Surviving Microfinance in These Trying TimesSurviving Microfinance in These Trying Times

2009 RBAP-MABS National Roundtable ConferenceMay 12-13, 2009

Hyatt Hotel and CasinoManila

Atty. Nicolas J. LimPresident/CEO,1st Valley Bank, Inc.

1st Valley Bank, Inc.

1st Valley Bank, Inc.• Established in 1956

• Formerly known as Rural Bank of Kapatagan Valley, Inc. (RUBANKA)

• The biggest in Northwestern Mindanao.

• Rated A+(rb) by the PhilRatings system.

• Hall of Fame Awardee, Most Outstanding RB, National Level by Land Bank of the Philippines

• 80% of the branches are in the rural areas.

1st Valley Bank, Inc.

Branch Offices

1st Valley Bank, Inc.

MF Programs with MABS

• FAME (Financial Assistance to Micro-Entrepreneurs)

Introduced in July 1999

• MAP (Micro-Agri Loan Product) Started in 2004.

• Mobile banking technology- sinceJuly 2006 (TextAPayment; TextADeposit; TextASalary)

1st Valley Bank, Inc.

Microfinance Operations(as of Dec 2008)

No. of Branches 19

No. of Account Specialists 26

No. of Borrowers 4,387

Loan Portfolio Balance P47.74 M

Cum. No. of Clients Served 10,920

Cum. No. Loans Disbursed since 1999 49,676

Cum. Amount of Loans Disbursed P782.78 M

No. of micro-deposit accounts 89,109

Total amount of micro-deposits P105.69M

Portfolio-at-Risk Rate, 30 days (PARR30) 2.75%

1st Valley Bank, Inc.

Selected Bankwide Indicators

Performance Data1999

(start of MF Operations)

Dec.08Net Change

1999 to Dec2008

Branch offices 6 19 183%

No. of employees 79 327 314%

Total Resources P251.17 M P2.68B 1066%

Total Loans P217.02 M P2.16B 895%

Total Deposits P88.42 M P1.56B 1664%

Total Capital P46.99 M P354.97 M 655%

Net Income, after Tax P6.51 M P 64.73 M 894%

1st Valley Bank, Inc.

External Challenges to our Operations

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1st Valley Bank, Inc.

Legacy Issue:

Recapitalization / Prohibited from Operating

Liquidity Problems

Massive Withdrawals - Bank Run

Lower Client's Trust in the RB Industry

1st Valley Bank, Inc.

Global Financial Crisis:

1st Valley Bank, Inc.

1VB STRATEGIES

• Robust Organizational Structure

• Generalist vs Specialist

• Increase the number of training focusing on Operational Efficiency

• Realign Targets

1st Valley Bank, Inc.

Other Initiatives

• Review Priority Programs

• Regularly Monitor Controllable Expenses

• Intensify recovery of foreclosed assets and other collectibles

• Widen sourcing of credit lines

• Prepare Notes for Rediscounting

• And Training…Training… Training…

and a lot more to be done

1st Valley Bank, Inc.

It’s Time to Go Back to Basics:

• Zero Tolerance to delinquency

• Start small loans, step up

• Shorter terms for fast recovery of funds

• Small frequent amortization payments

• Focus on character and cash flow rather than collateral

• Strict adherence to policies and standards

• Take care of your staff, they are your business centers

1st Valley Bank, Inc.

Microfinance Best Practices

is still the best weapon we have.

Stick to them