City Savings Bank Member: PDIC

City Savings Bank Member: PDIC

City Savings Bank Member: PDIC

1 Corporate Policy4 Financial Condition and Results of Operation7 Financial Summary9 Risk Management

13 Corporate Governance35 Corporate Information41 Capital Structure and Capital Adequacy45 Risk Exposures and Assessments51 Risk Related Disclosures56 Merger : PR Savings Bank58 Audited Financial Statements

CORPORATE POLICY Annual Report 2018: Reinventing Our Future

City Savings Bank Member: PDIC 1

Vision

In the service of God and His kingdom, City

Savings Bank aspires to be the preferred

institution in the areas where it operates within

the domestic banking industry.

We envision:

Highly motivated knowledge workers

Excellent and responsive service to ensure long-

term customer relationships

Active leadership in community development

Mission

We are an engaged team of professionals

committed to keeping things simple in creating

superior customer satisfaction.

Philosophy

The company’s reputation, built through decades of hard work, is what City Savings Bank considers as its

most valued asset. Through this comparative advantage, the Bank is deemed worthy of our stakeholders’

confidence and trust. This therefore makes building reputation and brand something that should be

continuously protected, enhanced, and immediately restored in times of crisis.

The Bank believes it is everyone’s duty to build reputation equity. Our goal is to cultivate brand

ambassadors and advocates from among our key internal and external stakeholders, to ensure that the

CitySavings brand is consistently delivered and experienced as promised.



Brand Promise: Straightforward Banking

It describes the CitySavings way. It articulates our commitment in everything we do—how we behave and

communicate and how we deliver our products and services.

Tagline: Simple is Good

An articulation of CitySavings’ brand promise to its clients.

Brand Attributes

These are the building blocks of our brand.

▪ Simple – Our processes are easy to understand. We have

simple products to match basic financial needs.

▪ Helpful – We look for ways to create a more convenient

banking experience.

▪ Reliable – Our terms are fair and clear, and we manage our

company prudently.

Service Principles

It guides us on how we extend service to our

internal and external customers.

▪ We take the initiative to offer help

▪ We go the extra mile

▪ We always look for and share ways to improve

▪ We make it easy and clear for our customers



Business Model

City Savings Bank (CitySavings) is a subsidiary of Union Bank of the Philippines (UBP), the banking arm of

Aboitiz Equity Ventures, Inc. (AEV). Listed in the Philippine Stock Exchange, UBP acquired CitySavings on

March 25, 2013 and presently holds 99.77% ownership.

The business of the Bank is primarily focused on providing salary loans to the teaching and non-teaching

personnel of the Department of Education (DepEd) wherein payment is made through the DepEd

Automatic Payroll Deduction System (APDS). This system ensures the on-time collection of loan payments,

thereby providing the Bank’s clients an opportunity to borrow at interest rates lower than informal

lenders’ standard rates.

The Bank also caters to the financial needs of pensioners, OFW beneficiaries, and seafarers. With the

acquisition of PR Savings Bank in June 2018, the Bank has begun its venture into motorcycle loans which

not only allows the Bank to enter a growing sector but also gives room for diversification. The Bank’s

efficient branch network and latest digital solutions will serve as leverages in fulfilling its promise of

quality service and offering the right products to both potential and existing clients.

FINANCIAL CONDITION & RESULTS OF OPERATION Annual Report 2018: Reinventing Our Future


President’s Message

Dear Fellow Stakeholders:

The Year 2018 saw the Bank wade deep into uncharted territory. With an adverse business environment,

the challenges of integrating our new acquisition, and a confluence of other detrimental factors that has

led to the lower financial results, the Bank’s ability to adapt to unfamiliar circumstances was tested this

year.

Loan portfolio decreased by P 8.3 billion (14.2%) versus 2017, to Php 49.9 billion.

Deposits decreased by P11.7 billion (24.20%) to Php 36.6 billion.

NPL ratio decreased to 4.25% as of year-end. This is adequately covered by a loan loss provision that

represents 60.2% NPL cover.

No. of borrowers decreased by 6.7% to 310,222 from 332,497 in 2017.

Total resources decreased by P1.8 billion or 2.4% versus 2017 to P75.6 billion by year-end 2018.

Net income declined to Php 1.8 billion.

These outcomes only motivate us to commit ourselves more fully to serving

Filipinos of moderate means, and we have taken steps last year to deliver more

effectively in the future.

We augmented our branch network by opening nine (9) branch-lites, five (5) in Northern Luzon and four

(4) in Mindanao, bringing our total footprint to 115 locations across the country. Our ATM network of

EMV-certified machines has increased to 42 units nationwide. We now have 1,169 dedicated CitySavings

bankers guided by our values of Service, Integrity, Responsibility, Innovation and Teamwork.

With these in place, we have utmost confidence in our ability to stand firm in the face of what may come

in 2019.

The past year was tumultuous for our core business of teacher’s loans. In June, our access to DepEd’s

Automatic Payroll Deduction System (APDS) was finally restored after eight long months. This came at the

expense of a slower turnaround time for our clients resulting from new processes instituted by DepEd as



part of the new APDS system. Furthermore, our market share was diminished by the introduction of the

GSIS Financial Assistance Loan (GFAL), featuring a lower rate and longer tenor than our standard teacher’s

loan offerings. To combat the adverse effects of the GFAL, we took full advantage of the new Terms and

Conditions of APDS Accreditation and increased in December our interest rates on 2-year and 3-year

teacher’s loans.

All told, our loan release figures have recovered to a comparable level from before

the termination of the APDS program.

The turbulence in the teacher’s market has justified our pursuit of opportunities to provide financial

services in other mass market segments. This is headlined by our foray into motorcycle financing via our

acquisition of Isabela-based Philippine Resources Savings Banking Corporation, or PR Savings Bank, in

June of last year.

PR Savings is the 15th largest thrift bank in the country, with assets of Php 11.75 billion. A majority of its

Php 7.93 billion loan portfolio is composed of teacher’s loans and motorcycle loans, and its branch

network comprises 102 locations nationwide. The acquisition not only provided an avenue for us to

diversify our product suite, but it also bolstered our position at the head of the teacher’s loans market and

expanded our reach across Luzon.

Supplementing our venture into motorcycle financing, our Sales and Business Development teams have

strived to grow our presence among state- and privately-run colleges and universities, as well as among

SSS and GSIS pensioners. In July, we launched a new loan offering for seafarers and employees of

manning agencies. We are optimistic that our efforts to diversify into new markets will continue to pay off

in 2019.

With regard to our efforts in financial inclusion, we cannot understate the

importance of being able to reach out to our countrymen who would otherwise

not have access to our brick-and-mortar locations, and we have made significant

steps in this endeavor.

In April, we laid the groundwork for our last-mile network when FAIRBank launched its digital agency

banking initiative, equipping agents with “Banking in a Box” kits that enable them to originate loans, open

deposit accounts and carry out cash transactions. This allows them to serve as our customers’ touch

points even in the most remote barangays in the archipelago. We further expanded our reach when we

and our affiliate Union Properties, Inc. acquired 51% of remittance agent network PeraHub, which boasts a

nationwide network of 378 company-owned outlets. This acquisition further opens up possibilities in

leveraging on PeraHub’s countrywide presence for agency banking. We continue to develop our

microfinance capabilities through FAIRBank and Progressive Bank in Visayas.

In addition to our initiatives in financial inclusion, we have continued to reach out to our communities via

our Corporate Social Responsibility (CSR) initiatives. Our CSR mirrors our group’s inspired purpose to drive

change for a better world. In 2018, the Bank’s CSR program spent Php 29 million on initiatives mostly

allocated to public education sector such as Project Synergy, which provided leadership training to

selected DepEd personnel and Brigada Eskwela in various school beneficiaries where our volunteer-

employees actively participated in the annual school repair and maintenance effort. Last year we also

decided to cast our nets wider and revamp our Project Teach advocacy, focusing on teacher training

solutions and a comprehensive school-based training package to ensure that what is learned by the

teacher in training is applied in the classroom. We strongly believe that this is an important area of focus

as we view better education as the catalyst to alleviating poverty and improving the quality of life of

Filipinos.



In 2018, we were recognized as the outstanding thrift bank in the Gawad CFI group level category. This is

in recognition of CitySavings’ partnership with Landbank in promoting countryside development and in

providing credit to marginalized and underserved sectors of society. We also won our first international

award as "Best CSR Bank - Philippines 2018 by the Global Banking and Finance Review in recognition of

our commitment and leadership in improving the lives of educators, students and families through various

CSR initiatives.

Teamwork is one of our core values and we acknowledge how significant it is to be able to capitalize on

synergies within our group. Nonetheless, we are mandated to exercise prudence in dealing with the

Bank’s related parties. Last year, we entered a number of related party transactions with Aboitiz &

Company, Aboitiz Equity Ventures and Aboitiz Power Corporation totaling Php 8.52 billion. We assure you

that these transactions are above board and were entered at arm’s length.

2018 presented us a competitive landscape to which we were unaccustomed, and

we anticipate the coming months will continue to pose complex challenges that

will test our resilience and adaptability. Keeping in mind what we have learned

from the experience of the past year and cognizant of the capabilities we have

developed, we look forward to what 2019 may have in store for us.

Allow me to conclude by expressing my most sincere appreciation to our shareholders and to all

CitySavings bankers for your continued support as we march toward becoming the leading mass market

bank in the Philippines.

LORENZO T. OCAMPO

President and CEO

FINANCIAL SUMMARY Annual Report 2018: Reinventing Our Future


5.23 B

296 M

2.71 B 2.82 B

835 M

1.87 B

7.39 B

196 M

2.78 B

4.81 B

1.14 B

3.37 B

T O T A L N E T

I N T E R E S T

I N C O M E

T O T A L

N O N - I N T E R E S T

I N C O M E

T O T A L

N O N - I N T E R E S T

E X P E N S E S

P R E - P R O V I S IO N

P R O F I T

A L L O W A N C E F O R

C R E D I T L O S S E S

N E T I N C O M E

PROFITABILITY2018 2017

6.31 B

50.96 B

75.44 B

36.63 B

14.60 B7.64 B

58.40 B

76.96 B

48.32 B

13.07 B

L I Q U I D

A S S E T S

L O A N S A N D

R E C E I V A B L E S

T O T A L

A S S E T S

D E P O S I T S T O T A L

E Q U I T Y

BALANCE SHEET DATA2018 2017

FINANCIAL SUMMARY Annual Report 2018: Reinventing Our Future


Selected Ratios

Workforce

* As part of the merger incentive provided to the Bank, CitySavings was granted an exemption from

Bangko Sentral ng Pilipinas for falling below the regulatory limit of 10%.

Return on Average Assets

2.42% vs. 4.57% in 2017

Return on Average Equity

13.33% vs. 28.65% in 2017

503

666

470

644

Officers Staff

2018 2017

Capital Adequacy Ratio

8.90%* vs. 18.38% in 2017

Tier 1/CET 1 Capital Ratio

8.34% vs. 17.66% in 2017

Non-performing Loan Ratio

4.25% vs. 4.39% in 2017

RISK MANAGEMENT Annual Report 2018: Reinventing Our Future


Risk Philosophy

CitySavings remains in its commitment to protect

its reputation, core investments, team members,

clients and communities, and long-term

stakeholder value through adopting an Enterprise

Risk Management (ERM) framework that is agile,

scalable, defensible, and competitively resourceful.

Risk Management in the business of banking is a

must for a healthy balance between risks and

returns. Through implementing risk management

policies that would actively address risks inherent

in the banking industry, the Bank will be able to

achieve its growth objectives.

Risk Policy

For opportunities to work on everyone’s

advantage and reduce adverse impact of key risks,

the Bank’s Board of Directors and Management

ensure that policies and procedures in place are

adequate. These are written comprehensively,

where the risk appetite, tolerances and key

indicators, management approach and framework

to be used in identifying, assessing, treating, and

monitoring material risks and related exposures

are clearly stated.

Systems being developed and implemented for

risk control and management are continually

tested to ensure these are appropriate, effective,

and aligned with risk management policies set by

the Bank. The Management ensures quality

assurance of these systems through rigorous and

forward-looking stress testing done at least

annually to point out events or movements in

industry conditions that could possibly impact the

Bank.

Risk Appetite

The Board of Directors sets the level of risk that is

to be accepted in order to achieve the Bank’s

objectives and fully implement its strategies.

CitySavings’ risk appetite is set based on a number

of factors, the top priority being its alignment with

the core strategies, and is a mixture of top-down

requirements (regulatory requirements) and

bottom-up aggregates (risk concentrations and

limits).

The Bank has come up with a Risk Appetite

Framework, which includes the Board-approved

Risk Appetite Statements which establishes the

philosophy and high-level boundaries for risk-

taking activities concerning the business, and Risk

Policies and Tolerances, which serve as guide in

day-to-day banking activities as this specifically

mentions limits for particular risks.

Risk Strategy

The Bank has established risk management

strategies which are intended to improve risk-

reward balance, weighing threats and

opportunities, avoiding and transferring

unacceptable risks, and reducing impact of

retained risks within the Bank’s risk appetite while

increasing shareholder value.

The risk management framework of CitySavings is

built upon three (3) pillars, namely:

• Governance: Policies and structures that guide

and support the RM process across the Bank.

• Process and Integration: The methodology, tools

and processes for assessing, treating,

monitoring and reporting risks including the

Integration with strategy and key internal and

external processes.

• Capability Building: Development of an RM

culture through Capability Building programs to

raise awareness and enhance the Bank’s

understanding and appreciation of risk

management.

Risk Exposures

In financing the Bank’s operations, CitySavings

binds itself into contracts in financial instruments

(loans and receivables) and financial liabilities

(deposit and bills payable), which subject the Bank

to certain risks, namely: credit risk, operational and

technology risks, and liquidity risks.



Risk Management Structure

Risk governance structure is deeply rooted in CitySavings’ organizational structure, and is made up of four

components:

1) the Branch Operations and the Operations Committee

2) the independent Risk Management team together with the corporate staff functions

(Compliance, Information Technology, Accounting and Finance, and Human Resources),

3) Internal Audit; and

4) the Board Committees.

An independent team for Risk Management was set up by Bank to:

• lead the risk management process,

• develop and monitor the risk management strategy and programs; and

• spearhead the development of a risk culture through measurement and capability building.

The said team aids the respective Board Committees, the Senior Management and its committees, while

Business Unit Heads implement the directives of the Board. Support units comprise other units with

corporate staff functions such as Accounting and Finance.

