 or 17.85% from the previous fiscal year. Most of this decrease is attributable to the fluctuations in the market value of investments in 2006 as compared to 2005. By far, the largest portion of the Bond Banks fund equity is its investment in loans to governmental units plus bond proceeds remaining in trust investments, less any related debt used to acquire those assets.  

 

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The Bond Banks financial position and operations for the past two years are summarized below based on information included in the financial statements.    Percentage ASSETS 2006 2005 Change   Current assets:  Cash $ 55,178 $ 55,849 (1.20)%  Investments held by trustee, at market value 9,586,950 8,420,706 13.85  Loans receivable from governmental units 68,258,177 68,796,609 (0.78)  Due from other funds  79,253 (100.00)  Accrued investment income receivable 887,131 845,386 4.94  Accrued interest receivable from governmental units 15,172,112 13,578,626 11.74  Other current assets 798,850 792,041 0.86  Total current assets 94,758,398 92,568,470 2.37   Noncurrent assets:  Investments held by trustee, at market value 124,834,119 128,571,580 (2.91)  Loans receivable from governmental units 730,921,547 673,592,814 8.51  Unamortized rebates to governmental units  and bond issuance costs 5,969,851 6,263,971 (4.70)  Total noncurrent assets 861,725,517 808,428,365 6.59   Total assets $ 956,483,915 $ 900,996,835 6.16%   LIABILITIES AND FUND EQUITY   Current liabilities:  Accounts payable and accrued liabilities $ 45,148 $ 51,394 (12.15)%  Due from other funds  79,253 (100.00)  Accrued interest payable 16,194,093 14,522,689 11.51  Accrued interest rebate payable to U.S. Government 693,760 571,757 21.34  Bonds payable 77,567,430 82,162,241 (1.36)  Total current liabilities 94,500,431 97,387,334 0.61   Noncurrent liabilities:  Accrued interest rebate payable to U.S. Government 1,955,432 2,346,061 (16.65)  Bonds payable 844,445,168 782,293,538 7.50  Total noncurrent liabilities 846,400,600 784,639,599 7.43    Total liabilities 940,901,031 882,026,933 6.67   Fund equity 15,582,884 18,969,902 (17.85)   Total liabilities and fund equity $ 956,483,915 $ 900,996,835 6.16%   Total cash and investments held by trustee decreased $2,571,888, or 1.88% at June 30, 2006 compared to June 30, 2005. The Bond Banks investment portfolio is comprised of cash and cash equivalents, U.S. Government obligations (including treasury bills, notes, and bonds), strips, agency notes and bank investment contracts. The Bond Banks investments are carried at fair value. Unrealized gains and losses (primarily due to fluctuations in market values) are recognized in the statements of revenues, expenses and changes in fund equity.    4

The Bond Banks loans receivable from governmental units increased $56,790,301 in fiscal year 2006. The Bond Banks total new loan originations in 2006 of $126,890,910 were 33.22% higher than 2005 originations of $95,248,500. Bonds payable increased $57,556,819.   Fund equity decreased 17.85% in fiscal year 2006. The Bond Bank continued to maintain a positive spread of income from investments and loans to governmental units over bond interest and operating expenses.    Percentage  2006 2005 Change   Interest on loans receivable from governmental units $ 40,534,724 $ 36,763,581 10.26% Interest income from investments 6,008,694 5,667,832 6.01 Net increase (decrease) in the fair value of investments (5,473,323) 966,414 (666.35) Other income 533,785 521,766 2.30    Total operating revenues 41,603,880 43,919,593 (5.27)   Interest expense 44,328,051 41,141,848 7.74 Operating expenses 341,275 434,540 (21.46) Other expense 321,572 238,979 34.56    Total operating expenses 44,990,898 41,815,367 7.59   Operating (loss) income (3,387,018) 2,104,226 (260.96) Fund equity, beginning of year 18,969,902 16,865,676 12.48   Fund equity, end of year $ 15,582,884 $ 18,969,902 (17.85)%   Operating revenues are generated principally from interest earned on investments and from fees and interest received from governmental units. The Bond Banks annual operating budget is approved by the Board of Directors.   Interest income on investments in 2006 increased 6.01% from 2005. This increase was the result of an increasing interest rate environment and larger amounts of reserve fund bonds outstanding.   Operating expenses in 2006 decreased $93,265 or 21.46% from 2005, which is mainly attributed to the change in the staffing of the Bond Bank from three people to two people.   The net decrease in the fair value of investments in 2006 of $5,473,323 was caused by movements in market interest rates during the year that had a negative impact on the fair value of investments held by the Bond Bank.   Requests for Information   This financial report is designed to provide a general overview of the Bond Banks financial statements for all those with an interest in its finances. Questions concerning any of the information provided in this report or request for additional information should be addressed to the Executive Director, New Hampshire Municipal Bond Bank, 25 Triangle Park Drive, Suite 102, Concord, NH 03301.    5

