INTRODUCTION

It is time to picture the Canlaon City of today in its proper perspective, by viewing it according to its noble goals and objectives, which are formulated towards attaining a transformation from what she has done in the past, towards what she can do at the present, in garnering a dependable socio-economic image specifically geared towards development. With the inclusion of Canlaon City in the third batch of CDS (city development strategy) cities, its envisioned plan is to craft a well formulated tool for planning and development which will be truly responsive to the demands of the future.

As local government gains experience in managing growth and change, its institutional capability improves considerably. The present investments from both public and private sectors have greatly improved the quality of service and utilities made available to the constituents. This is expected to raise the level of the public’s well being, and foster social change and development.

It has been noted, however, that a city without a bank is not complete. After the closure of the Rural Bank of Canlaon in September 1986, most financial transactions have ended up being made outside of Canlaon, thereby pulling out cash for circulation and putting it into

nearby cities with banking institutions, instead of circulating the resources within the area. It is evident that Canlaon is generating income but other municipalities/cities are gaining from the proceeds of it.

Based on an analysis of the interviews conducted, mismanagement could be pinpointed as one of the reasons why RB Canlaon closed after approximately 5 years of operation. Unsecured loans to farmers without proper assessment or appraisal of the area, without follow ups and assistance, led to a majority of loans defaulted upon and giving rise to the sentiment occasionally voiced that “the people didn’t like to pay back their loans.” No other banks wanted to buy Rural Bank of Canlaon since the CB required that any sale would also have to include assuming the Rural Bank’s previous accountability with Central Bank which amounts to approximately P80 million.

We recommend that in order to avoid repeating the mistakes of RB Canlaon, DCDB Canlaon branch should: maintain a high liquidity ratio especially during its first 3 years of operation, carefully screen all loan applicants to ensure their capability to pay, monitor its loan portfolio constantly with regard to non performing loans, invest in a varied portfolio such as t-bills and other government securities, and only grant loans which are backed up by sufficient collateral.

In order to foster the goals of the city towards development for a larger swathe of the community, it is imperative that a financial institution with integrity, supply much needed financial services to the local population from within the locality. This fits right in with the vision of Dumaguete City Development Bank which in its 26 years of operation has remained a responsible partner in serving the local and neighboring Visayas and Mindanao business communities and has also attained the highest public trust.

In the CDS plan for the year 2007, one of the strategies of Canlaon City is the “development of commercial and industrial growth centers outside the present city center.”

As the study team proposes a suitable location that is in the Uptown area, this will further coincide with the City’s plans for development. The proposed location is in the Uptown area, which is

outside the city center. The land is beside the City Mayor’s residence, fronting the market for the region’s high-value crops, such as lettuce, cabbage, cauliflower, and others. However, worth noting is the statement of the landowner explaining that this was an excellent location due to the proximity to the Mayor’s residence and the security provided at that location.

OBJECTIVE OF THE STUDY

This study aims to determine the feasibility of establishing a branch of Dumaguete City Development Bank in Canlaon City. This study also aims to identify which products and services of a bank the prospective market would like to avail of. It also seeks to determine the size of the prospective market and aspects related to the success of the bank.

SCOPE AND LIMITATIONS

The main focus of this project study is the feasibility of the proposed branch of DCDB in Canlaon City. Like most business

proposals, feasibility criteria have major aspects that need to be considered in arriving at final conclusions and recommendations. The aspects that need to be factored into this study are divided into marketing, organization and management; the technical, financial, socioeconomic aspects, and legal aspects.

Responses to the questionnaire were limited to employed residents of Canlaon City, both government and non-government, as well as small and medium business establishments. These were considered the target market as they are the most likely users of the banks services both as

depositors and loan makers as they possess sufficient income to save and also have the capability to repay loans taken. Only those who were identified as part of the target market were considered and given the chance to answer the questionnaires regarding the establishment of the bank.

SIGNIFICANCE OF THE STUDY

The intention of this study is to aid, guide, and assist the proponent in determining whether or not to establish the business. This study would help the DCDB Board of Directors in determining the viability of establishing a branch in Canlaon City.

METHODOLOGY
A market survey was conducted to determine the market demand for the proposed project. An analysis of the market demand is important in order to determine if the target market will patronize the proposed project. To draw a conclusion for its market demand, the researchers first determined who the target markets were. The target markets identified were the employed residents of Canlaon City and small and medium business establishments.

Employed residents refer to the City’s labor force and are categorized individuals. as follows: government, private and self-employed

In order to define the population of these markets, the

researchers requested assistance from the City Planning Office of Canlaon, obtaining and reviewing documents showing the total number of employed residents of that city.

The

sample

size

was

determined

using

Slovin’s

Formula.

Questionnaires were distributed to respondents based on the computed sample size. After retrieving the questionnaires, the responses were

tallied and graphed. These were then analyzed and interpreted.

SLOVIN’S FORMULA: n = N 1 + N (e)
2

where: n = sample size N = total population, male and female of the employed sector if Canlaon City e = sampling error of 5%

Permanent Government Employees Permanent Private Employees Self Employed Total Figures based on Population Distribution by Status NSO Census 2003 n= 9,799 1 + 9,799 (5%) = 384 sample size
2

343 4,618 4,838 9,799 of Employment 2003

The researchers also conducted interviews with key people whose inputs were essential to the feasibility study. Please see the section on Market Feasibility regarding the highlights of the interviews.

FEASIBILITY CRITERIA
There are several factors considered from the different aspects of the study: The demand for a bank and the willingness of the respondents to patronize the products and services of the proposed project were the factors used in determining the feasibility of the market study. The factors considered in determining the technical feasibility of the project were the location of the building, accessibility to the target market, layout and human resources required, equipment costs, and cost of land.

The evaluation of the financial feasibility was done through the financial projections. The socio-economic aspect of the project considered its economic contributions and other benefits to the City and the society as a whole.

PROJECT SUMMARY

A. NAME OF THE PROJECT The name of the proposed project is Dumaguete City Development Bank (DCDB), Canlaon Branch, Negros Oriental.

B. LOCATION The DCDB Canlaon Branch will be located in Uptown Barangay Mabigo, Canlaon City. Its main office or head office is located at the

corner of Dr. V. Locsin Street and Cervantes Street, Dumaguete City.

Canlaon City, situated on the eastern side of Mt. Kanlaon, in the province of Negros Oriental, is politically bound on the north by San Carlos, Province of Negros Occidental; on the east by Vallehermoso, Province of Negros Oriental; on the west by the Municipalities of La Castellana and Pontevedra, Province of Negros Occidental; and on the south by the Municipality of Guihulngan, Province of Negros Oriental.

The city is strategically situated nine-and-a-half (9.5) kilometers from the foot of Mount Kanlaon – an active volcano in Negros Island, bearing geographic location at 10° 24.7’ North Latitude, 23° 7’ East Longitude.

The City is geographically divided into three sectors: Downtown, Midtown/City Center, and Uptown. The City Center is 38 kilometers away from San Carlos City, Negros Occidental; 50 kilometers from Guihulngan City; 20 kilometers from Vallehermoso; 102 kilometers from Bacolod City, the capital of Negros Occidental (taking the cross-island country road traversing Negros Occidental and Negros Oriental via Canlaon City) and 166 kilometers from Dumaguete City, the capital of Negros Oriental.

It takes three hours to Dumaguete City; two-and-a-half hours from Bacolod City via La Castellana; and a four- to five-hour trip from Cebu City by land and sea transport via San Carlos City. The main industries of Canlaon city are Rice production with a total of 3,289 hectares, and sugarcane production with a total of 3,238 hectares out of a total area devoted to Agriculture of 9,783 hectares. The remaining area produces a mix of corn, vegetables, and livestock. These figures are cited from the Canlaon City CDS 2007. Further information was gathered from an interview with Mr. Roderick Schon. He volunteered that there are 4 major and traditional sugarcane planters in the area. He mentioned the Schon farm, Valmayor Hermanos, Jalandoni farm, and the Amador farm. Another major

property holder especially around the mabigo barrangay is the Bautista family.

These major planters each have total land areas of between 120 to 130 planted hectares. The rice growers on the other hand are composed of numerous smaller lot holders each holding between 20 to 30 hectares. Apart from these planters and farmers there are also a few businessmen in the community who run hardware shops, a mini grocery and restaurant as well as branches of known motorcycle distributors such as RUSI and Du Ek Sam. Some of the more prominent business men/women are: Cecil Canada, Julius Amador, and the Jalandonis.

PROPOSED SITE

The lot under consideration for the proposed DCDB bank branch site is located on Aquino Street, beside the present mayor’s residence, fronting the Uptown market complex. The added security is an extra feature of this location. Other advantages of this location are: the lot is offered at market value price, the lot has good drainage and a first class

cement barrangay road connecting the lot to the city, the Uptown market complex which faces it is the trading area for vegetables and livestock and is a bustling commercial hub, and this location is identified in the CDS strategies for economic development as an area targeted for economic growth. C. DESCRIPTIVE DEFINITION OF THE PROJECT Incorporated July 1980 by Julio 0. Sy, Lourdes M. Calumpang, Tita R. Sung, Jose E. Romero, Jr. and Gregorio E. Uymatiao, Sr., the Dumaguete City Development Bank was registered with the Securities and Exchange Commission. on October 17, 1980. The Central Bank of the Philippines granted DCDB authority to operate as a private development bank and formally started operations in Dumaguete City, Negros Oriental. In July 1990, DCBD established its first branch in the Municipality of Valencia, Bukidnon Province.

On August 8, 1992, the bank acquired the Rural Bank of Sibulan (Negros Oriental), Inc. On August 27, 1993, a second branch in the Municipality of Quezon, Bukidnon Province formally started operations. On October 16, 1993, the Lapu-Lapu City branch was its third branch. November 10, 1993, the Bangko Sentral ng Pilipinas granted the bank authority to accept demand deposits. On November 16, 1994,

computerization of branches’ Current Account/Savings Account began.

Today DCDB Canlaon City branch Negros Oriental is the next target of DCDB incorporators for the expansion of the bank. The mission of Canlaon city today is to … “Sustain Canlaon City's position as a special growth center of Northern Negros through the protection of its environmentally critical area system, maximize the output of its agricultural, commercial, infrastructure, transport, agro-industrial and eco-tourism resources and promote massive livelihood initiatives in the rural areas for sustainable development.” The proponent recognizes the potential of Canlaon City in terms of its resources and the need for a bank in that area. The project would fulfill, in part, DCDB’s mission to the community to be “a responsible partner in the countryside economic growth and development,” benefiting the community and contributing to the development of the city as well.

C. PROJECT’S LONG-RANGE OBJECTIVES

Establishing a DCDB branch in Canlaon, a city rich in agricultural resources, will provide the community with the banking and other financial services the community needs. Accomplishing this would contribute to the proponent’s vision to become the leading development bank in the Visayas-Mindanao region. A development bank’s objectives may be organized as follows:

(1) Accumulating the savings of depositors and investing them, together with capital loans secured by bonds, mortgages in real estate and insured improvements thereon, chattel mortgage, bonds and other forms of security or in loans for personal or household finance, whether secured or unsecured, or in financing for homebuilding and home development; in readily marketable and debt securities; in commercial papers and accounts receivables, drafts, bills of exchange, acceptances or notes arising out of commercial transactions; and in such other investments and loans which the Monetary Board may determine as necessary in the furtherance of national economic objectives; (2) Providing short-term working capital, medium- and long-term financing, to businesses engaged in agriculture, services, industry and housing; and (3) Providing diversified financial and allied services for its chosen market and constituencies especially for small and medium enterprises and individuals.

