Page 5
FIRST ISABELA COOPERATIVE BANK, INC.
Cauayan City, Isabela, Philippines
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2010
(Amount in Pesos)
1. GENERAL INFORMATION
The First Isabela Cooperative Bank, Inc. (FICOBank) was organized on September 10, 1976 as
a cooperative bank. The Bangko Sentral ng Pilipinas issued the authority to operate on
December 21, 1979. FICOBank opened its door to the public on January 2, 1980. The
Cooperative Bank has 227 common shareholders and 11,915 preferred shareholders as of
December 31, 2010.
The First Isabela Cooperative Bank, Inc. is primarily engaged in extending credit to all types of
cooperatives and their members, to small farmers and tenants, and to deserving rural industries
or enterprises and to transact all business which may be legally done by cooperative banks
organized under and in accordance with the Cooperative Code of the Philippines and to do all
other things incident thereto and necessary and proper in connection with said purpose within
such territory as may be determined and authorized by the Bangko Sentral ng Pilipinas.
The principal office of the cooperative bank is in Cauayan City, Isabela, Philippines. The bank
has various branches/extension/field offices located at the following service areas:
Region 1
1. Umingan, Pangasinan
2. Malasiqui, Pangasinan
3. Lingayen, Pangasinan
4. Mangaldan, Pangasinan
5. Urdaneta, Pangasinan
Region 2
6. Cauayan City
7. Roxas, Isabela
8. Aurora, Isabela
9. Ilagan, Isabela
10. Tumauini, Isabela
11. Cabagan, Isabela
12. Alicia, Isabela
13. San Mateo, Isabela
14. Santiago City, Isabela
15. Jones, Isabela
16. Echague, Isabela
17. Maddela, Quirino
18. Diffun, Quirino
19. Solano, Nueva Vizcaya
20. Bambang, Nueva Vizcaya
21. Solana, Cagayan
22. Tuguegarao, Cagayan
23. Aparri, Cagayan
Region 3
24. Paniqui, Tarlac
25. Concepcion, Tarlac
26. Dinalupihan, Bataan
27. Cabanatuan, Nueva Ecija
The accompanying financial statements of First Isabela Cooperative Bank, Inc. were authorized
for issue by the bank’s Board of Directors on March 5, 2011.
Page 6
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of Preparation
The financial statements of the bank are prepared in compliance with the accounting
principles as set forth in Philippine Accounting Standards (PAS) and Philippine Financial
Reporting Standards (PFRS).

PAS 1, Presentation of Financial Statements, provides a framework within which an
entity assesses how to present fairly the effects of transactions and other events; provides
the basic criteria for classifying liabilities as current or non-current; prohibits the
presentation of income from operating activities and extra-ordinary items as separate line
items in statements of income; and specifies the disclosure about key sources of
estimation, uncertainty and judgment that management has made in the process of
applying the entity’s accounting policy

PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, removes
the concepts of fundamental error and the allowed alternative to retrospective application
of voluntary changes in accounting policies and retrospective restatement to correct prior
period errors. It defines material omission or misstatements, and describes how to apply
the concepts of materiality when applying accounting policies and correcting errors.

PAS 10, Events after the Balance Sheet Date, provides a limited clarification of the
accounting for dividends declared after the statement of condition date.

PAS 16, Property, Plant and Equipment, provides additional guidance and clarification
on recognition and measurement of items of property plant and equipment; requires the
capitalization of the cost of asset dismantling, removal or restoration as a result of either
acquiring or having use the asset for purposes other than to produce inventory during the
period; and requires measurement of an item of property, plant and equipment acquired in
exchange for a nonmonetary assets or a combination of a monetary and a nonmonetary
assets at fair value, unless the exchange transaction lacks commercial substance. Under
the previous version of the standards, an entity measures such an acquired asset at fair
value unless the exchanged assets were similar.

PAS 17, Leases, provides a limited revision to clarify the classification of a lease of land
and buildings and prohibits expensing of initial direct cost in the financial statements of
lessors.

PAS 19, Employee Benefits, provides for the accounting for long-term and other
employee benefits. The standard requires the projected units credit method in determining
the retirement benefits of the employees and the change in the manner of computing
benefit expense relating to past service cost and actuarial gains and losses. It requires the
bank to determine the present value of defined benefit obligations and the fair value of
any plan assets with sufficient regularity that the amounts recognized in the financial
statements will not differ materially from the amounts that would be determined at the
statement of condition date.
Page 7
This Standard does not have material effect on the financial statements under audit since
the bank does not need to recognize any amount as part of its pension liability and as a
downward adjustment to surplus.

PAS 24, Related Party Disclosure, provides additional guidance and clarity in the scope
of the standard, the definition and disclosure for related parties. It also requires
disclosures of the compensation of key management personnel by benefit types.

PAS 30, Disclosures in the Financial Statements of Banks and Similar Financial
Institutions, provides for the required disclosures and presentation in respect of the
accounts of banks and similar institutions. It also provides that provision for general
banking risk is treated as appropriation of surplus and should not be included in the
determination of net income for the period. Additional disclosures required by this
standard were included in the financial statements.
