Producers Bank once again proved itself right in its optimistic anticipation for 2012 as the year ended with a bang.
In spite of uncertainties in the economic front at the start of 2012 — in large part due to the continuing uncertainties in the Eurozone, the Middle East, North Africa and the United States, Producers Bank has done well amidst these uncertainties. Producers Bank positioned itself well and reaped the benefits presented by opportunities arising from sweeping changes in the regulatory environment.
Presented below are the major developments for Producers Bank in 2012.
Producers Bank Completes Consolidation with New Rural Bank of Victorias, Inc.
Producers Savings Bank Corporation completed its consolidation with the New Rural Bank of Victorias, Inc., the largest rural bank based in Negros island, in October 2012 and in the process created the largest standalone thrift bank in the country in terms of branch network.
The consolidation has also resulted in the increase in the rediscounting line of Producers Bank with the BSP to PhP1.391 Billion.
Commences Process of Merger with Iloilo City Development Bank
Producers Savings Bank Corporation has a thrift bank subsidiary, namely, Iloilo City Development Bank (“ICDBank”). The Monetary Board of the BSP, in its Resolution No. 373 dated March 6, 2009, approved the investment of Producers Bank in ICDBank up to 49% of the issued and outstanding common shares of the latter. ICDBank, a 50-year-old thrift bank based in Iloilo City, has 8 operating branches at the end of 2012. While Producers Bank owns no more than 49% of the outstanding shares of ICDBank, the latter is considered a subsidiary of Producers Bank as Producers Bank exercises control over ICDBank as defined under BSP Circular 749 and PAS 27 (Separate Financial Statements).
Producers Bank and ICDBank entered into a Plan of Merger on November 16, 2012 and entered into an Agreement and Articles of Merger on December 21, 2012, with PSBC as the surviving thrift banking entity, after having obtained requisite board and stockholders’ approvals.
Requests for approval and consent for the said merger were filed on January 8, 2013 with the BSP and the Philippine Deposit Insurance Corporation (“PDIC”), respectively.
Land Bank Approves New Ph450.0Million Unsecured Subordinated Debt Eligible As Lower Tier 2 Capital for Producers Bank
Land Bank of the Philippines (“LANDBANK”) approved a new 10-year subscription in Producers Bank’s unsecured subordinated debt eligible as lower tier 2 capital in the amount of PhP450.0 Million. In February 2013, after obtaining prior Monetary Board approval, Producers Bank exercised its call option on its PhP120.0 Million unsecured subordinated debt which was issued in favor of LANDBANK in December 2007.
LANDBANK took cognizance of the fact that Producers Bank is currently the largest lender to the individual palay farmers and has also started to lend to sugar farmers. All this in spite of the lowering of tariffs for agricultural products under the AFTA-CEPT. It will be recalled that Producers Bank, was the first thrift bank to obtain accreditation from the BSP as an accredited rural financial institution in relation to the implementation of RA 10000 known as the Agri-Agra Credit Reform Act of 2009 and its implementing rules and regulations as contained in BSP Circular 736.
Producers Bank as an Accredited Rural Financial Institution
In BSP Circular Letter No. CL-2012-021 dated March 28, 2012 and in subsequent BSP Circular Letters on the same subject, Producers Bank was named as one of a handful of banks, and the first thrift bank, to have been accredited by the BSP as an Accredited Rural Financial Institution (“ARFI”) under the guidelines of RA 10000 and BSP Circular 736. As such, any bank lending to Producers Bank, or investing in Producers Bank, can claim such loan, investment or deposit as alternative agri-agra compliance.
In connection with being an ARFI, Producers Bank launched its Special Time Deposit Account for Banks (“SDA for Banks”) with the purpose to address the need of Banks to comply on an alternative basis with the requirements of RA 10000 and BSP Circular 736.
2012 Financial Performance of the Bank
Net Income after Tax
Audited Net Income after Tax (“NIAT”) registered for the year the three (3) month period ended 31 December 2012 was PhP32.373 Million representing an 8.92% return on equity.
The Total Resources of the Bank at year-end reached PhP 7.674 Billion.
Producers Bank Continues to Expand its Branch Network
When the consolidation of the ‘old’ Producers Savings Bank Corporation and New Rural Bank of Victorias, Inc. into the ‘new’ Producers Savings Bank Corporation took place, the ‘old’ Producers Bank had 73 operating branches while New Rural Bank of Victorias, Inc. had 5 operating branches and 1 Other Banking Office (“OBO”).
The ‘new’ Producers Savings Bank Corporation has 81 operating branches and 6 approved but unopened branches as of December 31, 2012.
It currently operates in 8 regions, namely, Cordillera Autonomous Region (CAR), Regions I to III, National Capital Region (NCR), Region IV-A (CALABARZON) and in Regions V and VI. The Bank has branches in 21 provinces namely, Pangasinan, La Union, Benguet, Nueva Vizcaya, Quirino, Isabela, Cagayan, Aurora, Nueva Ecija, Bataan, Bulacan, Pampanga, Zambales, Tarlac, Laguna, Quezon, Batangas, Camarines Sur, Albay, Sorsogon and Negros Occidental and in the cities of Baguio and Pasig.
With 81 operating branches, ‘new’ Producers Savings Bank Corporation had the largest branch network among standalone thrift banks as of the end of 2012.
Moving Forward in 2013
Given the positive picture of the Philippine economy, the growth prospects for Producers Bank are definitely bright. An improving economy coupled with anticipated credit rating upgrade from international rating agencies, would drive demand for loans and other services provided by banks, in the process boosting their income.
Enterprises will be looking to expand and new businesses will arise. There will be numerous opportunities for the Bank to assist businesses by offering them access to readily available capital through the different loan products and services that we offer. The opportunities cut across all sectors of the economy.
Producers Bank is uniquely positioned to take advantage of opportunities for an expanding agricultural sector because of the reach of our branch network. — Edmundo C. Medrano, Vice Chairman, President and Chief Operating Officer