E. HIGLIGHTS OF THE PROJECT 1. PROJECT

A project feasibility study about the proposed project was conducted. After determining the viability of the project, the proposal will be forwarded to the Board of Directors of DCDB for review and

approval. Land acquisition and the construction of the building will follow after compliance with the necessary requirements (please refer to Appendix F). Bangko Sentral ng Pilipinas prerequisites necessary in establishing a branch should be complied with at this time. After all the legal requirements have been met, and after the authority to establish a branch has been given, the branch shall be opened within six months from the date of approval. The target date the researchers are suggesting is August 8, 2008 for the obvious reason that round numbers for the Chinese origin is believed to be a lucky number that could bring good fortune and good luck.

2. MODE OF FINANCING

The establishment of the proposed branch of DCDB in Canlaon City will be financed solely from the capital funds of the Dumaguete City Development Bank. On the basis of the information supplied by the Vice President, the amount for the purchase of the lot and the construction of the building shall be taken from existing funds of the bank that have been earmarked for this purpose. The DCDB Board of Directors has the intention of purchasing the land and constructing a building that the DCDB Canlaon branch will occupy.

F.

MAJOR

ASSUMPTIONS,

SUMMARY

OF

FINDINGS

AND

CONCLUSIONS OF THE FOLLOWING: 1. MARKET FEASIBILITY In the survey conducted by the group, it was

ascertained that one of the reasons that there is a need for a banking institution in Canlaon City is due to the absence of certain financial services in the city such as: savings deposits, checking

accounts, commercial loans and other services that a bank normally provides. The residents and the members of the local government of the city have expressed their desire for a bank and emphasized the importance and role of a bank in their city. It was also determined that there are a number of probable clients, 99 percent of the respondents to be exact, who would be willing to avail of the products and services that the DCDB Canlaon branch will offer.

City Treasurer Ma. Luisa L. Luza, informed us of the possibility of using the bank as a depository for all the financial transactions of the government, both local and national. The quarterly Internal Revenue Allotment, or IRA of Canlaon City for 2007 is P44,574,756.00. The monthly operating expense of the local government is P6,458,090.00.

According to City Financial Analyst Rowena F. Oralde, if a bank would be established, she would recommend that all salary transactions go through the bank instead of her preparing the necessary documents in order to withdraw the amount from San Carlos and transporting the said amount back to Canlaon. The total monthly salary transactions for regular government employees of the city is P3,107,628.76.

An interview was also conducted with Ms. Doris Flores, the City Administrator of Canlaon. Ms. Flores described the people of Canlaon as hardworking and resilient. When asked about the

state of the City’s peace and order, she stated that said aspect was well maintained. The internal revenue allotment (IRA) of Canlaon as mandated by law is deposited with the Development Bank of the Philippines (DBP) in San Carlos City and other accounts are maintained with Landbank and the Philippine National Bank (PNB). The requirement that the Government deposit its money in a government bank presupposes that there is a government bank in the immediate area but in the absence of such the government may deposit its IRA in any private bank in the locality for convenience as mentioned in Chapter four of R.A. 7906.

According to Ms. Flores, attempts had been made to attract banks to establish branches in Canlaon City. A resolution to this end had previously been passed. However, no bank responded, it was believed, because of security reasons.

If the proponent decides to open a branch in Canlaon, Ms. Flores said that the City would provide the security services needed by the bank branch and that she will talk with the Mayor regarding this. She added that the City has continuity of plans,

negating any concern regarding a change in the administration. She said, “We really need a bank, we would be very happy if this would push through, we will support them if they need equity for construction. DCDB.” We will place our local revenues and income in

Aside from security concerns, former Councilor Hernani Blanco, who is now part of the Mayor’s policy determining body, stated that the road conditions were the main problem banks did not want to open a branch in Canlaon. This problem is no longer of concern as the city government has embarked on an infrastructure improvement program and as a result many farm-to-market roads have been concretized and the national highway connecting the city has also been improved.

Regarding the security concerns Blanco opined “They don’t need to worry…we have two battalions: the 11th and 12th Infantry Brigade assigned in Canlaon. Peace and order situation is ok now.” This is backed up by a city crime rate of .05 percent as seen in the CDS of 2007.

2. TECHNICAL FEASIBILITY

The technical aspect of the study shows that the project is feasible because of certain factors.

The accessibility of the location is convenient to residents and customers of the bank as it is within a 2 kilometers of the city center. There is ample parking as the lot fronts the Uptown market and also the lot is of a substantial size that a parking lot may be incorporated into the design.

It is also feasible considering that the branch structure is based on an existing DCDB branch (Valencia branch) and initial human resource requirements are minimal.

The building and lot will be purchased by the bank and will be owned by the bank. The cost of the lot is priced competitively based on comparisons with the other prospective sites that were identified. The lot is priced at 1,500 pesos per square meter and the recommendation is to buy a 500 square meter lot. The building will cover 150 square meters initially with the capacity to add a second story, and will cost approximately 2,000,000 pesos.

The project is deemed viable because of the availability of appropriate material and human resources of DCDB.

The description of products and services was based on existing products and services offered by DCDB head office and other branches. Based on the Agri Agra Law (PD 717), 25 percent of the banks loanable funds shall be allocated for agricultural credit.

Another consideration is the established bank operations policies and procedures which are applicable to the Canlaon branch without further modification.

3. FINANCIAL FEASIBILITY

The financial study was made based on the following assumptions: Operational Assumptions a) The branch will start its operation on August 8, 2008 b) Bank hours will be from 9:00am to 3:00pm c) Employees will work till 8:00am to 5:00pm with 1 hour lunch break. d) The bank will be open on weekdays and be closed on all public and special holidays. e) Cut- off for clearance of cheques will be 11:30am to allow for travel time to BPI San Carlos whose cut off time is 1:00pm. f) Excess funds will be deposited with BPI- San Carlos or loaned to DCDB head office at a rate of 9 percent. A portion may be invested in government securities depending upon the approval of the board of directors and in accordance with the rules and regulations of the monetary board regarding investments. g) Maximum of 10 percent current/saving deposits will be kept as cash in vault h) Company will procure a motorcycle for bank use.

i) Main office will provide a service vehicle for branch manager’s use. j) There will be a provision of an ATM machine in the bank layout but it will not be installed in the first year of operation, until the bank will be financially stable to purchase one. k) All policies and regulations of the Department of Labor and Employment (DOLE) will be complied with. l) All policies, rules and regulations of the DCDB main office will apply to the branch office. m) The first branch manager will be an officer from DCDB main office. n) Rank and file staff will be recruited from qualified residents of Canlaon. Revenue Assumptions a) Agricultural loans will have an interest rate of 15-18 percent, as prescribed by DCDB bank policy and the Agri-Agra Law. b) Commercial loans will have an interest rate of 15-18 percent, prescribed by DCDB bank policy and the BSP. c.) Excess funds will be loaned to DCDB main branch at the rate of 9 percent per annum.

Expense Assumptions

a) The salary of the bank branch employees will have a three percent merit increase every year. b) The utility expense will increase according to current market statistics. c) Bank premises, furniture, fixtures and equipment are carried at acquisition cost or construction cost less depreciation and impairment losses. Depreciation is computed on the straight-line basis over the estimated useful lives of the assets as follows: Buildings Furniture, fixtures and equipment 40 years 1-10 years

Leasehold improvements are amortized over the terms of the related leases or the useful lives of the improvements whichever is shorter. 4. SOCIO-ECONOMIC FEASIBILITY The project will be consistent with Canlaon’s economic expansion and growth since DCDB supports the Philippine

Countryside Development Program wherein the bank strives to be known as a “Responsible Partner for Growth” in the local business community.

The branch should focus on getting the local government unit as a main customer; the City Administrator stated the City’s willingness to assist in this regard with a board resolution. The city treasury and accounting office have also expressed their anticipation for the establishment of a bank in the City. This would eliminate the time required and the safety concerns inherent in traveling to and from San Carlos and other banking institutions to conduct the City’s banking business. The local government employees and the teachers and employees of the various schools in the area would be able to use these banking services, forgoing the inconvenience of having to cash a check within the city or going to San Carlos to do the same. The presence of a bank in Canlaon will also have a ripple effect on the economy of the area because by providing loans for agricultural improvement or post harvest facilities, or commercial loans for the start up of new businesses such as a supermarket or a department store the standard of living of the residents will improve. More jobs will be made available and more services will also be accessible to the residents of Canlaon.

5. MANAGEMENT FEASIBILITY

The management structure adopted by the project is based on the existing management structure of existing DCDB branch offices. This provides for a bank manager, a cashier, an accountant, an

accounting

assistant,

a

loan

processor,

one

teller,

and

a

messenger/janitor.

PROJECT STATUS AND TIMETABLE

The research project started with the identification of the proponent and the prospect study. On July 26, 2007, soon after the proponent, Dumaguete City Development Bank, and the study to be undertaken was identified, the group began formulating the survey questionnaire. This took one week. The formal distribution of survey

questionnaires began on the first week of August, and lasted for three weeks. The researchers then tallied the results during the second and third weeks. After tallying the results, the group commenced analyzing the collected data and drafting the feasibility study. The researchers collected the information necessary to accomplish the project during the fourth and fifth weeks. The period from August 13 to September 3 was used to focus on the Technical and Financial Study of the project. Finally, the last week of the study was spent on encoding and reviewing of the completed draft. The study ended on September 7, 2007.

PROJECT TIMETABLE A. Project Feasibility Study B. Ocular/Site Inspection C. Purchase of Land D. Processing of Business Permit

• • • • • •

Building Permit Fencing Permit Fire Safety Sanitary Permit Occupancy Permit Mayor’s Permit

E. Construction of Building F. Application for Authority to Establish a Branch (Form 1) • “Agreement to Organize a Bank” (Form 2)

• • • • • • • • • • • •

Bio-data sheet of each of the incorporators, proposed directors and officers, and subscribers (Form 3) Copy of Board Resolution authorizing the corporation to invest in such branch; and designating the person who will represent the corporation in connection therewith Copy of the latest Articles of Incorporation and By-Laws List of directors and principal officers List of major stockholders, indicating the citizenship and the number, amount and percentage of the voting and non-voting shares held by them A copy of the corporation’s audited financial statements for the last two (2) years prior to the filing of application A copy of the corporation’s annual report to the stockholders for the year immediately preceding the date of filing of application Certified photocopies of Income Tax Returns for the last (2) calendar years BIR clearance Detailed Plan of Operation and Economic Justification for Establishing the branch Projected monthly financial statements for the first three (3) years of operations, together with reasonable assumptions. Certificate of Compliance signed by the president stating required capital for the branch

G. Hiring and Training of Officers and Staff H. Issuance of authority to operate requirements • Receipt of advice of approval by the Monetary Board/Governor of the application for authority to establish the branch • Complete construction and furnishing of the bank building, which shall be equipped with vault and appropriate security devices such as lighting system, time delay device, tamper-resistant locks, alarm systems, etc. and provided with furniture, fixtures, equipment and bank forms; • Effect and complete the recruitment and hiring of officers and employees of the bank • Submit the following documentary requirements at least thirty (30) days before the scheduled start of operations: -Proof of registration of Articles of Incorporation and By Laws -Certification of compliance with the conditions of approval duly signed by the incorporators -List of officers and their respective designation and salaries;

-Bio-data sheet, evidence of citizenship and NBI and BIR clearances of each of the officers (who have not had the previous approval of the Monetary Board/Governor) which are needed for the evaluation of their qualification as officers -Chart of Organization -Manual of Operations embodying the policies and operating procedures of each department/unit/office. -Plantilla showing the positions with corresponding salaries -Two (2) sets of specimens of principal bank accounting and other forms -Bond policy of officers and custodial employees -Insurance policy on bank properties required to be insured -Blueprint of floor layout of bank premises I. Inauguration/Opening of the branch for business (Target Date is August 8, 2008)

J. Requirements within 30 days after first day of operations • • Inform BSP of the first day of operation and the banking hours and days Submit a Statement of Condition as of the first day of operation

GANNT CHART

ORGANIZATION AND MANAGEMENT ASPECT

A. ORGANIZATION AND MANAGEMENT A thrift bank shall be organized in the form of a stock corporation. The Monetary Board shall fix the minimum paid-up capital

of thrift banks in such amount as the Board may consider necessary for the safe and sound operation of thrift banks taking into account the development thrusts of this Act and due protection of the general public. No thrift bank shall be organized without a certificate of authority from the Monetary Board.