The adoption of this standard does not result in the reallocation of the general loan loss
reserves to cover the additional specific reserves required upon adoption of PAS 39.

PAS 32, Financial Instruments: Disclosure and Presentation, covers the disclosure and
presentation of all financial instruments. The standard requires more comprehensive
disclosures about the bank’s financial instruments, whether recognized or unrecognized
in the financial statements. Additional disclosures required by this standard were included
in the financial statements.

PAS 33, Earnings per Share, prescribes the principles for the determination and
presentation of earnings per share for entities with publicly traded shares, entities in the
process of issuing ordinary shares to the public, and entities that calculate and disclose
earnings per share. The standard also provides additional guidance in computing earnings
per share including the effects of mandatorily convertible instruments and contingently
issuable shares, among others.

PAS 36, Impairment of Assets, requires the annual impairment test of intangible asset
with an indefinite useful life or an intangible not yet available for use and goodwill
acquired in a business combination, whether or not there is an indication of impairment.

PAS 38, Intangible Assets, requires discontinuance of amortization of intangible assets
with an indefinite useful life. Where an intangible asset has a finite life, it has been
amortized over its useful life. Amortization years and methods for intangible assets with
finite useful lives are reviewed early in the year or where an indicator of impairment
exists. Intangible assets that have indefinite useful lives are not amortized, as there is no
foreseeable limit to the year over which the asset is expected to generate net cash inflows
for the Bank. However, intangibles with indefinite useful lives are reviewed annually to
ensure that the carrying value does not exceed the recoverable amount regardless of
whether an indicator of impairment is present.
Page 8

PAS 39, Financial Instruments: Recognition and Measurement, establishes the
accounting and reporting standards for recognizing and measuring the Bank’s financial
assets and financial liabilities. The standard requires a financial asset or financial liability
to be recognized initially at fair value. If applicable, the Bank shall measure financial
assets at their fair values, except for loans and receivables and held- to- maturity (HTM)
investments, which are measured at cost or amortized cost using the effective interest rate
method. Financial liabilities are subsequently measured at cost or amortized cost, except
for liabilities classified as “at fair value through profit and loss” and derivatives, which
are subsequently measured at fair value. PAS 39 requires that, in the absence of quoted
market rates, the discounted cash flow method will be used in determining whether an
asset is impaired.
In determining the allowance for impairment losses of a financial asset, PAS 39 requires
the comparison of the carrying values of such asset with its fair value based on quoted
price in an active market, recent market transaction, adjusted quoted price and fair value
computed based on valuation techniques.
The adequacy of allowance for probable losses on loans and receivables and other risk
assets was determined based on management criteria and BSP requirements. The
adoption of PAS 39 provisions on impairment of financial assets does not have effect to
the reversal of general reserves existing as of audit date.

PAS 40, Investment Property, prescribes the accounting treatment for investment
property and related disclosure requirements. This standard permits the Bank to choose
either the fair value model or cost model in accounting for investment property. Fair
value model requires an investment property to be measured at fair value with fair value
recognized directly in the statement of income. Cost model requires that the investment
property be measured at depreciated cost less any accumulated impairment loss.
2.2 Loans and Discounts
Receivables are carried at amortized cost using the effective interest rate method, reduced
by unearned discount, capitalized interest on restructured loans and allowance for probable
losses. It includes accounts classified as current, past due, restructured and items in
litigation.
Accounts are classified as past due when borrowers fail to pay their obligations when they
fall due. Restructured accounts represent loans whose principal terms and conditions have
been modified in accordance with a restructuring agreement setting forth a new plan of
payment or schedule of payment on a periodic basis. Items in litigation represent loans for
which collection/foreclosure cases have been filed in court or sheriff’s office as the case
maybe.
2.3 Allowance for Probable Losses
The allowance for probable losses, which includes both specific and general loan loss
reserves, represents management’s estimates of probable losses inherent in the portfolio
Page 9
after consideration of prevailing and anticipated economic conditions, prior loss experience,
estimated recoverable value based on fair market values of underlying collateral and
prospects of support from guarantors, subsequent collections and evaluations made by the
BSP- Supervision and Examination Sector. The BSP observes certain criteria and
guidelines based largely on the classification of loans in establishing specific loss reserves.
A one per cent general provision for probable losses is usually set. In addition, allowance
for probable losses on loans and other risk assets are provided as follows:
a.
b.
c.
d.
Loans especially mentioned – 5%
Substandard – 25%
Doubtful – 50%
Loss – 100%
Loans are written off against allowance for probable losses when management believes that
the collectibility of the principal is unlikely.
2.4 Bank Premises, Furniture and Equipment
The Bank’s depreciable properties are stated at cost less accumulated depreciation and
amortization and impairment in value, if any.
Depreciation and amortization are calculated using the straight-line method over the
estimated useful lives of the fixed assets as determined by the management of the Bank.
Minor repairs, maintenance and replacement of parts are charged to expenses when
incurred.
The property and equipment is presented in the balance sheet, net of accumulated
depreciation.