The Risk Governance responsibilities and reporting functions of the Board and its Committees are as

follows:

a) The Board of Directors is responsible for the overall risk strategy of the Bank with the aid of the Risk

Management Committee. The Board is in charge of establishing the strategic direction and risk-

taking capacity of the Bank and is also responsible for approving risk management strategies,

objectives and policies. The Board reports to the shareholders.

b) The Executive Committee reports directly to the Board of Directors. It is primarily responsible for

providing management sound guidance, and policies and strategic guidelines on key capital

expenditures. It is also responsible for periodically evaluating and monitoring the implementation of

strategies that the Board has approved.

c) The Risk Management Committee reports directly to the Board of Directors and is primarily

responsible for the development and oversight of risk management program as embodied in the

RMC Charter.

d) The Audit Committee reports directly to the Board of Directors and provides oversight of the Bank's

financial reporting and control as well as internal and external audit functions. It also monitors and

evaluates adequacy and effectiveness of the Bank’s internal control system.

e) The Corporate Governance Committee reports directly to the Board of Directors. It makes

recommendations on the study and evaluation of the structure, charter, policies and practices of the

Board and its committees and addresses issues of Corporate Governance.

f) The IT Steering Committee reports directly to the Board of Directors. It supervises the IT and

Information Security functions including the review and endorsement of the IT Strategic Plan, IT

policies, procedures and standards, Risk Assessment and Performance Measure activities.

g) The Related Party Transactions Committee reports directly to the Board of Directors the status and

aggregate exposures to each related party as well as the total amount of exposures to all related

parties. It ensures that transactions with related parties, including write-off of exposures, are subject

to periodic independent review or audit process.



h) The Compensation and Remuneration Committee provides oversight over the remuneration

packages to ensure that compensation is consistent with the Bank’s corporate culture, strategy and

control environment and ensures that succession plans for critical positions are in place.

The responsibilities of the different Management Committees are as follows:

a) The Operations Committee is responsible for implementing risk policies and procedures keeping in

view the strategic direction and risk appetite specified by the Board. It reports directly to the EVP and

Chief Operations Officer.

b) The Assets and Liabilities Committee reports to the President. It oversees the attainment of the

Bank's strategic objectives within the balance sheet and within the risk constraints facing the

business, specifically in terms of interest rate and liquidity.

c) The Credit Committee formulates and/or revises credit policies, practices and/or procedures for

compliance by the business units.

d) The Anti-Money Laundering (AML) Committee exercises management oversight on the Bank’s

Compliance with the Anti-Money Laundering Act and other related laws or regulations. It also

ensures that a performance review of existing outsourcing and service level agreements pertaining to

KYC activities is being conducted and makes recommendations whether or not to continue with the

arrangement.

e) The Process Steering Committee deliberates, decides and provides strategic direction for projects

initiated by any units of the Bank. It also ensures to resolve potential conflicts, issues and resource

management of the proposed project.

f) The Vendor Accreditation Committee (VAC) oversees the accreditation and evaluation of vendors

and service providers of the Bank in accordance with applicable rules and regulations, including

policies on related party transactions.

g) The Bid Committee evaluates proposals on the Bank’s procurement needs costing more than the set

limit and sets criteria for awarding the procurement contract.

Risk Management Process

The Bank’s risk management process comprises four parts: (1) establishing the context, (2) risk

assessment/measurement, (3) risk treatment, (4) risk monitoring and review. Consultation and

communication between the organization’s functions are essential to ensure the effectiveness and

efficiency of the process.

AML Governance

The Money Laundering and Terrorist Financing Prevention Program (MLPP) has been established by the

Bank to secure it from being made into a channel for money laundering, terrorist financing, and other

criminal activities. Through this program, CitySavings promotes awareness on the legal obligations under

the Anti-Money Laundering Act (AMLA), Terrorist Financing Act, and related rules and regulations.

The primary basis of the MLPP is the principles of confinement to high ethical standards and effective

Board and Senior Management oversight. With this, the Bank thrives towards an ethical culture within the



company founded on the Code of Ethics and Business Conduct’s description on how team members are

expected to display proper conduct and behavior. The Bank’s full compliance with the applicable rules and

regulations issued by AMLC and the BSP is ensured by the Board of Directors, therefore keeping MLPP

management as one of the key programs of the Compliance Department.

The Compliance Department ensures that the MLPP is being implemented by the Bank through the

appointment of lead implementer of the program, the AML Officer. Together with the team, monitoring is

closely done on daily covered transactions. Management oversight on the Bank’s AMLA compliance is also

done by the AML Committee.

The MLPP covers all transactions of the Bank that may be exposed to money laundering and terrorist

financing, and effectively reduces the Bank’s vulnerability by providing rules and regulations concerning

such.

Risks on money laundering and terrorist financing may arise from the development of new products and

business practices, and new technologies that may be used for both new and pre-existing products. To

manage these potential dangers, risk assessment is done to identify appropriate measures to mitigate the

said risk.

The key to ensure the effectiveness of MLPP is to continuously monitor and evaluate the performance of

its processes: from the program mechanisms used to ensure compliance of all parties to the individual

performances of branches and employees in terms of their obligations under the program.

For this, audit professionals are tasked to conduct assurance testing on the effectiveness and adequacy of

the MLPP. Therefore, the Bank ensures that it provides sufficient plantilla and proper training of the

Internal Audit Department.

The Bank considers the employees know-how on money laundering and terrorist financing prevention is

essential in implementing the MLPP effectively. Thus, the MLPP is incorporated in the universal personnel

training program.

Review and revisions on the MLPP manual are done at least every two (2) years to include recent updates

in the AML policies and procedures, latest trends in money laundering and terrorist financing typologies

and latest issuances of the BSP.

CORPORATE GOVERNANCE Annual Report 2018: Reinventing Our Future


Governance Practices

The responsibility of setting the over-all tone for the Bank’s corporate governance structure and practices

is with the Board of Directors. It must ensure that the conduct of affairs of the Bank maintains its highest

integrity, transparency and accountability.

For the year 2018, the Bank was awarded by the Land Bank of the Philippines as outstanding thrift bank in

the Gawad CFI group level category. This is also a testament of CitySavings’ commitment to providing

excellent customer service as it continues to maintain its strength and viability as a financial institution.

This goes to show that as it moves forward, CitySavings remains consistent in maintaining investor

confidence, assuring corporate growth, and promoting sufficient resource use, while safeguarding the

Bank with best practices in the industry.

Selection Process

The Bank duly regards the integrity, diversification of technical expertise and experience of each nominee

in determining the composition of the Board of Directors. This is to refrain from resorting to conformity

and ensure proper decision making. Nominees go through vetting and selection process. Once the list of

candidates is finalized, an election will be done.

A nomination policy has been established by the Bank to ensure that all of the directors are fit and proper

for the position. This enumerates the qualifications and disqualifications of a Director.

The appointment of Senior Management members is also subject to rules set by the BSP. They must also

uphold the vision, general operating philosophy, and core values of CitySavings.

Board’s Over-all Responsibility

Bank Directorship is regarded as a position of trust. Certain responsibilities are held by a Director, which

are primarily focused on the Bank’s stockholders and other stakeholders: customers, employees, suppliers,

financiers, government, and the community wherein it operates. They have the right to be concerned and

expect that the Bank is prudently and soundly operated from top to bottom.

The Board of Directors sets the direction through the establishment of strategic objectives that live up to

the Bank’s vision and mission. It is also entrusted with creating programs that would aid the Bank in

reaching these objectives, and the mechanisms to monitor the Bank’s performance progress. The Board

also approves and oversees the implementation of objectives, risk strategy, corporate governance, and

corporate values. The Senior Management’s performance is monitored as they manage the day-to-day

operations of the Bank, and this is done by the Board of Directors as well.



Board of Directors and Chairman of the Board

The Board consists of the Executive, Non-Executive, and Independent Directors.

Executive Directors are members of the board and are also part of Senior Management. They efficiently

communicate the Board’s directives and recommendations to the Bank’s operations side. Non-Executive

Directors, on the other hand, are directors that are not directly involved in the day-to-day operational

activities of the Bank. They hold independence from perspective of the Senior Management. Similarly,

Independent Directors are also not involved in the daily activities of the Bank; they are the selected

experts in their respective fields, therefore providing the company with independent judgment that is

essential to the Bank’s business.

The Chairman of the Board takes on the responsibility of providing leadership to the Board. He ensures

the Board is functioning effectively by maintaining a relationship of trust with the members, as well as

keeping quality communication between the Board and Management. He also makes certain that

informed decisions are made by the Board by promoting critical discussions. He also oversees the setting

of agenda in coordination with the Corporate Secretary, and ensures meetings are in-line with the Bank’s

by-laws.

The Chairman of the Board and its Directors, as the Bank’s leaders, are trusted to uphold utmost honesty

and integrity at all times.

The Board of Directors is composed of nine (9) Directors with at least three (3) Independent Directors,

each holding 1 share. The composition of the Board is as follows:

Members of the

Board of Directors

From March 22, 2018 to March 2019

Directorship No. of

Years

No. Of

Shares

Percentage

of Shares

Edwin R. Bautista Chairman of the Board 6 1 0.0004%

Erramon I. Aboitiz Vice Chairman of the Board 1 1 0.0004%

Eugene S. Acevedo

Resigned: October 1, 2018 Executive Director 6

1

0.0004%

Jose Levi S. Villanueva

Appointed: October 3. 2018

Resigned: December 31, 2018

Executive Director 3 mos.

Lorenzo T. Ocampo

Appointed: January 1, 2019 Executive Director -

Justo A. Ortiz Non-Executive Director 1 1 0.0004%

Nina D. Aguas Non-Executive Director 1 1 0.0004%

Arthur L. Amansec (†)

Deceased: January 7, 2019 Non-Executive Director 9 mos.

1 0.0004% Ricardo L. Moldez

Appointed: January 8, 2019 Non-Executive Director -

Roman S. Ronquillo Independent Director 8* 1 0.0004%

Carlos V. Valarao Independent Director 5 1 0.0004%

Teresita G. Domalanta Independent Director 5 1 0.0004%

*In accord with BSP Circular 969, the nine (9) year maximum cumulative term for independent directors shall be reckoned from 2012



Board Qualification

The Bank abides by the fit and proper rule of the Bangko Sentral ng Pilipinas (BSP), and the standards

defined by the Securities Exchange Commission (SEC). In general, any person who is part of the Board of

Directors is disqualified by the Bank once found to be engaged in any business considered a competitor

or antagonist to the Corporation or to any of its subsidiaries or affiliates.

Board of Directors from March 22, 2018 to March 2019:

Edwin R. Bautista (59, Filipino) serves as the Chairman of the

Board in CitySavings and the President and CEO of UnionBank. In

2006, he served as President of International Exchange Bank.

From 1997 to 2001, he was Senior Vice-President of UnionBank.

His work experience includes Vice-President and Group Head of

Transaction Banking at Citibank, Philippines from 1991 to 1997;

Marketing and Sales Director of the Philippines and Guam at

American Express International from 1990 to 1991 and Senior

Brand Manager at Procter and Gamble Mfg. from 1983 to 1987.

Mr. Bautista graduated from De La Salle University in 1982 with a

Bachelor of Science degree in Mechanical Engineering and

Masters in Business Administration (1984). He attended the

Harvard Advanced Management Program at Harvard University in

2011.

Erramon M. Aboitiz (62, Filipino) is the Vice Chairman of the

Board of City Savings Bank. He currently serves various positions

within the Aboitiz Group of Companies, namely: Director, Union

Bank of the Philippines, Pilmico Foods Corporation, and Pilmico

Animal Nutrition Corp; CEO, Aboitiz Power Corporation and

AboitizLand, Inc.; President and CEO, Aboitiz and Company, Inc.

and Aboitiz Equity Ventures; and Chairman, San Fernando Light

and Power Co., Subic Enerzone Corp, SN Aboitiz Power (SNAP

Group), Aboitiz Foundation, Inc., Aboitiz Renewables, Inc.

(formerly PHC), Davao Light and Power Co, Inc., and Cotabato

Light and Power Co., Mr. Aboitiz graduated from Gonzaga

University Spokane, Washington in 1977, with a Bachelor of

Science Degree majoring in Accounting and Finance.

Eugene S. Acevedo (55, Filipino) was the President and CEO of

CitySavings and Senior Executive Vice-President, Head of Retail

Banking and Corporate Banking Centers of UnionBank until

October 1, 2018. He was previously President, Vice Chairman and

CEO of Philippine National Bank from May 2010 to July 2011.

Before that, he held several positions in Citibank for 23 years and

his last posts with the firm were as Managing Director and

Country Treasurer for Hong Kong, and Global Markets Head for

Hongkong-Taiwan Cluster. From 1984 to 1985, he was a Physics

lecturer at the University of the Philippines. Mr. Acevedo

graduated from the University of San Carlos in 1984 with Bachelor

of Science degree in Physics. He also took up Masters in Business

Management (1987) at Asian Institute of Management and

attended the Harvard Advanced Management Program at

Harvard University in 2014.



Jose Levi S. Villanueva (62, Filipino) was the Acting President

and CEO of CitySavings from October to December 2018. He

held various positions in UnionBank from 1999 to 2014. He was

also the General Manager for Visayas Commercial Operations of

Piltel from 1998 to 1999; Segment Manager for Visayas and

Mindanao in IBM from 1997 to 1998; Vice President of Citibank

N.A. from 1989 to 1997; and Visayas Region Head for Monark

Equipment Corp. from 1987 to 1989. Mr. Villanueva graduated

from the University of San Carlos in 1977 with Bachelor of

Science degree in Electrical Engineering.

Lorenzo T. Ocampo (54, Filipino) is the President and CEO of

CitySavings. He was the President and CEO of PETPLANS, Inc.,

Banana Fintech Services Corp., and Waybetter, Inc.; Director of

Family Alliance, Margarita Land, Inc., Eastoffices, Inc.; and Trustee

of Dualtech Training Center. He was formerly the President and

CEO (2003 to 2018) and Treasurer (1998 to 2002) of PETNET, Inc.;

Chairman of A.V. Ocampo ATR King Eng Insurance Broker from

2005 to 2017; Management Trainee-Product Manager of

Philippine Refining Co. (Unilever) from 1987 to 1991; and Analyst

of Anscor Capital and Investment Corporation from 1986 to 1987.

Mr. Ocampo is a graduate of Georgetown University in 1986 with

degree in Bachelor of Science in Business Administration, Major in

Finance and proceeded to University of Asia and Pacific to take up

Strategic Business Economics program in 1995.

Justo A. Ortiz (61, Filipino) was the Chairman of the Board

prior to the appointment of Edwin R. Bautista (March-October

2018). He currently serves as a Director of CitySavings and

Chairman of UnionBank, Union Properties, and Philippine

Payments Management, Inc; Director of Aboitiz Equity Ventures;

Board of Trustee of Insular Life Assurance Company, Ltd.;

Member of Philippine Trade Foundation, Inc., World Presidents

Organization/Young Presidents Organization, and Children’s

Hour Philippines. Prior to joining AEV, he held positions under

CitiBank N.A., namely: Relationship Manager (1979-1985);

Treasury Marketing Unit Head (1985-1988); and Managing

Partner-Investment Banking (1988-1993). Mr. Ortiz graduated

from the Ateneo de Manila University in 1977 with a degree in

AB Economics.