Republic Act 8791, The General Banking Law, Section 15, “Board of Directors”. The provisions of the Corporation Code to the contrary notwithstanding, there shall be at least five (5), and a maximum of fifteen (15) members of the board or directors of a bank, two (2) of whom shall be independent directors. An "independent director" shall mean a person other than an officer or employee of the bank, its subsidiaries or affiliates or related interests.

Non-Filipino citizens may become members of the board of directors of a bank to the extent of the foreign participation in the equity of said bank.

The meetings of the board of directors may be conducted through modern technologies such as, but not limited to, teleconferencing and video-conferencing. Sec. 16. Fit and Proper Rule, To maintain the quality of bank management and afford better protection to depositors and the public in general the Monetary Board shall prescribe, pass upon and

review the qualifications and disqualifications of individuals elected or appointed bank directors or officers and disqualify those found unfit.

After due notice to the board of directors of the bank, the Monetary Board may disqualify, suspend or remove any bank director or officer who commits or omits an act which render him unfit for the position.

In determining whether an individual is fit and proper to hold the position of a director or officer of a bank, regard shall be given to his integrity, experience, education, training, and competence.”

Republic Act 7906, Thrift Bank Act, Section 7, “Directors and Officers”, states, “At least a majority of the members of the board of directors of any thrift bank which may be established after the effectivity of this Act shall be citizens of the Philippines: Provided, however, That no appointive or elective official, whether full-time or part-time, shall at the same time serve as officer of any thrift bank, except in cases where such service is incident to financial assistance provided by the government or a government-owned or controlled corporation to the bank: Provided, further, That in the case of merger or consolidation duly approved by the Monetary Board, the limitation on the number of directors in a corporation, as provided in Section 14 of Republic Act 7906 ,shall not be applied so that membership in the new board may include up to the total

number

of

directors

provided

for

in

the

respective

articles

of

incorporation of the merging or consolidating banks.”

DCDB SENIOR MANAGEMENT Executive Committee Gregorio L. Uymatiao, Jr. Susano O. Sy Nicholas S. Ramas-Uypitching Silvestre H. Sung Ma. Vivian Joyce V. Sastrillo Corporate Management and Officers Julio O. Sy Gregorio E. Uymatiao, Sr. Ma. Vivian Joyce V. Sastrillo Sinfronio C. Viloro Vice Margarito E. Credo Rowena I. Buling Billiam G. Sy Head Office Consolacion Gilda F. Elli Walden E. Justalero Dumaguete Branch Floranita U. Calaurian Ma. Rosario I. Espina Ma. Elvie J. Teves Assets and Liabilities Committee Ma. Vivian Joyce V. Sastrillo Gregorio L. Uymatiao, Jr. Silvestre H. Sung Jocelyn S. Limkaichong Rowena I. Buling Floranita U. Calaurian Consolacion Gilda F. Elli Walden E. Justalero Chairman Vice-Chairman Member Member Member President Treasurer Executive Vice President President/Area Manager Assistant Vice President Comptroller Internal Auditor Assistant Manager-HRD Loan Officer Manager Cashier Accountant Chairman Vice-Chairman Member Member Member Member Member Member

Compliance, Audit and Examination Committee Nicholas S. Ramas-Uypitching Chairman

Miguel A. Diaz Julio O. Sy B. FORM OF OWNERSHIP

Vice-Chairman Member

Ownership of thrift banks, “At least forty percent (40%) of the voting stock of a thrift bank which may be established after the approval of this Act shall be owned by citizens of the Philippines, except where a new bank may be established as a result of a merger or consolidation of existing thrift banks with foreign holdings in which case, the resulting foreign holdings shall not be increased but may be reduced and, once reduced, shall not be increased thereafter beyond sixty percent (60%) of the voting stock of thrift banks. The percentage of the foreign-owned voting stocks shall be determined by the citizenship of individual stockholders and in case of corporations owning shares, by the citizenship of each stockholder in the said corporations.”

C. ORGANIZATIONAL CHART ORGANIZATIONAL CHART OF PROPOSED DCDB CANLAON BRANCH

Branch Manager Messenger/Janitor

Branch Cashier Branch Teller

Branch Accountant

Loan Processor

Accounting Assistant Loans book keeper

D. JOB DESCRIPTION Position Title: BRANCH MANAGER

BASIC RESPONSIBILITIES: Responsible for the overall supervision of the Cash, Accounting and Account Services Sections to ensure achievement of deposit targets, maintain good client relations as well as the proper implementation of bank policies and procedures including submission of accurate and timely reports required by the Head Office.

SPECIFIC RESPONSIBILITIES: 1. Develops marketing strategies, plans and programs needed to ensure achievement of performance targets in terms of deposit levels. 2. Reviews daily call reports of Accounts Services Representatives; monitors significant accomplishments; provides marketing support whenever necessary to capture available opportunities. 3. Monitors daily performance of Accounts Services Representatives and Accounts Services Assistant; provides training to enhance marketing skills. 4. Monitors quality of service rendered by field and office personnel to maintain good client relations. Ensures fast, timely and reliable servicing of accounts; renders corrective measures to remedy customer complaints, answers inquiries or addresses concerns raised by clients.

5. Monitors movements of accounts; studies the peculiarities of each account to identify business potentials. 6. Supervises the Cashiering and Accounting functions to comply with the bank’s policies, procedures and reporting requirements. 7. Supervises the preparation and distribution of the monthly bank statements. 8. Performs other tasks as may be assigned from time to time.

Position Title:

CASHIER

BASIC RESPONSIBILITIES: Responsible for the custodianship of items of value such as cash, managers checks, time deposit certificates, passbooks, checkbooks, security/investment papers, unused DCDB checks of other banks and accountable forms. Also responsible for ensuring that Tellers and other frontliners under the Cash Section render quality service and are customer oriented at all times.

SPECIFIC RESPONSIBILITIES:

1. Monitors the daily flow of cash to ensure adequacy of cash reserve/cash in vault; maintains the Cashier’s Accountability Book reflecting daily cash movements; 2. Ensures that actual cash in vault balances off with records all the time and that bills have been carefully counted and bundled preventing shortages or overages. 3. Assists in monitoring daily cash transactions of Main Branch and other branches to ensure adequacy of bank reserve in compliance with Central Bank requirement. 4. Coordinates fund transfers to and from branches with the Fund Management Unit and depository bank. 5. Verifies and approves over the counter withdrawals and

encashment to authenticate signatures and check the identity of payees as well as validate sufficiency of account balance. 6. Monitors amount of cash handled by each Teller; replenishes cash upon request; verifies and receives surrendered excess cash to maintain safe levels in Teller’s box. 7. Assists Tellers in reviewing the day’s transactions to trace errors resulting to shortages, overages or incorrect proof sheet balances. 8. Reviews checks deposited; supervises transmittal/deposit of

checks to depository bank for clearing; notifies clients of returned checks.

9. Calls on current account clients in case of insufficiency of funds to avoid nonpayment or non-clearing of issued checks. 10.Leads and trains the front liners in rendering good service and maintaining professional client relations. 11.Reviews the Teller’s proof sheet before submission to Accounting. 12.Closely coordinates with corporate clients regarding payroll

arrangements for continued satisfactory service. 13.Acts as custodian of all accountable forms of the bank and monitors its usage and inventory level. Safe keeps signature cards, unreleased checks to clients (TD interest, loan proceeds, loan rebates, etc.) and unused Time Deposit certificates. 14.Countersigns for IOAs, checks and withdrawals from other banks, investments and borrowings. 15.Assists Tellers in the delivery of cash to valued accounts upon request. 16.Performs other tasks as may be assigned from time to time.

Position Title:

ACCOUNTANT

BASIC RESPONSIBILITIES: Responsible for the over-all supervision of Main Branch accounting work mainly the recording, checking of computations and verification of time deposit and loan transactions. Also responsible for overseeing the

preparation of daily accounting and cash reports and the disbursement functions.

SPECIFIC RESPONSIBILITIES: 1. Checks and verifies computation of time deposit transactions such as placements, terminations, pre-terminations and renewals. 2. Supervises the Accounting Staff and Bookkeepers in areas of receiving loan payments and time updating deposit placements, loans

disbursements,

timekeeping,

accounts,

bookkeeping and general accounting. 3. Verifies entries in the trial balance against source documents to check correctness of accounting classification and figures

recorded. 4. Checks and verifies computation of interest in loans. 5. Checks and verifies list of back accounting transactions to ensure correctness of entries and figures. 6. Approves over-the-counter transactions independently for

withdrawals of P20,000.00 and below; co-signs with Cashier for withdrawals of more than P20,000.00. 7. Reviews tickets prepared by Accounting Staff such as payment of expenses and deposits to other banks. 8. Checks monthly reports prepared by Bookkeepers of time deposit, loans and general accounting.

9. Verifies bank reconciliation statements on a monthly basis. 10.Countersigns for/recommends approval of IOAs, cash advances and DCDB checks issued. 11.Performs other tasks as may be assigned from time to time.

Position Title:

TELLER

BASIC RESPONSIBILITIES: Responsible for the efficient handling of transactions involving receipt and payment of cash and checks. Also responsible for rendering quality service to maintain good client relations and promote the bank’s services.

SPECIFIC RESPONSIBILITIES: 1. Receives cash and checks for such transactions as savings and current account deposit, time deposit placement, loan payments, SSS payments and others. 2. Checks quality of bills and verifies cash count. 3. Sorts cash according to quality and bundles them accordingly to facilitate counting. 4. Pays cash for such transactions as withdrawals, check

encashment and others’.

5. Verifies validity of order to pay; checks date, name of payee as against identity of presentor, amount in words and figures and authenticity of signatures. 6. Checks account balances and secures the approval of assigned authorities prior to any payment. 7. Updates passbooks after completion of each transaction. 8. Maintains adequate amount of cash to serve transactions; requests additional cash or surrenders excess cash whenever necessary for security reasons. 9. Prepares proof sheet to summarize transactions processed during the day and counter check totals with other sections. 10. Verifies cash count of withdrawals from depository bank. 11. Acts a Roving Teller; picks-up deposits. 12. Performs other tasks as may be assigned from time to time.

Position Title: LOAN PROCESSOR BASIC RESPONSIBILITIES: Responsible for effectively identifying business prospects,

preparing suitable loan packages that meet clients’ needs, processing and monitoring of loan accounts.

SPECIFIC RESPONSIBILITIES: 1. Identifies potential loan borrowers; visits prospective accounts and offers the bank’s loan facilities and discusses how the bank can assist in the growth of the business. 2. Studies and analyzes the business prospects, its viability as well as the credit worthiness of the borrower and the project. This would involve interviews with prospects, ocular inspection of project sites, review of feasibility study and analysis of financial projections and other related activities that can further strengthen the positive prospects of the business. 3. Ensures timely submission of complete loan

requirements/documents. 4. Prepares loan reports that provide accurate figures and reliable data/information that can be used by the Credit Committee in endorsing loan applications for approval of the Board of Directors. 5. Follows-up the documentation process; prepares the credit

implementation ticket to ensure prompt release of loan proceeds. 6. Computes for net loan proceeds and verifies correctness from Accounting. 7. Personally attends to clients for signing of loan documents and actual release of loan proceeds. 8. Visits projects and monitors business progress and collection performance.