The management reviews impairment on the carrying values of the Bank’s property and
equipment when events or changes in circumstances indicate that the carrying value may
not be recoverable. If such indication exists and where the carrying values exceed the
estimated recoverable amount, the assets or cash-generating units are written down to their
recoverable amount, an impairment loss is recognized in the statements of income (see
accounting policy on impairment of non-financial assets.)
2.5 Impairment of Non- Financial Assets
An assessment is made at each statement of condition date if there is any indication of
impairment of any asset, or if there is any indication that an impairment loss previously
recognized for an asset in prior years may no longer exist or may have decreased. If such
indication exists, the asset’s recoverable amount is estimated. An asset’s recoverable
amount is calculated as the higher of the asset’s value in use or net selling price.
Page 10
An impairment loss is recognized by a charge against current operations for the excess of
the carrying amount of an asset over its recoverable amount. An impairment loss is charge
to operation in the year in which it arises, unless the asset is carried at a revalued amount, in
which case the impairment loss is charge to the revaluation increment in the said asset.
A previously recognized impairment loss is reversed by a credit to current operation (unless
the asset is carried at a revalued amount, in which case, the reversal of the impairment loss
is credited to the revaluation increment of the same asset) to the extent that it does not
restate the asset to a carrying amount in excess of what would have been determined (net of
any accumulated depreciation and amortization) had no impairment loss been recognized
for the asset in prior years.
2.6 Derecognition of Financial Instrument
a. Financial Asset
The derecognition of a financial asset takes place when the bank has either (a) transferred
substantially all the risk and rewards of ownership or (b) when it has neither transferred nor
retained substantially all the risks and rewards but it no longer has control over the asset or
a portion of asset.
Where the bank has transferred its rights to receive cash flows from an asset and has neither
transferred control of the asset, the asset is recognized to the extent of the Bank’s continuing
involvement in the asset.
b. Financial Liability
A financial liability is derecognized when the obligation under the liability is discharged,
cancelled or had expired.
2.7 Real and Other Properties Acquired (ROPA)
Assets acquired by the Bank in settlement of loans are recorded at the lower of the balance
of total loan exposure or bid price less impairment in value, if any.
The carrying values of the ROPA are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be recoverable. If any such indication
exists and where carrying values exceed the estimated recoverable amount, the assets and
cash - generating units are written down to their recoverable amount (see accounting policy
on Impairment of Non- Financial Assets).
2.8 Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow
to the bank and the revenue can be reliably measured.
Page 11
a. Interest Income
Interest on financial instruments is recognized based on the effective interest method of
accounting.
Loans are non-accruing when principal is past due in accordance with existing BSP
regulations or in the opinion of the Bank’s management, in which case, collection of interest
or principal is doubtful. Interest income on these loans, however, is recognized. Loans are
not classified as accruing until interest and principal payments are brought current or
restructured in accordance with the existing Bangko Sentral ng Pilipinas regulations and
future payments appear assured.
Interest on investment securities is recognized as the interest accrues, taking into account the
effective yield on the asset.
b. Loan Fees and Service Charges
Loan fees that are directly related to acquisition and origination of loans are included in the
cost of receivable and are amortized using effective interest method over the term of the
loan.
c. Gain from Sale of ROPA
For cash sale, the entire gain from the sale (excess of selling price over carrying values) of
property is recognized as Income from Assets Acquired during the year. For installment
sales, under which the consideration is receivable in installments, the revenue is recognized
under the installment method. Under installment method, each collection consists partly of
recovery of cost and partly of recovery of gross profit in the same ratio that these two
elements existed at the original sales. The gain recognized on the cash collections is based
on the percentage of total income to total sales price.
d. Provisions and Contingencies
Provisions are recognized when the Bank has a present obligation (legal or constructive), as
a result of a past event. It is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
Contingent liabilities are not recognized in the financial statements. They are disclosed
unless the possibility of an outflow of resources embodying economic benefits is remote.
Contingent assets are not recognized, but are disclosed in the financial statements when an
inflow of economic benefit is probable.
Post year-end events that provide additional information about the Bank’s position, at the
statement of condition date (adjusting events), are reflected in the financial statements. Post
year-end events that are non-adjusting events are disclosed in the notes to financial
statements when material.
Page 12
e. Offsetting
Financial assets and financial liabilities are only offset and the net amount reported in the
statements of condition when there is legally enforceable right to setoff the recognized
amounts and the Bank intends to either settle on a net basis or to realize the asset and the
liability simultaneously.
2.9 Cash and Due from Other Banks
For purposes of reporting cash flows and for balance sheet presentation, cash and cash
equivalents includes cash on hand, due from other banks, checks and other cash items under
the definition per BSP regulation and short term bills with original maturity of three months
or less.
3. USE OF JUDGMENT AND ESTIMATES IN THE PREPARATION OF FINANCIAL
STATEMENTS
The preparation of financial statements in accordance with PAS/PFRS requires the Bank to
make estimates and assumptions that affect the reported amounts of resources, liabilities,
income, expenses and disclosure of contingent resources and contingent liabilities, if any.
Future events may occur, which will cause the assumptions used in arriving at the estimates
to change. The effect of any change in estimates will be reflected in the financial statements
when reasonably determinable.
Estimate and judgment are continually evaluated and are based on historical experiences and
other factors, including the expectation of future events that are believed to be reasonable
under the circumstances.
