1. Company LOGO www.company.com Security Bank – Federal Savings Bank Group IV “Security you can bank on”

2. Company LOGO www.company.com Mergers and Acquisitions? Merger and consolidation was a major theme of the Philippine financial system during the first half of 2000. Banks and non-banks alike sought ways to rapidly gain financial and marketing strength amid the growing competition in the Philippine financial system.

3. Company LOGO www.company.com Mergers and Acquisitions? The Bangko Sentral stepped up its efforts aimed at rationalizing existing policies, rules and regulations in the supervision and examination of financial institutions. To further speed up the creation of bigger and stronger banks, an enhanced incentive package for mergers and consolidations was offered (Box 1).

4. Company LOGO www.company.com What is the Box 1? This was done to foster healthy competition between and among banks, bring about more and better financial services at lower cost, and promote stability and efficiency in the Philippine banking sector.

5. Company LOGO www.company.com The Acquirer - SBC SBC was incorporated on May 1, 1951 and started operations as a commercial bank on June 18, 1951. It acquired its universal banking license from the BSP last April 26, 1994 where it changed its name from Security Bank and Trust Company to Security Bank Corporation.

6. Company LOGO www.company.com The Acquirer - SBC Commercial banking operations include Corporate Relationship, Branch Banking, and Consumer Lending Groups. Investment banking includes Treasury Group, Fixed Income and Securities Division, and Investment House

7. Company LOGO www.company.com The Acquirer - SBC Had its IPO on June 8, 1995. Security Bank Corporation provides commercial banking and investment banking services in the Philippines. As of 31 December 2006, the Security Bank Corporation had a network of 114 online branches and 93 ATMs.

8. Company LOGO www.company.com The Acquired – FS & MB This bank was established on 1998 after the Asian crisis. The owner of the bank, Henry Go, also has interest in real estate and cargo handling business. Federal Savings, a relatively small bank has three branches located in Makati, Laguna and Novaliches has total resources amounting to P500 Million only.

9. Company LOGO www.company.com The Acquired – FS & MB On September 30, 2000 Security bank purchased all of the common stocks of Federal Savings and Mortgage bank for a total cost of about P461 million in exchange for 18,627,761 shares. The fair value of assets acquired amounts to about P540 million and P273 million of this balance are cash and cash equivalents.

10. Company LOGO www.company.com The Acquired – FS & MB Total liabilities amounts to about P216 million. The excess of the total acquisition cost over the fair value of the net assets acquired of about P137 million is treated as goodwill being amortized on a straight-line basis over ten years.

11. Company LOGO www.company.com Why FS & MB? Federal Savings and Mortgage bank is a potential target, it is newly established when it was acquired. This means that they still have clean financial statements. Security Bank saw the potential of Federal savings.

12. Company LOGO www.company.com Consolidated FS Income Statement Data (in Millions) For the years ended 20001999 Interest Income5,3834,232 Interest Expense3,2942,437 Net Interest Income2,0891,795 Other Income892882 OPEX2,0651,694 Provisions486407 Taxes paid363361 Net Income422412

13. Company LOGO www.company.com Consolidated FS Balance Sheet Data (in Millions) For the years ended 20001999 Total Resources78,84355,323 Total Deposits46,79834,634 Loan Portfolio (net)32,76328,228 Total Liquid Assets30,00817,400 Total Earning Assets 48,74341,040 Total Capital Funds8,6677,781

14. Company LOGO www.company.com Consolidated FS Federal Savings’ assets are only P550 million which was accounted for at the consolidated financial statements of Security bank on September 2000. Before mergers in the year 2000 the bank has a total asset of P55 billion In the year end financial statement of 2000 these amounts increased. In addition to this is the increase in total resources, net loan portfolio, and total deposits of SBC.

15. Company LOGO www.company.com Rankings The Philippine banking industry on the year 2000 has a total of 12 universal banks, 13 domestic commercial banks, 2 government banks and 16 branches of foreign banks. After merging with Federal savings in 2000, Security Bank Corporation ranked 8 th in terms of consolidated assets with P71 billion. The leading bank that time is Metropolitan Banking Corporation with P439B in assets.

16. Company LOGO www.company.com Members: Bagares, Franz Josef Balido, Patrick Christian Bautista, Dave Roland Cariño, Michael Aldrin Go, Garrick Shane Luneza, Romelyn Maunahan, John Wendell