9. Prepares post-release documents of refinanced accounts. 10.Regularly updates loan documents of existing loan accounts. 11.Coordinates with Collection Unit regarding problem accounts; offers solutions to problems encountered by borrowers. 12.Perform other tasks as may be assigned from time to time.

Position Title:

GENERAL BOOKKEEPER

BASIC RESPONSIBILITIES: Responsible for the preparation of the daily trial balance and counterchecking T-accounts of other Sections to validate consolidated report. Also responsible for the maintenance of the general ledger and subsidiary ledgers of the Main Branch.

SPECIFIC RESPONSIBILITIES: 1. Prepares the daily trial balance and counterchecks entries with proofsheet of other sections. 2. Manually balances CA/SA transactions and counterchecks with computer print-out on a daily basis; balances computer print-out of accounts by subtype and size against trial balance. 3. Posts daily transactions in the general ledger and subsidiary ledgers.

4. Computes for the month-end accruals of expenses payables and amortization of prepaid expenses and deferred expenses to prepare the month-end proofsheet. 5. Files transaction tickets according to account title. 6. Prepares Main Branch accounting reports for submission to the Controllership Unit. 7. Prepares SSS collection remittance for all branch collections. 8. Prepares month-end and quarterly reports such as income statement and various schedules of the Main Branch. Performs other tasks as may be assigned from time to time

Position Title:

MESSENGER/JANITOR

BASIC RESPONSIBILITIES: Responsible for the prompt and efficient delivery of letters, bank statements, reports and other communication materials to clients, other banks and other private and government agencies. Also responsible for maintaining cleanliness of office premises which includes work stations, executive rooms, reception areas, toilets, the conference room, etc. as maybe assigned.

SPECIFIC RESPONSIBILITIES: 1. Plans daily itinerary and daily work priorities to maximize time and effort as well as ensure prompt delivery of outgoing documents. 2. Regularly cleans service vehicle. 3. Regularly cleans assigned areas. Collects and disposes garbage at the end of the day. Washes dishes at the end of the day. 4. Assists in the repair and maintenance of office facilities, plumbing and electrical works, office equipment and furniture. 5. Assists in the purchasing functions of immediate supervisor. 6. Performs other tasks as may be assigned from time to time.

E. JOB SPECIFICATION MINIMUM QUALIFICATION REQUIREMENTS MANAGER • • Must be a graduate of a business course At least 5 years work experience in marketing or client relations • • With very good communications and interpersonal skills He must be fit and proper for the position he is being proposed/appointed to. In determining whether a person is fit and proper for a particular position, the following matters must be considered:

- integrity/probity; - competence; - education; - diligence; and - experience/training. CASHIER • Must be a graduate of a business course preferably accounting • At least five years work experience in bank operations in a supervisory capacity

ACCOUNTANT • • Must be a Certified Public Accountant At least five years bank accounting work in a supervisory capacity

LOAN PROCESSOR • • • Graduate of a four-year course At least 2 years experience in a related field Must have working knowledge on credit investigation, appraisal, financial analysis

Must be aggressive and a self-starter; able to work with minimum supervision

Must be an effective communicator (oral & written communication skills)

GENERAL BOOKKEEPER • • Must be an accounting graduate At least one year accounting work experience

TELLER • • Must be a graduate of a business course With good communications and interpersonal skills

MESSENGER/JANITOR • • • At least college level Has ability to drive a motorcycle and car Hardworking

MARKETING ASPECT

A. PROJECT DESCRIPTION

The name of the project is Dumaguete City Development Bank, Canlaon City Branch, Negros Oriental. As defined in Republic Act No. 8791 The General Banking Law of 2000, banks shall refer to entities engaged in the lending of funds obtained in the form of deposits. There are many classifications of banks, most common of which are the universal banks, commercial banks, rural banks, cooperative banks and thrift banks.

Republic Act No. 7906 also known as the “Thrift Banks Act of 1995” refers thrift banks to include savings and mortgage banks, private development banks, and stock savings and loans associations organized under existing laws.

“In addition to powers granted it by this Act and existing laws, any thrift bank may: (1) Accept savings and time deposits (2) Open current or checking accounts: Provided, That the thrift bank has net assets of at least Twenty million pesos (P20,000,000) subject to such guidelines as may be established by the Monetary Board;

and shall be allowed to directly clear its demand deposit operations with the Bangko Sentral and the Philippine Clearing House Corporation (3) Act as correspondent for other financial institutions (4) Act as collection agent for government entities, including but not limited to, the Bureau of Internal Revenue, Social Security System, and the Bureau of Customs (5) Act as official depository of national agencies and of municipal, city or provincial funds in the municipality, city or province where the thrift bank is located, subject to such guidelines as may be established by the Monetary Board (6) Rediscount paper with the Philippine National Bank, the Land Bank of the Philippines, the Development Bank of the Philippines, and other government-owned or controlled corporations. Said institutions shall specify the nature of paper deemed acceptable for rediscount, as well as rediscounting rate to be charged by any of these institutions (7) Issue mortgage and chattel mortgage certificates, buy and sell them for its own account or for the account of others, or accept and receive them in payment or as amortization of its loan. Such mortgage and chattel mortgage certificates shall be issued exclusively in national currency and exclusively for the financing of equipment loans, mortgage loans for the acquisition of machinery and other fixed installations, conservation, enlargement or improvement of productive properties and real estate mortgage loans for: (a) the

construction, acquisition, expansion or improvement of rural and urban properties; (b) the refinancing of similar loans and mortgages; and (c) such other purposes as may be authorized by the Monetary Board. A thrift bank shall coordinate the amounts and maturities of its certificates with those of its loans, so as to ensure adequate cash receipts for the payment of principal and interest at the time they become due. The bank shall accept its own certificates at least at the actual price of issue, in any prepayment of loans which mortgage or chattel mortgage debtors may wish to make: Provided, That the date of maturity of the certificates is not later than the date on which the payment would otherwise become due, in the absence of the aforesaid prepayment (8) Purchase, hold and convey real estate under the same conditions as those governing commercial banks (9) Engage in quasi-banking and money market operations (10) Open domestic letters of credit (11) Extend credit facilities to private and government employees: Provided, That in the case of a borrower who is a permanent employee or wage earner, the treasurer, cashier or paymaster of the office employing him is authorized, notwithstanding the provisions of any existing law, rules and regulations to the contrary, to make deductions from his salary, wage or income pursuant to the terms of his loan, to remit deductions to the thrift bank concerned, and collect such reasonable fee for his services

(12) Extend credit against the security of jewelry, precious stones and articles of similar nature, subject to such rules and regulations as the Monetary Board may prescribe

B. DESCRIPTION OF TARGET MARKET The target markets of the proposed project are the local government of Canlaon City, the employed residents of Canlaon City and nearby municipalities and the small and medium business

establishments. Employed residents refer to the labor force of the city and are categorized as: government, private and self-employed

individuals. Other Target Markets identified are the large scale planters and different businessmen in the community who would most likely avail of loans.

C. DEMAND FOR BANKING SERVICES The survey showed that 60 percent of the respondents have an existing bank account. Thirty-six percent do not patronize any banking institution. Four percent did not answer the question. To determine the demand for the business, the data gathered, as shown in Figure 12 shows 99 percent in favor of DCDB opening a branch in Canlaon City

and 99 percent ready to avail of its products and services. One percent do not favor the project.

Canlaon City is a third class city in the province of Negros Oriental, Philippines. According to the 2000 census, it has a population of 46,548 people in 9,302 households.

The financial resources of the local government of Canlaon for the year 2007 are broken down as follows:

Revenue per Month Taxes, Licenses, Permits National Government Subsidiaries Other Sources P14,224,342.32 P 14,858,252.00 P 1,233,522.76

In Negros Oriental, the government plans to concentrate on the development of the province’s geothermal resources. It is building an additional 20-megawatt power plant at Palinpinon II, and another 40megawatt power facility in Northern Negros near Canlaon City.

As mentioned in the project description, the additional powers of a thrift bank is to act as an official depository of national agencies and of

municipal, city or provincial funds in the municipality, city or province where the thrift bank is located, subject to such guidelines as may be established by the Monetary Board. The government sector would be the major client of the prospective bank. The list of clients would include teachers of the various schools in the area, employees of privately-owned businesses, and small and medium enterprises.

For the government clients and other businesses, payroll can be facilitated through the bank, negating the need for transacting business in San Carlos or elsewhere. Currently, Canlaon employees have to travel to San Carlos City, Negros Occidental, to collect their salary, cash their cheques, or have them cashed at certain establishments in Canlaon for a fee.

At present, these resources are not put to use productively in Canlaon City; the employees tend to do their shopping in San Carlos City since they are already there. The market opportunities created by a

bank branch in Canlaon City for small to medium businesses make this project viable.

D. SUPPLY

Although there are no existing banking institutions in Canlaon City, there are other financial institutions that more or less provide similar services. There are three pawnshops: Palawan Pawnshop,

Chamar Pawnshop, and Cebuana Lhullier which also provides the service of pera padala, and Western Union. There is one lending

investor, AAA Agency, which is based in San Carlos City. Credit cooperatives also accommodate loans, and among the three biggest in Canlaon are the Bucalan Multipurpose Credit Cooperative, Canlaon City Government Employees Credit Cooperative and Canlaon City

Multipurpose Development Credit Cooperative. As shown in Figure 15, 47.9 percent of the respondents avail their loans from SSS/GSIS, 22.9 percent from Credit Cooperatives, 20.2 percent from pawnshops, 7.3 percent from informal lending and 1.7 percent from other institutions. And as shown in Figure 8, 60 percent of the respondents have existing bank accounts. Based on the survey conducted, the respondents avail of the services of the institutions mentioned above.

E. DEMAND-SUPPLY ANALYSIS In determining the demand and the supply for financial services of the proposed project, the researchers concluded that there is a high demand for a bank in Canlaon City. The lack of a bank in the city has resulted in the respondents turning to other financial institutions like

credit cooperatives and pawnshops. Aside from that they use the services of banks outside the city regardless of distance, cost and time considerations. This shows that there is demand and a lack of supply of financial services which a local bank could provide.