The following presents a summary of these significant judgment and estimates:
a. Impairment Losses of Loans and Receivables
The Bank reviews its loan portfolios to assess impairment at least on a regular basis. In
determining whether an impairment loss should be recorded in the Statement of Income,
the Bank makes judgment as to whether there is an observable data indicating that there
is measurable decrease in the estimated future cash flow from a portfolio of loans before
the decrease can be identified with an individual loan in the portfolio. The evidence may
include observable data indicating that there has been an adverse change in payment
status of the borrowers of the Bank, or national or local economic conditions that
correlate with defaults on assets in the group.
b. Held-to-Maturity (HTM) Investments
The bank classifies non-derivative financial assets with fixed or determinable payment
and fixed maturity as HTM. This classification requires significant judgment. In making
this judgment, the bank evaluates its intention and ability to hold such investments to
maturity. If the bank fails to keep these investments to maturity other than in certain
Page 13
specific circumstances, e.g. sales that are so close to maturity, it will be required to
reclassify the entire portfolio as AFS.
c. Pension and employee benefits
The determination of the obligation and cost of pension and other employees’ benefits is
dependent on the selection of certain assumptions used in calculating such amounts.
While the Bank believes that the assumptions are reasonable and appropriate, significant
differences between actual experiences and assumptions may materially affect the cost of
employees’ benefits and related obligations.
The bank also estimates other employee benefits obligation and expense, including cost
of paid leaves based on historical leave availments of employees, subject to the Bank’s
policy.
These estimates may vary depending on the future changes in salaries and actual
experiences during the year.
4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Market risk is the risk of loss that may result from the changes in the price of a financial
product. Market risk maybe affected through (1) currency risk, (2) fair value interest rate
risk and (3) price risk. Currency risk in turn is the risk that the value of financial instrument
will fluctuate because of changes in foreign exchange rates. Fair value interest rate risk on
the other hand is the risk that the value of financial instruments will fluctuate because of
changes in market interest rates. And finally, price risk is the risk that the value of
instrument or its issuer or factors affecting all instruments traded in market.
The bank management plan adopts a strict policy of review and evaluation in engaging in
business with various financial instruments in the market. And to be able to cope up with the
erratic behavior of various risks that may affect the liquidity and profitability of the bank
leading to devaluation in the value of its assets particularly the financial instruments, the
management has created a committee of three members of the board whose main functions
are geared towards the monitoring of the following:
a) Market Risk- to monitor the fluctuation of foreign currency risks, the changes in market
interest rates due to volume of currencies in the market together with the other factors that
are specific to the individual instrument or its issuer or factors affecting all instruments
traded in the market.
The Bank is highly affected by the movements of this risk as it embodies not only the
potential loss, but also the potential for gain.
b) Credit Risk - it is of paramount importance that his risk is highly evaluated by the
committee to determine the extent of the obligation of one party to the financial instrument,
i.e., his/her financial capability to discharge obligation, his/her present financial position and
Page 14
viability as this will cause the other party to incur a financial loss as a result of the failure of
the latter to pay his/her obligation.
c) Liquidity Risk - to monitor this area of concern which deals with the factors affecting the
financial capability of the party to be able to raise funds to meet commitments that is
associated with the financial instruments. These are situations wherein the party is unable to
liquefy his financial assets quickly, and sometimes even below the asset’s fair market value.
d) Cash Flow Interest Rate Risk - this concern pertains to the future cash flow that a
financial instrument may generate at a normal value because of the erratic behavior affecting
the market interest rates. It is also the committees’ task to monitor the floating rate debt
instruments because such changes in the interest rates result dramatic changes in the effective
interest rates of the financial instruments, but without corresponding appreciation in its fair
value.
5. CASH AND DUE FROM OTHER BANKS
Cash and Due from Other Banks represent the total amount of cash in the Bank’s vault in the
form of Philippine currency and checks and other cash items received after the cut-off time
until the close of the regular banking hours as well as due from other banks in the form of
savings, current, and time certificates of deposits with maturities of three months or less. The
composition of cash and cash equivalents on December 31, 2010 and 2009 are as follows:
Particulars
Cash on Hand
Cash and other cash items
Due from Other Banks
Total Cash and Due from Other Banks
2010
20,963,647.20
424,084.40
457,814,467.14
479,202,198.74
2009
17,665,420.50
833,443.56
372,971,246.16
391,470,110.22
Due from Bangko Sentral ng Pilipinas represents the balance of the deposit account
maintained against deposit liabilities. This is the accumulated total required reserves paid by
the bank against its deposit liabilities.
6. LOANS AND RECEIVABLES
Loans and receivables portfolio is summarized below:
Page 15
Classification
Loans Receivable:
Current Loans
Past Due Loans
Restructured Loans
Loans in Litigation
Total Loans Receivable
Less: Loan Discount Premium
Net Loans Receivable before Allowance
for Probable Losses
Less Allowance for Probable LossesSpecific
General Loan Loss Provision
Total
LOANS AND RECEIVABLES - NET
2010
2009
1,049,527,038.45
89,427,931.27
23,696,425.22
13,663,758.79
1,176,315,153.73
20,824,121.42
1,041,499,324.54
42,882,165.55
7,619,439.30
2,506,153.72
1,094,507,083.11
14,644,662.25
1,155,491,032.31
17,905,422.42
1,079,862,420.86
8,548,251.19
11,900,774.38
10,565,830.09
29,806,196.80
1,125,684,835.51
19,114,081.28
1,060,748,338.78
Allowance for probable losses represents amount set up against undivided profits to provide
for losses which may arise from non-collection of loan accounts.
