1st Valley Bank provides microfinance services in the Philippines and has seen significant growth since 1999, but now faces challenges from the global financial crisis and a legacy of issues in the rural bank industry that have reduced client trust. The bank is implementing strategies like intensifying recovery of past due loans, expanding credit lines, and returning to microfinance best practices like short loan terms and frequent repayments to survive the difficult economic times.

1. Surviving Microfinance in
These Trying Times
Atty. Nicolas J. Lim
President/CEO,1st Valley Bank, Inc.
2009 RBAP-MABS National Roundtable Conference
May 12-13, 2009
Hyatt Hotel and Casino
Manila

2. 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.

3. Branch Offices
1st Valley Bank, Inc.

4. 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.

5. 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.

6. Selected Bankwide Indicators
1999 Net Change
Performance Data (start of MF Dec.08 1999 to
Operations) 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.

7. External Challenges to our Operations
1st Valley Bank, Inc.

8. Legacy Issue:
Lower Client's Trust in the RB Industry
Massive Withdrawals - Bank Run
Liquidity Problems
Recapitalization / Prohibited from Operating
1st Valley Bank, Inc.

9. Global Financial Crisis:
1st Valley Bank, Inc.

10. 1VB STRATEGIES
• Robust Organizational Structure
• Generalist vs Specialist
• Increase the number of training focusing on
Operational Efficiency
• Realign Targets
1st Valley Bank, Inc.

11. 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.

12. 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.

13. Microfinance Best Practices
is still the best weapon we have.
Stick to them
1st Valley Bank, Inc.