Nina Perpetua D. Aguas (66, Filipino) serves as a Director of

City Savings Bank. She is also currently a Director of UnionBank

and holds directorship in various companies. In the past, she was

a Director of Mapfre Insular Insurance Corporation (2016);

President and CEO of PBCOm (2012 - 2015); Managing Director,

Private Bank Asia Pacific (2009-2012), and Managing Director,

Retail Bank Asia Pacific (2009) of ANZ Banking Ltd. Singapore;

Board Member of Philippine Stock Exchange Market Integrity

Board (2008; 1978-1980); held various positions in Citigroup, Inc.

from 1982 to 2008; Regional Credit Officer of Bank of Nova

Scotia, Asia Pacific (1980-1981); Senior Advisor of Quattro Risk

Management (1978-1980); Consultant of SAC Private Capital, LLC

(1978-1980); Chief Accountant of Gervel, Inc. (1976-1977); and

Auditor of Sycip Gorres Velayo & Co. (1973-1976). Ms. Aguas is a

graduate of University of Sto. Tomas in 1973 with a Bachelor of

Science degree in Commerce, major in Accounting.

Arthur L. Amansec † (72, Filipino) served as Director of

CitySavings and Belle Corporation, prior to his passing on

January 7, 2019. Past positions held include: Board Director of

Philam Life Tower Condominium Corp. and Philam Life Tower

Management Corp. (2017-2018); Founder and First National

President of the Christian Labor Organization; Executive Labor

Arbiter (1986-1990) and Labor Arbiter of National Labor

Relations Commission (NLRC) (1986-2011); Staff Attorney of

National Mines & Allied Worker’s Union (1976-1981); and

Assistant Attorney of Siguion Reyna, Montecillo & Ongsiako Law

Office (1973-1976). Mr. Amansec was a graduate of University of

the Philippines in 1967 with a degree in Bachelor of Arts, and

pursued Master of Laws in University of New South Wales,

Sydney, Australia from 1999 to 2000.

Ricardo L. Moldez (71, Filipino) serves as Commissioner of

Social Security System and appointed as Director of CitySavings

following Mr. Amansec’s passing. Past positions held include:

Board Member of Human Rights Victims Claim (2017-2018); Board

Private Practitioner at RLMoldez Law Office (1976-2017); Special

Counsel of the Department of Justice (1974-1976); Municipal

Attorney of Muntinlupa City (1974); Private Practitioner (1973) and

Court Interpreter of the Municipal Court of Muntinlupa (1969-

1972). Mr. Moldez graduated from the Lyceum of the Philippines-

Manila in 1967, with a degree in Bachelor of Arts, and a degree in

Bachelor of Laws in 1971.



Roman S. Ronquillo (87, Filipino) serves as an Independent

Director of City Savings Bank. He was President and Director of

Ronesgo Development Corporation and Paradise Village

Association. Previously, he was an Independent Director of

Visayan Electric Company (2005 to 2007); Director of Keppel Cebu

Shipyard (1988 to 2001); President and Director of Cebu Shipyard

(1975 to 1988) and Surigao Wood Inc. (1973 to 1992); and a Cost

Operations Manager/Reseller of ESSO Philippines (PETRON) (1955

to 1973). He graduated with Bachelor of Science degree in

Commerce from the University of the East in 1954 and completed

the Senior Executive Development Program from the University of

the Philippines in 1966.

Carlos V. Valarao (53, Filipino) is an Independent Director of

City Savings Bank. He is currently Managing Director of Alchemy

Education Solutions Inc. He served as senior policy adviser of

three education secretaries and had developed numerous

programs and projects for the Department of Education. Among

others, he had previously served as managing director and

featured columnist of Educator Magazine for Teacher, managing

director of Metropolitan Art Gallery, executive director of

Children’s Museum and Library, Inc. (CMLI), and administrative

officer and teacher of values formation and civics at Saint Francis

Academy. Mr. Valarao graduated from the University of the

Philippines, Diliman with a Bachelor’s degree in Philosophy.

Teresita G. Domalanta (74, Filipino) serves as an Independent

Director of City Savings bank. She is a Career Executive Service

Officer III (CESO III) and a former Regional Director of the

Department of Education, National Capital Region (NCR) and

Region 02. She also served as Board of Director and Treasurer,

Association of DepEd Regional Directors (2006-2010); Board of

Director, Association of Regional Executives, Metro Manila (2007-

2010); Board of Trustee Philippine Public School Teachers

Association (2013-May 2014); and Consultant of GSIS, (2006-

2009). She also served as Consultant to the Union Bank Learning

System CSR Initiative (2006-2010). Ms. Domalanta graduated

with Bachelor of Science degree in Elementary Education and

Master of Arts in Education (Academic Requirements) from

Philippine Normal University. She completed her Master of Arts

in Education and Doctor of Education in UP Consortium and

Northeastern University. She also took up the Program for

Decentralized Educational Development (PRODED) at the

Development Academy of the Philippines as Gold Medalist

(1983-1988), and finished training course for Senior Managers at

the Asian Institute of Management (AIM) in 2003.



Board-level Committees

The Board Executive Committee guides the management in (a) establishing strategies to accomplish

goals set by the Board; and (b) taking on strategic projects and significant initiatives. It is also appointed

with certain approval authority and is entitled to conduct monitoring and evaluation of the

implementations of the strategies set by the Board.

Member Attendance

*5 meetings held

Arthur L. Amansec (†)

Deceased: January 7, 2019 100%

Edwin R. Bautista 100%

Erramon I. Aboitiz 67%

Eugene S. Acevedo

Resigned: October 1, 2018 100%


Appointed: October 3, 2018


100%

Justo A. Ortiz 100%

Nina D. Aguas 33%

The Board Corporate Governance Committee is tasked to assist the Board in decisions regarding

corporate governance, nomination and compensation matters. It is responsible for ensuring the Board’s

effectiveness and due observance of corporate governance principles and guidelines.

Member Attendance

*5 meetings held

Carlos V. Valarao 100%

Eugene S. Acevedo


Roman S. Ronquillo 100%

Teresita G. Domalanta 100%

The Board Audit Committee assists the board in (a) ensuring integrity of the Bank’s financial reporting

processes; (b) ensuring the adequacy and effectiveness of the Bank’s internal control system, governance

and risk management processes; (c) reviewing the annual independent audit of the Bank’s financial

statement and the external auditor’s qualifications and independence; (d) ensuring compliance with

applicable laws and regulations; and (e) providing an avenue of communication among the Bank’s

independent auditors, management and the internal auditing department and the Board.

Member Attendance

*5 meetings held






The Board Risk Management Committee assists the Board in determining the Bank’s risk appetite and

oversees the Bank’s risk profile and performance against the defined risk appetite. The committee is

responsible for (a) the development and oversight of the Bank’s risk management program; and (b) the

oversight of the discretionary authority limits delegated by the Board to Management.

Member Attendance

*5 meetings held

Arthur L. Amansec

Deceased: January 7, 2019 25%


Eugene S. Acevedo




The Board IT Committee assists in decisions related to IT Risk Management. It is responsible for

providing the Board with information regarding IT performance, status of major projects and other

significant issues. It reviews and endorses IT strategic plan to the Board and approves IT policies,

procedures and standards.

Member Attendance

*5 meetings held


Eugene S. Acevedo



Appointed: October 3, 2018


20%

The Board Related Party Transaction (RPT) Committee assists in ensuring that those defined as related

party transactions are transacted at arm’s length. Where applicable, it is responsible for reviewing and

approving RPTs or endorsing them to the Board for approval or confirmation. It also evaluates existing

relations between and among businesses and counterparties on an ongoing basis.

Member Attendance

*5 meetings held




The Board Compensation Remuneration Committee is tasked to make recommendations to the Board

regarding the remuneration of directors, officers and all other employees within the organization. It

provides guidance to strengthen the provisions on promotion or career advancement directives and

oversees the succession plans for critical positions.

Member Attendance

*No meeting held

Edwin R. Bautista -

Justo A. Ortiz -

Roman S. Ronquillo -



Changes in the Board of Directors

Election of directors was held during the Annual Stockholders’ Meeting on March 22, 2018, resulting to

the appointment of Directors Erramon I. Aboitiz, Justo A. Ortiz, Nina Perpetua D. Aguas, and Arthur L.

Amansec, and the three independent Directors. Director Ortiz was appointed as Chairman of the Board.

He was succeeded by Director Edwin R. Bautista in October 29, 2018. Director Ortiz remained as a Non-

Executive Director of City Savings Bank.

Director Eugene S. Acevedo resigned effective October 1, 2018. Replacing him as Director is President and

CEO Jose Levi S. Villanueva. Director Villanueva was succeeded by Director Lorenzo T. Ocampo on

December 31, 2018.

Director Arthur L. Amansec’s term as a director ceased as a result of his passing on January 7, 2019.

Director Ricardo L. Moldez was elected to fill up the vacancy.

The Senior Advisers to the Board

Catalino S. Abacan (65, Filipino) is the Senior Adviser of the

Board. He was the President and CEO of CitySavings until March

22, 2018 and has held key positions in UnionBank from 1997 to

2014. He was appointed as President and CEO of the Philippine

Resources Savings Banking (PRSB) Corporation in June 2018 when

CitySavings took over the management of PRSB. From 1994 to

1997, he was VP for Operations, Manila Offshore Banking Unit of

Lippo Bank of Indonesia and was instrumental in setting up a

branch in Cambodia. He held several positions in Philippine

Banking Corporation from 1975 to 1993 and the last position he

held was Group Head for Operations in Transaction Banking,

International/ FCDU and Treasury. Mr. Abacan graduated from

University of the East in 1975 with Bachelor of Science degree in

Business Administration Major in Accounting and passed the CPA

Board in the same year. He completed units leading to Masters of

Business Administration at the Ateneo Graduate School in 1978.

Teodoro M. Panganiban (66, Filipino) serves as Senior

Adviser to the Board of CitySavings. He is a former Director of

the Bank. He is currently the Director of Philippine Clearing

House Corporation and Member of the Operations Committee of

the Bankers Association of the Philippines. He was formerly

Executive Vice-President and Chief Risk Officer of UnionBank and

Senior Vice-President from 1997 to 2001. Prior to joining the

Bank, he was Vice President and Senior Country Operations

Officer at Citibank N.A., Philippines. In 1971 to 1997, he held

several positions at Citibank N.A. in Manila, Cebu, Hong Kong,

Belgium and New Zealand. Mr. Panganiban graduated from the

University of the Philippines, Diliman in 1971 with Bachelor of

Science degree in Business Administration and Accountancy.



The Senior Management

Eugene S. Acevedo (55, Filipino) was the President and CEO of

CitySavings up to October 1, 2018. Prior to joining the bank, he served as

President, Vice Chairman and CEO of Philippine National Bank, and was

with Citibank for 23 years.

Jose Levi S. Villanueva (62, Filipino) is the President and CEO of

CitySavings from October to December 2018. He also held several

key positions in UnionBank from 1999 to 2014.

Lorenzo T. Ocampo (54, Filipino) is the President and CEO of

CitySavings. Prior to joining the Bank, he was the President and CEO of

PETNET, Inc. from 2003 to 2018.

Emmanuel S. Santiago (63, Filipino) is the EVP-Microfinance Head.

He served as the President and Director of Banco Dipolog, Inc. and

Chairman and Director of Rural Bank of Nagcarlan, Inc. from 2014 to

2015 and EVP of Philippine Bank of Communications from 2012 to

2015.

Cesar G. Ilagan (64, Filipino) is the SVP - Chief Financial Officer of

CitySavings until December 31, 2018. He held several key positions in

UnionBank as follows: SVP/Corporate Planning Group Head from 2016 to

2017; SVP/Financial Controller from 2004 to 2016; and FVP/Operations

Controller from 2001 to 2003.



Linda Flor P.D. Hortezano (56, Filipino) is the FVP-Branch

Operations Head of CitySavings. She held key positions in

CitySavings as follows: VP/Head of Financial Controllership from

2007 to 2012 and Senior Manager-Chief Accountant from 2003 to

2005.

Antonio Jose S. Dominguez (51, Filipino) is the FVP-Sales Group Head

of CitySavings until December 31, 2018. He was the SVP and Head of

Mobile Sales in HSBC from 1994 to 2016 and Senior Investment Officer

in All Asia Securities Management Corporation from 1990 to 1994.

Anna Bella G. Gatbonton (55, Filipino) is the FVP-Chief Audit

Executive of CitySavings. She is a Certified Public Accountant. She

had been seconded as Internal Audit Head in CitySavings from March

2014 to June 2015 and was VP-Senior Region Operations Head in

UnionBank from 2009 to 2014.

Joselynn B. Torres (60, Filipino) is the FVP-Business Development Head

of CitySavings until November 30, 2018. She served as Board Director of

Rural Bank of Nagcarlan, Inc. from 2014 to 2015 and Business

Development Head of Philippine Bank of Communications from 2013 to

2015. She was the Compliance and Control Head of the Consumer

Group in CitiBank Philippines from 2008 to 2013.

Maila M. Quijano (46, Filipino) is the FVP-Human Resource and

Quality Head of CitySavings. She was the HRQ Manager of

CitySavings from 2005 to 2010.



Antonio Martin C. Reyes (56, Filipino) is the FVP-Chief Technology and

Process Officer of CitySavings. Past positions in UnionBank are:

Infrastructure Planning and Services Head from 2016 to 2017;

Technology Infrastructure Administration Head from 2004 to 2016; and

Mainframe Technical Support Head from 1994 to 2004. He also worked

as Mainframe Systems Administrator in Metropolitan Bank and Trust

Company from 1989 to 1994.

Jose Gerardo E. Guillen (58, Filipino) is the VP-Chief Risk Officer of

CitySavings. He was the Credit Review Head of UnionBank from

1998 to 2016.

George R. Allera (50, Filipino) is the VP-Central Processing Services

Head of CitySavings. He also served as the AVP- Cash and ATM

Operations in CitySavings from 2009 to 2014 and AVP-Cash and

Collections Operations from 2007 to 2008.

Silvia M. Inoc (43, Filipino) is the VP-Business Process Management

Head of CitySavings. She held key positions in CitySavings as

follows: Loans and Collections Group Head from 2009 to 2014; AVP-

Loan Operations from 2007 to 2008 and AVP-Operations from 2006

to 2007.

