Chairman’s Message While 2020 will be remembered as the year of COVID-19, it was also year that allowed us at FCB to reflect. The year 2020 showed us PURPOSE. The importance of our role as bankers to ensure the functionality and strength of our communities was made exceedingly clear to us. Our depositors need continued access to their deposits, and our borrowers need access to liquidity for their needs, especially during times of calamity. We at FCB are proud to have provided steadfast service in all our areas. The year 2020 proved our RESILIENCE. We have had to be mentally and emotionally strong to face the unexpected challenges this year, as individuals, and as an organization. Our company was committed to taking care of our people, and our people remained committed to our mission to provide affordable banking services to our clients. The year 2020 is also a year that showed us the importance of ADAPTABILITY. COVID-19 has reminded us that we operate in a Darwinian landscape. It is not the biggest or largest that will survive, but the fastest to adapt. We have adjusted as restrictions and rules kept changing. We have maintained a proactive mindset, while providing tools to support this mindset and to adjust to the New Normal. Offering the online application process for qualified borrowers, offering various outlets for releases, introducing new products, and identifying new markets have all been part of adapting. Maintaining support staff in regional clusters in order to ensure operational continuity has also been essential. We are also proud to announce that our mobile banking app, FCBPay, which is not only responsive to the needs of this time but also an important step towards the future, was officially launched in February 2021. FCB’s 2020 results reflect the fundamental strength of our Bank amidst a very challenging environment. Our Bank continued to perform well in terms of capital adequacy and liquidity. Our capital adequacy and liquidity ratios have consistently been well above regulatory requirements and industry averages; which we have maintained amidst the pandemic. Despite the decline in profitability year on year, our return on equity in 2020 was still above industry average. We will continue our prudent management strategy, while at the same time focus on increasing loan generation in 2021. As the Philippine economy further reopens, GDP is expected to grow between 6.0%-7.0% in 2021. However, economic growth is also largely dependent on the rollout of vaccines. We expect access for the general public by third or fourth quarter 2021. Until the full rollout, COVID-19’s impact will continue to weigh down on our healthcare system and the economy for the next few months. At FCB, we have chosen to concentrate on positivity, continuity and action –that in order for us to serve all the Bank’s stakeholders –being shareholders, employees and customers FCB ANNUAL REPORT 2020 Page 2 alike—we must focus on moving forward. FCB will continue to focus on its niche strategy: countryside banking that is high tech and high touch, under New Normal standards. We are no longer navigating a crisis, but are facing a new reality, and FCB is ready. We are grateful to our Almighty Father for all the blessings. I wish to sincerely thank you all our employees for your incredible dedication, perseverance, and commitment. Thank you to our customers and shareholders as well, for your continued support and trust in FCB. We are proud of what FCB has accomplished thus far, and look forward to a better 2021. Clariville Paz Uy-Evardone Chairman FCB ANNUAL REPORT 2020 Page 3 The President’s Report While the year 2020 has presented the world economy with a major crisis in the form of COVID-19, FCB delivered on our commitments to our clients, our people, our shareholders, and our communities. I’m pleased to announce our performance for the year 2020. Our total deposits grew by 14.5%, or from P12.477 billion to P14.286 billion. FCB persists in its effective and efficient delivery of financial services needed by our market. Total Deposits (in Million Pesos) 15,000 14,000 14,286 13,000 12,000 12,477 11,000 10,000 2019 2020 The Bank started 2020 with good momentum on loan generation, but this was disrupted by COVID-19 and resulting community quarantines and severe travel restrictions. The Bank was still able to increase its loans, with growth of 14.1%, from P11.214 billion to P12.796 billion. The Bank also fully supported Bayanihan I and Bayanihan II, implementing the grace periods for loan payments to assist businesses and consumers heavily impacted by the pandemic. Despite these issues, FCB also maintained the quality of its loan portfolio, as the Bank proactively worked with its affected borrowers