F. PRICE STUDY Bank charges: Bank certification Purchase of a Manager’s check, MC Documentary stamp on MC Inter-branch transfer Below minimum balances (current and savings, or C&S) Dormant C&S accounts Overnight checks: if funded or deposited after closing time or a late deposit if funded on the next banking day before clearing or cut-off time if not funded or returned Demand deposits: Minimum initial deposit Minimum maintaining balance Average daily balance to earn interest Savings deposits: Minimum initial deposit Average daily balance to earn interest P50.00 P20.00 P1.50 P50.00 regardless of amount P25.00 per month P30.00 per month

P100.00 P600.00 P1,100.00 P 5,000.00 P 2,000.00 P50,000.00 P 500.00 P1,000.00

Preferred savings deposit: Minimum deposit of P50,000.00 for one month (renewable) The interest, amount earned on time deposits, are subject to twenty percent withholding tax, as prescribed by the BSP policy. Deposits are covered under PDIC maximum of P250,000.00

DCDB offers these rates for the following deposit products: - Super Privileged Time Deposit gives 6.5% per annum with a term of five years; interest payable monthly and will be credited to your current or savings account. - Interest rates on Time Deposits and Preferred Savings Deposit: AMOUNT (Pesos) 5,000.00- 99,999.99 100,000.00- 499.99.99 500,000.00- 999,999.99 1,000,000.00- 4,999,999.99 On 5M and above, a special rate may be given. - Savings Deposit accumulates 1.5% per annum, which requires a monthly minimum balance. - As for the loans, the rates range from 15% - 18% per annum, explains DCDB Loans Department. G. MARKET ANALYSIS There are basically two factors affecting the market; these are internal and external factors. Interest Rates (%) 2.25 2.50 2.75 3.00

INTERNAL FACTORS 1. Location

Most if not all of the respondents do their banking in San Carlos City, Guihulngan City, Dumaguete or outside the City of Canlaon. Accessibility of the business or the bank would attract the market to not go out of Canlaon City, but instead do their banking transactions where it is near. 2. Interest Rates High interest rates on savings and low interest rates on loans would entice the market in patronizing the business. 3. Management of the Business Good management would lead to excellent operations. And excellent operations lead to give quality service. 4. Employees Motivated and well-trained employees could help the bank in giving quality service to its clients. Employees with good communication skills would have the ability to welcome the clients and make them feel comfortable when doing their transactions. EXTERNAL FACTORS 1. Competitors The competitors are the most significant external factor that could affect the market of the bank because more or less these pawnshops and credit cooperatives provide similar products and services. The people of Canlaon City do their banking transactions in San Carlos City, although this is outside of

Canlaon City. It still poses a threat to the new branch of DCDB because the depositors have already established the trust and security of their deposits with these banks. It is noted that there are eight banks in San Carlos namely: Bank Victorias, BPI, DBP, PNB, Landbank, RCBC, Equitable PCI and Metrobank.

Guihulngan has three banks namely: Landbank, PNB and the Rural Bank of Guihulngan City.

2. Security Because of the previous experience with RB Canlaon City, the market may now be hesitant to open an account with DCDB. The security of their deposits will be questioned.

To illustrate and summarize the factors, refer to the model below: Porter’s Five Forces THREAT OF NEW ENTRY

Competitiv e Rivalry

SUPPPLIER POWER

BUYER POWER

THREAT OF SUBSTITUTION

Threat of New Entry: • Expensive to enter except for an established bank • Knowledge not readily available except for established banks • No economies of scale to favor the initial entrant • Low barriers of entry • New entrants not necessarily banks to compete Supplier Power: • The suppliers would be the depositors • In the case of the government agencies they are important to the branch, but once there is a MOA (Board Resolution) this should capture them • There is no one else in the location who they can switch to deposit their money Threat of Substitution: • Substitution is hard because substitutes are either or more expensive or need more requirements (collateral)

Competitive Rivalry: • Few competitors in area at present • No competitors who can offer the same quality of service • No competitors that can offer all the services needed • Competitor banks are at least 1 hour away by car

Buyer Power: • Low buyer power • In the case of the government agencies they are important to the branch but once there is a MOA (Board Resolution) this should capture them • There is no one else in the location who they can switch to • The government comprises few powerful buyers on price

SWOT ANALYSIS

STRENGTHS First bank in Canlaon ergo Captive Market -Wide range of financial services -The bank is reputable and is trusted by the community -Deposits are PDIC Insured -Expertise in banking

WEAKNESSES Newly established branch -Not everyone is aware of the bank’s services -Market has low trust in banks because of previous bank closure -Market appears to have a growth limit because of the lack of customers passing through the area

OPPORTUNITIES THREATS -All loans of small & medium -Security enterprises -Entry of other banks -Government patronage -Fortuitous events, i.e, eruption of -Captive market Mt. Canlaon -Private sector patronage An analysis of the two tools illustrated above reveal certain aspects of the industry that the marketing program will have to address. An important aspect evident is the fact that the main advantage of putting up a bank branch in Canlaon City at this moment is that there is no other equivalent bank (in terms of range of financial services) in the immediate area. By being the first, the branch hopes to be able to capture a large portion of the market before competitors try to enter the area. In Porter’s model we also see that it will be relatively easy for a competing bank to enter the area, as there are low barriers to entry and little to protect the market originally captured by the initial entrant. Should an equivalent competitor enter the market many of Porter’s forces would change and there would be a higher

level of threat of substitution, thereby giving the buyers and suppliers a higher level of bargaining power. The marketing program may address these two aspects by vigilant attention to their product mix and the demands of the market.

H. MARKETING PROGRAM

Before the start of the operations of the bank, an advertising campaign must be formulated and put into motion. As the government is foreseen to be a major client, advertising should include this sector and future products and services should reflect their needs.

Signage should be placed in a few visible areas around the city. Printed material should also be disseminated showing the bank’s products and services and its location.

We

suggest

constructing

two

billboards

announcing

the

establishment of DCDB, Canlaon City branch. A suggested site would be

the junction in the Municipality of Vallehermosa to San Carlos and Canlaon City. Another site to be considered is at the corner of the national highway and Aquino Avenue, Canlaon City.

Local print and media advertising will be utilized during the last four months of the construction. The media will always be informed of any event concerning the bank’s development.

On the City’s charter day or fiesta, the bank should already make its presence known through sponsorships of various activities.

Various promotional schemes will be utilized to attract customers to bank with DCDB Canlaon City.

First 100 depositors Type of Account Savings Account Initial Deposit P500-P5,000.00 P5,001-20,000.00 Demand Deposit Preferred Accounts Loan Release P20,001 above P5,000-20,000.00 P20,001 above P50,000 above Giveaways Ball pen T-shirt Ball pen & T-shirt T-shirt Ball pen & T-shirt Ball pen, T-shirt, Bag Ball pen, T-shirt, Bag

Suggested promotional activities for the subsequent years: • For new accounts with initial deposit of P50,000.00 above, giveaways should be given like ball pens, bag, t-shirt, umbrella etc (discretion of the manager)

DCDB must be involved in major activities in the city such as city fiesta, celebration commemorating the founding of the city, etc. Give out brochures and fliers.

“Summer Extravaganza” Promo – this is between the months of March to May. Those who will open an account during this time will get giveaways such as sun visors, summer cap, fans, and shirt or other summer wear. The freebies would depend on their initial deposit.

“Savings for the Rainy days” Promo – this is between the months of June to August. Same details will be undertaken with the promo during summer but the giveaways would differ. The freebies would be something they could use during the rainy season like umbrellas, jacket, cap etc.

For the month of December, calendars and diaries will be given to the clients.

TECHNICAL FEASIBILITY

A. PRODUCT/SERVICES DESCRIPTION
Types of Account Ownership Individual or Personal Account The most common type of a bank account is the single-name individual or personal account in which a single individual transacts with the bank under his own name. Since the bank deposit is a

contract, only those with legal capacity to enter into contracts may make bank deposits. Under general contract principles, insane or demented persons and deaf mutes that do not know how to read or write, cannot give consent and therefore, cannot enter into contracts, including bank deposits. The legal presumption that follows when money is deposited in the individual name of a person is that the money is his property, and the Bank does not question ownership of funds deposited. In the

absence of fraud, or commission of some other crime or irregularity, the bank may accept funds for deposit regardless of its source.

Joint Accounts

A joint account is a joint undertaking between two or more individuals to open and maintain a deposit account with the bank. It may take the following form: a. Joint “and” Account – when an account is opened and

maintained in the name of two persons bound together by the conjunctive “and”, a co-ownership is created by virtue of which the ownership on an undivided thing of right belongs to both of them. b. Joint “and/or” Account – When two depositors open an account with the use of the disjunctive “and/or”, either one of them may deposit and withdraw from the account without the knowledge, consent and signature of the other.

Business Name/Sole Proprietorship Account

The submission of the application and certificate of registration issued by the Department of Trade and Industry must first be required before an account in a business name may be opened. This is especially true in the case of sole proprietorship in order to ascertain the true name

and real identity of the depositor.

Only the registered owner of the

business name may deal with the account, and checks payable to either the true name or business name may be accepted for deposit to the account after proper endorsement.

Partnership Account By the contract of partnership, two or more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves.

Corporate Account

A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence. A corporate

account may be opened in the name of the corporation. It is improper and irregular to open and maintain a corporate account in the individual name of an officer or any person because funds in a corporate account belong to the corporation, with the officers acting merely as agents

Accounts of Unregistered or Unincorporated Association

Social clubs, associations, parish or religious organizations and other unregistered or unincorporated groups may apply for deposit accounts. In such cases the bank should require a copy of the articles of association or constitution and by-laws of the organization, which should contain provisions on the treatment of funds and designation of officers authorized to deal with bank deposits. Officers must likewise be required. A certificate of Authorized

Treasurer-In-Trust Account

A temporary account pending the Securities and Exchange Commission (SEC) approval of a new entity’s Article of Incorporation. The treasurer should hold the money used in opening the account in trust for the new corporation. Treasurer’s affidavit must be submitted. This account is opened with a set of temporary cards only, to be replaced by set of permanent cards upon SEC’s approval. No checkbook should be issued at this point. Usually the client will request for a Bank’s This

certification regarding its cash balance addressed to SEC.

certification should bear the signature of a Bank officer and duly notarized before presentation.

TYPES OF DEPOSIT ACCOUNTS

Passbook Savings Accounts Initial deposit ADB to earn interest P500.00 P1,000.00 1.5%

Is a deposit of client’s funds commonly evidenced by a passbook issued by the bank to the depositor. The funds are withdrawable

anytime upon presentation of the passbook and withdrawal slip duly accomplished and signed by the depositor, subject to verification of identity, authority, validity of signature and adequacy of balance.

Current/Demand Deposits Accounts Initial deposit Maintaining Balance ADB to earn interest P5,000.00 P2,000.00 P50,000.00 1.5%

Is a deposit wherein funds may be withdrawn through the issuance of checks. Checking accounts provide its users the safety and convenience of paying business and personal transactions without carrying cash. It is withdrawable anytime upon presentation of a duly endorsed check, subject to verification of: a. Identity and authority of drawer and person presenting the check b. Adequacy of balance.

Clients may open a checking account as long as the proper identification papers and documents are presented and the requirements complied with. Current account depositors may pre-order personal or

commercial checkbooks with the branch.

Preferred/Time deposits Minimum deposit Interest Rate P50,000.00 2.25%-3%

These represent funds deposited with the Bank by clients for a fixed period of time, thus earning interest higher than that given to savings accounts. Unlike current and savings account, time deposits are not subject to check or cash withdrawal upon demand. These deposits are evidenced by certificates issued by the Bank, which bear details such as the name of the person to whom the certificate is payable, the date of issue, amount, interest rate and maturity date.

OTHER SERVICES

Loans

(rate:15-18% pa) Servicing the financial needs of the clients thru borrowing of funds

from the bank either for commercial, industrial, agricultural or for personal purposes.

Manager’s/Gift Checks

These are checks issued to customers in exchange for cash, check, or an amount debited against their account. Payment of these checks and by the bank so much so that they are more acceptable than ordinary check. Gift checks are issued in different denominations and serve as gifts for different occasions. B. BANK POLICIES The new DCDB Canlaon City branch will follow the bank policies of that of the Main Branch and other branches as seen in the Bank’s Operations Policies and Procedures Manual.

Just to cite some of these policies: a branch teller will only have P25, 000.00 in his/her cashbox possession, as is prescribed in the manual of operations. The teller will immediately turn over all excess amounts to the cashier with proper standard documentation of such transaction. Deposit to other bank transactions releases the amount from what is available in the cash in vault. Deposit pick-up between the bank and the client shall follow agreed banking procedures with professionalism and utmost security.