Carlos B. Kahn (49, Filipino) is the VP-Treasurer of CitySavings. Prior to

joining the Bank, he was Branch Manager in Sterling Bank of Asia from

2008 to 2011. He has also held key positions in Export and Industry

Bank, namely: Liquidity Head (2007-2008), FCDU Liquidity Head (2006),

Peso Liquidity Head (2005-2006), Correspondent Banking Head (2005),

and Treasury Marketing Officer (2003-2004).



Ma. Antonette F. Benavides (43, Filipino) is the VP-Attraction and

Development Head of CitySavings. She was the HRD Head of Bank

of Tokyo UFJ from 2012 to 2013 and HRD Head of Fort Bonifacio

Development Corporation from 2011 to 2012.

Marisa G. Guingcangco (53, Filipino) is the VP-Branch Audit Head of

CitySavings. She is a Certified Public Accountant. She was a Regional

Service Operations Officer (RSOO) in UnionBank from 2007 to 2014

and was a Branch Accountant back in 1988.

Ruelito R. Aquino (49, Filipino) is the VP-Sales Head of City

Savings Bank. He was appointed as VP-Sales Head of PR Savings

Bank in June 2018 when CitySavings took over. Prior to joining the

Bank, he was the Head for Trade Sales and Marketing of Abbot

Laboratories from 2017 to 2018 and Head for National Sales of ARC

Refreshments Corporation from 2015 to 2016 and Country Manager

of Republic Biscuit Corporation from 2013 to 2015.

John Arden J. Orata (26, Filipino) is the VP-Enterprise and Solutions

Architect of CitySavings. He was the Country Leader for Digital and

Cloud Solutions of PCCW Solutions Ltd. (2017-2018), Head of Systems

Infrastructure Engineering (2016-2017) and Cloud Architect (2015-

2016) of Globe Telecom, and Chief Information Officer and Co-Founder

of WiFi Nation (2013-2014)

Ma. Filomena C. Gibe (54, Filipino) is the AVP-Security and Safety

Head of CitySavings. She was the Information Security Operations

Head of Eastwest Bank from 2014 to 2015 and Information Security

Head of UnionBank in 2012.



Ronaldo J. Tiamzon (53, Filipino) is the AVP-Technology Management

Head of CitySavings. He held an AVP position in Sterling Bank of Asia

from 2008 to 2011 and was a Senior Consultant for Riyadh Bank from

2003 to 2008.

Barry S. Baya (52, Filipino) is the AVP-Financial Controller of

CitySavings. He is a Certified Public Accountant. He was the Chief

Compliance Officer of CitySavings from 2014 to 2015 and was the

CPS Director of UnionBank from 2013 to 2014.

Candy P. Seguerra (39, Filipino) is the AVP-Chief Compliance Officer of

CitySavings. She obtained her Bachelor of Laws in University of San

Carlos College of Law in 2009 and was formerly the Securities Counsel

of the Securities and Exchange Commission from 2010 to 2014.

Julius Rommel A. Tiples (50, Filipino) is the AVP-Regional Business

Head - Region 6 of CitySavings. He is concurrently the Deputy Sales

and Marketing Head-Visayas and Mindanao and has held key

positions in CitySavings in the past, including: Area Manager-

Western Visayas (2013-2014), and Branch Head (2004-2013).

Marson S. Senica (35, Filipino) is the AVP-Regional Business Head -

North Luzon of CitySavings. He is concurrently the Deputy Sales and

Marketing Head-Luzon. He was the Microfinance Product Head of PR

Savings Bank from 2000 to 2012.



Ryan S. Bascug (35, Filipino) is the AVP-Regional Business Head-

Region 7 of CitySavings. Past positions in the Bank include: Area

Manager from 2014 to 2015, Branch Head from 2013 to 2014, and

Set-Up Officer from 2011 to 2012.

Adrian G. Ruiz (39, Filipino) is the AVP-Regional Business Head-Region

8 of CitySavings. Past positions in the Bank include: Area Manager from

2013 to 2014, Luzon and Collections Group Head for Luzon from 2011-

2013, and Branch Head from 2006 to 2010.

Buenaventura S. Sanguyo Jr. (49, Filipino) is the Corporate

Secretary of CitySavings. He is concurrently the Deputy Head- Legal

Division and Assistant Corporate Secretary of UnionBank. He served

as the General Counsel and Alternate Compliance Officer of the

Philippine Stock Exchange, Inc. from 2011 to 2015.



Performance Assessment

Regular performance assessment of the Board and

Senior Management is done periodically to ensure

their duties and responsibilities are carried out.

Performance targets supporting CitySavings’

strategic objectives are set by the Senior Officers.

Their direct supervisors are tasked to evaluate and

assess performances based on the attainment of

their respective goals.

Similarly, Independent Units (Risk, Compliance,

Audit) are also subject to assessment by the Board

based on their Key Result Areas and targets for

the year.

For the Board and its members, the Corporate

Governance Committee is responsible for their

periodic performance evaluation.

Orientation & Education

CitySavings strongly believes that continuous

learning aids the Directors with the best

governance it can have. Hence, series of training

are provided for the Directors to be equipped with

knowledge on recent evolving trends in the areas

of governance, risk management, information

technology, anti-money laundering, finance, and

other fields applicable to the business.

A Training Needs Assessment (TNA) is conducted

by the Compliance Team to confer and prioritize

the training needs appropriate for the Directors.

Both internal and external resources are looked

into build a program that suits the current needs

of the Board. Post-evaluation is done by the

Directors to determine the program’s over-all

effectiveness.

Meanwhile, the Executive Leadership Boot Camp

(ELB) is a program established by the HRQ to

further build up the Senior Officers’ level of

engagement as part of the Bank’s retention

program and as required by regulatory policy on

succession and business continuity. Participants

are identified through periodic evaluation to see

the need of a Senior Officer to attend the said

program.

Retirement & Succession Plan

The Bank's succession plan is designed to identify

and prepare candidates for critical positions that

become vacant due to retirement, resignation,

death or new business opportunities. For Senior

Management, critical positions are reviewed by the

Compensation Remuneration Committee,

approved by the Corporate Governance Board and

ratified by the Board of Directors. Meanwhile,

Functional Group Heads assume the responsibility

of identifying critical positions in their respective

units.

The Bank is committed to the development of its

employees as a means to attain organizational

readiness at all times. The Bank provides training

in line with the needed competencies and the

Individual Development Plan (IDP) of the

employees. Group Heads promote and ensure the

implementation of these plans, while the Human

Resource and Quality (HRQ) Team assists in the

process.

In case of emergency successions, the Bank may

(a) require the Group Head to take on the

responsibilities, (b) temporarily redistribute these

responsibilities to other employees or (c) enter

into a Secondment or Inter-Locking Agreement

with parent bank, UnionBank. The Board of

Directors shall replace members of senior

management, when necessary, and have in place

an appropriate plan of succession.

On the other hand, any vacancy in the Board of

Directors, other than removal or term expiration,

may be filled subject to a majority vote in quorum.

The director or directors chosen shall serve for the

unexpired term.

An independent director may serve for a maximum

cumulative term of nine (9) years, calculated

starting 2012. After which, they are prohibited

from serving as independent director. In general,

the retirement age declared by the Bank is sixty

(60) years old; however, the Board may approve

the extension of a senior officer when their

services are still needed by the Bank.



Remuneration Policy

The Remuneration and Compensation Policy

applies to officers and all other employees of the

Bank, and is reviewed and approved by the

Compensation Remuneration Committee (CRC).

This is established based on market conditions to

ensure equitable job and position evaluation,

competitive pay and performance-based pay

increase.

The Bank institutes a matrix indicating salary

ranges based on factors such as years of expertise,

performance, job function and responsibilities and

specific skill sets related to the position, among

others. This will serve as basis of the remuneration

of the employees, and is subject for review as

needed, and must also be validated through

comparison of market data within similar

industries. Salary reviews are conducted annually,

together with the Annual Performance Appraisal

where pay adjustments are based on.

Review and approval of compensation and

remuneration are done by (1) the President/CEO

upon the recommendation of the Group Head for

rank-and-file employees up to Senior Manager; (2)

the CRC for Executive Vice President to President;

and (3) the Chairman of the Board upon the

recommendation of the President for Assistant

Vice President to Executive Vice President. The

position level, pay range, and specific components

of the total compensation package for the

President/CEO are decided upon and approved by

the CRC as well.

The remuneration for the Board of Directors is

recommended by the Corporate Governance

Committee and is reviewed annually. Full

discussion and concurrence by the Board must

come with changes in Board compensation.

Executive directors within the Board do not

participate in discussions pertaining to his/her

own compensation.

Dividend Policy

Dividends to be declared shall be taken from the

unrestricted retained earnings of the Bank and

shall be governed by the requirements set by the

BSP. A majority of the Board of Directors must

approve of the cash dividends, and no further

approval from the Bank’s shareholders shall be

required. On the other hand, approval from both

the Board and shareholders representing more, if

not equal to, two-thirds of the Bank’s outstanding

capital stock must be required for stock dividends,

provided that the residual capital would be

enough to cover the Bank’s risks, both present and

potential.

No dividends were declared for 2018.

Related Party Transactions

As a policy, related parties are defined as the

Bank’s subsidiaries, affiliates and any party that

exerts direct/indirect control over the Bank and

vice versa. The Bank, through its Related Party

Transactions (RPT) Committee, reviews all business

transactions and interactions with its related

parties and ascertains that identified RPTs are

conducted at arm’s length and are transacted in

the ordinary course of business and in accordance

with the established policies and regulations. The

Bank exercises appropriate oversight to avoid

situations and circumstances that would be

disadvantageous to its stakeholders.

The initiating unit is responsible for determining

whether a transaction is classified as an RPT.

Relevant authorities review and approve identified

RPTs to avoid probable conflict of interest and to

assure that the conditions covering the transaction

puts the Bank’s interest first. Thresholds are

established to ensure effective monitoring and

reporting of breaches on limits, if any. The Bank is

further governed by policies and guidelines on

Conflicts of Interest and Whistle-Blowing.



Material Related Party Transactions

Related Party Type Nature of Transaction Terms &

Conditions

Aggregate

Amount *in millions of Php

Related Entities Affiliate Bills Payable 30 days, 6.45% 5,670

Related Entities Affiliate Bills Payable 31 days, 6.45% 2,550

Related Entities Affiliate Bills Payable 32 days, 6.45% 300

Conglomerate Map

List of Major Stockholders

NAME NATIONALITY % OF

OWNERSHIP

VOTING

STATUS

Union Bank of the Philippines Filipino 99.77% VOTING

Various Filipino 0.23% VOTING



Self-Assessment Function

Self-assessment is especially necessary to ensure

compliance with policies and guidelines duly

established by the top management. This is done

through Compliance Testing, as headed by the

Compliance Team and Audit Engagements by the

Internal Audit Team.

The Compliance Team consist of the Chief

Compliance Officer, Regulatory Compliance

Officer, Anti-Money Laundering (AML)

Compliance Officer, and Compliance Specialists.

The Team oversees compliance with regulations

and procedures relevant to the Bank’s operations,

and directly coordinates with regulators such as

the BSP, and ensures that the Bank carries out its

fiduciary duties and responsibilities. With its

adequate authority, independence, and resources,

the Compliance Team ensures the effective

implementation of the Compliance Program.

Similarly, independent from the management,

CitySavings’ Internal Audit Team was established

as objective assurance and consulting arm of the

Bank. The Team spearheads the examination,

evaluation, and improvement of the over-all

effectiveness of risk management, internal control,

and governance processes of the Bank. This

responsibility comes with the authority to

communicate with any employee directly to

examine any activity or entity, and authority to

access any record, file or data relevant to the

Team’s assignment. Audit results, findings,

opinions, appraisals and other information are

reported by the Team to the appropriate level of

management.

Both teams report directly and functionally to the

Board of Directors, through the Corporate

Governance Committee for Compliance Team, and

Board Audit Committee for Internal Audit Team.

Administratively, both teams report to the

President and CEO.

The Board, together with Senior Management,

reviews these self-assessment functions, policies,

and internal control measures. It also ensures that

internal control weaknesses are addressed

promptly by following-up on recommendations

made by management.

Consumer Protection

The Bank holds over-all client experience as an

important aspect of the business. Having customer

service excellence embedded in the Bank’s vision,

CitySavings has established a Consumer Assistance

Management Framework which encases policies

and procedures that deal with addressing client

inquiries, requests, and complaints. This also

includes the roles and responsibilities of the units

and persons involved.

The responsibility of approving consumer

assistance policies and overseeing the

implementation, as well as the mechanisms to

ensure compliance, is with the Board. On the other

hand, implementation of the said policies and

procedures is under the responsibility of Senior

Management.

Through the Consumer Assistance Management

System (CAMS), CitySavings ensures that clients

are given the means to provide feedback and

express their concerns, may it be through the

Bank’s website, social media pages, e-mail or

through branch visit. A Consumer Protection

Assistance Helpdesk or hotline is also maintained

for customer service concerns, which are

addressed accordingly. To put forward optimal

recommendations and avoid recurrence of such

complaint, the nature of each concerns is analyzed

accordingly. Significant client concerns are also

immediately endorsed to the appropriate unit of

the Bank.

CitySavings also ensures to pinpoint and resolve

systemic problems and weaknesses in the Bank’s

internal control process, in accordance with the

Bank’s Consumer Protection Risk Management

System (CPRMS). The Risk Management

Committee (RMC) makes certain that intrinsic

operational risks in material products, activities,

processes, and systems are identified, addressed,

and subjected to appropriate risk mitigation

procedures.

The effectiveness of the CPRMS is also periodically

reviewed by the RMC, and is evaluated to ascertain

if the audit mechanisms in place provides

sufficient oversight. The RMC deliberates strategic

decisions involving consumer protection issues

and ensures that consumer protection-related risk

registers are up-to-date.



Corporate Social Responsibility

City Savings Bank is dedicated in running its business holistically. Part of it is making sure that the Bank

gives back to the community and be active in reaching out to public schools through various CSR

projects. Helping to create a better learning environment is part of the Bank’s commitment to contribute

to the improvement of our country’s public school system.

Our CSR Philosophy

• Alignment with education-related initiatives

• Distributed approach

• Increase awareness where we are new

• Employee engagement in CSR activities

repaired and repainted

schools nationwide

The Bank has actively supported the Department of Education (DepEd)’s Brigada Eskwela projects since 2010 with the goal of making a significant contribution to the schools’ teaching and learning environment.

BRIGADA ESKWELA

277

training runs

#WeatherWiser DepEd attendees

divisions

This initiative aims to move towards a #WeatherWiser nation. Together with Weather Philippines Foundation, Inc. (WeatherPhilippines), this is the Bank’s way to help improve nationwide disaster preparedness in public schools.

WEATHER 101 AND

TROPICAL CYCLONE 101 25

1,122

56



laptops & projectors

ALS teacher beneficiaries

divisions

Through this project, the Bank extends its commitment and passion for going the extra mile by supporting DepEd ALS mobile teachers’ mission of bringing literacy to marginalized sectors in order to empower communities with no access to formal education.

