PRESIDENT’S MESSAGE AND REPORT TO SHAREHOLDERS

Last year, despite all the uncertainties and difficulties that the COVID-19 pandemic brought that plagued businesses, we implemented a strong tactical strategy that covered both sides of the profit equation. The tactical plans were cost containment for funds acquired and operational expenses; collection intensification for all amortizations due and foreclosures on collaterals the first instance that it can be implemented, and revenue maximization in pricing and fee structures. All these were done to ensure that the bank will withstand the impact of the pandemic that was infecting the whole world with no cure in sight and a long-drawn lockdown that wreaked havoc on the country’s economy and our clients’ businesses.

As the business landscape grew dimmer, we responded by putting into motion several medium-term strategic initiatives which prioritized: development of new markets, new products, and new business models; digitalizing the Bank; and deepening synergies with institutions such as the Bangko Sentral ng Pilipinas (BSP) and Philippine Clearing House Corporation (PCHC). All these priorities dove-tailed with the cooperative’s aspirations for the cooperative bank to be the payment and settlement of bank of cooperatives for all their business transactions.

We embarked on these strategic initiatives to build the capacity of the bank to be able to compete in a highly competitive business environment that was rapidly shifting into the digital space asthe new normal. At the same time, we laid the foundation forthese strategic initiatives, and we did this by improving the operational efficiency in terms of the internal processes without sacrificing controls. Simultaneously, we trained our personnel and hired seasoned experts to ensure the bank successfully implements and maintains the strategic initiative.

The Credit Administration and Support Division (CASD) was organized as the banks middle-office so loan accounts brought in by the front office are independently reviewed and evaluated by an independent unit otherthan the Account Officers. We organized our MSME Lending unit that tapped the small business loans market that lent out loans ranging from Php100,000 to Php500,000.00. The unit also tapped the whole sale Salary Loan and Housing Loan Market that gave out loans to employees of large cooperatives up to a maximum of Php100,000.00 for salary loan and up to Php5,000,000.00 depending on the capacity to pay of the employee.

A weekly Assets and Liabilities Committee (ALCO) meeting was instituted to review our cost of funds, cost of reserves and the spreads we need to cover all our costs and achieve the desired rate ofreturn for proper pricing of loans and deposits. Liquidity levels were kept at an optimal level which ranged from 21% to 24% as against the prior yearsthatranged from25% to 28% as funds were acquired justin time for the loan releases to minimize the negative drag on the available funds. To support our cash and liquidity management capability, we became a participant of Philpass which gave us the capability to do fund transfers electronically from our BSP demand deposit account to any Philpass participant bank within the Philippine Banking System (PBS).

For so many years before, we have relied solely on the lending business for revenues. This year we launched the Juan Stop Bills Pay that allows the bank customers and the public to pay their bills, send money to anyone, and load their e-wallets and allows the bank to earn fees from bills payments received from depositors and walk-in customers. Our MSME borrowers can now pay their loans in over 20,000 merchant outlets nearest themand even after office hoursfor Seven- Eleven convenience stores.

The after several years of preparation and attempts, the consolidation of the three cooperative banks namely Consolidated Cooperative Bank (CCB), Bataan Cooperative Bank (BCB) and Metro South Cooperative Bank (MSCB), was restarted last May of 2020 and by November 27, 2020 we have completed all the documentation and submitted our application to BSP. As of March, we have already received feedback from the BSP, and we have amended some of the documents based on the comments of the BSP and we are just waiting for the issuance of the General Assembly resolution approving these amendments from the constituent banks which should be finished by June 2021.

The bank hasstarted the preparation works to launch its checking account which is scheduled to come out to the public by July 2021. We have also signified to the BSP since December 2020 the banks intention to offer electronic payments and financial services specifically internet banking services and BSP have already issued MSCB a Certificate of Eligibility (COE) and completion of the licensing requirements is ongoing. Launching of the internet and mobile banking is scheduled to happen by November 2021.

We thank you, our fellow cooperators, for your continued support. We thank our Board of Directors for their guidance and counsel. We thank our employeesfortheir loyalty and dedication.

We are MSCB — “Empowering The Cooperatives In The Digital Space”.