CHAIRMAN’S ADDRESS

Good morning to the stockholders of Janiuay Rural Bank.

Ladies and gentlemen, I am again privileged and honored to welcome you to our Annual Stockholders Meeting. These are difficult and challenging times and the rules of social distancing prevent the holding of a ‘normal’ business meeting. However, we are allowed to utilize electronic means to communicate among one another and your Board feels that we should conduct a stockholders’ meeting to complete our corporate mandate to apprise the bank’s stakeholders of our results for 2019 which my brother will discuss with you later and for me to address you of the challenges we are facing in 2020. 2020 would have been a challenge like every year we operate. This year would have been self-imposed because we targeted robust objectives in our business growth and profit results due to the two new branch/branch-lite units we opened late last year.

Who would have thought that this covid-19 pandemic would derail all our plans and efforts? There are significant obstacles ahead and the business sector has virtually stopped operating, leaving depositors, borrowers, owners, workers, teachers at home to do little. That description of course fits you and me.

But there is a little band of people that rise above this difficult environment because of the importance of banking. This is my brother Dennis, Jiza, the officers and staff of Janiuay RB. Through all the risks they face they have continued to rise above these and continue to run the bank for our depositors and borrowers and the population we serve. While all staff deserve praise, of particular importance deserving of our gratitude are the three staff of JRBI (Bernie, Rhea and Alvin who drives for them) who perform the risky and difficult work of replenishing our ATM units. These machines are our main link to the public who need funds for their salary payments, transfers /remittances, pension and 4Ps disbursements. In many cases aside from the bank visit itself and other remittance agencies, this is the only way they can access their funds. We have adjusted shortened work hours and a 3-day week for City BLU since without transport no client can reach us there. Many commercial banks do not even open all their branches and those they open until 1pm only.

Income will be affected this year. Every bank will face the difficulties that we will face. The important thing is where the bank is coming from – a position of strength or weakness? All I can say to you is that your bank before Covid had very strong financials – strong capital adequacy ratio (23% vs. Minimum 10%) and minimum liquidity ratio of 41% vs. 16% mandated. Will the downturn affect us? Of course. We are not immune, rest assured we will hurdle the difficult times ahead. Your bank will need everyone, every stockholder to contribute to helping the bank through these hard times. With business and employment just returning, we will need to obtain new loans in all categories, particularly the business sector because loans is our lifeblood.

Thank you.

LEOPOLDO H. LOCSIN Chairman

Note: Delivered by the Chairman of the Board during the Annual Stockholders’ Meeting held last May 18, 2020 via Videoconference (Zoom Application).

JANIUAY RURAL BANK, INC. 2019 ANNUAL REPORT Page 1

THE PRESIDENT’S REPORT

2019 RESULTS Increase/Decrease 2018 2019 Php %

I. Income

Interest Income 13,842,579 16,702,597 2,860,018 20.7 Interest Expense 3,477,403 3,927,971 450,568 12.9 Net Interest Income 10,365,176 12,774,626 2,409,450 23.2 Other Income 7,927,258 8,781,039 853,781 10.8 Non-Interest Expense 16,149,950 17,652,412 1,502,462 9.3 Net Income after Tax 1,708,383 1,891,964 183,581 10.7

Balance Sheet

Assets 227,915,484 252,721,423 24,805,939 10.9 Equity 47,005,918 48,897,882 1,891,964 4.0 Deposit Liabilities 178,648,122 198,841,929 20,193,807 11.3 Total Loan Portfolio (net) 122,746,681 135,837,202 13,090,521 10.7

FINANCIAL PERFORMANCE 2019 VS 2018

The Bank’s Interest Income grew 20.7% in 2019 from P13.8M to P16.7M as we resumed our full year APDS operations (2018 had a 6 month- moratorium on APDS releases); Loan Portfolio driven by the APDS business grew 10.7% from P122.7M to P135.8M in 2019, an increase of P13.1Million. Deposit liabilities increased 11.3% or P20.193M to the highest level attained by the bank – P198.841M. Bank’s Service Charge Income grew 43.2% or P1.940M due to the increase in the APDS portfolio which is SC driven. However the gain here was offset by the loss of our 4Ps distribution income which resulted in a gain of only P854K in bank’s Other Income. On the other hand, bank commissions gained P435k in 2019 due to the significant growth in our ATM volume. This growth in ATM withdrawal volume is due to 4Ps beneficiaries now using ATMs to receive their grants while in previous years these were distributed in cash form. Interest Expense grew 12.9% mirroring the growth in deposit liabilities. Non-Interest Expense of the bank grew 9.3% or P1.502M, due to Compensation/Salaries growing to full year booking of high cost officer positions like the Internal Auditor and Compliance Officer (transfer from Loans) and in particular due to the increase in bank head count following the opening of the two new branch/branch lite units in Tapaz, and Concepcion, Iloilo. This last point of branching expansion deserves further comment. Management and Board has recognized that the bank has reached a plateau in its growth, this despite the dramatic increase of the bank’s deposit liabilities which is driven by input from the current depositor base. However, loan growth in new directions (the growth now is from the APDS business) – particularly MSMEs (business) and agricultural has been slow. There are missed opportunities in these borrowing sectors which is where our long term growth strategy is pinned on as these sectors parallel the government’s objectives of economic growth and stimulus. These sectors also present a much higher rate of interest yield than the APDS loan portfolio on which our lending is anchored and these are the sectors that we do not serve so well.