and also has limited exposure to hard hit industries (e.g. airlines, tourism, large retail, POGOs, and the like). Total Loans (in Million Pesos) 15,000 14,000 13,000 12,796 12,000 11,000 11,214 10,000 2019 2020 FCB ANNUAL REPORT 2020 Page 4 Despite the pains felt by the banking industry as a whole, FCB still performed above our peers in terms of return on equity. The Bank’s NPAIT posted a decrease from P538 million in 2019 to P404 million in 2020. The decrease was attributable to the change in income recognition of service fees (now amortized over the life of the loan) and residual effects of the reduction in lending rates from the Terms and Conditions of APDS Accreditation (TCAA) with the Department of Education. NPAIT (in Million Pesos) 600 500 538 400 404 300 200 100 2019 2020 The Bank’s total resources grew from P19.299 billion to P21.409 billion or 10.9%, while the total capital posted an increase from P5.324 billion to P5.689 billion, or 6.9%. Total Resources (in Million Pesos) 22,000 21,000 21,409 20,000 19,000 19,299 18,000 17,000 16,000 2019 2020 FCB ANNUAL REPORT 2020 Page 5 Total Capital (in Million Pesos) 6,000 5,689 5,000 5,324 4,000 3,000 2019 2020 FCB continues to be a well-capitalized financial institution and far better capitalized than universal banks. FCB’s risk-based capital adequacy ratio of 33.45% is much higher than the industry, and the BSP-mandated minimum of 10%. In terms of key financial indicators, FCB attained the following: 2019 2020 Return on Average Equity (ROE) 10.60% 7.34% Return on Average Assets (ROA) 2.86% 1.99% Risk-based Capital Adequacy Ratio (CAR) 36.28% 33.45% Your bank continues to perform well in comparison to the average of the thrift bank (TBs) industry, as indicated by the table below: As of 12/31/20 TBs FCB ROE 5.97% 7.34% ROA 0.86% 1.99% CAR * 17.51% 36.64% *Comparison is as of September 30, 2020, which is most recent publicly available CAR data for thrift banks. In 2020, we implemented the following projects: 1. Continued to develop our people by conducting regular meetings virtually to update all employees on health protocols, New Normal standards, operational guidelines, and updates on most recent policies and circulars from the government regulators i.e. BSP, AMLC, etc. 2. Continued enhancements to all hardware, communication, and software resources. 3. Expanded towards new growth opportunities, particularly as we pilot tested the Bank’s mobile banking application, FCBPay. FCBPay is an enhancement to the FCB ANNUAL REPORT 2020 Page 6 Bank’s PITAKArd system, which utilizes QR (Quick Response) Code. The product was launched in Bohol on February 1, 2021. As part of its Corporate Social Responsibility, the Bank has also donated a significant amount for various types of assistance to our communities in response to the pandemic. As we remain proactive in our response to the unusual challenges during these times, I firmly believe we are emerging stronger from the crisis. Moving forward, FCB will continue to implement its business philosophy of managed growth while implementing modern technology in a closed business model. The end view is to minimize security risk and exposure to external hackers and malwares. In closing, I would like to say thank you to our valued customers for your continuing support and to the employees for your dedication and hard work. My sincere gratitude also goes to our shareholders for the trust and confidence you have extended to the officers and staff of the Bank. Thank you and God bless us all. Joseph M. Lacea President April 17, 2021 FCB ANNUAL REPORT 2020 Page 7 ABOUT FIRST CONSOLIDATED BANK WHO WE ARE First Consolidated Bank is a private development bank, established in 1982 when 14 rural banks in Bohol, namely Rural Banks of Antequera, Baclayon, Carmen, Catigbian, Cortes, Dauis, Inabanga, Loay, Pilar, Sierra-Bullones, Tagbilaran, Talibon, Tubigon and Ubay agreed to put their resources together to form the first ever consolidated rural bank in the entire country. The consolidation resulted in the conversion of these rural banks into branches of FCB. The Bank changed its status from rural to development bank in February 1997. FCB is an independent bank, not affiliated with any bank holding company, and has 2,233 shareholders. FCB operates its Head Office in Tagbilaran City, with 133 locations: seventy-eight (78) branches and fifty-five (55) branch-lite units located all across the Philippines. WHAT WE DO As a private development bank, FCB provides basic banking services to its clientele. The Bank serves its customers through deposits, loans and other banking services through its branches that are mostly strategically located in the countryside where majority of the clients are situated.