Home History Financial Highlights Core Values Board of Directors Management Committee Our Clients Products & Services Risk Management Corporate Governance Report of Independent Auditors Statement of Management Responsibility Branch Directory Awards & Citations E-mail Us

CHAIRMAN'S REPORT

Fellow shareholders,

     The year 2009 was characterized by financial turbulence and unprecedented uncertainties. We were in a quandary when the cycle would end or the extent of the damage it would cause. What we did know was that we had to prepare for a severe economic downturn. Together, we were determined to sail through those challenging conditions to assist our clients in every way we could and to pursue our mandate during this uncertain time.
     What transpired last year was we got the scare of our lives. Your management team tried every available technique from past crisis and in the process, hurdled challenges as they come. While, our financials reflected modest earnings for the year but fairly decent in relative terms (industry wise), we find no excuse for our performance. I am of the belief the year 2009 was a traumatic challenge our bank had ever experienced.

Result of Operation

     Queen City Development Bank generated gross revenue of P 99.6 million in 2009, higher by 5.40% from the P 94.5 million we earned a year ago. Net revenue was listed at P 8.2 million. Lower loan volume brought about by tight credit condition and continuing low interest regime dictated the pace of the revenue taking. Adding burden to the already tense situation was the implementation of Basel II which brought stricter implementation in compliance of capital adequacy ratio (CAR) and higher reserves on non-performing loan accounts.
     Despite all these hardships, we remained resolute to our approach in every transaction we take. Indeed, last year was a challenging year for Queenbank.
While we are not contented with the result of operation which was further brought by increasing operating costs, we remained optimistic of our future. On a bright note, we are appreciative despite all these events happening our way; we grew organically and further improve our market share. All these were the result of our strong conviction, robust balance sheet, broad business approach, and steady application of risk management guidelines which served us well thus enabling us to withstand the drought in the business environment.
     Although we are saddened with the result of our 2009 financial statement, we continue to move forward and gain momentum in the recovery process. We are enthusiastic about the opening of Tagbilaran Branch late last year. Although new in the area, the branch was able to stand tall, generating spectacular loan and deposit growth early on and an early expectation of converting itself into a profit center could be achieved by second quarter of this year. We likewise continue to invest in the upgrading of our infrastructure by acquiring more automated teller machines (ATMs), the new products to support the need of our growing clientele.
     While we saw problems rising in commercial loans and retail lending, we are fortunate to have only 3 foreclosures last year. Accounts were likewise given special attention resulting to restricting and reverting them back to current status. Our cleansing process ended with soured accounts now classified under ROPAs. In as much as Queenbank is strong in the middle market, we feel that commercial banking is still the niche with excellent prospect for us.

Our Market Presence

     It is worthwhile to note that our branch network has established its own market presence. They cater not only to small and medium entrepreneurs but also to retail consumers once the strong-hold of rural banks and lending investors. As a market player, we continue to finance viable businesses coming our way. We have not stopped lending despite the adverse business climate but prudence prevailed in all decisions made.
     One important point to highlight is that despite catering to all business indices, we continue to maintain a healthy portfolio quality with ratio way below the industry level.
Our goal is to continually provide financing and better service to our customer. This does not mean being the biggest in asset size. We know that size really matters but one reason to grow and gain economies of scale is when doing so enables us to do a great job for our clients. Needless to say, we are comfortable with our market position. We are of the belief that in every industry we do, business is strong and can be a force in the immediate term.

The Industry’s Future

     The damage brought about by the worst crisis and the degree of damage it has done made every banker and regulator aware of the industry’s weaknesses. Regulators were quick to tighten the screw and make immediate remedy to avoid further damage. And, while actions were done to avoid recurrence of the problem, it is hoped that new guidelines are thoroughly studied and forward-looking.
     Beyond all this, there are still several issues that need revisiting. We believe that our country can still rise and improve the standard of living of its populace. On energy, we are continually experiencing major crisis, and, as a nation, we have not acted on a reasonable long-term policy. If done right, a sound energy policy could be economically efficient, reduce geographical chaos, and improve our way of life. Similarly, politicians continue to make promises but fail miserably in this area while comfortably sitting inside their big-air conditioned offices. We can’t fall into the same trap of this institutional sclerosis. Queenbank for its part is doing its share to provide funds needed for the development of our country in general.

Our Next Move

      Your management team is deeply committed for the continued sustainable growth of our bank. Extreme caution is exercised in every decision it makes all for the protection of our institution. We provide funds for small to medium businesses, house and lot acquisitions for individuals, horizontal and vertical development for subdivision developers, industrial loans to increase production, and improvement of school facilities just to name a few. These are our commitment in keeping our borrowers aware Queenbank is supportive of viable projects aimed for growth.
     We have been candid that nobody got spared by the financial crisis which had a profound impact on the result of our financials. In such condition, credit default would rise significantly, which would require increases in loan loss reserves. We stated last year how this condition will affect the industry in general but then, we managed to limit our exposures only to highly acceptable proponents and closely supervised existing ones quite well. We foresaw the global economic downturn will be met with government reaction and there is a strong reason to believe that it will eventually return to normalcy.
     I continue to mirror on how proud I am of the people in our organization. It is often in the toughest of times that one learns what kind of stuff we are really made of. With the extraordinary pressure in 2009, I am impressed by their dedication, work ethics and strength of character shown by all of the personnel in our bank.
     Throughout our history, we have always believed that our obligation extends beyond simply serving shareholders, clients, and employees. For us, public service means working hand in hand with government in country building, in a non-partisan way. We believe that solutions come only when we participate in constructive dialogue and take bold steps to come up with solutions.

Our Responsibility to Queenbank

     The real measure of strength is for us to overcome problems and emerge better prepared for it. For more than 29 years we continue to support our clients and the communities we serve. More than ever, we are focused on doing things right to make sure this franchise remains strong, and vigorous, so that we can continue to do what it does best for years to come. We believe we are responsible to our shareholders, to our creditors, clients, and our personnel. That is the underlying reason we work hard to uphold all our obligations in our daily chores.

     In closing, allow me to thank you our shareholders, members of the board, our various committee members, senior officers, middle managers, and all personnel who supported us during this tumultuous time. As the leader of the team, I look forward to bring better result this year.

  Dr. Rogelio M. Florete
  Chairman and President