NEW HAMPSHIRE MUNICIPAL BOND BANK   BALANCE SHEETS   June 30, 2006

           ASSETS   Current assets:  Cash (note 3)  Investments held by trustee, at market value (note 3):  Cash equivalents  Loans receivable from governmental units  Accrued investment income receivable  Accrued interest receivable from governmental units  Unamortized rebates to governmental units and bond  issuance costs    Total current assets   Noncurrent assets:  Reserve Fund investments held by trustee, at market value (note 3):  Cash equivalents  U.S. Government obligations  Loans receivable from governmental units  Unamortized rebates to governmental units and  bond issuance costs    Total noncurrent assets    Total assets    LIABILITIES AND FUND EQUITY   Current liabilities:  Accounts payable and accrued liabilities  Accrued interest payable  Accrued interest rebate payable to U.S. Government  Bonds payable (note 4)    Total current liabilities   Noncurrent liabilities:  Accrued interest rebate payable to U.S. Government  Bonds payable (note 4)    Total noncurrent liabilities    Total liabilities   Fund equity    Total liabilities and fund equity     See accompanying notes to the financial statements.  

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 Municipal Division State Non-State Guaranteed Guaranteed Fund Group Fund Group $  $ 8,745  3,234,233 6,352,717  6,778,667 59,494,510  15,501 871,630  1,034,453 14,047,881  121,375 677,475  11,184,229 81,452,958  1,716,628 4,005,294  9,347,118 109,765,079  29,357,147 682,439,400  600,991 5,368,860  41,021,884 801,578,633 $ 52,206,113 $ 883,031,591

$   857,613  13,788  8,034,841  8,906,242  665,690  36,850,237  37,515,927  46,422,169  5,783,944 $ 52,206,113

$ 45,148  15,246,702  679,972  67,547,589  83,519,411  1,289,742  788,469,931  789,759,673  873,279,084  9,752,507 $ 883,031,591

             Educational Institutions Division    Pinkerton Academy Coe-Brown Northwood  Fund Group Academy Fund Group      $ 23,802 $ 22,631                  1,760,000 225,000                72,184 17,594                    1,855,986 265,225                        17,175,000               17,175,000    $ 19,030,986          $        72,184         1,760,000       1,832,184              17,175,000    17,175,000    19,007,184    23,802    $ 19,030,986  

 

               1,950,000         1,950,000 $ 2,215,225

$       17,594         225,000  242,594         1,950,000  1,950,000  2,192,594  22,631 $ 2,215,225

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Total $ 55,178  9,586,950  68,258,177  887,131  15,172,112  798,850  94,758,398

 5,721,922  119,112,197  730,921,547  5,969,851  861,725,517 $ 956,483,915

$ 45,148  16,194,093  693,760  77,567,430  94,500,431  1,955,432  844,445,168  846,400,600  940,901,031  15,582,884 $ 956,483,915

NEW HAMPSHIRE MUNICIPAL BOND BANK   STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND EQUITY   For the Year Ended June 30, 2006

              Operating revenues:  Interest on loans receivable from governmental units  Interest income from investments  Net decrease in the fair value of investments  Other income    Total operating revenues   Operating expenses:  Interest expense  Operating expenses  Other expense    Total operating expenses   Operating income (loss)   Fund equity, beginning of year   Fund equity, end of year       See accompanying notes to the financial statements.

 

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 Municipal Division State Non-State Guaranteed Guaranteed Fund Group Fund Group $2,428,172 $ 37,044,427  672,129 5,334,937  (752,375) (4,720,948)   526,785  2,347,926  38,185,201   2,589,303  40,676,623   100,000 233,275   321,572  2,689,303  41,231,470   (341,377) (3,046,269)  6,125,321  12,798,776  $5,783,944 $ 9,752,507

                 Educational Institutions Division      Pinkerton Academy Coe-Brown Northwood  Fund Group Academy Fund Group                                          

 

$ 946,204  1,465         6,000  953,669

 946,204  7,200         953,404  265  23,537 $ 23,802

$ 115,921  163         1,000  117,084

 115,921  800         116,721  363  22,268 $ 22,631

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Total

$ 40,534,724  6,008,694  (5,473,323)  533,785  41,603,880

 44,328,051  341,275  321,572  44,990,898  (3,387,018)  18,969,902 $ 15,582,884