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Thus early in 2019, Management decided to explore other areas of growth in particular geographic opportunities far from where bank operations currently exist. Thus were born the applications to establish branch units in two new areas that offered growth potential. This was speedily approved by BSP in mid-year and the units were opened in the 3rd and 4th quarter of 2019.

PERFORMANCE MEASURES AND RATIOS

2018 2019 Return on Average Equity 3.69% 3.86% Net Interest Margin 5.27 % 6.10%

2018 2019 Risk-based Capital Adequacy Ratio 22.55% 22.80% Past Due Ratio 17.56% 12.94% Loans (net) to Deposit Ratio 68.71% 68.31% Book value per share P144.63 P139.56 Outstanding shares 325,000 350,000

CAMELS rating of the bank remained at 3 after the December 2019 General Examination of the bank.

HIGHLIGHTS OF PERFORMANCE MEASURES AND RATIOS

The bank’s capitalization is solid. Risk-based Capital Adequacy Ratio of 22.8% by year end represented a slightly higher rate than 2018’s 22.55% confirming the bank’s strong capitalized position; Past due loans ratio declined to 12.94% from 17.56% as large borrowers in default either were taken out by other lenders, paid out their loans or returned to current status. . Loan volume grew significantly – P13Million or 10.7% and while the increase of 11.3% in our deposit liabilities was about the same percentage -wise with loan growth, the peso growth in deposits was much higher than loans, thus Loans to Deposit Ratio (net) declined to 68.3% by year end 2019 from 68.7% in 2018. Early in 2019, BSP approved bank to declare stock dividends of P2.5Million increasing the outstanding capital stock to 350,000 shares. So, despite an increasing net worth, the bank’s book value per share declined to P139.56 due to the dilution effect.

2020 OUTLOOK

INCOME 2019 2020 % Incr. Gross Interest Income 16,468,907 23,540,000 42.9 Non-Interest Income 7,812,481 12,738,000 63.0 Gross Income 24,281,388 36,278,000 49.4 Other Expenses 22,705,238 29,072,000 28.0 Net Income After tax 1,840,295 5,046,000 274.2

BALANCE SHEET 2019 2020 Assets 240,473,694 265,000,000 Liabilities 191,868,006 213,000,000 Equity 48,605,688 52,000,000

JANIUAY RURAL BANK, INC. 2019 ANNUAL REPORT Page 3

EXPECTATIONS – 2020 - ALL BETS ARE OFF

There were ambitious objectives in the bank’s 2020 plans as outlined by the Chairman in his address, in particular the results expected from the two new units. However, everything is off the table now with the Covid-19 pandemic starting March, 2020. Our entire focus is now on SURVIVAL. Lending has dried up, but we know there is a pent- up demand from the consumer side and the business delivery side to satisfy the consumer need, whether food or goods or services. Everyone from the highest level of ownership and board and management, officers and staff need to put up 100% focus on the job at hand. It will not be an easy task. Despite our strong capital base, the length of the lack of business and the expectation of prolonged losses in the coming months will put pressure on the management and stockholders for in the worst case, capital infusion to stem the tides may have to be considered. We may have to be creative in ensuring how best we can reduce expenses to minimize the anticipated losses by considering areas of rationality we may not have contemplated before.

A NOTE ON THE INITIATIVE OF PRODUCERS TO ACQUIRE JANIUAY RB

Early this year, Producers Savings Bank submitted an attractive offer to acquire Janiuay Rural Bank, which our stockholders were highly positive with. We began compiling the proper documentation of the stockholders in anticipation of a highly do-able transaction. After the signing of a MOA between JRBI and Producers and the initiation of their due diligence of our bank, subsequent to their first week assessment, the officer in charge of the DD began taking a position that he felt the offer of their President was high and took a highly negative position on JRBI’s value. Whether this was gamesmanship or deliberate on the negotiating process we cannot tell. Your President feels that in many of his arguments, he was unnecessarily discounting the positive strengths of bank’s capital, our goodwill and current structure and missing out (or simply ignoring) on the opportunity to improve our bank operations to the likeness of Producers. This writer feels, you acquire another because that other represents an opportunity to make it grow and improve it and you should price on potential. If you acquire one of the same strength and condition, there is no upside and a purchase does not make sense because there is no pricing on opportunity anymore. At any rate, Covid-19 intervened and of course with drastic lockdowns and the downturn in the financial markets from the loss of businesses, communication has ceased. We are and I am sure Producers are facing significant challenges to our respective banking operations and these negotiations have either temporarily ceased or even permanently. So, my message to the stockholders on this aspect is to disregard the acquisition thought at this time. If it comes or not come to pass is no longer in our hands.

