Lauren Antonette M.

Mendoza

2013400059

Prosecutor Noemi Macababbad

Rural Bank of Calaca

Due Diligence Report
Company Profile
The Rural Bank of Calaca, Inc. was established in May
1961 as a family-owned bank with Judge Manuel P.
Calanog and his wife, Dr. Dolores Macatangay-Calanog, as
founders. The bank's services at the time consisted of the
acceptance of savings deposit from, and the extension of
simple loans to, residents of Calaca and neighbouring
barrios. Lending was limited to extending small
agricultural loans.
Upon the demise of the founders, the children took over
the ownership of the bank for a brief period. In 1991, the
eldest daughter, Atty. Fe Calanog-Ona and her spouse, the
former Judge Sofronio A. Ona, acquired all the shares of
the Rural Bank and are now at the helm of its
management with their children, Atty. Christine C. Ona,
Dr. Jacqueline Ona-Joo, Sofronio C. Ona Jr. and Manuel C.
Ona.
Industry Profile
According to the Banko Sentral ng Pilipinas study that was
conducted, the Philippine banking system maintained its
positive performance in the first half of 2014. Profit
growth eased due to tempered trading gains. Banks,
nevertheless, revert to lending activities as they prudently
position their balance sheets and support the overall
bottomline with interest-based income. Credit remains
relatively
skewed
to
the
real
estate
sector.
Universal/commercial banks have expanded their reach in
areas considered as the home turf of rural banks,
indicative of banks initiatives to support inclusive growth
by providing access to finance for all Filipinos.

[Type text]

[Type text]

[Type text]

Financial Background
The management has taken a new approach in its rural
banking operations. Fresh capital was infused to
strengthen its position in the rural banking industry. The
bank's operations were upgraded to include savings
deposit, time deposit and demand deposit/checking
account. Loan coverage has been expanded to
accommodate
agricultural,
commercial,
industrial,
personal, salary and special loans. The upgrading of its
equipment was given priority to simplify operations and
provide better service. Its stable standing made it
inevitable for the bank to branch out to other
municipalities. its branches in San Jose and Nasugbu, both
in the province of Batangas, started operations in 1997 to
further strengthen the Rural Bank of Calaca, Inc.'s
presence in the countryside development.
Pertinent Documents
1. Financial Report of The Rural Bank of Calaca
- these reports should be obtained from the
Securities and Exchange Commission in order to
ascertain the assets and liabilities of the bank
2. List of all the properties that have been acquired
through Real Estate Mortgage
- the said list should be acquired from the
3. Guaranties, Loans and Credit Agreements
4. Employee Standings of Rural Bank of Calaca
5. Contracts that Rural Bank of Calaca have entered into
6. Management / Organization Chart of Rural Bank of
Calaca
-since this is a family owned company this should be
ascertained in order to see if there will be posing problems
in case of acquisition.

Lauren Antonette M. Mendoza

2013400059

Prosecutor Noemi Macababbad

7. All litigation proceedings

-whether from Past to Present
8. Insurance Policies
Conclusion
In the normal course of banks, when there is a possible
bank run then it will pose as a huge risk for a new
company that will acquire it. Banks generally have a
reserve fund for each of their depositors in case of loss or
bankruptcy. In this case, it was prevalent that there is
already loss and due to possible bank run the bank will
not pay the depositors anymore and it will be coursed
through PDIC wherein there is a limit to what will be paid
out to the depositors.
In case it will be acquired, then all the rights, obligations
will be transferred to the acquiring bank and the acquiring
bank will be liable for the depositors of the Rural Bank of
Calaca. Likewise, it was stated that there are still
properties acquired by the Rural Bank through Real Estate
Mortgage, but it has to be ascertained that this will be
sustainable for the losses that the bank has already
incurred. As for the small target market of the rural bank
then it can be a good opportunity to create new job
opportunities and it will not just be beneficial for the
universal bank but for also the whole community.
There are two scenarios that are to be considered in the
case at bar.
Given the circumstances and the documents acquired, I
would advise the universal bank to acquire the Rural Bank
if it has the financial capacity to sustain the losses. It is
apparent that there are risks that are to be taken, but it
can also be a good opportunity for the universal bank to
expand and to reach more areas that other banks have
not yet penetrated.

[Type text]

[Type text]

[Type text]

It can also be possible that there are no acquisition that

will be made if the universal bank is not that capable to
ascertain their financial capacity and that if they will incur
losses and if the rural bank will be more of a liability
rather than a possible asset. In this case, on its face the
rural bank has no more assets nor liquidated assets
available and the universal bank should be ready with the
obligations that will be transferred by the rural bank to
them.
References
http://ruralbankofcalaca.com
www.bsp.gov.ph/.../StatRep_1Sem2014b.pdf