The cashier and bank accountant will verify cash in vault at the end of the day. The main cash vault will be in the dual control of two authorized employees designated by the executive vice president of the bank. Bank policy states that the vault shall be regularly opened fifteen minutes before the start of the day and closed at the earliest possible time.

Amount of the cash in vault follows strictly the reserve requirement for the day after considering bank’s deposits with which the Bangko Sentral ng Pilipinas, or BSP, has available for its reserve cover.

Deposits over one million pesos will be under the anti-money laundering policy, Republic Act 9160, and its mandatory plan of actions to handle such transaction. For existing accounts, the deposit considered large and unusual are those that are ten times the regular average daily transaction for the immediate preceding six months and will be subject to such policy also.

Payment of “on us” checks under a savings account for withdrawals over the counter require: Amount P500.00 and below P501.00- 20,000.00 approving authority tellers any one of the bank officers

P20, 001.00 and above

any two of the bank officers

Dormant accounts are those that don’t show any transaction or movement for a period of time; current accounts require one year and savings accounts require two years. Fund transfers require written authority or a BOD resolution.

Loans and other credit accommodations A customer’s confidential information sheet contains the following|: 1. Name of client 2. Address of the client 3. Purpose of the loan 4. Deposit/loan accounts 5. If client is a corporation, it must indicate the following: - Ownership/ management/ officers or BOD - History of the corporation - Significant highlights/ products of the corporation - Financial standing which is current to the last two to three years - The suppliers and credit dealings - Competitors and affiliate companies.

Offering Ticket and Credit Approval Memorandum

1. The heading contains a detailed explanation of the subject/s concerning the loan application, the type of credit facility to be issued, and amount of the loan and the date of preparation of the memorandum. 2. The terms and conditions for the payment of the loan applied for. 3. The client’s confidential information sheet. 4. The client’s financial statements for the current past two to three years. 5. Proof of security and/or collateral support for the loan application. 6. Credit investigation. 7. Recommendation of loan processor/ account officer to the approving body/ officer of the bank.

Credit Authority Structure of the loan approval/ levels of approving authority 1. Board of Directors 2. Executive Committee 3. President 4. Executive Vice President/ Vice President 5. Assistant Vice President

Designated “approving officers” are empowered to execute and sign for and in behalf of the bank as long as the loan agreement is governed by

the bank’s policy on extension of credit, prevailing credit memorandums/ policies issued by the bank from time to time and pertinent laws, rules and regulations issued by the bank compliance officer, the BSP and some government authority.

General Approving and Signing Authority Levels of Authority - Broad, strategic and long-term credit policies and directions - New and/ or amendments in existing credit programs and necessary guidelines - Operating policies, plans, guidelines, President/ EVP/ VP Board of Directors Approving body/ officer Board of Directors

rules and regulations, to effectively implement the approved credit policies and programs

Secured loans - up to single borrower’s limit - up to P5.0 M - up to P500 T - up to P100 T

Approving body Board of Directors EXECOM President/ EVP/ VP AVP

Unsecured loans

- up to single borrower’s limit - up to P1.0 M - up to P500 T

Board of Directors EXECOM President/ EVP/ VP

In the signing of bank business documents, deed of real estate, mortgage/ mortgage agreements, cancellation of mortgage, disclosure and release of statements, a branch manager is empowered to perform such duties. But all memorandums of agreements concerning

refinancing programs and/ or special projects are the responsibility of the President/ Executive Vice President/ Vice President..

Collection of Accounts 1. A first notice is prepared by the branch bank loan processor and is mailed through the ordinary post office mail fifteen days before the loan’s due date. 2. A second notice is mailed through registered post office mail one week after the loan’s due date. Enclosed is a statement of the account. 3. A mail inconvenience letter is mailed fifteen days after the receipt of the second notice. 4. A lawyer’s letter will follow, giving the subject fifteen days to settle the account’s business before instituting judicial or extrajudicial proceedings.

5. If there is no payment/ settlement after fifteen days of the receipt of the lawyer’s letter, judicial and extrajudicial proceedings will be instituted.

Loan processors/account officers are advised to exhaust all means to collect all past due accounts and try to apply all mitigating measures to help the account get back to its current status. Foreclosure proceedings shall apply only as the last recourse of the bank. “In case of non-payment of the amount of this note by any amortization on demand when due, or any other amount or amounts due on the account of this note, the entire obligation plus interest and penalty and whatever advances made by the bank shall become due and demandable at the option of the bank.”

All of these products and services will be offered by DCDB Canlaon City Branch. Special thought should also be given to specific improve irrigation

Agricultural loans and programs designed to:

infrastructure, provide post harvest facilities such as mechanical dryers and rice mills, seed bank programs, livelihood programs, agricultural mechanization, and micro-financing and other entrepreneurship based loans.

C.BANK LAYOUT

BANK LANDSCAPE

D.EQUIPMENT/SUPPLIES

Security Devices Cash vault Vault Doors Time Locks Combination Locks Burglar Alarm Hold up Alarm (3 @ 2,440) Records Vault Cash Steel Safe Total Equipment Adding Machine Bill/Money Counter Coin Counter Check Writer Doc Stamps Machine Typewriter Computer 6 @ 28,550.00 Printer 5 @ 2,495.00 Generator Fax Machine Filing Cabinets 2 @ 4,000 Tables and Chairs ATM Machine 24 hours Total Stationary and Supplies Scissor 6@42.00 Push Pin Clip paper Foldback clips

Price P60,000.00 68,000.00 1,363.00 14,575.00 23,200.00 7,320.00 38,000.00 10,956.00 P223, 414.00 Price P2,750.00 40,000.00 30,000.00 4,494.82 18,160.90 2,185.50 171,300.00 12,475.00 42,800.00 6,995.00 8,000.00 20, 000.00 272,187.00 631, 348.22 Price 252.00 26.00 24.75 19.00

Fastener Cutter Eraser Sharpener Ring Files Clear tape 12@19.50 Masking tape 6@20.25 Glue Long Folder 12@8.00 Short Folder 12@4.25 Lond Bond paper 1 rim Short Bond paper 1 rim Record Book Stapler 6@169.25 Puncher 3@189.50 Staple Wire 12@36.00 Journal Book 6@24.00 Ledger 6@29.00 Total

10.50 33.00 6.25 20.25 138.50 234.00 121.50 47.75 96.00 51.00 224.25 202.75 106.50 1,015.50 568.50 432.00 144.00 174.00 3, 948.00

E. BUILDING PLAN
As to be determined by the Board of Directors as of the moment. Our recommendation is to purchase a bigger piece of land and develop a commercial complex containing retail, service, and other business including the bank. Offer this as a start for the small to medium entrepreneurs of the city. Suggested types of business are a grocery store and a restaurant or service providers.

FINANCIAL FEASIBILITY

A. GENERAL ASSUMPTIONS
The first general assumption is that through a passed city board resolution, the DCDB Canlaon City branch is made the government’s depository for the city and region. All government financial transactions including the payroll of the government employees and public school teachers will avail of the bank’s services.

Quarterly Internal Revenue Allotment (national) Monthly local collections (taxes, permit, etc.) TOTAL

P44,574,756.00 P14,224,342.32 P58,799,098.32

The group makes a general assumption that excess cash will be loaned out to DCDB main branch at the rate of 9 percent per annum.

Operational Assumptions a) Bank hours will be from 9:00am to 3:00pm b) Employees will work till 8:00am to 5:00pm with 1-hour lunch break. c) The bank will be open on weekdays and be closed on all public and special holidays. d) Cut- off for clearance of cheques will be 9:30am to allow for travel time to BPI San Carlos whose cut-off time is 11:00am. e) Excess funds will be deposited with BPI- San Carlos. A portion may be invested in government securities at manager’s discretion subject to restrictions. f) Maximum of 10 percent current/saving deposits will be kept as cash in the vault g) Company will procure a motorcycle for bank use. h) Main office will provide a service vehicle for the branch manager’s use. i) There will be a provision for an ATM machine in the bank layout but it will not be installed in the first year of operation, until the bank will be financially stable to purchase one.

j) All policies and regulations of the department of labor and employment (DOLE) will be complied with. k) All policies, rules and regulations of the DCDB main office will apply to the branch office. l) The first branch manager will be an officer from DCDB main office. m) Rank and file staff will be recruited from qualified residents of Canlaon City.

Revenue Assumptions a) One percent service charge will apply to all government transactions. b) Two percent service charge will apply to all payroll transactions. c) Agricultural loans will have an interest rate of 15 percent d) Commercial loans will have an interest rate of 15 percent.

Expense Assumptions a) The salary of the bank branch employees will have a three percent merit increase every year after having rendered a minimum of 1 year of efficient service. b) The utility expense will increase according to current market statistics.

c) Bank premises, furniture, fixtures and equipment are carried at acquisition cost or construction cost less depreciation and impairment losses. Depreciation is computed on the straight-line basis over the estimated useful lives of the assets as follows:

Buildings Furniture, fixtures and equipment

40 years 1-10 years

Leasehold improvements are amortized over the terms of the related leases or the useful lives of the improvements whichever is shorter.

SOCIOECONOMIC FEASIBILITY

A. ECONOMIC ASPECT
We foresee the bank branch having an economic impact on the community. Services offered by the bank will most probably affect certain prevalent social behaviors.

For instance, people will no longer have to purchase unnecessary items in order to have their checks cashed locally. Trips to and from San Carlos City or elsewhere for the purpose of cashing checques and obtaining money will be minimized. Following this line of thought, people may travel less and demand that local establishments upgrade their products and services which are otherwise found in San Carlos City, Bacolod, or Guihulngan.

More convenient access to financing may encourage more people and establishments to avail of loans for home or business improvements.

Industrial loans will promote the growth of businesses in the community. This in turn could lead to more employment opportunities.

Agricultural loans could lead to higher productivity through improvements in farming practices.

B. SOCIAL DESIRABILITY

Having the services of a bank brings quite a confidence boost to a young city like Canlaon City. Once again it is given the opportunity to present itself’ “as a special growth center of Northern Negros” with the capacity of a financial banking institution. The entrepreneurs will have the financial confidence, as well as convenience and security, to establish them in the local and even international business markets.

Having the knowledge, and the assistance, to decide how to invest and use a loan wisely bring confidence in all working people. The agricultural sector should be given an opportunity to avail of services that will save for the future, at the same time increase their power as consumers.

C. JOB OPPORTUNITY

As for the bank, there will be a staff of at 6 persons, not including the security guards. The tellers, bookkeepers, clerks and messenger can be locally hired if qualified. As for the city, the bank provides the ability, for small to medium business entrepreneurs through loans, to put up the business, which in turn creates jobs. As for the agriculture sector, through education and

communication, will develop the consumer confidence that can fuel the city’s economy thus creating more jobs. The agricultural community will also benefit from having the capital to utilize more efficient means of production such as mechanization, improved storage and handling facilities.

LEGAL ASPECT

When starting a business, it’s crucial that the owner must be familiar with the basics of business law. Most businesses legal

troubles are the result of unclear documents. Whether one deals with employees, contractors, or the services that offered, there are certain legalities that one should consider.

In applying for a Mayor’s permit, the bank must submit a copy of the SEC registration. Zoning and Locational clearance and certificate of building inspection must be obtained from the Engineering department. And then proceed to the Bureau of Fire Protection for the Fire Safety Inspection clearance. The officer-in-charge will then assess the

building for architectural presentability, structural stability, sanitary inspection and signage. Assessment and Payment must be made and after that is the issuance of Business/Mayor’s Permit.