In compliance with existing requirements and regulations, the General Loan Loss Provision
was earmarked to provide for general losses, which are not linked to individually identifiable
accounts. A provision of one per cent of the gross loan portfolio is required
7. OTHER CURRENT ASSETS
Particulars
Returned Checks and Other Cash Items
Petty Cash Fund
Unused Stationeries and Supplies
Prepaid Expense
Deferred Charges
Accounts Receivable
Miscellaneous Assets
Total Other Assets
2010
2,480,688.38
165,000.00
1,322,070.19
700,473.41
8,729,182.52
2,741,149.42
6,850,288.87
22,988,852.79
2009
3,149,948.87
150,000.00
994,049.69
548,458.10
955,099.43
3,022,782.07
5,470,502.45
14,290,840.61
8. NONCURRENT FINANCIAL ASSETS
Held-to-Maturity Financial Assets (HTM)
Held-to-Maturity financial Assets refers to debt securities quoted in an active market with
fixed or determinable payment and fixed maturity that the bank has a positive intention to
hold to maturity.
Page 16
HTM financial assets shall be measured upon initial recognition at the fair value plus
transaction costs that are directly attributable to the acquisition of the securities. After initial
recognition, the bank shall measure HTM financial assets at their amortized cost using the
executive interest method.
A gain or loss arising from the change in the fair value of HTM financial assets shall be
recognized in the income statements when the securities are derecognized or impaired, and
through amortization process using effective interest method.
Unquoted Debt Securities Classified as Loans
This refers to unquoted debt securities with fixed or determinable payments and maturity.
Unquoted Debt Securities Classified as Loans shall be measured upon initial recognition at
their fair value plus transaction cost that are directly attributable to the acquisition of the
securities. The bank shall use the effective interest method on the realization of Unamortized
Discount/Premium.
A gain or loss arising from the change in the fair value of this account shall be recognized as
profit or loss when the security is derecognized or impaired through the amortization process.
Investment in Non-Marketable Equity Securities (INMES)
INMES includes equity instruments that do not a quoted market price in active market and
whose fair value cannot be reliably measured. INMES shall be measured upon initial
recognition at its fair value plus transaction costs that are directly attributable to the
acquisition of the securities. After initial recognition, the bank shall measure INMES at cost.
A gain or loss arising from the change in fair value of the INMES shall be recognized as
profit or loss when the security is derecognized or impaired.
9. BANK PREMISES, FURNITURE AND EQUIPMENT
The composition of bank premises, furniture and equipment as of December 31, 2010 as
follows:
Particulars
Bank Premise-Land
Bank Premise-Building
Bank Premise-Under Construction
Leasehold Improvements
Furniture, Fixtures and Equipment
Transportation Equipment
Total
At Cost
15,172,439.00
19,441,288.77
2,740,252.22
37,359,934.38
56,728,833.42
25,278,257.75
156,721,005.54
Accumulated
Depreciation
6,928,005.15
8,540,729.17
31,093,169.26
10,892,712.75
57,454,616.33
Net Book
Value
12/31/2010
15,172,439.00
12,513,283.62
2,740,252.22
28,819,205.21
25,635,664.16
14,385,545.00
99,266,389.21
Page 17
Land represents the acquisition cost of the land or lot by the Bank as site of its office.
Acquisition costs consist of the purchase price and all expenditures incurred incidental to the
acquisition, such as cost of surveying, registration, issuances of title and other expenditures
that enhance the value of the land.
Building and leasehold improvements represents the cost of materials, labor and other
capitalizable expenditures related to the erection of the building.
Furniture, fixtures and equipment represent the cost of furniture such as desks, tables and
chairs; fixtures on building which do not form part of the building account; and equipment
such as computers, typewriters and others.
Transportation Equipment consists of all vehicles purchased by the Bank intended for use in
its operations.
The composition of bank premises, furniture and equipment as of December 31, 2009 as
follows:
Bank Premise-Land
Bank Premise-Building
Bank Premise-Under Construction
Leasehold Improvements
Furniture, Fixtures and Equipment
Transportation Equipment
Total
At Cost
15,172,439.00
19,441,288.77
6,483,679.15
24,223,686.01
45,691,910.54
19,626,555.99
130,639,559.46
Net Book
Accumulated Value
Depreciation
12/31/2009
- 15,172,439.00
5,854,008.45 13,587,280.32
6,483,679.15
5,561,951.36 18,661,734.65
23,892,557.97 21,799,352.57
7,608,272.25 12,018,283.74
42,916,790.03 87,722,769.43
10. REAL AND OTHER PROPERTIES ACQUIRED (ROPA)
Composition of ROPA as of December 31, 2010 and 2009 are as follows:
Particulars
Real Estate Mortgage
Less: Allowance for Probable Losses
Accumulated Depreciation
Total Allowances
Total ROPA
2010
46,479,773.08
527,179.28
1,308,131.50
1,835,310.78
44,644,462.30
2009
32,925,418.94
527,179.28
1,003,696.27
1,530,875.55
31,394,543.39
ROPA consists of mostly residential, house and lot properties. Others are chattel and other
pledges.