DENNIS H. LOCSIN President

Note: Delivered by the President during the Annual Stockholders’ Meeting held last May 18, 2020 via Videoconference (Zoom Application). JANIUAY RURAL BANK, INC. 2019 ANNUAL REPORT Page 4

INCOME 2019 2018 % Incr. Gross Interest Income 18,193,000 13,842,579 19.0 Non-Interest Income 7,781,000 7,927,258 - 1.8 Gross Income 25,974,000 21,769,837 19.3 Other Expenses (incl. provision/impairments) 23,612,000 20,061,454 17.7 Net Income After tax 2,362,000 1,708,383 38.3

BALANCE SHEET 2019 2018 Assets 226,078,000 227,915,484 Liabilities 176,806,000 180,909,566 Equity 49,272,000 47,005,918

KEY STRATEGIC PLANS 2020 – 2024 KEY DETERMINANTS

1. REVENUE a. Continue loan portfolio diversification by emphasizing aggressive loans marketing of: i. business loans (SMEs) ii. agricultural b. Maintain reliance on but with de-emphasis on the growth of teachers’ salary loans to maintain the revenue in this category while the other portfolio gains are ramping up. By 2022 – target percentage in the loan portfolio is 50% and by 2024 – 40%. c. Improve net interest margin with loans designed to increase interest revenue rather than monthly principal and interest amortizations. d. Recover the loss of the 4Ps business through additional volume growth in the ATM units in our operations. e. Focus efforts and solidify operations and business growth in the 2 new branch units established by the bank and by 2022, determine if the results warrant additional expansion. f. Additions of new products in our loan portfolio are limited. The bank does not have interest nor the capability in real estate, automobile/motorcycle financing nor lending through micro-finance. g. Bank-wide as the remittance and transfer of money via electronic systems such as PhilPaSS, Pesonet and Instapay continue to grow, to ride on this bandwagon and push awareness in the various branches/BLUs so as to grow the other income revenue tied to the transactions.

2. CAPITAL/RESOURCES a. Expect the two new branch/bl units to generate P10M deposit growth every year for the next 5 years. This will add P100M deposit liabilities by 2024. Each unit will increase loans by P8M every year. b. Increase paid-in capital to 40M by 2022 and to 45M by 2024. c. Increase total equity to P62M by 2022 and P68M by 2024. d. Maintain car at 20-23% during the 5-year period in question. e. Reduce past due ratio to 11% by 2022 and 9% by 2024. f. Organization – develop a plan to ensure adequate supervision of the increased number of branch/bl units by middle of 2020 and focused loans growth in all units including head office at the same time. g. Strengthen the central function roles of compliance, internal audit and information technology. h. Reduce ROPA by 70% by year end 2020. JANIUAY RURAL BANK, INC. 2019 ANNUAL REPORT Page 5

3. EXPENSE CONTROL a. Maintain rates on deposit liabilities. b. Evaluate options on insurance charges and licenses and tax expense reviews. c. Review other expenses (electricity, transportation, stationery & office supplies, etc.) To determine reductions in Q1, 2020.

4. OTHER ISSUES a. BSP focus on strengthening the industry shows no abatement in the closure of weak undercapitalized banks nor banks with questionable owner transactions. This will translate to more close-in supervision tactics in an otherwise already highly regulated environment. b. The message to consolidate and merge remains and in fact a new message has been telegraphed that a more appropriate program to replace the SPCRB which had spotty results. c. The bank’s aging ownership who are actively involved in the bank’s management is not opposed to 3rd party interests/inquiries for a relationship with JRBI. In the past, previous negotiations had developed, the final tipping point has just not been hurdled.

Major Strategic Initiatives

The following were the areas of strategic focus by JRBI in 2019/2020:

1. Following the establishment of the new branch in Concepcion and the BLU in Tapaz, the expansion of geographic coverage would be a substantial source of deposit and loan growth for the bank in 2020 and beyond. 2. Strong focus in expanding the loan portfolio in the business sector – not only to accomplish compliance in the requirement (10% of the loan portfolio) for lending to this sector, MSMEs represents strong interest income potential capped by institutional assist mechanisms of the government (e.g. Philippine Guarantee Corporation) which will mitigate the high risk profile of this borrower profile especially on the smaller size subsector. 3. Maximize lending business in the Agri/Agra sector to attain the required sector percentage of the bank’s loan portfolio thereby avoiding the penalties imposed on the shortfall. 4. As we are not able to access the cash distribution of the government’s Social Amelioration Fund (SAF), bank must continue to ensure it manages through timely cash supply of our portfolio of installed ATM units to maximize cash availability and withdrawal transactions particularly those with the 4Ps ATM disbursement program that used to be handled by the bank. This was one of the challenges of lost income opportunity that our already unit installed base partially repelled. 5. Bank has recognized the value of cash remittances as a business opportunity and has worked assiduously at getting accredited for Instapay/Pesonet accreditation. We are currently gaining experience via our linkage with Union Bank’s i2i cash remittance system (admittedly a one way street in the current relationship). As part of its digitalization program, cashless money transfers is a significant revenue opportunity as seen by the phenomenon that is Palawan Pawnshop. 6. Defining the bank’s APDS loan portfolio this late in the itemization of strategic initiatives is not meant to diminish its huge importance to the bank’s profitability and business model. On the contrary and despite the relatively low interest income rate, the guarantee of collectability is its main attraction. When this business was put on hold in the last half of 2018, the challenge of portfolio maintenance became prime and which we hurdled successfully in 2019. We continue to rely on this portfolio for its surety but recognize that in the years ahead, its importance will diminish unless circumstances intervene (which has happened in 2020).

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BOARD OF DIRECTORS

❖ LEOPOLDO H. LOCSIN Chairman Filipino, 77 years old

Leopoldo H. Locsin is the Chairman of the Board of Directors of Janiuay Rural Bank, Inc. He took the chairmanship in 2017. He is a director/stockholder of Locsin Ventures Development Inc. He was the President of JRBI from 1975 until 2002. He had various trainings with RBRDFI. He is a graduate of the Bachelor of Science in Business Administration from the University of the East.

