1. LANDBANK’s EQUITY INFUSION PROGRAM for CFIs

2. Presentation Outline Objective of the Program Program Modules  Developmental Developmental  BusinessBusiness  Risk RecoveryRisk Recovery Eligibility Requirements Features of LBP Investment Documentary Requirements Major Enhancements of the Program LANDBANK’s EQUITY INFUSION PROGRAMS for CFIs

3. Objective To continually strengthen the capital base of accredited CFIs as conduits in the delivery of financial assistance to small farmers and fisherfolk. LANDBANK’s EQUITY INFUSION PROGRAMS for CFIs

4. Equity Investment Modules Available: Developmental Business Risk Recovery Risk Recovery LANDBANK’s EQUITY INFUSION PROGRAMS for CFIs

5. DEVELOPMENTAL MODULE Purpose To provide incentives to CFIs which undergo mergers and consolidation Eligible CFIs CFIs participating under Module III (Merger, Consolidation or Acquisition) of the CFIEP; Newly-established CFIs that need to strengthen capital base.

6. DEVELOPMENTAL MODULE Amount of Investment Minimum of P 0.25 million and a maximum of P 10 million per CFI but not to exceed 49% of CFI’s total outstanding and issued capital stock Dividend Rate Equivalent to the average 364-day T bill rate

7. LANDBANK EQUITY INFUSION PROGRAMS for CFIs Equity Investment Modules Available: Developmental Business Risk Recovery Risk Recovery

8. BUSINESS MODULE Purpose Provide incentives to good banks and help them sustain their financial strength Motivate serious investors to invest in CFIs and venture into rural banking Eligible CFIs CFIs in operation for at least three years

9. BUSINESS MODULE Amount of LBP Investment Minimum of P 0.25 million and a maximum of up to 30% of the CFI’s total outstanding and issued capital stock. Dividend Rate Equivalent to the average 364-day T bill rate + 1 % per annum.

10. LANDBANK EQUITY INFUSION PROGRAMS for CFIs Equity Investment Modules Available: Developmental Business Risk Recovery Risk Recovery

11. RISK RECOVERY MODULE Type 1Type 1- Strengthens participating CFIs, which are willing to act as collecting agents, via equity conversion of collected written-off Agrarian Reform Loans (ARLs) Type 2 Type 2 -Involves the conversion of matured investment into a new equity investment facility

12. RISK RECOVERY MODULE – Type 1 Purpose Recover long-standing past due loans/written-off/rock accounts from CRBs and disenfranchised coops; Strengthen participating CFIs, which are willing to act as collecting agents, via equity conversion of collected written-off Agrarian Reform Loans (ARLs) Accounts Eligible for Conversion ARLs written-off amount; Past due accounts of disenfranchised coops.

13. RISK RECOVERY MODULE – Type 1 Amount of LBP Investment Up to 85% of total amount collected but in no case shall the preferred stocks exceed 49% of the CFI’s total outstanding and issued capital stock Dividend Rate Equivalent to the average 364-day T bill rate

14. RISK RECOVERY MODULE – Type 2 Purpose Convert the existing matured investment into current status Strengthen financial structure and sustain viability of the participating CFIs through an enhanced LBP risk recovery investment program

15. RISK RECOVERY MODULE – Type 2 Amount of LBP Investment for Conversion Minimum of P0.25 million up to 49% of the CFI’s total outstanding and issued capital stock, provided the total amount of LBP investment to the CFIs will not exceed P20 Million. Amount for conversion includes the matured principal balance, net of accumulated sinking fund, if any, including the accrued interest income of the sinking fund, and all other prior payments. Unpaid dividends at the time of conversion shall not form part of the conversion There will be no fresh capital infusion on the part of LBP to the CFIs.

16. RISK RECOVERY MODULE – Type 2 Accounts Eligible for Conversion Matured investments under the following programs: a.LBP-initiated equity programs such as Cooperative Bank Formation Program, Capital Strengthening Program, Presidential Directive of 1981, 1:1 and 2:1 Program; b.DBP Transferred Shares c.BSP-mandated programs such as Specialized Rural Bank Trust Fund, BSP 1143/BSP 1172 & BSP Circular 1369. Eligibility Requirements All CFIs with matured investments.  Except for CFIs whose retained earning is sufficient to cover outstanding principal investment and dividends due, and  Provided CAR will not go below 10%, after the application of the retained earnings.