Page 18
11. DEPOSIT LIABILITIES
The breakdown of deposit liabilities as per classification is shown below:
Demand Deposit
Savings Deposit
Certificates of Time Deposits
Total Deposit Liabilities
2010
23,201,168.97
1,019,461,947.73
193,667,881.30
1,236,330,998.00
2009
22,947,095.31
774,713,892.90
157,103,613.59
954,764,601.80
12. BILLS PAYABLE
This account represents all types of directly negotiated borrowings that are obtained from local
banks and non-bank financial intermediaries.
Particulars
BSP
Local Banks & Other Financial Intermediaries
Total Bills Payable
2010
4,760,000.00
134,036,368.55
138,796,368.55
2009
10,305,000.00
359,999,725.99
370,304,725.99
Unsecured Subordinated Debts amounting to P 49,233,333.32 are included in the total amount
presented in Balance Sheet under line item Bills payable.
13. OTHER CURRENT LIABILITIES
As of December 31, 2010 and 2009, the following financial liabilities are due within one year
from Statement of Financial Condition date:
Particulars
Accrued Interest, Taxes and Other Expenses:
Accrued Interest Payable
Others
Total Accrued Interest
Others Liabilities:
Accounts Payable
Dividends Payable
Withholding Tax Payable
SSS, Medicare & EC Payable
Others
Total Other Liabilities
2010
2009
5,885,248.18
2,639,991.45
8,525,239.63
2,670,313.20
5,759,496.10
8,429,809.30
7,044,294.34
3,162,847,.34
2,675,079.22
6,363,982.37
83,187,189.42
102,433,392.69
12,196,592.59
2,174,411.01
2,232,385.53
4,553,344.27
28,214,821.32
49,371,554.72
Page 19
14. CAPITAL STOCK
As per Article 6 of the Bank’s Articles of Cooperation, the authorized share capital is Fifty
Million Pesos (Php50,000,000) divided as follows:
Common Shares (30,000 shares @ P1,000 par value)
Preferred Shares “A” (3,100 shares @ P1,000 par value)
Preferred Shares “B” (13,200 shares @ P1,000 par value)
Preferred Shares “C” (3,700 shares @ P1,000 par value)
30,000,000.00
3,100,000.00
13,200,000.00
3,700,000.00
Preferred stock represents the amount of Subscribed Preferred Shares, which has been fully paid
by the corresponding stockholders.
Common Stocks are paid up shares of various Samahang Nayon and cooperatives in the
province.
15. RETAINED EARNINGS
Retained Earnings-Free represents unappropriated or free portion of the accumulated profits of
the bank and Retained Earnings-Reserves represents the accumulated amount set aside for
specific purposes. The composition of Retained Earnings - Reserves as of December 31, 2010
and 2009 are as follows:
Particulars
Reserve for Contingencies
Reserve for General Fund
Reserve for Optional Fund
Reserve for Retirement of Preferred Stock
CETF
Reserve for Retirement Plan
Reserve for Stock Dividends
TOTAL RETAINED EARNINGS - RESERVES
2010
2009
27,012,783.66 22,252,783.66
34,777,359.88 30,017,359.88
28,062,783.66 23,302,783.66
18,886,783.66 14,126,783.66
4,775,388.00
2,238,051.78
9,088,824.42 12,680,000.00
20,278,000.00 20,278,000.00
142,881,923.28 124,895,712.68
16. INTEREST INCOME ON LOANS
Total Interest Income on Loans for the year follows:
Particulars
Interest on Loans:
Loans and Discounts
Agrarian/Other Agricultural Credit Loans
Restructured Loans
Micro Finance
Past Due Items/In Litigation
Total Interest Income from Loans
2010
2009
167,812,224.10 121,187,245.52
47,628,565.31 35,610,723.41
1,907,978.89
1,910,263.90
19,077,687.68 15,568,221.23
9,187,927.43
7,328,633.99
245,614,383.41 181,605,088.05
Page 20
17. INTEREST EXPENSE
Total Interest Expense for the year follows:
Particulars
Interest on Savings Deposit
Interest on Time Certificates of Deposits
Total Interest Expense on Deposits
Interest on Borrowed Funds
Finance Charge
Total Interest Expense
2010
56,656,779.48
15,508,638.59
72,165,418.07
21,553,411.64
205,100.41
93,923,930.12
2009
41,295,701.40
15,602,205.96
56,897,907.36
23,000,886.54
626,732.05
80,525,525.95
18. COMPENSATION/FRINGE BENEFITS
Details of this account as of December 31, 2010 and 2009 are provided below:
2010
Particulars
2009
41,781,191.67 29,312,494.70
Salaries and Wages
9,546,725.65
Fringe Benefits-Employees
9,817,271.63
2,587,500.00
Directors' Fee