❖ DENNIS H. LOCSIN President/Director Filipino, 73 years old

Dennis H. Locsin is the President and a director of Janiuay Rural Bank, Inc. He took the reins for JRBI in 2003 and has long been responsible for the turn- around of the bank. He is the Vice President and a stockholder of Locsin Ventures Development Inc. At Eye Center, he is a director/stockholder while same is true with Country Bankers Insurance Corp. and Country Bankers Life Insurance Corp. He had his Masters’ Degree in Business Administration from the Asian Institute of Management and was a graduate of Bachelor of Science in Natural Science from Ateneo de Manila.

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❖ MA. JIZA L. BARREDO Vice President- Operations/Director Filipino, 56 years old

Ma. Jiza L. Barredo is the Vice-President and a director since 2011. Prior to the position, she joined JRBI in 2001 as the Internal Auditor/Compliance Officer then later as the Corporate Secretary. She is also a director of Locsin Ventures Development, Inc. She had various trainings and seminars from BSP, RBRDFI, RBAP, Confed of WVRB and NLRC. She is a graduate of Bachelor of Science in Business Administration major in Accounting from the University of the in the Visayas.

❖ CARLOS NESTOR S. ALDEGUER Director Filipino, 65 years old

Carlos Nestor S. Aldeguer is a director of Janiuay Rural Bank, Inc. since May 11 ,2019. He is a member of the Audit Committee. He is also the President and Managing Director of Aga de Oro Lending Corporation which was founded in December 2015. His banking experience was with Bank of the Philippine Islands (BPI). He had various bank-related trainings with BPI as an officer and after a series of promotions aff, he rose from the ranks to being the Area Business Director in 2014 prior retirement. He had undergone training with RBRDFI. He had MBA units with the University of the Philippines in the Visayas and was a graduate of Sacred Theology from the University of Santo Tomas.

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❖ ROBERTOJ. GARCIA Director Filipino, 57 years old

Roberto J. Garcia is a director of Janiuay Rural Bank, Inc. since May 11, 2019. He is a member of the Risk Management Committee. He is the President and stockholder of Parisol Realty Development Corporation. He is also the owner of Samurai Motors, Samurai Talabahan and Champion Builders Supply. He had undergone training with RBRDFI. He was a graduate of Bachelor of Science in Commerce from Colegio de San Juan de Letran .

❖ BENJAMIN JESUS C. JARANTILLA Independent Director Filipino, 51 years old

Benjamin Jesus C. Jarantilla is a director of Janiuay Rural Bank, Inc. since 2007. He is a fishpond owner in and is a stockholder of Locsin Ventures Development Inc. He had various trainings from the RBRDFI. He graduated with a degree in Bachelor of Science in Commerce major in Business Administration from St. Paul’s College of Iloilo.

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❖ ISABELITA O. POJOL Independent Director Filipino, 77 years old

Isabelita O. Pojol is a director of Janiuay Rural Bank, Inc. since 2007. She was JRBI’s cashier from 2003 until 2006 while a savings/time bookkeeper from 1971 until 2003. She had various trainings and seminars from RBAP, RBRDFI and BSP. She graduated with the degree in Bachelor of Science in Commerce from the University of San Agustin.

❖ LORY PE R. LOCSIN Corporate Secretary Filipino, 60 years old

Lory Pe R. Locsin is the Corporate Secretary of Janiuay Rural Bank, Inc. She assumed the office in 2011 while a Director from 2005 until 2011. She is a Director of Locsin Ventures Development, Inc. With Health Link, she is also the Corporate Secretary. She had various training with RBAP. She took her Doctor of Medicine course from West Visayas State University and her Bachelor of Science in Biological Sciences from the University of the Philippines in the Visayas.

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Corporate Vision and Mission Statement

Vision

TO BE THE PREFERRED RURAL BANKING LOANS PROVIDER AND DEPOSIT HAVEN IN , OFFERING THE MOST CONVENIENT BANKING SERVICES TO SMALL AND MEDIUM SCALE BUSINESSES, AS WELL AS THE AGRICULTURAL SECTOR AND GOVERNMENT EMPLOYEES.

Mission

AS SERVICE-ORIENTED BANK, WE WILL PRIORITIZE THE NEEDS OF OUR CLIENTS AND DELIVER THE HIGHEST QUALITY AND EFFICIENCY OF SERVICE TO GUARANTEE THE UTMOST CUSTOMER SATISFACTION, ENABLING THEM TO BE GOOD CITIZENS OF SOCIETY.

Core Values

L – EADERSHIP 0 – PTIMISM C – OMPETENCE S – USTAINABILITY I – NTEGRITY N – URTURING NEEDS

Name and Nature

The name of the corporation is the JANIUAY RURAL BANK, INC. (JRBI) as approved under Securities and Exchange Commission Certificate of Registration No. 11807 dated October 26, 1956. It is located at Crispin Salazar St., , Janiuay, Iloilo, Philippines.

The JANIUAY RURAL BANK, INC. is authorized to operate as a rural bank on December 15, 1956 under the provision of R.A. 720 and 7353, as amended and the rules and regulations duly promulgated by the Monetary Board of the Bangko Sentral ng Pilipinas under Certificate of Authority No. 572 dated October 3, 1972. The original By-Laws and Articles of Incorporation were adopted by the stockholders in a meeting and submitted to the CPD-DRB and endorsed to the Securities and Exchange Commission, Manila with six (6) incorporators : Maria L. vda. De Araneta, Jose C. Locsin Jr., Juan C. Locsin, Lourdes C. Locsin, Ester L. Jarantilla and Manuel C. Locsin.

