Premiere Bank wants to acquire thrift, rural banks

MANILA, Philippines - Premier Development Bank (Premier Bank) has sent out “search parties” for a possible acquisition, preferably in the Luzon area.

The rejuvenated thrift bank has the appetite, and resources, for a thrift or rural bank in Central and Northern Luzon as it has already a significant presence in the National Capital Region and Regions four and five.

After all, Premiere Bank reported total resources worth P3.336 billion and a capital base of P800 million as of February this year. It was ranked among the top 10 thrift banks in the country in 2008 in both categories.

“We are looking for organic or inorganic growth,” Herminio M. Famatigan Jr., Premiere Bank president and chief executive officer, said. However, Famatigan stressed that they will remain a thrift and development bank as it has been, and will remain, its policy orientation.

At the start of the year, it manages 38 branches of which 17 has been renovated, with seven more including the head office nearing completion.

In terms of geographical locaton, 15 branches are located within the greater Metro Manila area, while the rest are within Luzon with a bias in the Calamba, Laguna, Rizal and Quezon area (Calabarzon).

It also operates 40 automated teller machines (ATMs) with three offsites located in Trinoma, SM Taytay, and the main office of CF Sharp (one of the country’s leading manning agency).

Meanwhile, Famatigan emphasized their value proposition of offering fast and nimble service to its principal market of consumer or retail market, and the small and medium enterprises (SMEs).

Premiere Bank’s services strengthen its value proposition to customers as well as sales and service partners. Instead of hard-sell marketing, the bank attracts more customers by employing a personal approach onto its services.

Premier Bank’s loan portfolio is basically divided in SME loans accounting for 55 percent of portfolio, and the remaining 45 percent to the consumer market. That is basically personal loans, salary loans, and the second-hand auto market.

Its loan portfolio grew from P1 billion in 2007 to P1.8 billion last year. “We will likely expand this to P3 billion this year,” the bank chief executive said.

Meanwhile, its personal loan bookings continue to grow at neck breaking speed.

From just P600 million in 2006, it has more than doubled in 2007 to P1.5 billion and to P2 billion last year.

Deposits have been expanding by an average 50 percent in the past two years, reaching P2.4 billion as of end February this year.

Premier Bank is healthy with a capital adequacy ratio (CAR) of a little over 30 percent versus the required minimum level of 10 percent by the Bangko Sentral ng Pilipinas (BSP). The bank’s real and other properties acquired (ROPA) had remained a manageable P47 million.

Premiere Bank prefers to stay away from the volatile mortgage or property market to preserve its portfolio for faster albeit smaller loans.

Net income remains somewhat of a challenge as it had to write-off some systems as well as fund its expansion and change of image.

The bank registered a loss of P13 million in 2007 to write-off certain systems. Then last year, it completely cleaned up its books as well as fund its expansion, refitting and recruitment program leading to an income loss of P21 million.

But Famadigan is optimistic that all the preparations will lead to positive gains starting 2009.

“2009 is the year we will make money after having turning around the bank last year. We have a very strong balance sheet,” he said.

In the past two years, the thrift and development bank recruited more than half of its present personnel of 400. “Roughly two-thirds are with three years of less experience in banking which we are presently training in an almost weekly basis,” the bank chief executive said.

In 2006, the New York-based private investment firm Rohatyn Group made an investment of P460 million in Premiere Bank. The Rohatyn Group Investment consortium, includes the Madrigal-Gonzalez family. The original incorporators led by the Reyes family remains the majority stakeholders.