1,676

56

ALTERNATIVE LEARNING SYSTEM (ALS) ADVOCACY

83

In partnership with the Ramon Aboitiz Foundation, Inc. - Kool Adventure Camp (RAFI - KAC), this leadership training program uses an adventure-based learning approach to transform DepEd partners and build a dynamic and sustainable education community.

DepEd teaching and

non-teaching beneficiaries

program runs

5

PROJECT SYNERGY

155

With this program, the goal of the Bank is to build up its good governance advocacy to encourage fiscal prudence and protect consumer’s interests as well as enhance the knowledge of public school teachers regarding practical wealth management.

training sessions nationwide

DepEd

attendees

295

17,878

PROJECT ₱er@parasyon



beneficiary

schools

emergency & learning first aid kits

kits

teaching

relief bags kits

In times of calamities or disasters, the Bank provides immediate assistance to support basic needs, improve health and boost morale of the affected communities. Such assistance may range from providing relief goods, hygiene kits, potable water, as well as teaching and learning kits to school beneficiaries. It also may involve initial repairs to damaged infrastructure. The Bank is driven to co-create safe, empowered and sustainable communities.

9

71 300

740

156

DISASTER-RELATED PROJECTS

NCR & Region IV-A

beneficiary schools

DepEd

beneficiary

teachers

In 2018, CitySavings decided to cast its nets wider and revamp the Project Teach advocacy by focusing on teacher training solution and comprehensive school-based training package to ensure that what is learned in training is applied in the classroom. In partnership with Alchemy Education Solutions, Inc., Project Teach provides public school teachers with year round in-service training aligned with DepEd’s Philippine Professional Standards for Teachers (PPST), the K-12 Curriculum, and Learning Action Cells methodology.

1,591

19

PROJECT TEACH: Educator Empowerment Program

program runs

DepEd attendees

In partnership with Ramon Aboitiz Foundation, Inc. – Eduardo J. Aboitiz Cancer Center (RAFI – EJACC), this initiative brings light on breast cancer awareness, its early detection and prevention. This is CitySaving’s way of looking after the welfare of its clients.

950

PROJECT PINK

14

CORPORATE INFORMATION Annual Report 2018: Reinventing Our Future


Organizational Structure



Products & Services

Asset Products: ▪ DepEd Teachers Salary Loan

The forerunner of City Savings Bank’s loan products is its Department of Education Salary Loan. It

constitutes the biggest share of the Bank’s loan portfolio and is extended only to the teachers and

personnel employed in public elementary and secondary schools. The terms and conditions that

applies to this product is governed by a Memorandum of Agreement with DepEd-RPSU or

Autonomous Schools.

▪ LGU Salary Loan

This is a Salary Loan for regular employees and officers of a Local Government covered by a

Memorandum of Agreement with a Local Government Unit (LGU), where the terms and conditions for

the salary deduction repayment scheme are specified.

▪ Pensionado Loan

This is a loan extended to GSIS and SSS pensioners with pension deposit accounts either with Union

Bank of the Philippines or City Savings Bank. Repayment shall be via automatic debit of the

amortization from their pension deposit accounts.

▪ Loan Against Deposit

The Loan against deposit product is a secured loan exclusively available for CitySavings depositors.

This product enables the Bank to accommodate borrowers with minimum requirements needed to

apply for loan.

▪ Tawid-Tulong Loan

Tawid-Tulong Loan is a loan offered to pre-screened or pre-qualified Overseas Filipino Workers’

(OFW) Beneficiaries who regularly receive international remittances. For the time being, this shall be

offered solely to those receiving such remittances through PETNET’s PeraRemit service.

▪ Seaman Loan

Seaman Loan is a salary loan offered to seafarers registered with partner manning agencies. It is an

unsecured loan product, repaid monthly through their salary allotment.

▪ Agency Employee Loan

Agency Employee Loan is a product offering designed for in-house permanent employees of

accredited agencies partnered with CitySavings for OFW and Seaman Loans. Terms and conditions

that apply to this product, some of which may vary from agency to agency, are covered by the MOA

between CitySavings and each accredited agency.

Liability Products:

▪ Savings Account

An interest-bearing deposit, which can be withdrawn anytime upon presentation of passbook together

with a duly accomplished withdrawal slip or through ATM card.

▪ Checking Account

A deposit account held in the Bank for the purpose of securely and quickly providing frequent access

to funds on demand anywhere and anytime. Checking accounts are intended neither for the purpose

of earning interest nor for the purpose of savings, but for convenience of businesses or individuals,

hence most banks tend not to give interest earnings. However, clients can deposit or withdraw any

amount of money for any number of times, subject to the availability of funds. Upon application,

depositor must have maintained a City Savings Bank savings account for at least 6 months.



▪ Time Deposit

An interest bearing deposit, which is held for a fixed term, whereby the depositor can only withdraw

the funds after giving notice.

Corporate Website

Today’s digital age ushered in trends and technologies that are changing the way companies do business.

Organizations need to adapt, thrive and more importantly deliver their respective brand promises to

remain relevant to the customers they serve.

In a recent study, the average user now spends around six (6) hours each day using the internet. In Asia

Pacific alone, there are about two billion users with a 48% penetration rate. While social media takes a big

chunk of the pie in terms of internet usage, websites are still important for organizations to maintain. As

an owned digital asset, a website is regarded as a credible source of information.

The City Savings Bank website (citysavings.com.ph) features the following:

Corporate profile of CitySavings, corporate governance, and branch/ATM locations

Deposits and loans product features, requirements, and frequently asked questions (FAQs)

Job opportunities within the Bank, which are linked to Kalibrr, a recruitment platform

Corporate updates and security advisories

CSR initiatives and stories

Customer feedback form for inquiries and concerns

The website is secured with a Secure Sockets Layer (SSL) certificate, optimized to maintain search engine

page rankings, and linked to CitySavings’ social media assets.

Corporate Website SEO: Optimizing for Success

OCTOBER 2017

MAY 2017

MARCH 2017

CitySavings launched

refreshed and updated

corporate website

SEO Project was completed;

Product and branded keywords

page rankings significantly

improved; Website traffic

picked up

SEO project continued to

maintain improvements and

take advantage of emerging

digital trends

Search Engine Optimization (SEO)

project commenced; Started site

audit and enhancements

2018



Bank’s Brick and Mortar

METRO MANILA

Anonas Branch

G/F Belmont Place Bldg.,

No. 5 Anonas St., Project 3,

Quezon City

(02) 277 0690

0925 321 3921

Caloocan Branch

Dianne Building

746 Rizal Avenue Ext.,

Grace Park, Caloocan City

(02) 709 9302

0925 551 7421

España Branch

1880 Espana Gallery Bldg., San

Diego and Quintos St. cor.

España Boulevard, Sampaloc,

Manila

(02) 354 8046

0917 855 2799

Las Piñas Branch

Alabang-Zapote Road

cor. Crispina Ave.

Pamplona, Las Piñas City

(02) 738 0991 / 894 0516

0942 083 1886

Marikina Branch

#3 G. Fernando Ave.,

San Roque, Marikina City

(02) 632 0980

0925 777 0691

Navotas Branch

M. Naval St., Navotas City

(02) 374 4165

0925 577 5616

North Caloocan Branch

R-V Sabangan Bldg.,

500 Susano Road, Hillcrest

Village, Camarin, Caloocan City

(02) 294 8690

0915 605 4780

Ortigas Branch

Basement 1 00184

Robinsons Galleria

EDSA cor. Ortigas Ave.,

Quezon City

(02) 584 9091

0977 277 4613

Taguig Branch

48 Gen Alfredo Santos Ave.,

Lower Bicutan, Taguig City

(02) 887 4103

0925 577 5613

Tondo Branch

Ushio Plaza V Honorio Lopez

Boulevard, Tondo, Manila

(02) 714 6603

0917 834 4621

Valenzuela Branch 389 Mc Arthur Highway

Malinta, Valenzuela City (02) 990 2683

0925 551 9426

NORTHERN LUZON

Alaminos Branch

Quezon Ave., Poblacion

Alaminos City, Pangasinan

(075) 632 8208

0925 321 3927

Aparri Branch Lite Balisi St., Centro 7

Aparri, Cagayan (078) 888 0785

0917 257 1187

Baguio Branch G/F Insular Life Bldg.,

Abanao Ext., cor. Legarda St.,

Baguio City, Benguet (074) 244 0792 / 244 0796

0917 862 0840

Bangued Branch Lite Torrijos St. Zone 5,

Bangued, Abra (074) 269 0482

Bontoc Branch Lite Lower Caluttit,

Bontoc, Mt. Province (074) 269 0481

0917 822 6323

Cabarroguis Branch Lite Purok 1, Gundaway,

Cabarroguis, Quirino (078) 400 1701

0917 824 9488

Dagupan Branch

Rudel Bldg.,

Perez Blvd. cor. Guilig St.,

Dagupan City, Pangasinan

(075) 656 0301

0998 965 2216

La Union Branch

Kenny Plaza,

Quezon Ave., Catbangen

San Fernando City, La Union

(072) 607 0038

0998 965 2199

Lagawe Branch Lite 7 Rizal Ave. Poblacion East,

Lagawe, Ifugao (074) 269 0480

0917 809 9457

Laoag Branch

Trece Grande Bldg., Brgy. 19

#187 J.P. Rizal cor. Samonte

Sts., Laoag City, Ilocos Norte

(077) 607 0247 / 670 0052

0915 795 1690

Luna Branch Lite 2nd floor Awali Square Bldg.

San Isidro Sur, Luna, Apayao (074) 269 0479

0917 802 4096

Santiago Branch G/F Insular Life Bldg.

Maharlika Highway,

Santiago City, Isabela (078) 305 0756

0917 589 0936

Solano Branch G/F Ongtao Bldg.

J.P. Rizal Ave. cor. Burgos St.,

Solano, Nueva Vizcaya (078) 803 1734

0925 321 3923

Tabuk Branch Lite Bulanao Norte

Tabuk City, Kalinga 0917 257 2339

0927 481 2039

Tuguegarao Branch Unit 11-13 Red Square Bldg.,

1 Rizal St. cor. College Ave.

Tuguegarao City, Cagayan (078 )844 0871 / 844 9973

0917 316 6905

Urdaneta Branch

Honaco Commercial Bldg.

National Highway

Urdaneta City, Pangasinan

(075) 656 0017

0998 965 2218

Vigan Branch

Rivero St., Brgy. 8

Vigan City, Ilocos Sur

(077) 674 0712

0917 501 3796

CENTRAL LUZON

Angeles Branch Diamond Spring Hotel

192 McArthur Hwy,

Balibago,

Angeles, Pampanga (045) 458 2057

0925 551 9427

Balanga Branch Lite G/F Dilig Bldg. 2, Don Manuel

Banzon Ave., DFS

Balanga City, Bataan 0977 658 9710

Baler Branch Lite NE Mall, Brgy. Suklayin

Baler, Aurora 0930 917 6564

0977 701 2238

Baliuag Branch Unit 5 & 6 R-Bldg.

DRT Hi-way, Pinagbarilan,

Baliwag, Bulacan (044) 913 0234

0917 710 6226

Cabanatuan Branch 701 Paco Roman St.,

Dimasalang, Cabanatuan City,

Nueva Ecija (044) 463 0266

0998 965 2217

Marilao Branch G/F RL Bldg., McArthur Hwy.

Abangan Norte Marilao,

Bulacan (044) 322 0604 / 769 4442 0998 965 2217

Meycauayan Branch Lite Meycauayan College

Commercial Center, McArthur

Highway,

Brgy. Calvario.

Meycauayan City Bulacan 0928 210 2442

Olongapo Branch PNRC Bldg., Magsaysay Dr.

Olongapo City, Zambales (047) 222 0780

0917 501 2266

Pampanga Branch Suburbia Commercial Center

Brgy. Maimpis, City of San

Fernando, Pampanga (045) 300 0019

0917 815 2122

San Jose Del Monte Bulacan

Branch

Quirino Highway, Brgy.

Maharlika, San Jose del Monte,

Bulacan 0925 551 9429

San Jose, Nueva Ecija Branch Mario Salvador Bldg.

Maharlika Highway,

Brgy. Malasin, San Jose City

Nueva Ecija (044) 330 3505

0925 551 9430

Tarlac Branch Plaza de Oro Arcade

MacArthur Highway

Sto. Cristo, Tarlac City (045) 985 7958

0917 716 1201

SOUTHERN LUZON

Bacoor Branch G/F Lemon Grass Bldg. Tirona

Highway, Habay

Bacoor, Cavite (046) 423 4124

0925 551 7422



Batangas Branch Lite Stall 7 & 8, G/F, Puregold

Calicanto Road, Batangas City (043) 783 0674

0926 521 8983

Calamba Branch G/F Andenson Bldg. 1, National

Highway, Brgy. Parian, Calamba

City, Laguna (049) 502 9461

0917 632 6410

Calapan Branch Pure Gold-Calapan,

J.P. Rizal St., Brgy. Camilmil,

Calapan, Oriental Mindoro (043) 288 2177

0917 876 8243

Daet Branch G/F Central Plaza Mall

Central Plaza Complex

Brgy. Lag-on

Daet, Camarines Norte (054) 885 0145

0925 321 3924

Dasmariñas Branch

Lot 5 & 6, Block 94, Governor's

Dr., Metrogate Subd.

Dasmarinas City, Cavite

(046) 413 0571

0918 694 0990

Goa Branch Lite #102 Rizal St.

Goa, Camarines Sur 0950 545 7753

0917 924 7399

Gumaca Branch

A Bonifacio St., Brgy. Tabing

Dagat, Gumaca, Quezon (042) 317 8020

0917 873 6222

Infanta, Quezon Branch General Luna St., Poblacion 39,

Infanta, Quezon (042) 323 2950

0998 587 9315

Iriga Branch Zone 5, Highway 1,

San Miguel, Iriga City

Camarines Sur (054) 456 0622

0917 331 9628

Legazpi Branch Tower Mall 4

LandCo Business Park

Legazpi City, Albay (052) 284 0343

0917 565 0827

Lemery Branch

National Road, Brgy. Malinis

4209, Lemery, Batangas (043) 741 0096

0917 873 5995

Lipa Branch G/F 1NK Centre

General Luna St., Sabang

Lipa City, Batangas (043) 981 0046 / 702 3626

0998 965 2230

Lucena Branch G/F ML Tagaro St., Brgy. 5

Lucena City, Quezon (042) 797 0763

0998 965 2213

Masbate Branch Upper G/F, Gaisano Capital

Mall, National Highway

Masbate City (056) 578 1230

0977 807 3102

Naga Branch Door #44-45 CBD II Terminal

Triangulo, Naga City

Camarines Sur (054) 472 7515

0998 985 6724

Palawan Branch Unit 1A G/F Unionbank Bldg.