JRBI was the second rural bank established in Iloilo and one of the more established rural banks in the country. It has turned 63 last December, 2019 and has been operating continuously and successfully, a testament to the prudent manner that the bank’s owners have managed the affairs of the bank and services to its depositors and borrowers. To this day, the bank has never compromised its adequacy of capital or the safety of its depositors, preferring to maintain a steady if not spectacular growth in its size.

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Corporate Governance System

1. ADMINISTRATION – The bank’s corporate administration is entrusted to professionals with experience and proven expertise in the field of rural banking and corporate governance as well as in human resource development and support services of the corporate staff and employees.

2. TRAINING AND DEVELOPMENT – The bank’s officers and employees have undergone training through the Bangko Sentral ng Pilipinas’ Institute of Rural Banking where the basic rural banking course (BRBC), directors and other executive officers’ training courses are extended to meet the mission and social responsibility of the corporation.

Other seminars/workshops extended to bank officers and employees are provided by RBAP with the support of the Chamber of Iloilo Rural Banks, Inc.

CORPORATE BOARD OF DIRECTORS

The Board of Directors, is composed of seven (7) directors, two (2) of which are elected as independent directors. The Board shall elect officers to be composed of the President, Vice- President, Manager, Secretary, Treasurer/Cashier, Internal Auditor and Compliance Officer whose duties and responsibilities as such are defined in the By-Laws.

The position of a director is a position of trust. A director assumes certain responsibilities to different constituencies or stockholders, its depositors and creditors, its management and employees and the general public at large. These stockholders have the right to expect that the Bank is being run in a prudent and sound manner.

The Board of Directors is primarily responsible for the corporate governance of the Bank. To ensure good governance, the Board establishes strategic objectives, policies and procedures that will guide and direct the activities of the Bank and the means to attain the same as well as the mechanisms for monitoring its management performance.

Role of the Chairman

The President was concurrent Chairman until this duality of position and function was disallowed by the BSP. The former President and Chairman Leopoldo Locsin was the bank’s operating manager prior to the incumbency of the current President.

The Chairman of course conducts the board meeting at which the bank’s performance and issues and problems are discussed, ensures that issues are treated fairly but transparently and solicits comments and opinions from the directors. He also follows the agenda in conducting the meeting making sure all issues are approved by the board where this is needed.

As the longest serving manager and director of the bank, the Chairman has a good feel for the banking operation and he contributes his input on loan applications as they are routed to him as a member of the Credit Committee. He is less involved in the day to day operations of the bank.

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ATTENDANCE MEMBER/S NO. OF MEETINGS ATTENDANCE % LEOPOLDO H. LOCSIN - Chairman 13 13 100.00 DENNIS H. LOCSIN 13 13 100.00 MA. JIZA L. BARREDO 13 13 100.00 LORY PE R. LOCSIN 13 13 100.00 CARLOS NESTOR S. ALDEGUER 13 12 92.31 ROBERTO J. GARCIA 13 13 100.00 BENJAMIN JESUS C. JARANTILLA 13 13 100.00 ISABELITA O. POJOL 13 13 100.00

Committees

1. THE AUDIT COMMITTEE

The Audit Committee is composed of Non-Executive Directors of whom two (2) are independent directors including the Chairman, who have extensive experience in accounting, auditing and related financial management expertise or experience.

The Audit Committee shall have the following duties and responsibilities: 1. To be responsible for the setting up of the bank’s internal audit division; 2. To be responsible for the appointment of the bank’s Internal Auditor; 3. To be responsible for the appointment of the bank’s External Auditor; 4. To have an explicit authority to investigate any matters within terms or reference, full access to and cooperation by management and full discretion to invite any director or executive officer to attend its committee meetings and adequate resources to enable it to effectively discharge its functions; and 5. To conduct an annual review of the bank’s internal control system, including financial, operational and compliance control, risk management and other areas of concern that could affect bank management.

ATTENDANCE MEMBER/S NO. OF MEETINGS ATTENDANCE % ISABELITA O. POJOL - Chairman 5 5 100.00 BENJAMIN JESUS C. JARANTILLA 5 5 100.00 CARLOS NESTOR S. ALDEGUER 5 5 100.00

2. RISK MANAGEMENT COMMITTEE

The Risk Management Committee is composed of Non-Executive Directors of whom two (2) are independent directors including the Chairman who is not the Chairman of Audit Committee and who possesses a range of expertise as well as adequate knowledge of the Bank’s risk exposure to be able to develop appropriate strategies for preventing losses and minimizing the impact of losses when they occur.

The Risk Management Committee shall have the following duties and responsibilities:

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1. To oversee the limits of discretionary authority that the Board delegates to management, ensure that the system remains effective and that the limits are observed and immediate corrective actions are taken whenever limits are breached; 2. To identify and evaluate exposures by assessing the probability of each risk becoming reality and by estimating its possible effect and cost; 3. To develop risk management strategies by defining the strategies for managing and controlling the major risk to reduce the chance of harm and failure or minimize losses if the risk become real; 4. To implement the risk management plan by conducting regular discussions on the bank’s current risk exposure based on regular management reports and direct concerned units or offices on how to reduce these risks; and 5. To review and revise the plan as the need arise to ensure its continued relevancy, comprehensiveness and effectiveness.