17. RISK RECOVERY MODULE – Type 2 Sanctions The CFI should submit application, together with documentary requirements within three (3) months upon receipt of the advice from the Lending Center. If LANDBANK will not be able to receive the application within the said period, LANDBANK shall be constrained to cut the relationship with the CFI. Establishment or renewal of credit line with LANDBANK shall be subject to the arrangement or settlement of matured investment with LANDBANK.

18. Eligibility Criteria (For All Modules except for Type 2) RAR of not less than 10% and a PDR of not more than 25% Met the minimum capital requirement set by BSP Profitable operations for the past three years Not experiencing liquidity problems No irregularities, with the exceptions noted per latest BSP, PDIC and/or LBP examination duly addressed Complied with all the terms and conditions of the BSP Rehab Program or LBP Equity Infusion Program previously participated in No arrearages with BSP, DBP, LBP and other financial/government institutions Accredited under the LBP’s Rediscounting Program

19. Features of Investment ( For All Modules ) Entitled to one seat in the CFI board Non-voting; Non-participating (for Risk Recovery Module only)Risk Recovery Module Cumulative; For purposes of redemption, shares shall be valued at par plus all earned but unpaid dividends, if any; Preferred shares shall be mandatorily redeemable, without provision for conversion into common shares, within: - 5 years for Business and Risk Recovery-Type 1 Modules - 10 years for Developmental & Risk Recovery-Type 2 Modules Preference in assets in case of liquidation; Payment of dividend shall have a 90-day grace period reckoned from dividend due date, but with a penalty of 2% per month on the dividend due after the grace period. Dividend rate e quivalent to the average 364-day T-bill rate

20. Documentary Requirements ( For All Modules ) SEC Approval of the Amendment/Addendum to the CFI’s Articles of Incorporation and By-laws brought about by the increase in authorized capitalization to accommodate the LBP’s equity infusion/new equity investment; change in the features, terms and conditions of redeemable preferred shares, and provision indicating dividend rate. Establishment of sinking fund List of stockholders and their stockholdings with bio-data List of directors and key officers with bio-data Financial statements for the last 3 years including current interim financial statement (audited and unaudited) Latest BSP examination report and the CFI’s reply

21. Documentary Requirements ( For All Modules ) Three-year business plan and Capital Build-up Program Board Resolution authorizing:  The CFI to apply under the LBP Program and designating officers authorized to sign all pertinent documents with specimen signature;  The CFI to submit reports and documents that will be required by LBP;  The LBP to apply the sinking fund to the investment if the sinking fund level, including interest earnings, is equal to the outstanding investment and accrued dividends.

22. Documentary Requirements ( For All Modules ) Prior written consent from LANDBANK if the CFI is planning to enter into a merger, consolidation with or acquire another bank or any transaction that will change its ownership structure. Memorandum of Agreement, and Escrow Agreement between LANDBANK and the CFI.

23. Documentary Requirements ( For Developmental and Business Modules ) All CFIs with outstanding availment under the developmental or business module should execute an amendment of the MOA consistent with the new requirement and features of the program. Board Resolution authorizing the CFI to apply under the program, submit documents and designating officers authorized to sign documents with specimen signature, and effecting the application of the sinking fund to the matured investment, and redemption of preferred shares upon maturity of the equity investment. Amendment of the articles of incorporation reflecting the new features of the equity investment, including the non-convertibility of the preferred shares into common upon maturity.

24. Documentary Requirements Specific to Risk Recovery – Type 2 Board resolution effecting the transfer of the sinking fund contribution plus accrued interest of the fund to LBP Letter of Intent to apply for conversion into a new equity investment facility Copy of CFI application for declaration of dividends, duly received by BSP, or BSP approval for dividend declaration; or plan of payment approved by BSP if the CFI is not allowed to declare dividends.

25. Major Enhancements of the Program ParticularsBeforeNow Dividend Rates At 12% levelMarket Rate (At 364-day T- Bill Rate) Sinking FundNot all programs were required to put up the fund Required CoverageLimitedExpanded – With the inclusion of Risk Recovery 2

26. www.landbank.com Engr. Ernesto B. Tumanut CFI Account Officer Isabela Lending Center North and Central Luzon Lending Group Agricultural & Development Lending Sector ernietumanut@yahoo.com 0917 574 2429