Breathing new life and direction into a newly acquired regional unit bank

Every generation needs a revolution - an entrepreneurial revolution

Rizal Philippines
July 28, 2016

I tried doing a bp myself. I am doing this for a rural bank which was just acquired and I was asked for advice on how to turn this around.  The BSP requires a BP too:

I started getting the inputs Monday, I attended their informal meeting yesterday. I started working on this this morning and was done by 12:30

3 days from input to output of a draft   5 hours to draft  What am trying to say:   You can do it YOU CAN SUBMIT THE DRAFT

I  Background:

The San Francisco bank  was recently acquired from its former owners recently, (March)   It was established on December 11, 1959 as the 235th rural bank to serve then the growing QC area area.  It has because of its managementand owners  kept up with the times.  It stopped lending for a time, has only about 1.300 depositors

It has been acquired by a group headed by dynamic business woman  who is engaged in construction, real estate, luxury goods trading and lending investor.

Its management team and Board of Directors:  include:

1.  Mr. AG   President and Director former head of a chemical petrochem plant, and now heads the first solar manufacturing plant in the PHL

2.   Mr EV  - VP and Director, formerly from from two large commercial bank

3,  Mr. EMR -  Manager of Operations, formerly cluster head and Senior Manager at a Universal Bank

Its financial is as follows (as of June 30, 2016)  

  Total Assets:   101,071549

   Total Loan Portfolio  net                 54, 630,154

Total Deposit                                     67,601,975

Total Stockholders Equity                31,447,315

PNL for the first 6 months of 2016

Income                                               4,788,013

Expenses                                          5,072,846

 Income/Loss                                        264,883

II  Opportunity Scanning:

Macro:

1.   Increasing Philippine Population 

     This will be the driver for increased consumption (salary loan) and other businesses

2.  Political  (more peace and order)

    The new President is intent on crushing drugs and criminality, and corruption.  The peace and order will usher in more investments and business activity.

    The govt wants to lift the poor from poverty (we can not legislate that you get out of poverty.  You have to work yourself  - Duterte)

3.  Social

    The poorest of the poor about 70% of the population, the CDE segment are short of cash.  They get financing from Bombay, and pawnshops where they get 2 to 4% rate per month on the average.

   This segment of population need micro insurance, microfinance and other services.

    Consumerism is on the rise and even the poor want to have aspirational products and gadget

4.  Environmental  (business)

    1.  Many banks have closed  due to various financial crisis further upping the demand for financial services

    2.  Most U Banks and Kbanks are serving the upper and middle market and neglecting the lower market.   They have neglected and left out the small lower market being not cost effective.

(We cant quantify these yet)

III.  Business concept and model

      Concept    Banking (not just rural banking)  Serving financial needs of many people with courtesy speed  and concern

      Jobs:      remittance, cash safekeeping, income, stability, fast service,  courtesy, accessibility, convenience

      Pains:    service fee, long queues, discourteous staff, policy banking,

     Gains:   courteous and fast service, income, security, stability, new products

      Model  

Ptm       -   middle and lower market

Link      -  personal through private bankers,  text, emails, and social media, website, portal

Bond    -   crm and personalized service by private bankers and staff

Key Process  -  loan processing, deposit,  private banking, services:   

                              bayad center,  micro insurance, bank assurance

Key resources:    computer software for :

                             bank transactions, website for private banking,                                  bank office,.

                             liquidity

'                            bank staff:

                             lending and collection

                             treasury

                             risk management

                             asset and liability management

Partners:         condominium owners

                        high value friends of CBC

                        Cross over technology (solar power manufacturer)

                         developers and businessmen
                         Western Union  Bayad Center, commercial banks
                         SSS, HDMF, BSP DBP (for loan origination)
                         ATM backbone (Megalink)

   MVP       quick and hassle free competitive lending

                   value and security for your money

Financial:

         Revenues   -       12%

        Cost of money      2%

        Spread                10%  

      Revenues:   Fee based:   1/2 of 1% to Max of 5%

Positioning:   San Francisco Bank  (as a  bank)

Geographical coverage :    MM and NCR

Strengths:           Solid financial condition

                         Location -   MM

                        Connections of the owner and BOD

                       

   Weakness:     x corporate officers top management

                       lack of deep talents for banking;  sparse staff for real banking

                      mixed interest of the owner (can be source of lack of focus)

                      unknown to many to the banking public

                      limited market at the moment

IV Business Objectives:

Vision:    We envision the economic upliftment of the entire San Francisco del Monte by providing financial aid to its small businessmen and small industrialists. < could be MM or NCR>

Mission:  

1.  We behold our leadership in nation building by encouraging and promoting entrepreneurial leadership with its expanding and extensive products and services in order to effectively address our clients' needs.  Our commitment is excellent service to the people we prioritize -  our patrons, our shareholders and whole community

2.  Dedicating  service to the new entrepreneurs by providing them a highly accessible financing window.  We believe in:

      1. Encouraging nationwide agricultural, industrial, and commercial development though organization of cooperatives and associations aof marketing of their products to assure the viability of their continuous operations

     2,  Providing funds to entrepreneurs and other types of businesses to avoid their being victimized by high cost of usurious sources of capital

     3.  Maintaining a friendly relationship between the bank and its client by immediate attendance to their needs.

The rural bank is a child of RA 720 Rural Banking Act 

Business objectives:

Objectives and Key Result Areas

  Year         Equity      Liability        Total Asset    Loans

   1.            30M  + 20         150      200                110                      

   2             70                      250     320                 188                     

   3            100                     350     450                 262                        

   4            120                     500      620                375                         

    5            150                    850     1,000              637