1,382,500.00
4,146,199.57
SSS, PhilHealth & Pag-ibig Contributions
3,247,357.98
195,404.78
Contribution to Retirement/Provident Fund
216,549.24
58,257,021.67
Total Compensation/Fringe Benefits
43,976,173.55
19. OTHER ADMINISTRATIVE EXPENSES
Other administrative expense details are presented hereunder:
2010
Particulars
7,333,177.86
Rent
4,532,927,.21
Power, Light and Water
0.00
Information Technology Expense
11,753,600.24
Fuel and Lubricants
13,648,909.49
Travelling Expenses
7,173,701.15
Repairs and Maintenance
8,363,476.70
Security/Clerical/Messenger and Janitorial
7,414,199.9
Postage/Cable/Telephone and Telegram
11,790,769.44
Stationery and Office Supplies
106,383.00
Periodicals and Magazines
7,251,617.54
Advertising and Publicity
4,868,953.5
Representation and Entertainment
59,686.20
Membership Fees and Dues
313,960.75
Donations and Charitable Contributions
0.00
Banking Fees
56,943.12
Fines and Penalties
1,729,737.50
Miscellaneous
86,398,043.60
Total Other Expenses
2009
4,687,280.47
3,166,825.12
3,635.00
9,443,167.72
8,708,134.62
4,734,979.70
6,071,880.13
5,476,013.54
9,426,406.12
111,876.00
4,750,142.14
4,449,831.64
48,451.00
342,489.06
274,716.38
15,750.00
1,025,109.77
62,736,688.41
Page 21
20. DEPRECIATION EXPENSE
Details of depreciation expense per asset type are as follows:
2010
1,067,510.44
7,895,976.72
4,094,453.02
3,091,208.26
557,128.31
16,706,276.75
Particulars
Buildings
Furniture, Fixtures and Equipment
Transportation Equipment
Leasehold Rights and Improvement
ROPA
Total Depreciation Expense
2009
1,055,492.33
4,854,539.62
2,073,953.93
1,946,000.14
1,003,696.27
10,933,682.29
21. If GAAP will be used (loan service charge and fees are not amortized) the net income of the
bank would be P 54,031,437.68. While under PAS (loan service charge was amortized) the
net income of the bank was P 47,612,994.14.
Net Income – GAAP
P 54,031,437.68
Less: Loan service charge & fees
6,418,443.54
Net Income per PAS/AFS
47,612,994.14
22. OTHER REQUIRED DISCLOSURES PROVIDED UNDER SUBSECTIONS X164.4
TO X164.6 OF THE MORB
a.
Basic Quantitative Indicators of Financial Performance for 2010:
Return on Average Equity =
Net Income
Average Equity
=
47,612,994.14 =
221,596,482.65
21.49%
Return on Average Assets =
Net Income
Average Assets
=
47,612,994.14 =
1,761,352,259.42
2.70%
Net Interest Margin =
13.10%
Basic Quantitative Indicators of Financial Performance for 2009:
Return on Average Equity =
Net Income
Average Equity
=
50,861,152.43 =
203,586,610.56
24.98%
Return on Average Assets =
Net Income
Average Assets
=
50,861,152.43 =
1,308,273,743.11
3.89%
Net Interest Margin =
14.28%
Page 22
b.
c.
Risk Based Capital Adequacy Ratio = 21.21%
Concentration of Credit as to industry/economic sector where concentration is
said to exist when total loan exposures to a particular industry/economic sector exceeds
thirty percent (30%) of the total loan portfolio-2010.
Industry/Economic Sector
Agriculture, Hunting & Forestry
Manufacturing
Electricity, Gas and Water
Wholesale & Retail Trade
Transportation, Storage, Communication
Real Estate, Renting and Business Activities
Education
Other Community, Social and Personal
Hotels and Restaurants
Private Households with Employed Persons
TOTAL
Amount
Percentage
327,662,568.77
27.85%
605,230.94
0.05%
4,200,000.00
0.36%
832,039,316.67
70.73%
3,172,266.18
0.27%
0.00%
0.00%
1,704,318.40
0.14%
1,183,121.81
0.10%
5,748,330.96
0.49%
1,176,315,153.73 100.00%
d. Breakdown of total loans as to secured and unsecured and breakdown of secured as to
type of security 2010.
1,099,721,745.01
93.49%
76,593,408.72
6.51%
1,176,315,153.73
100.00%
REM
665,164,838.35
60.48%
Chattel Mortgage
182,970,858.31
16.64%
Personal Asset (Jewelries)
242,995,548.36
22.10%
8,590,499.99
0.78%
1,099,721,745.01
100.00%
Secured Loans
Unsecured Loans
TOTAL
Hold-Out Deposits
TOTAL SECURED LOANS
Page 23
e. Concentration of Credit as to industry/economic sector where concentration is said to
exist when total loan exposures to a particular industry/economic sector exceeds thirty
percent (30%) of the total loan portfolio-2009.