Rizal Ave. cor Dacanay St.

Brgy. Colero, Puerto Princesa

City, Palawan (048) 434 9965

0925 551 7420

San Jose, Occidental Mindoro

Branch Lebrilla Ang Bldg.

Burgos cor. Rizal St.

Brgy. Poblacion 1,

San Jose Occidental Mindoro 0925 321 3922

0917 807 1659

Sorsogon Branch AD Reyes Bldg.

1461 Magsaysay St.,

Brgy. Salog, Sorsogon City (056) 211 0099

0925 577 5756

Sta. Cruz Branch P. Guevarra St., Poblacion

Brgy. IV, Sta. Cruz, Laguna (049) 501 3740

0925 577 5753

Sta. Rosa Branch Lite Unit 15, 2nd Level, Unitop Mall

Balibago Commercial Complex

Sta. Rosa, Laguna (049) 530 8660

0949 608 8635

Taytay Branch National Road, Ilog Pugad

Brgy. San Juan, Taytay, Rizal (02) 585 9145

0998 584 9115

Virac Branch Lite Unit 21 G/F Virac Town Center,

Rizal Ave.

Brgy. Gogon Sirangan

Virac, Catanduanes (052) 811 4053

0909 087 6362

WESTERN VISAYAS

Antique Branch C.R. Bldg., T.A. Fornier St.

San Jose, Antique (036) 540 8188 / 540 8885

0908 851 2418

Bacolod Branch G/F 722 Metropolis Tower

Lacson St., Mandalagan

Bacolod City

Negros Occidental (034) 709 0250 / 441 1572

0928 559 3700

Cadiz Branch Lite

Laura Hotel, Villena St.

Cadiz, Negros, Occidental

(034) 720-7232

09271369150

Estancia Branch Lite National Hwy., Brgy. Tabuan

Estancia, Iloilo 0977 770 0314

Guimaras Branch Lite E. Cantua Bldg., San Miguel

Jordan, Guimaras (033) 581 2994

0956 420 2598

Iloilo Branch G/F 143 Esperanza Bldg.

General Luna St., Iloilo City (033) 509 8277 / 335 1857

09255519425

Kabankalan Branch L&M Bldg., Guanzon cor.

Azcona St., Kabankalan City (034) 746 8881

0932 846 0389

Kalibo Branch G/F Cruzadel Bldg, Archbishop

Reyes St. Poblacion, Kalibo,

Aklan (036) 268 1382 / 500 7001

0998 961 0690

Leganes Branch Pestaño Bldg., Gustilo St.

Poblacion, Leganes, Iloilo (033) 524 8200

0998 965 2201

Roxas Branch Bonifacio (McKinley) St.

Roxas City, Capiz (036) 621 3948 / 522 4242

0917 634 6475

San Carlos Branch Doors 2-4 Heritage Bldg. 1

F.C. Ledesma Ave.

San Carlos City (034) 729 8878

0999 884 8639

CENTRAL VISAYAS

Balamban Branch

E.S. Binghay St., Poblacion

Balamban, Cebu

(032) 465 0060 / 333 2515

0917 303 3934

Bogo Branch

P. Rodriguez St., Bogo, Cebu

(032) 434 8561

0917 319 7345

Carcar Branch

Esperanza Village, Awayan

Carcar City

(032) 406 2246

0932 873 8192

Danao Branch Lite

Unit 5, GA Complex II

Juan Luna St., Danao City

(032) 231 2615

0977 758 0927

Dumaguete Branch

G/F EROS Bldg.

Dr. V. Locsin St. cor. Real St.

Dumaguete City

(035) 421 0690 / 421 0691

0917 571 5453

Head Office Branch

City Savings Financial Plaza,

Osmeña Blvd. cor.

P. Burgos St., Cebu City

(032) 411 8500

0917 325 0782

Mandaue Branch

Doors 3 & 4, Citybridge Plaza

A.C. Cortez cor. P. Burgos St.

Mandaue, Cebu

(032) 344 1394

0917 630 5611

Tagbilaran Branch

C. P. Garcia North Ave.

Tagbilaran City

(038) 501 9822

0920 902 9764

Tanjay Branch

Sweet Lady Bldg., Legaspi St.,

Brgy. Poblacion 8, Tanjay City

Negros Oriental

(035) 415 9288 / 527 0926

0905 553 2200

Ubay Branch

G/F Rogelio Inn Bldg.

Colonel Marciano Garces St.,

Poblacion, Ubay, Bohol

(038) 518 8832

0998 985 6725

EASTERN VISAYAS

Borongan Branch

JRC Bldg., Songco

Borongan, Eastern Samar

(055) 560 9087

0917 328 1082

Calbayog Branch

Salcor Bldg., Rosales Blvd.

Calbayog City, Samar

(055) 533 9007

0975 420 4243

Catarman Branch

Camara Bldg.

CORPORATE INFORMATION



1305 Bonifacio

cor. Garcia Sts.

Brgy. Mabolo

Catarman, Northern Samar

(055) 251 8081 / 590 9799

0917 208 5233

Catbalogan Branch Lite

P3 Brgy. Mercedes

Catbalogan, Samar

(055) 544 0242

0906 779 2744

Naval Branch Lite

208 P. Inocentes, Naval

Biliran

(053) 561 3064

0926 181 0677

Ormoc Branch

STP Bldg, Aviles St.

Ormoc City, Leyte

(053) 561 3980

0918 951 1450

Sogod Branch

Concepcion cor. Mangkaw

St., Brgy. Zone 1 Sogod,

Southern Leyte

(053) 382 3012 / 3420 / 3421

0905 360 1870

Tacloban Branch

YPL Bldg., Door #3

Salazar St., Tacloban City

(053) 523 8080 / 325 3525

0921 378 5158

NORTHERN

MINDANAO

Butuan Branch Imadejas Triangle,

JC Aquino Ave., Imadejas Subd.

Butuan City (085) 300 0025

0916 450 8652

Cagayan de Oro Branch TS Fashion Bldg.

Corrales Ave. (between J.

Ramonal & R. Chaves Sts.,)

Cagayan de Oro City (088) 231 6059

0917 848 1790

Dipolog Branch Sergio Osmena St.

Central Brgy., Dipolog City (065) 908 2085

0925 321 3926

Iligan Branch Lite

Brgy. Mahayahay, Roxas Ave.

Iligan City (063) 224 0900

0905 420 0972

Ipil Branch Lite

CL Bldg., Poblacion, Ipil

Zamboanga Sibugay (062) 311 0109

0917 801 4828

Mangagoy Branch Lite

Saint Vincent De Paul Diocesan

College, Inc.

John Bosco St., Mangagoy,

Bislig City

(086) 313 0388

0927 824 4487

Pagadian Branch F&N Bldg., San Francisco

District, Pagadian City

Zamboanga del Sur (062) 925 2197

0925 321 3925

San Francisco Branch Lite G/F-01, Gaisano Capital San

Francisco, Brgy. 5, National

Highway, San Francisco

Agusan Del Sur (085) 343 9002

0939 908 7381

Surigao Branch G/F Parkway Mall Km 3

Brgy. Luna, National Highway,

Surigao City (086) 310 0262

0917 852 3711

Tandag Branch Lite #11 Purok Saturn, Telaje,

Capitol Road, Tandag City,

Surigao Del Sur (086) 313 1146

Valencia Branch Lite Unit 2, Velox Energy Gas

Station, Sayre Highway

Hagkol Poblacion

Valencia City,Bukidnon (088) 315 0602

0905 419 4038

Zamboanga Branch RHW Bldg. Mayor Jaldon St.

Brgy. Canelar

Zamboanga City (062) 955 8974

0916 756 0821

SOUTHERN

MINDANAO

Davao Branch Doors 1-3 PNRC Bldg.

M. Roxas Ave., Davao City

(082) 227 8412

0917 315 4150

Digos Branch

Rizal Ave., Digos City

Davao Del Sur (082) 333 0281

0917 842 7865

General Santos Branch Santiago Blvd.

General Santos City (083) 552 6498

0917 805 1869

Glan Branch Lite Hombrebueno St.

Poblacion Glan Sarangani (083) 311 0152

0917 832 9559

Isulan Branch Lite 2nd Floor, Kalawag 2

National Highway, Isulan

Sultan Kudarat (064) 460 1661

0917 826 6579

Kidapawan Branch G/F Aspilla Bldg.

Quirino Drive, Kidapawan City

North Cotabato, (064) 572 0814

0998 587 9317

Koronadal Branch Villa Amor Hotel, Door 14

General Santos Dr. cor.

Arellano St. Koronadal City, (083) 520 2059

0998 587 9316

Malita Branch Lite Lustre Bldg., Manuel Peralta St.

Malita, Davao Occidental (082) 380 0002

0917 826 6121

Mati Branch Rizal St., Mati City, Davao Oriental (087) 811 3699

0910 865 4362

Nabunturan Branch Lite Door #3 Tsukiko Bldg. LB Flores

St. Purok 13 Poblacion

Nabunturan, Compostela Valley (084) 200 1518

0917 534 2067

Tagum Branch G/F PLJ Bldg., Apokon Road

Tagum City, Davao del Norte (084) 655 6393

0917 852 2892

CAPITAL STRUCTURE AND CAPITAL ADEQUACY Annual Report 2018: Reinventing Our Future


It is the Bank’s policy to maintain a strong capital base to sustain the development of its business and to

meet regulatory capital requirements at all times. The Bank also seeks to maintain a prudent balance

between the advantages and flexibility afforded by a strong capital position and the higher returns on

equity possible with greater leverage.

When managing capital, the Bank determines the levels of risk weighted asset growth and the optimum

amount of capital required to support planned business growth. As part of its management policy, capital

generated in excess of planned requirements is returned to stockholders, normally by way of dividends.

Under current banking regulations, the Bank’s compliance with regulatory requirements and ratios is

based on the “unimpaired capital” (regulatory net worth) reported to the BSP, which is determined based

on regulatory policies, which differs from PFRS in some respects. Moreover, the risk-based capital ratio of

a bank, expressed as a percentage of qualifying capital to risk-weighted assets, should not be less than

ten percent (10.00%). Qualifying capital and risk-weighted assets are computed based on BSP regulations.

The qualifying capital of the Bank for purposes of determining the capital-to-risk assets ratio to total

equity excludes:

(a) unbooked valuation reserves and other capital adjustments as may be required by the BSP;

(b) total outstanding unsecured credit accommodations, both direct and indirect, to directors, officers,

stockholders and their related interests (DOSRI);

(c) deferred tax asset or liability; and,

(d) other regulatory deductions.

Risk assets consist of total assets after exclusion of cash on hand, due from BSP; loans covered by hold-

out on or assignment of deposits; loans or acceptances under letters of credit to the extent covered by

margin deposits; and other non-risk items as determined by the Monetary Board of the BSP.

Effective January 1, 2014, the Bank complied with BSP Circular No. 781, Basel III Implementing Guidelines

on Minimum Capital Requirements, which provides the implementing guidelines on the revised risk-based

capital adequacy framework, particularly on the minimum capital and disclosure requirements for

universal banks and commercial banks, as well as their subsidiary banks and quasibanks, in accordance

with Basel III standards.

The Circular sets out a minimum Common Equity Tier 1 (CET1) ratio of 6.00% and Tier 1 capital ratio of

7.50%. It also introduces a capital conservation buffer of 2.50% comprised of CET1 capital. The BSP’s

existing requirement for Total CAR remains unchanged at 10.00% and these ratios shall be maintained at

all times.

BSP provided a temporary relief to the Bank from compliance with the minimum CAR of 10% from June

2018 to the effectivity of the merger with PR Savings Bank, provided that the Bank shall not fall below 7%.

2018 2017

Common Stock 258,256,000 258,256,000

Additional Paid-in Capital 937,333,350 937,333,350

Retained Earnings 11,547,481,832 8,558,886,826

Prior- period adjustments -

Retained Earnings- Restated 11,547,481,832 8,558,886,826

Undivided Profits 1,866,527,738 3,365,636,077

Prior- period adjustments - -3,147,233

Undivided Profits-Restated 1,866,527,738 3,362,488,844

Other Comprehensive Income -9,660,741 -49,787,516

Total Capital 14,599,938,179 13,067,177,504



Less:

Deferred Income Tax 647,523,263 643,638,277

Restatement Adjustment - 247,799,667

Deferred Income Tax -restated 647,523,263 891,437,944

DOSRI - Unsecured 80,161,158 56,870,127

Other Intangibles - net 149,348,119 83,715,892

Unbooked valuation reserves and other capital

adjustments based on the latest examination as

approved by the Monetary Board

298,014,596

-

Other equity investments

7,999,381,478

98,387,004

Total Tier 1 Capital 5,425,509,565 11,936,766,537

Add Tier 2 Capital - General Loan Loss Provision 298,014,596 522,332,968

Total Qualifying Capital 5,723,524,161 12,459,099,505

Total Credit Risk-Weighted Assets 54,694,650,003 62,280,055,114

Add: Total Operational Risk Weighted Assets 12,976,418,529 10,902,910,883

Total Risk-Weighted Assets 67,671,068,531 73,182,965,997

Risk-based Capital Adequacy Ratio

Total CAR 8.46% 17.02%

Tier 1/ CET 1 CAR 8.02% 16.31%

Capital Conservation Buffer 2.02% 10.31%

The Bank’s regulatory capital position as at December 31, 2018 and 2017, breakdown of Credit Risk-

Weighted Assets and reconciliation of all regulatory capital elements and/or regulatory adjustments/

deductions are as follows:

BSP Report Adjustment Audited FS

2018

2018

Common Stock 258,256,000

258,256,000

Additional Paid-in Capital 937,333,350

937,333,350

Retained Earnings 11,958,234,257 (410,752,424) 11,547,481,832

Undivided Profits 1,787,739,740 78,787,997 1,866,527,738

Other Comprehensive Income (49,787,517) 40,126,775 (9,660,741)

Total Capital 14,891,775,830 (291,837,652) 14,599,938,179

Less:

Deferred Income Tax 678,905,209 (31,381,946) 647,523,263

DOSRI - Unsecured 80,161,158 - 80,161,158

Other Intangibles - net 149,348,119 - 149,348,119

Unbooked valuation reserves and other capital

adjustments based on the latest examination as

approved by the Monetary Board

261,926,924 36,087,671 298,014,596

Other equity investments 8,046,758,724 (47,377,246) 7,999,381,478

Total Tier 1 Capital 5,674,675,697 (249,166,131) 5,425,509,566

Add Tier 2 Capital - General Loan Loss Provision

261,926,924

36,087,671

298,014,596

Total Qualifying Capital 5,936,602,621 (213,078,460) 5,723,524,161

Total Credit Risk-Weighted Assets 54,585,488,951 109,161,051 54,694,650,003

Add: Total Operational Risk Weighted Assets 12,717,018,651 259,399,878 12,976,418,529