Since the project is to establish a bank, legalities with the Bangko Sentral must also be accomplished. The application for

authority to establish a bank should be completed before the requirements for the issuance of authority to operate is complied with.

After the inauguration of the bank, within 30 days from the date of opening, another set of requirements must also be submitted to the Central Bank. For the bank operations, as mentioned in Republic Act 8791, The General Banking Law, Section 21, “Banking Days and Hours” are, “Unless otherwise authorized by the Bangko Sentral in the interest of the banking public, all banks including their branches and offices shall transact business on all working days for at least six (6) hours a day. In addition, banks or any of their branches or offices may open for business on Saturdays, Sundays or holidays for at least three (3) hours a day: Provided, That banks which opt to open on days other than working days shall report to the Bangko Sentral the additional days during which they or their branches or offices shall transact business.

Chapter 7 of Republic Act 7906, or An Act Providing for the Regulation of the Organization and Operations of Thrift Banks, And for Other Purposes, states exemptions which a thrift bank is legally entitled to. Briefly, the exemptions are: 1) tax emptions; 2) exemption from

publication

requirement;

3)

exemption

from

notarial

charges;

4)

exemption from registration fees.

For the proposed project, it shall be opened from Monday thru Fridays, 9:00am to 3:00pm. However, employees are set to work from 8:00am to 5:00pm with a 1-hour lunch period.

PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA

Figure 1. Age Bracket of Respondents

Below 20 6% 12% 26% 12% 5% 14% 25% 21-30 31-40 41-50 51-60 above 60 No Answer

Figure 1 shows the age bracket of respondents.

Twenty-six

percent of the respondents are aged between 41-50 followed by 31-40 years old, 25 percent. A total of 77 percent of the respondents can be considered to be in the wage earner age.

Figure2. Gender of Respondents

13% 29% Male Female NO Answer 58%

Figure

2

shows

that

58

percent

of

those

who

answered

the

questionnaires are female and 29 percent are male. Thirteen percent did not specify their gender

Figrue 3. Civil Status of Respondents

23% 13% 7% Single Married Widow No Answ er 57%

Figure 3 shows the civil status of the respondents. Fifty-seven percent of those who responded are married and 23 percent are single. Seven percent are widowed and 13 percent did not specify their status.

Figure 4. Members in the Family

22% 1 to 5 58% 6 to 10 No answer

20%

Figure 4 shows the bracket for the number of members in the respondent’s family, 58 percent, 1-5 members; 20 percent, 6-10 members, and 22 percent did not specify.

Figure 5. Monthly Income of Respondents
No Answer Above 40,001 20,001-40,000 15,001-20,000 10,001-15,000 5,001-10,000 Below 5,000 0 20 40 60 80 100 104 120 7 11 32 45 71 114 Series1

Figure 5 shows the range for the monthly income of the respondents. Out of the 384 respondents 114 of the respondents earn between P5,001 to P10,000. This is followed by 104 respondents, earn below P5,000. The researchers sought to determine if the respondents belonged to the income generating body of Canlaon City. According to this data 56 percent of the respondents belonged to the 10,000 and below monthly income bracket. Even if a large portion of the sample size earn 10,000 or below we can see from the succeeding graph that 44 percent of the sample population spend below 5,000 pesos a month. This would mean that at least some if not most of the 10,000 peso and below income earners will also only expend 5,000 pesos per month. We can imply from this that even though a large percentage of the sample population earn a relatively low monthly income their monthly expenses are still low and this is encouraging as it may be an indicator that even the lower income earning individuals may still have the capacity to save. This

presupposes that the lower income earners are also the ones who have a lower monthly expenditure, which it is logical to assume.

Figure 6. Monthly Expenses of Respondents

8%

3% Below 5,000

18% 44%

5,001-10,000 10,001-15,000 Above 15,000 No Answ er

27%

Figure 6 shows the monthly expenses of the respondents. The researchers wanted to know the spending power of the residents of Canlaon. Forty-four percent of the employed sector spend below 5,000, twenty seven percent spend P5,001-P10,000, eighteen percent spend P10,001-15,000 and 8 percent of the respondents spend P15,000 and above. Figure 7. Monthly Savings of Respondents
250 200 150 100 50 0 None Below 1,000 1,001-5,000 5,001-10,000 Above 10,000 No Answ er 18 79 23 9 28 Series1 227

Figure 7 shows the monthly savings of the respondents.

From their

monthly income, 227 respondents answered that they save below 1,000.

79 respondents save between 1,001-5,000. And 23 respondents save between 5,001-10,000. There were 18 who answered none and 28 The researchers sought to

respondents did not specify their savings. establish that people still save money.

This question also served to

determine the amount of savings of the sample population.

Figure 8. Exsisting Bank Account
4%

36% 60%

yes no no answ er

Figure 8 shows that 60 percent of the respondents already have an existing bank account with other banking institutions outside Canlaon City and thirty six percent don’t have bank deposits. The researchers wanted to determine the percentage of those who avail of the services of a bank and those who don’t.

Figure 9. Existing Banks
RB Tanjay Allied Bank UCPB Victoria's Bank Union Bank RCBC BPI EPCIB RB Guihulungan Metrobank DBP Land Bank PNB 0 10 20 30 40 50 60 70 80 90

Figure 9 shows the existing banks that the respondents specified. It shows that the majority of the respondents who avail of banking institutions outside Canlaon City go to Landbank San Carlos or Guihulngan. These banks also pose as competitors to DCDB. Although located outside of Canlaon City, but still are catering to banking needs of target market of this study.

Figure 10. Products and Services of Existing Banks
5% 5% 2% 1% Savings Time Deposit Checking Account 8% 46% Utilities Payment Loans Credit Card 11% Remittances Direct Deposit Income tax Assistance 4% 8% 7% Wire Transfers Portfolio Management

Figure 10 shows the products and services of the existing banks which the respondents avail of. It shows that the bigger portion of the pie goes to savings accounts deposits (46 percent). percent avail of the loan services of their banks. Eleven

Figure 11. Current Problems of Existing Bank Slow Service
9% 2% 7%

Long Lines No Parking Low Saving intrest Rates High loan Intrest Rates Unaccomodating Staff None No Answer

26%

14%

5% 8% 9% 2%

18%

Long Distance Expensive For Travel

Figure 11 shows the current problems the respondents encountered with their banks. Twenty-six percent indicated that the main

problem is the low savings interest rates that their current bank offers. Eighteen percent indicated distance to their banking

institution was a problem.

Figure 12. Respondents in Favor of DCDB Branch
382 400 300 200 100 0 2 Yes No

Yes

No

Figure 12 shows the number of respondents in favor of the establishment of a DCDB branch in Canlaon City. respondents are not in favor. Only 2

One respondent who answered No

said that the bank would be a future competitor of the office the respondent is currently working for.

Figure 13. Ideal Location
Bautista's Estate Old Ceres Terminal Near the School EXODUS Ave. Along National Highw ay, 7 Near Police Station Anyw here Within the city

Series1

City Hall

Near Public Market Mabigo Midtow n City Proper/Centre 0 20 40 60 80 100 120 140 160

Figure 13 shows the sites the respondents prefer as a location for the bank. The majority said that it would be best if the branch would be situated in the city proper or the city center. This is actually misleading as Mabigo Midtown and City Proper are the same place. In effect almost 60 percent of the population prefer the midtown area for the location of the bank branch. The group are recommending a site outside of that area due to price considerations. However, the researchers believe that regardless of where the bank will be located in Canlaon City, it would be only minutes away from the city center

Figure 14. Banking products and services the respondents wants to avail
2.96% 10.94% 35.17% 9.66% 7.78%

Savings Account Time Deposit Remittances Wire Transfers Checking Account Utilities Payments Direct Deposits Portfolio Management Loans Credit Card Income Tax Assistance ATM SSS Pensioner

6.31% 9.95%

5.32% 3.65%

1.58% 4.24% 0.10% 2.36%

Figure 14 shows the products and services that the respondents would like to avail of if the plan for a DCDB branch in Canlaon City materializes. 35.17 percent for savings deposits, 10.94 percent for time deposits, and 9.95 percent for loans.

Figure 15. Other Financial Institutions Utilized By Respondents

7.3% 22.9%

1.7% SSS/GSIS 47.9% Paw nshops Credit Coop Informal Lending Others

20.2%

Figure 15 shows the other financial institutions utilized by the respondents. These institutions are also considered as competitors of

the bank because they offer similar products and services such as small

loans and cashing of cheques. The chart shows that 47.9 percent of the respondents avail of services from SSS/GSIS. 20.2 percent of the

respondents go to pawnshops and 22.9 percent to credit cooperatives. Others go to informal lending institutions such as the “5-6”, meaning for every five pesos barrowed, six pesos must be returned.

Figure 16. Respondents who would avail of DCDB products and services

NO 1% YES NO YES 99%

Figure 16 shows the percentage of the respondents who would avail of DCDB’s product and services. Out of the 384 respondents, 99 percent would readily avail of these services and only 1 percent would not because the bank would be a threat (competition) to the company the respondent works for.

SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS A.FINDINGS 1) There is a demand for a bank in Canlaon City. Only two of 384 respondents did not see a need for a bank in the area. This makes up .5 percent of respondents not in favor of a bank in Canlaon. 2) The socio-economic profile of the community indicates that a significant portion of the community saves. Specifically, the

survey revealed that from their monthly income, the majority (227 respondents) answered that they save below P1,000. This comprises 59 percent of the total respondents. 3) A majority of respondents (35.17 percent) are willing to establish a savings account with the proposed bank. 10.94 percent would put their money in a time deposit account, and 9.95 percent would avail of bank loans. 4) The government’s monthly revenues are as follows: From taxes, licenses, and permits: P14,224,342.32 From P44,574,756.00 From other sources: P1,233,522.76 National Government Subsidiaries:

B. CONCLUSIONS

Based on the above findings, we conclude that the proposed branch of DCDB cannot rely on revenues generated by non-government sources such as interest from loans. This is because the income-earning non-government sector has very little power to save amounts of any significance. Despite the widespread desire for a formal banking institution, any revenue generated from savings accounts, loans, and other fees would be negligible. The general economic level of the city shows that there are no large enterprises and that the city is predominantly agricultural. Despite this deficiency, the large Internal Revenue Allotment (IRA), revenues generated by fees from taxes, licenses, and permits, and the government payroll, coupled with the present administration’s willingness to have the proposed bank act as its official depository offsets the low saving power of the private sector. In conclusion, we find it feasible to open a branch in Canlaon, only if the proposed bank branch can capture the government market and act as its official depository at the outset.

C. RECOMMENDATIONS We therefore recommend the following: 1) Obtain a board resolution from the local government designating the proposed bank as its’ official depository.