Industry/Economic Sector
Agriculture, Hunting & Forestry
Manufacturing
Electricity, Gas and Water
Wholesale & Retail Trade
Transportation, Storage, Communication
Real Estate, Renting and Business Activities
Education
Other Community, Social and Personal
Hotels and Restaurants
Private Households with Employed Persons
TOTAL
Amount
296,188,301.24
4,038,257.89
7,700,000.00
737,128,178.30
3,597,790.58
2,537,427.97
1,131,321.31
9,378,265.27
1,023,881.71
31,783,658.84
1,094,507,083.11
Percentage
27.06%
0.37%
0.70%
67.35%
0.33%
0.23%
0.10%
0.86%
0.09%
2.90%
100.00%
f. Breakdown of total loans as to secured and unsecured and breakdown of secured as to
type of security-2009
Type of Loan
Secured Loans
Unsecured Loans
TOTAL
REM
Chattel Mortgage
Personal Asset (Jewelries)
Hold-Out Deposits
TOTAL SECURED LOANS
Amount
982,736,033.70
111,771,049.41
1,094,507,083.11
731,058,497.28
40,512,623.83
199,039,212.59
12,125,700.00
982,736,033.70
Percentage
89.79%
10.21%
100.00%
74.39%
4.12%
20.25%
1.23%
100.00%
Page 24
g. Total Outstanding Loans to DOSRI - 2010
No DOSRI Loans as of December 31, 2010
Percent of unsecured DOSRI to total DOSRI loans - None
Percent of past due DOSRI to total DOSRI loans - None
Percent of non-performing DOSRI to total DOSRI loans - None
h. Nature and amount of contingencies arising from off-balance sheet items.
- None
i. Provisions and allowances for losses and how determined 2010 - 2009.
Allowance for Probable Losses on Loans-Specific
General Loan Loss Provision
Allowance for Probable Losses-ROPA
Allowance for UDSCL
Allowance for Probable Losses – SCR
Allowance for Probable Losses - AR
TOTAL
17,905,422.42
11,900,774.38
527,179.28
0.00
448,583,76
22,347.60
30,804,307.44
8,548,251.19
10,565,830.09
527,179.28
7,060,558.56
0.00
0.00
26,701,819.12
The allowance for Probable Losses was determined as per Note 2 - Significant Accounting
Policies
Page 25
j. Aggregate amount of secured liabilities and assets pledged as security
Agency
BP-Bangko Sentral ng Pilipinas
BP-LBP-Ordinary Loan
BP-LBP-Term Loan
BP-MBTC
BP-DBP
BP-UCPB
BP-BDO
BP-PSBank
NLSF – Investment
PCFC – Investment
PCFC – Institutional
Union Bank
NLDC
Total Bills Payable - Secured
k. Accounting Policies (see Note 2)
Security
REM
REM
REM
CHATTEL
PN
PN
CHATTEL
CHATTEL
PN
PN/CHATTEL
PN/CHATTEL
CHATTEL
PN/PDC
2010
2009
4,760,000.00 10,305,000.00
80,951,516.93 227,167,400.31
4,641,666.08
5,599,939.37
645,361.42
2,303,289.00
11,185,000.00 29,878,000.00
10,000,000.00 10,000,000.00
404,600.00
690,200.00
2,853,222.22
1,864,650.00
- 16,595,282.07
9,756,984.83 15,551,523.06
349,442.18
2,471,000.00
11,127,017.07
138,796,368.55 320,304,725.99
Page 26
2010
A. Statement of Condition
Amount
Particulars
Qualified for
Derecognition
Under
PFRS/PAS
Not Qualified
for
Derecognition
Under
PFRS/PAS
Total
Additional Information
NPAs sold, gross
Allowance for credit losses(specific) on NPAs sold
3,166,954.26
0.00
0.00
0.00
3,166,954.26
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Cash received
0.00
0.00
0.00
Financial instruments received, gross
Less: All. For credit losses (specific)
Carrying amount of all credit losses (specific)
Less: Unbooked all. For credit losses (specific)
Adj. Carrying amount of all financial instruments received
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Deferred charges, gross
Less: Deferred Charges written down
Carrying Amount of deferred charges
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
All. For credit losses (specific) on NPAs sold applied to:
Unbooked allowance for credit losses:
Specific
General
Additional allowance for credit losses:
Specific
General
Page 27
2010
B. Statement of Income and Expense
Amount
Particulars
Qualified for
Derecognition
Under
PFRS/PAS
Not Qualified
for
Derecognition
Under
PFRS/PAS
Total
Additional Information
Net Income/(loss) after income tax
(with regulatory relief)
Less:
Deferred charges not yet written down
Unbooked all. For credit losses (specific)
on financial instruments received
Total deduction
Less: Deferred Tax Liability, if applicable
Net Deduction
47,612,994.14
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Net Income/(loss) after income tax
(without regulatory relief)
Loans Receivable, Net
Accounts Receivable:
Gross
Less: Allowance for Probable Losses
Accounts Receivable, Net
Sales Contract Receivable:
Gross
Less: Allowance for Probable Losses
Sales Contract Receivables, Net
47,612,994.14
1,125,684,835.51
1,060,748,339.58
2,763,497.02
22,347.60
2,741,149.42
3,022,782.07
3,022,782.07
7,127,685.91
448,583.76
6,679,102.15
6,570,643.27
6,570,643.27