Total Risk-Weighted Assets 67,302,507,602 368,560,929 67,671,068,531

Risk-based Capital Adequacy Ratio 8.82%

8.46%

Total CAR 8.82% 0.08% 8.90%

Tier 1/ CET 1 CAR 8.43% (0.09%) 8.34%



BSP Report

Adjustment

Audited FS

(as restated)

2017

2017

Common Stock 258,256,000 - 258,256,000

Additional Paid-in Capital 937,333,350 - 937,333,350

Retained Earnings 9,277,095,922 - 8,558,886,826

Undivided Profits 3,340,928,168 21,560,676 3,362,488,844

Other Comprehensive Income

(68,764,461)

18,976,945

(49,787,516)

Total Capital

13,744,848,979

40,537,621

13,067,177,504

Less:

Deferred Income Tax 650,741,262 240,696,682 891,437,944

DOSRI - Unsecured 65,874,288 (9,004,161) 56,870,127

Other Intangibles - net

83,715,892

-

83,715,892

Other equity investments 39,266,325 59,120,679 98,387,004

Total Tier 1 Capital 12,905,251,212 (250,275,579) 11,936,766,537

Add Tier 2 Capital - General Loan Loss Provision 522,332,968 522,332,968

Total Qualifying Capital 13,427,584,180 (250,275,579) 12,459,099,505

Total Credit Risk-Weighted Assets 62,173,843,072 106,212,042 62,280,055,114

Add: Total Operational Risk Weighted Assets 10,891,077,061 11,833,822 10,902,910,883

Total Risk-Weighted Assets 73,064,920,133 118,045,864 73,182,965,997

Risk-based Capital Adequacy Ratio

Total CAR 18.38% (212.02%) 17.02%

Tier 1 CAR 17.66% (212.02%) 16.31%

Computation of Operational Risk-Weighted Assets is as follows:

2018

Nature of Item Gross Income

2015 2016 2017 Average

A Net Interest Income

A.1 Interest Income 4,743,703,999 5,617,023,218 9,135,398,470

A.2 Interest Expense 1,638,682,755 1,680,351,716 1,742,115,440

A.3 Subtotal (A.1 less A.2) 3,105,021,244 3,936,671,502 7,393,283,030

B Other Non-Interest Income

B.1 Dividend Income - - -

B.2 Fees and Commissions Income 2,757,881,131 3,349,970,073 -

B.3 Net Gain/Loss on Financial Assets and

Liabilities Held for Trading

- - -


Liabilities Designated at Fair Value through

Profit or Loss

- - -

B.5 Net Profit/Loss on Foreign Exchange - - -

B.6 Net Gain/Loss on Fair Value Adjustment in

Hedge Accounting

- - -

B.7 Other Income 13,748,127 9,965,823 195,728,716

B.8 Subtotal (Sum of B.1 to B.7) 2,771,629,258 3,359,935,896 195,728,716

C Gross Income (A.3 plus B.8 to Part V Item A) 5,876,650,502 7,296,607,398 7,589,011,746

D Capital Charge multiply by capital factor 15% 881,497,575 1,094,491,110 1,138,351,762 1,038,113,482

E Adjusted Capital Charge

1,297,641,853

F Risk-weighted Amount

12,976,418,529

2017

Nature of Item Gross Income

2014 2015 2016 Average

A Net Interest Income

A.1

Interest Income 3,259,673,839 4,743,703,999 5,617,023,218



A.2 Interest Expense 1,330,901,254 1,638,682,755 1,680,351,716

A.3 Subtotal (A.1 less A.2) 1,928,772,585 3,105,021,244 3,936,671,502

B Other Non-Interest Income

B.1 Dividend Income - - -

B.2 Fees and Commissions Income 2,332,551,600 2,757,881,131 3,349,970,073


Liabilities Held for Trading - - -


Liabilities Designated at Fair Value through

Profit or Loss

- - -

B.5 Net Profit/Loss on Foreign Exchange - - -

B.6

Net Gain/Loss on Fair Value Adjustment in

Hedge Accounting - - -

B.7 Other Income 13,148,543.73 13,748,127 9,965,823

B.8 Subtotal (Sum of B.1 to B.7) 2,345,700,144 2,771,629,258 3,359,935,896

C Gross Income (A.3 plus B.8 to Part V Item A) 4,271,399,514 5,876,650,503 7,296,607,398

D Capital Charge multiply by capital factor 15% 640,709,927 881,497,575 1,094,491,110 872,232,871

E Adjusted Capital Charge

1,090,291,088

F Risk-weighted Amount

10,902,910,883

Computation of Credit Risk-Weighted Assets, on the other hand, is as follows:

2018 2017

Risk

Weight

Principal

Amount

Risk Weighted

Amount

Principal

Amount

Risk Weighted

Amount

Checks and Other Cash Items 20% 35,999,456 7,199,891 8,836,787 1,767,357

Real Estate Loans (Current) 50% 285,876 142,938 4,120,026 2,060,013

Microfinance/SME 100% 55,015,710 55,015,710 39,704,167 39,704,167

Real Estate Loans (Past Due) 100% 406,282 406,282 1,360,204 1,360,204

Non-Performing Loans 150% 1,289,283,600 1,933,925,400 1,079,221,494 1,618,832,240

Due from Other Banks 100% 2,866,244,438 2,866,244,438 1,269,071,424 1,269,071,424

Other Assets 100% 49,831,715,344 49,831,715,344 59,347,259,709 59,347,259,709

Total Credit Risk-Weighted Assets 54,694,650,003 62,280,055,114

RISK EXPOSURES AND ASSESSMENTS Annual Report 2018: Reinventing Our Future


The relevant risks to which the Bank is exposed to

include credit risk, operational risk, interest rate

risk, liquidity risk, legal risk and compliance risk.

CREDIT RISK

Strategies and Processes

Taking into account the opportunities found

within the niche that the Bank caters to, the Board

of Directors recognizes and accepts the risk on

concentration of credit exposures to each

particular set of clients. The Bank retains the

strategy of increasing customer franchise and

maintaining the right degree of flexibility within

the confines of Board-approved credit limits and

policies through proper judgment and well-

documented requests for exception with prior

approval from the respective credit authorities.

To test if these policies and procedures are

effective and viable, regular monitoring of

measures is a must. Encountered measures in

need of improvement, if any, are put under

constant and close observation, and are reported

to the Credit Committee and the Board Risk

Management Committee for further actions, if

necessary.

Structure and Organization

The Bank’s Board of Directors oversees all aspects

of credit risk management and sets its general

tone and direction. In line with these, specific

strategies are set by delegated Board-level and/or

senior management-level committees.

The Board RMC develops and oversees the risk

management program and strategies on credit

risk control and management to prevent losses

and lessen the impacts when losses are incurred.

The Credit Committee, on the other hand,

evaluates existing policies, practices, and

procedures on credit or related matters. If needed,

it also formulates or creates new policies to serve

as guide for the management of credit risks while

ensuring these are tolerable, based on the risk

appetite of the Bank. Reviewing and approving of

loans is delegated by this committee to the Branch

Junior Loan Committee, based on Board-approved

authority thresholds.

With regards to credit risk management, the Risk

Management Team works independently in

ensuring the adequacy and constant updating of

Bank’s credit policies and procedures to keep up

with the changes in the demands of the business.

The loan portfolio quality of the Bank is also

reviewed by the RMT to identify measures and

control credit risk exposures faced by the Bank.

The Team also facilitates forwarding the

information from line management to the Board

(via the Board RMC).

Risk Measurement and Reporting

The Bank ensures that it measures risk accurately

and in a timely manner to control or monitor risk

levels. In line with this, the Bank has developed a

credit scoring system for Teachers’ Loans

composed of two major components: (1) the

Acquisition Scoring; and (2) the Behavioral Scoring.

New borrowers are subjected to the former while

the latter is used for existing accounts. The

resulting scores correspond to probabilities of

default–the primary element in the computation

for the Expected Credit Loss (ECL) and/or the

required loan loss provisions in consonance with

the Bank’s adoption of the regulations of PFRS 9.

An additional credit risk measure is also adapted

by the Bank. This is in compliance with the Internal

Ratings-Based Approach (Foundation) of BASEL II,

which is based on measures of unexpected losses

(UL) and expected losses (EL). The risk-weight

functions produce capital requirements for the UL

portion.

In determining the capital requirement for a given

exposure, the Bank may rely on internal estimates

of risk components provided it complies with

certain minimum conditions and disclosure

requirements and regulatory approval. The risk

components include measures of the probability

of default (PD), loss given default (LGD), and the

exposure at default (EAD).



These measurements of credit risks are reported

to the Board of Directors through the Board RMC,

for monitoring of credit quality portfolio and

ensure adherence to regulatory requirements and

the Bank’s annual business plan. The report must

include disclosure of material variances from plan

and their causes, as well as management's plan to

correct the variance.

The scores are summarized and reported to the

Board of Directors through the Board RMC, with

the end in view of apprising the Board about the

credit quality of the loan portfolio. The Risk

Management team also provides the Board with

updates on new pronouncements, regulations

and/or processes prescribed by external regulators

(BSP and external auditor SGV) and business

partners (DepEd) and lays out the impact of said

items on the books of the Bank.

A summary on compliance with credit policy and

relevant regulatory requirements is provided to

the Board by the management. Through these

reports, the management is able to quickly and

accurately evaluate the credit risk level incurred by

the Bank and determine if the credit standards are

met by the Bank’s current performance.

Risk Mitigating and Monitoring

Processes and guidelines on credit risk mitigation

have been established by the Bank. CitySavings is

governed by the following credit limits: Internal

Single Borrower’s Limit (SBL) or Individual

Borrower’s Limits (IBL), Directors, Officers,

Stockholders, and other Related Interests (DOSRI)

Limits, NPL Ratio Limits and Credit Authority

Limits. Compliance with BSP’s limit on exposure to

any single person or Bank of connected persons to

an amount not exceeding 25% of the Bank’s

adjusted capital accounts is also being monitored

by the Bank.

While credit concentration is recognized and

accepted by the Board of Directors, the risk factor

is low by industry standards mainly because the

repayment source, the Automatic Payroll

Deduction System accorded by DepEd to the Bank

as an accredited Private Lending Institution (PLI),

mitigates the risk shouldered by the Bank.

Stress tests are also facilitated to determine

potential impact of probable movements in the

market and in political conditions, such as

competition, DepEd interest rate ceilings and Net

Take Home Pay (NTHP) changes in the annual

General Appropriations Act.

OPERATIONAL RISK


Sustainable growth is pursued and business

processes or activities are managed ethically, in

compliance with applicable laws and regulations,

and captured within the Bank’s defined levels of

authority and appropriate internal controls.

To ensure no major or catastrophic losses are

incurred, the Bank has established proper

reporting and escalation procedures together

with the Board and Management’s oversight

functions and integrated management control

systems.

The Bank gives zero tolerance to activities

involving fraud, be it internal or external, and

more importantly, the Bank puts life first over

property.


The RMT, along with the branch and support

group risk champions, is tasked to lead the

operational risk management implementation,

further improve strategy and programs

concerning operational risk and conduct

monitoring, and promote development of a risk

culture through measurement and capability

building.


To adequately provide basis for measuring and

monitoring operational risk incidents, the Bank

applies several tools such as Key Risk Indicators,

Loss Experiences, Risk Driver Analysis and Risk

Mapping.

Bank-wide risk identification workshops are also

conducted to bring into play the bottom-up

approach and ensure the involvement of all Bank

officers and employees in risk identification. The

risk universe of the Bank is further refined using

the identified and evaluated risks which leads to

risks



creation of specific categories for operational risks.

These are assessed using enhanced likelihood and

impact criteria and are subsequently prioritized for

treatment. Monitoring and review are integral to

the process to verify the effectiveness of the

implemented controls and/or treatment plans.

Risks involved and the nature of changes in the

operating environment are reflected on the

frequency of monitoring. Regular reports of the

Operations Committee and the Board include

results of the said monitoring activities and are

passed on to respective levels of management and

areas of the bank that may be affected.


The Bank has designed internal controls to assure

efficient and effective operations, safeguard

assets, produce accurate and reliable financial

reports, and comply with laws and regulations

applicable to the business. Five components

constitute a sound internal control program,

namely: (1) control environment, (2) risk

assessment, (3) control activities, (4) information

and communication, and (5) monitoring activities.

Approval and decision limits for Cash, Treasury,

Loans, Procurement (capital expenditures and

operational expenses), Payment Documents, and

Contracts are also established by the Bank, and are

assigned to appropriate key people within the

organization.

Specific policies guiding the Bank in its activities

have also been documented and are accessible for

viewing through the Business Process Library,

which serves as central filing of written policies.

This is maintained by the Business Process

Management department.

LIQUIDITY


The Bank is governed by Board‐approved liquidity

risk limits, specifically MCO Limits and Liquidity

Ratio Limits alongside those limits prescribed by

regulators, to ensure short and long term covers

for projected cash requirements.

The limits are monitored on a regular basis and

exceptions are reported to the Assets and

Liabilities Committee (ALCO) and the Board RMT

for appropriate action, as necessary.


To effectively carry out the liquidity strategy of the

Bank, Senior Management remains involved to

ensure effective management of liquidity and

appropriate policies and procedures are at play to

control and limit liquidity risk.

The Board of Directors exercises general oversight

function on all aspects pertaining to liquidity and

liquidity risk management to establish over-all

tone and direction. Specific strategy-setting may

be delegated to board-level and/or senior

management-level committees.

The ALCO manages the Bank’s balance sheet and

ensures execution of business strategies and

attainment of targets. It also establishes the

asset/liability pricing policies that are in line with

the balance sheet objectives of the Bank.


Liquidity risk exists in all of the Bank’s business

activities, and is interrelated with different risks as

well. The Bank’s risk management system

addresses this by capturing and quantifying the

main sources of liquidity risks and communicating

the intricacy and interconnection of liquidity risk

with other risks.

A variety of models, methods, and controls are

used by the Bank to manage liquidity. These

include risk limits, cash flow projections, liquidity

ratios, and key liquidity indicators. MCO reports,

liquidity ratios and limit breaches, if any, are

presented to the ALCO and RMC based on an

agreed frequency.


Liquidity management entails estimation and

fulfillment of liquidity needs in the most cost-

effective way. Upon establishment and

implementation of liquidity plans, an array of

available resources is considered.

The Bank can obtain liquidity from both sides of

the balance sheet, as well as from off-balance

sheet activities. Among available assets, liabilities,



or off-balance sheet items, the Bank takes into

consideration the most cost-effective option to

fund or meet existing financial obligations. The

characteristics of funds providers and any market

or regulatory constraints on funding are

reviewed by the Bank, as well as potential uses

for excess cash flows and risk arising from

funding concentrations.