ATTENDANCE MEMBER/S NO. OF MEETINGS ATTENDANCE % BENJAMIN JESUS C. JARANTILLA – 100.00 Chairman 3 3 ISABELITA O. POJOL 3 3 100.00 ROBERTO J. GARCIA 3 3 100.00

Selection Process for the Board and Senior Management

Board of Directors President and Chairman in discussing matters of the board’s oversight of the bank and its operations determine if the board and the individual directors are effective in their participation in board discussions. As these discussions commonly take place during board or committee meetings, each director is expected to express conclusions, critiques and recommendations directed towards the enhancements of processes and operations ensuring that at JRBI, these are transparent and fair and in keeping with familiar regulations. Certain directors that are not productive nor do not participate effectively are candidates for replacement by individuals more qualified to perform the roles of directors. The President and Chairman who represent the majority of bank ownership determine possible candidates based on regulatory requirements and some small degree of familiarity towards the individual’s capacity and desire to act as board director. A Search Committee has not been established though this might be the most appropriate vehicle in order to expand the search of qualified candidates.

Senior Management Currently, the President and CEO and the Vice President of Operations represent the bank’s top management reporting to the bank’s Board of Directors. The next layer of management is held by the Compliance Officer, Internal Audit Officer and the Bank Accountant. The secondary level of management is selected from a further level of these individual’s reports. CO and IA do not have reports (due to the limited bank’s size), only the Bank Accountant. Being a family privately held institution, the decision queue is skewed towards a family candidate to replace positions in the top 2 of the bank. Skewed though not a certainty. The outsider must recognize that the shareholding structure leans toward self proposal and approval of top management replacements including replacements of self. This is about as candid a statement as it gets on top management replacements. The bank and the major shareholders do

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not see this as the only solution. It is recognized by the shareholders that there is an available pool of top managers in other banks that could be enticed to move to Janiuay RB. Our search for candidates to fill the Loans Manager position of the bank has been fruitless these past months and a search for even a higher placed individual looks daunting.

Anti-Money Laundering Policy

Janiuay Rural Bank, Inc. (JRBI) adopts the policies of the Bangko Sentral ng Pilipinas (BSP) (a) to protect the integrity and confidentiality of bank accounts and ensure that its stockholders, in general, and the covered persons, in particular, shall not be used, respectively, as a money laundering site and conduit for the proceeds of unlawful activity; and (b) to protect life, liberty and property from acts of terrorism and to condemn terrorism and those who support and finance it and reinforce the fight against terrorism by criminalizing the financing of terrorism and related offenses. JRBI shall develop sound risk management policies and practices to ensure that risks associated with ML/TF such as reputational, operational, and compliance risks are identified, assessed, monitored, mitigated and controlled, as well as to ensure effective implementation of risk management, to the end that JRBI shall not be used as a vehicle to legitimize proceeds of unlawful activity or to facilitate or finance terrorism. The four (4) areas of sound risk management practices are: 1. adequate and active board and senior management oversight; 2. acceptable policies and procedures embodied in a money laundering and terrorist financing prevention compliance program (MLTFPP); 3. appropriate monitoring and Management Information System (MIS); and 4. comprehensive internal controls and audit.

Performance Assessment Program

Every year, the members of the Board of Directors are given annual appraisal on their performance during the year. Each member is evaluated according to six (6) identified factors which encompass the implementation of their respective duties and responsibilities on top of the various trainings and seminars for continuing education and in accordance with the provisions of the MORB as prescribed by BSP. Knowledge of work or technical competence, job commitment and reliability, leadership, integrity, decisiveness and judgement and attendance are specific factors identified for the members of the Board. These will evaluate the members’ performance and contribution for the Board as a whole.

Orientation and Education Program

Bank hired an HR Consultant to assist the bank in its human resource practices and to undergo organizational smoothing in its structure and to define positions in the formal way including job performance appraisals, training and educational requirements.

These are in process. Some parts of these functional requirements have been approved.

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Fringe Benefit Program

Under the Financial Assistance for officers and employees under Sec. X338 of the MORB, the Bank has approved a revised Fringe Benefit Program for its officers and employees last October 2018. In its desire to improve the living conditions of its officers and employees to cushion the high cost of living and to meet their housing, transportation, household and personal needs, the Board of Directors adopted a financial assistance plan known as “JRBI’s Fringe Benefit Program”. The program was first adopted in the year 2008 and revised/amended on June 11, 2012 and was again revised last September 28, 2012.

For the third time in July 2019, “JRBI’s Fringe Benefit Program (FBP) was revised to accommodate certain issues concerning actual implementation; to suit the needs of the time and to give more benefits to its officers and employees.

Related Party Transaction Policies and Procedures

These policy guidelines on Related Party Transactions (RPTs) were prepared in compliance with BSP Circular No. 895 dated December 14, 2015 directing all banks that overarching policy in handling RPTs shall be prepared and approved by JRBI’s Board of Directors. Janiuay Rural Bank, Inc. crafted its initial RPTs on January 19, 2016. These policy guidelines shall be the second (2nd) revision/amendment on the said RPTs. The Bangko Sentral ng Pilipinas (BSP) recognizes that transactions between and among related parties create financial, commercial and economic benefits to both JRBI as well as the entire group, thus, RELATED PARTY TRANSACTIONS (RPTs) shall be allowed, provided, that these are done on an arm’s length basis.