INTEREST RATE


The Bank continues to build the business, and at

the same time seeks to reach a reasonable level of

stability in net interest margins through managing

available assets and liabilities dynamically within

the Board-approved Net Interest Income at Risk

Limit (simplified Earnings-At-Risk), and statutory

regulatory requirements.

Monitoring of measures is done on a regular basis.

Reports on exceptions are provided to Senior

Management, ALCO and Board RMC for necessary

action.


The Bank has established an Interest Rate Risk

management structure which is similar to the

Liquidity Risk Management Structure.


Earnings-at-Risk (EaR), or simply “gap analysis” that

serves as a measure of likely earnings volatility for

accrual portfolios, is utilized by the Bank. This

involves matching of interest components of assets

and liabilities and measuring the resulting variance

during a given period and thereafter comparing

against a limit previously set by the Board.

To make up for the limitations of EaR, a stress

test is also conducted on the sensitivity of the

Bank’s EAR to increasing changes to the yield

curve above normal conditions. Monthly EaR

reports and EaR stress tests are prepared by RMT,

which are also presented at least quarterly to

ALCO for further review.

The additional capital charge for interest risk in the

banking book is also measured by the Bank by

subjecting maturing/repricing assets and liabilities

within one year to a parallel shift in yield curve.

The resulting impact to the Bank's net interest

margin for a period of one year is converted to risk

weighted assets by multiplying the resulting

impact by 10.


Interest risk is managed in the banking book

through the use of EaR limits, which is compared

to the potential decline in interest income. The

EaR Limit is the monetary amounts of risk or

potential loss deemed tolerable by top

management for the accrual portfolios (interest

rate repricing gaps). RMT and ALCO recommend

these limits, which is then endorsed by the RMC

and duly approved by the Board. Annual review on

EaR limits is done, or when deemed necessary.

An excess over the EaR limit means that the open

gap positions, even within its nominal limits, has

potential to cause more loss than management

can accept. The Bank follows a prudent policy on

managing its assets and liabilities so as to ensure

that exposure to fluctuations in interest rates are

kept within acceptable limits. Long-term

borrowings are usually at fixed rates.

LEGAL

Implementation of established legal risk

management framework culture is headed by the

Board of Directors, as facilitated by the Legal

Office. Although the Legal Division supports the

business units in identifying risks, renders legal

opinions on how to mitigate them and reports on

the overall risk exposure, legal risk management

remains to be a shared responsibility between the

Legal Division and the various business units.

The Bank encounters legal cases in the ordinary

course of its business. However, material impact

on the Bank’s financial position is not expected

from contingent liability from these cases.



COMPLIANCE

Building a culture of compliance is the cornerstone of the Bank’s program of managing its compliance risk

in tandem with reputational risk. Given the nature of its business, the Bank believes that fostering a work

environment that values ethical behavior is the best way of guarding against reputational risks that could

undermine its franchise value.

The ethics-based compliance program of the Bank manages and mitigates business risks associated with

the business model of the Bank.



Credit Risk Exposure

The table below shows the Bank’s maximum exposure to credit risk on loans and receivables as of

December 31, 2018 and December 31, 2017 (gross of allowance for impairment losses):

December 31. 2018 December 31, 2017

Maximum Exposure Maximum Exposure

Carrying

Value

Financial

Effect of

Collateral

in

Mitigating

Credit Risk

Maximum

Exposure to

Credit Risk

Carrying

Value*

Financial

Effect of

Collateral in

Mitigating

Credit Risk

Maximum

Exposure to

Credit Risk

Loans:

Consumption 48,330,005,932 13,235,000 48,316,770,932 55,936,136,932 19,582,500 55,916,554,432

Commercial 55,015,710 − 55,015,710 39,800,599 3,666,000 36,134,599

Real Estate 692,158 6,113,644 − 5,480,230 12,775,844 −

Agricultural 246,338,185 − 246,338,185 630,388,647 − 630,388,647

Accounts

receivable 2,151,080,169 − 2,151,080,169 1,996,606,346 − 1,996,606,346

Unquoted debt

securities 376,972,586 − 376,972,586 405,205,749 − 405,205,749

Accrued

interest

receivable

631,474,717 − 631,474,717 519,573,549 − 519,573,549

51,791,579,457 19,348,644 51,777,652,299 59,533,192,052 36,024,344 59,504,463,322

The financial effect of collaterals in mitigating credit risk is equivalent to the fair value of the collateral or

the carrying value of the loan, whichever is lower.

Concentration of credit arises when a number of counterparties are engaged in similar business activities,

or activities in the same geographic region, or have similar economic features that would cause their

ability to meet contractual obligations to be similarly affected by changes in economic, political or other

conditions. Concentrations indicate the relative sensitivity of the Bank’s performance to developments

affecting a particular industry or geographic location.

RISK-RELATED DISCLOSURES Annual Report 2018: Reinventing Our Future


Concentration by Industry1

a. Total Credit Risk Exposure

b. Consumption

c. Financial Intermediaries

1 Loans and advances to banks include Due from BSP, Due from other banks and SPURA.

72.55%

22.96%

3.98%

0.37%

0.08%

0.06%

0.15%

2018

Consumption Financial Intermediaries

Others Agricultural

Commercial Real estate

0.00%

100.00%

0.00%

2018

Loans andAdvances toBanksLoans andReceivables

Others

96.67%

3.33%

2018

Loans andAdvances toBanks

Loans andReceivables

Others

73.34%

22.43%

3.30%

0.83%

0.05%

0.05%

0.10%

2017

Consumption Agricultural

Others Financial Intermediaries

Commercial Real estate

0.00%

100.00%

0.00%

2017



Others

0.00%

100.00%

0.00%

2017

Loans andAdvances toBanksLoans andReceivables

Others



d. Agricultural

e. Commercial

f. Real Estate

0.00%

100.00%

2018



Others

0.00%

100.00%

2018



Others

0.00%1.66%

98.34%

2018



Others

97.63%

2.37%

2017



Others

0.00%

100.00%

2017



Others

0.00%15.27%

84.73%

2017



Others



g. Others2

Concentration by Counterparty

Information on concentration of financial assets as to counterparties (excluding cash and other cash

items) as at December 31, 2018 and 2017 are as follows:

2018 2017

Public school teachers 50,929,552,347 59,016,597,476

Financial intermediaries 15,294,725,587 17,106,124,389

Corporate 140,979,815 72,263,604

Other individuals 252,703,569 69,878,274

66,617,961,318 76,264,863,743

Allowance for Impairment Loss (840,960,944) (1,138,365,842)

65,777,000,374 75,126,497,901

Cash and Cash Equivalents

The credit risk for cash and cash equivalents is considered negligible since the counterparties are

reputable banks with high quality external credit ratings. Included in the cash and cash equivalents are

cash in banks which are insured by the Philippine Deposit Insurance Corporation up to a maximum

coverage of P0.50 million for every depositor in each banking institution.

Loans and Receivables

The carrying amount of loans and receivables as at December 31, 2018 and 2017 represents the maximum

exposure to credit risk without taking into account the value of any collateral obtained.

The credit grades used by the Bank in evaluating the credit quality of its loans and receivables are as

follows:

2 Others include refundable deposits and other investments

99.99%

0.01%

2018

Loans andAdvances to Banks


Others

0.00%

99.99%

0.01%

2017

Loans andAdvances to Banks


Others



Credit Risk Rating

A perfect score of 1000 is assigned to individual borrowers. A higher credit score indicates that a loan is

more likely to be repaid within the regular terms and conditions of the credit and vice-versa. Translating

these into credit quality grades:

a. Acquisition

Risk Rating Score Band Score Range

Sub-Standard A High 0 500)

Standard B Average [500 600)

C Moderate [600 700)

High Grade D Low [700 750)

E Minimal [750 1000)

b. Behavioral

Risk Rating Score Band Score Range

Sub-Standard A High 0 375)

Standard B Average [375 475)

C Moderate [475 525)

High Grade D Low [525 750)

E Minimal [750 1000)

HIGH GRADE – refers to accounts with credit risk scores of MINIMAL or LOW. These are receivables which

have a high probability of collection. The counterparty has the apparent ability to satisfy its obligation and

the security on the receivables is readily enforceable.

STANDARD – refers to accounts with credit risk scores of MODERATE or AVERAGE. These are receivables

where collections are probable due to the reputation and the financial ability of the counterparty to pay

but with experience of default. These credit scores of MODERATE or AVERAGE are considered PASS

ratings; while

SUBSTANDARD – refers to those with higher than normal possibility of default. These pertain to accounts

scored as HIGH (High Risk). These are individual credits or portions thereof which appear to involve a

substantial and unreasonable degree of risk to the Bank because of unfavourable record or unsatisfactory

characteristics. High risk borrowers require an endorsement from the Branch Business Head and exception

approval from the Regional Business Head or Group Head of Sales & Marketing based on the amount of

the loan.

DepEd/Teachers’ Loans

Below is the breakdown of the Bank’s DepEd loans exposure (outstanding balance and accrued interest

receivable) by credit scoring as of December 31, 2018:

Credit Score Stage 1 Stage 2 Stage 3 Total

D to E 45,059,018,290 45,059,018,290

B to C 80,318,685 49,243,706 129,562,391

A 196,141,839 196,141,839

Default 1,620,327,095 1,620,327,095

45,139,336,975 245,385,545 1,620,327,095 47,005,049,615



Non-DepEd Loans

Other receivables from customers of the Bank include small portfolios such as household and GSIS loans.

Exposure to credit risk is managed through regular analysis of the ability of borrowers and potential

borrowers to meet interest and capital repayment obligations and by changing the lending limits when

appropriate. The ECL stage bases are determined based on the aging and delinquency of the accounts.

The description of each groupings according to stage is explained further as follows:

A. Stage 1 (Standard grade)

Those that are considered current and up to 30 days past due, and based on delinquencies and

payment history, do not demonstrate significant increase in credit risk.

B. Stage 2 (Substandard grade)

Those that are considered more 30 days past due but do not demonstrate objective evidence of

impairment as of reporting date, and, based on delinquencies and payment history, demonstrate

significant increase in credit risk.

C. Stage 3 (Loss)

Those that are considered default or demonstrate objective evidence of impairment as of reporting

date.

Below is the breakdown of the Bank’s Non-DepEd loans exposure (outstanding balance and accrued

interest receivable) by credit quality as of December 31, 2018:

Risk Rating Stage 1 Stage 2 Stage 3 Total

Standard 3,321,284,414 3,321,284,414

Substandard 18,979,020 18,979,020

Loss 273,526,500 273,526,500

3,321,284,414 18,979,020 273,526,500 3,613,789,934

As of December 31, 2018, other financial assets, which include ‘Due from BSP’, ‘Due from other banks’,

‘SPURA’, ‘Accounts receivable’ and ‘Unquoted debt securities’ under ‘Loans and receivables’, and ‘Security

deposits’ under ‘Prepayments and other resources’ are classified as high grade (“Stage 1”).

As at December 31, 2018 and 2017, there are no restructured loans included in the past due or

individually impaired receivables of the Bank.

Past due but not impaired loans and receivables

Loans and receivables are considered past due but not impaired if contractual interest or principal

payments are past due but the Bank believes that impairment is not appropriate on the basis of the level

of collateral available and/or status of collection of amounts owed to the Bank.

DISCLOSURE ON MERGER IMPACT Annual Report 2018: Reinventing Our Future


On February 28, 2019, City Savings Bank (CitySavings) merged with Isabela-based thrift bank Philippine

Resources Savings Banking Corporation (PR Savings), with CitySavings as the surviving entity.

This was the culmination of a year-long process that kicked off on December 29, 2017 when CitySavings

signed a Share Purchase Agreement with the Ropali Group of Companies for PR Savings’ common shares.

In order to obtain 100% ownership, CitySavings subsequently signed an agreement with the International

Finance Corporation for the purchase of its preferred shares in PR Savings.

In keeping with CitySavings’ strong tradition of compliance with legal and regulatory requirements, the

Bank sought to obtain approval for the acquisition and eventual merger from all concerned governing

bodies. The Philippine Competition Commission, the country’s antitrust regulator, approved the

transaction on April 5, 2018. The Bangko Sentral ng Pilipinas (BSP) gave the greenlight for the acquisition

on June 19, 2018. Having secured these approvals, CitySavings completed its acquisition of PR Savings

Bank on June 27, 2018.

The go-ahead for the merger would come later in 2018, with the Philippine Deposit Insurance Corporation

providing its approval on September 28, and the BSP on December 27. Securing the consent of all

relevant regulatory bodies paved the way for the Securities and Exchange Commission to finally legitimize

the merger of the two entities in February 2019.

Merging with PR Savings Bank formalized CitySavings’ foray into the burgeoning market of motorcycle

financing. In line with its mission of serving Filipinos of moderate means, CitySavings acquired PR Savings

with the goal in mind of catering to the rapidly expanding mass market segment of motorcycle loans. The

move represents a diversification for CitySavings, whose well-established presence in the salary loans

market for public school teachers is supplemented by the expansion of a product suite that already

includes loans to private school teachers, pensioners under the Government Service Insurance System

(GSIS) and Social Security System (SSS), as well as seafarers. For the motorcycle business to flourish, the

Bank intends to capitalize on PR Savings’ existing relationship with established market player Ropali to

provide a steady flow of motorcycle financing clients, and to reach out to new customers via CitySavings’

existing channels.

As a result of the merger, CitySavings’ physical network of 115 combined branches and branch-lite units is

augmented by PR Savings Bank’s 102 locations. CitySavings’ geographical footprint has grown,

particularly in Luzon where PR Savings Bank’s locations are concentrated.

DISCLOSURE ON MERGER IMPACT Annual Report 2018: Reinventing Our Future


To prepare the organization for the anticipated growth of the business arising from the new product mix

and expanded branch network, the Bank sought to streamline its operations and standardize policies and

processes, implementing the CitySavings way. In terms of personnel, this consisted of rationalizing the

table of organization of the consolidated institution and homogenizing the setup of sales and operations

in each branch, as well as facilitating CitySavings training programs for absorbed PR Savings Bankers.

Backroom operations and asset management were centralized, in contrast with the prior siloed setup per

product in PR Savings Bank. Policies on risk management, compliance with regulations, corporate

governance and internal audit were standardized across the merging institutions and augmented in

response to the new strategic direction the Bank being forged by the Bank.

On a consolidated3 basis, CitySavings ended 2018 with a total net loan portfolio of Php 63.86B, net

income of Php 1.83B and capital adequacy ratio of 10.60%.

3 Figures on consolidated basis were computed based on solo FRP figures for CitySavings and PR Savings Bank.