REMUNERATION POLICY

REMUNERATION POLICY ensures payment of equitable, competitive remuneration to all JRBI employees which is based on government regulations, individual performance, the bank’s market benchmark, industry practices and bank performance as a whole. *It aims to determine remuneration based on JRBI’s financial position, growth and trends; *To align reward and recognition mechanism directly to the effort, performance, dedication and achievement related to the bank’s operations; *To attract, retain, motivate and promote talent and to ensure long term sustainability of key positions and create competitive advantage; and *To ensure compliances and maintain high standards in governance. This policy shall include FIXED Remuneration such as basic minimum wages, salary leveling and government mandated compensation, 13th month pay, while VARIABLE remuneration includes company-initiated compensation such as fringe benefits, performance incentives. All bank employees, in all branches, are covered by this Policy, which includes probationary, regular, casual/contractual, project-based status.

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Self-Assessment Function

The Compliance Officer, who is a Senior Bank Officer, shall have the following duties and responsibilities: 1. Build-up a library of relevant laws, rules and regulations issued by the BSP, SEC, PDIC, BIR, SSS, DOLE and other national and/or local government laws and codes for the effective implementation of said laws/codes; 2. Keep the library current and up-to-date by seeing to it that copies of the new laws and regulatory body issuances, interpretations, amendments, repeal and/or revocations are on file and properly disseminated to all officers and employees of the bank; 3. Evaluate each new law, rule and regulation with the following objectives: a. Identification of the department/office and the officer affected; b. Providing implementing guidelines; c. Identification of the risk of non-compliance thereto. 4. Conduct regular meetings and/or seminar/workshop among officers and staff on the interpretation, implementation guidelines and risk implementations of each law, rule and regulation in the operation of the bank; 5. Adopt an open communication process for the free flow of information and compliance issues; 6. Consult with appropriate regulatory agencies for additional clarification on specific provision of laws, rules and regulations and on problems encountered therefrom and discuss compliance findings with such agencies; 7. Provide continuing orientation and training of existing staff as well as new employees to ensure that all personnel are adequately trained and supervised and made aware of the existence of particular laws, rules and regulations and ethical standards of the bank. The duties and responsibilities of the Internal Auditor shall be as follows: 1. Responsible for the internal audit activities of the bank; 2. Render annual audit report to the audit committee and management in areas of financial audit, compliance audit, operations audit, management audit and information system audit; 3. Develop an effective internal control system and make an annual review of the system to determine its efficiency and effectiveness; 4. Suggest/recommend to the audit committee deficiencies/exceptions on the results of examination undertaken; and 5. Perform other duties as may be prescribed by the Audit Committee.

Retirement and Succession Policies

Janiuay RB funds a retirement program administered by RCBC to cover the financial requirement of staff who are qualified to retire under the program. On the succession plan, it is premised on the maintenance of the existing stockholders’ equity without significant change. For the Board of Directors, main requirements are having multi-faceted business experience, being fit, education-qualified with honesty and integrity with the mandate to provide governance oversight within laws, regulations and company policies. For Senior Management and Officers, knowledge and experience with consideration on the reputation, conduct and behavior.

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Declaration of Dividends

The bank has an authorized subscribed capital in the amount of Forty Million Pesos Only (P 40,000,000.00), Philippine currency but the subscribed capital amounted only to Thirty Five Million Pesos (P 35,000,000.00). Thus, an amount of Five Million Pesos (P 5,000,000.00) is still available to be subscribed by the stockholders. Under its Amended By-Laws, dividends may be declared in the form of cash, stock or property dividends to all stockholders of record on the basis of their outstanding stock subject to the approval by the Board of Directors in case of cash dividends and ratified by 2/3 of the outstanding capital stock of the stockholders present in case of stock or property dividends. Such dividend shall be declared from the unrestricted surplus of the corporation and payment of such dividend declaration shall be in accordance with the Section X136.2 of the Manual of Regulations with respect to prior approval by BSP. Last February, 2019 Board Meeting, the capital account was reported to again continue to increase. Because of the income, the Board approved the declaration of stock dividends equivalent to P 2.5M subject to the ratification in the 2019 Annual Stockholders’ Meeting which were credited to stockholders on record as of December 31, 2018. (Note: Due to the staggered booking of loan loss provisions as incurred in the new BSP regulations implemented in 2016, JRBI is prohibited from declaring cash dividends. However, said loan loss provisioning were fully booked/complied last December, 2019).

Note: Ratification was done during the Annual Stockholders’ Meeting which was sent to Bangko Sentral ng Pilipinas (BSP) and was duly approved.

Consumer Assistance Management System (CAMS)

Janiuay Rural Bank, Inc. (JRBI) hereby commits to conduct ethical business practices and will not engage in practices that may cause harm to the consumer as well as consider consumer outcomes in the conduct of the business.

JRBI must ensure that their consumers have a reasonable holistic understanding of the products and services which they may be acquiring or availing. In this context, full disclosure and utmost transparency, to the extent allowed under applicable laws and regulations, are the critical elements that empower the consumer to make comparisons and informed financial decisions. This is made possible by providing the consumer with ready access to information that accurately represents the nature and structure of the product or service, its terms and conditions, as well as its fundamental benefits and risks.

Financial consumers have the right to expect that their financial transactions, as well as relevant personal information disclosed in the course of a transaction, are kept confidential and are secured. Towards this end, JRBI must ensure that they have well-articulated information security guidelines, well-defined protocols, a secure database, and periodically re-validated procedures in handling the personal information of their financial consumers. This should be an end-to-end process that should cover, among others, the array of information that will be pre- identified and collected, the purpose and manner of gathering information, the lnformation Technology (lT)-security infrastructure of JRBI, and the protocols for disclosure, both within JRBI and especially to third parties.

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Corporate Social Responsibility Initiatives

In the spirit of Christmas, giving is one way of celebration. We decorate, visit and offer presents for family, friend, relatives and especially our less fortunate brothers and sisters. This year, JRBI arranged meals and giveaways to our special group of friends, The Indigenous People Learners from the Doña Lucia Locsin IP School located in Brgy. Matag-ub, Janiuay, Iloilo Province.

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The singing voices of the children together with their teachers and leaders provided for their hope, their dreams and their gratitude for the simple gifts each of them received.

For it is in giving that we receive.

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Name of Stockholders/Subscribers Nationality SHARES AMOUNT RATIO 1. Dennis H. Locsin Filipino 98,889 9,888,900.00 28.26% 2. Leopoldo H. Locsin Filipino 68,262 6,826,200.00 19.50% 3. Frolu H. Locsin Filipino 45,270 4,527,000.00 12.93% TOTAL 212,421 21,242,100.00 60.69%

List of Officers

HEAD OFFICE – JANIUAY, ILOILO 1. DENNIS H. LOCSIN President

2. MA. JIZA L. BARREDO Vice – President/Operations

3. ROSCEL E. MATUTINA Compliance Officer

4. EVE M. LEGRIA Acting Internal Auditor

5. GLENN P. MIRAVITE Credit Administrative Officer

6. BERNARDITA D. CABAIS Treasurer/Cashier/Security Officer

7. ANA LIZA C. VILLANUEVA Accountant

BRANCH LITE UNIT – 8. DINA M. URIARTE Branch Lite OIC/Cashier

ANINI-Y BRANCH - 9. CIRILO S. GELVEZON, JR. Branch Head

10. MA. TERESA T. MARCELO Branch Cashier

BRANCH LITE UNIT – TAPAZ, CAPIZ 11. RACHEL L. ROTE Branch Lite Head/Cashier

CONCEPCION BRANCH - ILOILO 12. NORIEL V. ROTE Branch Head

13. RHODA A. ACAP Branch Cashier

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WEBSITE – www.rbjaniuay.com Email address – [email protected]

Banking Hours: 8:30 a.m. – 2:30 p.m. Banking Days: Tuesday - Saturday

PRODUCTS AND SERVICES

1. DEPOSITS a. Savings Deposit i. Regular Deposits ii. Special Savings Deposits b. Time Deposit – 5 year fixed with higher-yield special time deposit

2. LOANS a. Mirco, Small and Medium Enterprise Loans b. Pension/Allottee Loans c. AGFP Loans/Other Agricultural Credit Loans d. Real Estate Loans e. Teachers’ Salary Loan

3. MONEY REMITTANCE/SERVICES a. Western Union Money Transfer b. i2i (Unionbank) i. POS Withdrawal ii. Bills Payment iii. Instapay iv. Pesonet v. Wallet to Wallet

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ENCASH ATM LOCATIONS:

1. ATM - 1 Janiuay Rural Bank, Inc. (Head Office Building) Crispin Salazar Street, Janiuay, Iloilo 5034

2. ATM - 2 Masacote Arcade Aquino Nobleza Street, Janiuay, Iloilo 5034

3. ATM – 3 I-Mart Store Bermejo Street, Cabatuan, Iloilo 5031

4. ATM – 4 Janiuay Rural Bank, Inc. (Anini-y Branch Building) Brgy. Butuan, Anini-y, Antique 5717

5. ATM – 5 Cooperative Building Poblacion, Lambunao, Iloilo 5042

6. ATM – 6 Janiuay Rural Bank, Inc. (Tapaz Branch Lite Building) San Geronimo Street, Poblacion, Tapaz, Capiz 5814

7. ATM – 7 Janiuay Rural Bank, Inc. (Concepcion Branch Building) Concepcion Commercial Complex, D.B Oñate Street, Poblacion, Concepcion, Iloilo 5013

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BRANCHES

1. Janiuay Rural Bank, Inc. Head Office Crispin Salazar Street, Janiuay, Iloilo 5034 PLDT No. (033) 330-01-31 Globe No. (033) 531-84-30 (0917) 305-50-83 Smart No. (0925) 349-58-14 Email Address: [email protected]

2. Janiuay Rural Bank, Inc. Branch Lite Unit Ground Floor, Viosil’s Arcade M.H. del Pilar Street, Molo, Iloilo City 5000 PLDT No. (033) 314-75-94 Smart No. (0998) 531-49-39 Email Address: [email protected]

3. Janiuay Rural Bank, Inc. Branch Brgy. Butuan, Anini-y, Antique 5717 Globe No. (0917) 800-09-67 Smart No. (0998) 547-87-17 Email Address: [email protected]

4. Janiuay Rural Bank, Inc. Branch Lite Unit San Geronimo Street, Poblacion Tapaz, Capiz 5814 PLDT No. (036) 651-65-41 Globe No. (0917) 722-70-21 Smart No. (0910) 148-53-30 Email Address: [email protected]

5. Janiuay Rural Bank, Inc. Branch Concepcion Commercial Complex DB Oñate Street, Poblacion Concepcion, Iloilo 5013 Globe No. (0917) 167-01-65 Smart No. (0999) 711-42-63 Email Address: [email protected]

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