2) Obtain approval from the Banko Sentral Monetary Board allowing the DCDB branch to act as the official local government depository in the absence of an existing official depository in the area. 3) Purchase the site of the proposed branch. Later when feasible, buy the surrounding lots for future expansion including after business enterprises. 4) To insure the continued support of the local government in the advent of competitor banks entering the market, continuously update products and services in order to meet the government’s evolving needs. 5) In the first three years of operation the bank should: a) Be conservative with its loan exposure b) Maintain a level of liquidity at or above the industry average

APPENDICES

Appendix A Survey Questionnaire

SILLIMAN UNIVERSITY DUMAGUETE CITY, 6200 PHILIPPINES Dear Sir/Madam: This is a letter of introduction from the students enrolled in BA240 (Feasibility Study) of the Masters Degree Program in Business Administration of Silliman University. In partial fulfillment of our academic requirements, we are preparing a feasibility study to be conducted in your area. Specifically, the study aims at determining the feasibility of establishing a branch of the Dumaguete City Development Bank (DCDB) in Canlaon City, Negros Oriental. While this study is academically driven, this is a live study, and we have the support of our proponent, the DCDB, as well. In this regard, we are seeking the cooperation of various entities from the local government of Canlaon City, and from the public and private sectors in your area. As representatives of both our school and the DCDB, be assured that we will conduct ourselves as this study with the utmost professionalism required of us. We will be grateful for any assistance that you may extend to us by answering the attached questionnaire thoroughly. All responses will be kept strictly confidential. Thank you for your time. Yours truly,

Rene Juntereal Maldon Tiempo Maricris Joy Tan Victor Cal Noted by: Atty. Gloria G. Futalan Professor MBA Program, CBA Silliman University

Katherine S. Calibat Sina Pourabrisham Bert Riego

THANK YOU FOR THE TIME AND EFFORT YOU SPENT IN ANSWERING THIS QUESTIONNAIRE. THIS INFORMATION WILL REMAIN CONFIDENTIAL. Name (optional):_________________________________________________ Address:_________________________________________________________ Age:_________________________Gender__________Civil Status________ Occupation:______________________________________________________ Place of Work:____________________________________________________ Number of Members in the Family:________________________________ INSTRUCTIONS: Please put a check (/) on the space provided for your answers: 1. How much is your monthly income? _____ below P5,000 ______P15,001-P20,000 _____ P5,001-P10,000 ______P20,001-P40,000 _____ P10,001-P15,000 ______ P40,001 and above please indicate the amount __________ How much are your monthly expenses? _____ below P5,000 ______ P5,001-P10,000 _____ P10,001-P15,000 ______ above P15,000 please specify:______________ How much of your monthly income do you usually save? ______ below P1,000 ______ P1,001- P5,000 ______ P5,001 – P10,000 ______ above P10,000

2. Do you have an existing bank account? ______ Yes Please specify the bank:______________________ ______ No With what financial entity do you bank?_________ 3. What kind of services do you avail of from your bank? ____Savings deposit ___ Time Deposit ___Checking Acct ____Utilities Payments ___Loans ___Credit Card(s) ____Remittances ___Direct Deposits ___Income Tax assistance ____Wire Transfer ___Portfolio Management 4. What problems if any, have you encountered with your existing bank? ____slow service ___low savings interest rates ____long queues ___high interest rates for loans ____no parking ___ unaccommodating staff Others please specify________________ 6. Are you in favor of Dumaguete City Development Bank (DCDB) opening a branch in Canlaon City? _______YES ______ NO If no please state your reasons__________________________________________ 7. What kind of banking services wound you want to avail of? _____savings accounts _____checking account _____loans _____time deposit _____utilities payments ____credit card(s) _____remittances _____direct deposits ____wire transfer _____income tax assistance _____portfolio management others______________________________________________ 8. What financial institutions have you utilized at this time? ____SSS/GSIS/Pagibig _____Credit cooperatives ____Pawnshops _____informal lending(5-6,etc) ____others please specify___________________________ 9. If DCDB opens a branch in Canlaon City, would you readily avail of its services? _______YES __________NO 10. Please write your comments and suggestions on the proposed project in the space below:

Comments and Suggestions Given by Respondents • I believe that Canlaon City does need a bank in order to augment our livelihood through its banking services and to provide security in any amount of money we can save. • The proposed establishment of DCDB in Canlaon City will be very beneficial to its residents especially to businessmen and planters since the city has no existing bank and other financial institutions. • The proposed project is a big honor for the Canlaonians for it will not cost them too much for the fare and time in going to San Carlos to deposit or withdraw their money. • I want this proposed project to be fulfilled and accomplished because I want to change the economic situation of the city and life of the people in Canlaon City. “Kaya dapat lang ipatupad ninyo ngayon ang plano ng DCDB.”

There should be low interest rates imposed, fast release of transactions, and not too many or difficult requirements to procure.

I would like to suggest the following: 1. High interest in savings account 2. Accommodating staff 3. Offer quick loans release 4. Must have good location and parking area

This is a very feasible project for the city to improve its economic situation and to provide convenience of its residents. People will learn to save and there will be lesser risk for us to transact banking business in other places far from the city. We hope that the project will be implemented this year (2007). More power to the project!

Make the project soon. It will provide us convenience, the ability to manage our finances and improve the economic situation in Canlaon City.

• • •

Place ATM Facility Please hurry. It is good and for the welfare of the people in Canlaon City specifically.

Good idea but you need to study it further.

• • •

I hope your DCDB branch in Canlaon City will be a success. Please respond and just do it! Please put up an ATM Machine in Canlaon City for the proposed DCDB branch.

• • • • • •

Please construct your building as soon as possible. I hope that this project will push through. The earlier you open the better so we can avail of its services. We need to have a bank in Canlaon City. We will be very grateful if we will have a bank in Canlaon City. Here are my suggestions: 1. Have easy access on any transaction 2. Have accommodating staff and personnel 3. Must be located at the heart of the city

• • •

I am highly in favor of the proposed project. We will be very happy if your proposed project will be materialized. Please realize this feasibility study. It will be a big help to the Canlaonians.

If we will have a bank here in Canlaon City, there will be no need to go to San Carlos City just to deposit our money.

Putting a bank in Canlaon City is very necessary considering that our city is far from San Carlos City and Guihulngan City were banks are located.

Happy to have one because not even one bank is available in this city.

• •

This proposed project is very good. The project proposed is very good especially here in Canlaon City. We need a bank here so please make it true.

Here in our place I agree that this city should have a bank in order that people here can easier deposit their money.

It is ideal to establish a bank in the city since at the present the city has no banking institution.

It is better that we have a bank in the city so that the people of Canlaon City can deposit their money and can avail of loans for the development of their business for better living.

• • • •

The sooner the better. Do it now! ASAP. Project proposal is very good to us especially there is no existing bank.

• •

Do good service. It is a good proposal so that we will not be going out of Canlaon City.

• •

Very good proposal. ASAP.

If we have DCDB here in Canlaon City, we can easily deposit or withdraw in our saving account. SUGGESTION: “It is good if there is ATM in the said bank”

• • • • • •

To improve Canlaon City. I suggest that you will open a bank. It is good to have a bank in Canlaon City for convenience. Hoping you will open your branch here ASAP. We would be grateful to have a bank in Canlaon City. We would be grateful enough to have a bank at Canlaon City in order for us to save expenses in going to San Carlos City to get out money sent sometimes from a distance relative.

The project of pulling up a branch in Canlaon City is very beneficial to the constituents considering that as of the moment there is no available bank at the place.

• •

For me it is better to have the proposed project in our city. Much better if you open DCDB here so that is easy for us to open saving accounts.

It is a good project; if this will be materialized may be most of the depositors will no longer go to San Carlos City where banking institutions are.

I hope that DCDB branch in Canlaon City will be realized ASAP.

It is a good project if this will be materialized plenty of residents here will be benefited since we don’t have any banks in here in at place. I hope this will be materialized soon.

I suggest that the proposed project must be implemented immediately, because we need vary badly the bank in Canlaon City.

I personally and urgently request for the implementation of the proposed project for the benefit of the constituents of Canlaon City.

I suggest that you will open or install an ATM machine so that our problem in going to San Carlos City will be solved.

It’s a good opportunity for us to have a banking institution in our city. It will facilitate the safety of the government funds of the city of Canlaon City and later the financial transactions of the constituents of the city and barangays and the neighboring towns as well.

• •

Early action for this project. I think this is a good decision to open a DCDB branch here in our place so that we can avail of bank transactions in a short period of time because mostly we have our transactions in the cities of San Carlos, Guihulugon and Dumaguete and we need more or less than 1 day of traveling and transacting. ”needed the soonest possible time”

• • • • •

Afraid of bankruptcy especially on private banks. I want immediate action if ever….. Hope it will rise soon. This proposed project is really needed in our place. As early as possible you can open your branch here in Canlaon City so that we can avail of your services.

Hope that this Feasibility Study will be materialized as early as possible.

It would be convenient for the people of Canlaon City to do banking business.

It would be nice if the said proposed project will push through so it could be convenient for the people here and have their saving deposits. They don’t have to travel to San Carlos to deposit so with the city government as it would be less risky.

• • • • •

Good project proposal. Salamat! I hope this will be materialized. Madaliin ang pag-open kasi wala kaming banko rito. Easy to deposit. This proposed project is really needed here in Canlaon City because we don’t have any existing bank.

This will be a great help to our city and to the people of Canlaon City.

• •

This proposed project is needed in our locality. If in case BSP will grant DCDB an authority to oparate in our area business will improve their sales, many supply increases and peoples way of life eases.

We will be very happy if you will open here in our city because we really need a bank here.

• • •

Give low interest for loans. Hoping that this proposed project will be operating soonest. The P300.00 back and forth fare is a lot of money in just withdrawing or applying loan, if takes time for how many hours we have to be absent or on leave, whereas if have here in Canlaon City, it’s a great help and great favor for all employees including businessmen/women/people.

Canlaon City has a strong demand for banking institution and if DCDB will decide to put up a bank, the pros and cons must be thoroughly considered. There must be a strong tool or procedure to safeguard the investment, particularly loan and credit.

• •

Hanep because no bank in Canlaon City. It’s nice/good to have a branch here in Canlaon and it’s an opportunity for the Canlaonians and for me to have an access of DCDB services especially an agricultural loan, since the area is the agricultural basket of Negros Oriental.

This would benefit the residents of Canlaon and safety of keeping code.

• •

Can it be as soon as possible? Please! I hope and pray that this proposal will come true to this city because its very hard for us Canlaonians.

It will be beneficial to the people of Canlaon but it would be a big thread to the company that I’m working with. It will be a future competitor of our office.

• •

As early as possible. Canlaon City badly needs a bank to cater to the needs of the people. We would be vary happy if DCDB decides to open a branch here. Best regards.

We are in favor to have a branch here in Canlaon City, Negros Oriental, so that the people experience and know how to save for their own good for the future.

I suggest that the proposed project will be implemented as soon as possible.

Canlaon City is the city with no banking institution where in people are looking forward.

• •

For immediate implementation of the project. We really don’t have fixed income. Last few years I was able to avail of banking services from DBP and other banks in San Carlos City.

It is unwise to place your savings in places where you have to spend and several pesos will be wasted for your fare back and forth. I realized I was not saving because of the distance from the bank to our place. I would be vary happy to avail of services from your bank because this is what is lacking in our place. I hope you will open the soonest possible time. • • Soon the bank will be open. I’m very happy if DCDB will open here in Canlaon City for the convenience of the people. • It’s okay to have a bank here in Canlaon so it’s easy, especially for the students on their allowances. • Big investors are hesitant to come to Canlaon for no bank is available and they have no travel an hour to San Carlos City for banking services. If DCDB opens its branch in Canlaon, it would be a boost to our local economy and an eye opener for the locals to save or deposit their money to the bank instead of hiding it in certain places that might lead to loss or impulse spending. • • It should be at the city center. For additional employment of Canlaon people. 1) Additional employment for the people of Canlaon City. 2) Easy to access for any transaction.

3) A town or city should have a bank for the safety or their financial transaction. • The office I’m working is very interested in opening an account for there is no bank here in Canlaon City. 1) Make this project possible. 2) The strategic location for banking is Mabigo proper. 3) Before starting, advertisement and promotion must be given for barangays. • Please make this proposed very soon. 1) Easy access for any transaction. 2) Accommodating personnel and staff. 3) It should be at the heart of the city. • 1) Must have low interest rates of loan.( credit services) 2) Must have character loans. 3) Must provide social services to the clients. 4) Short time processing. • It’s very good to have a bank in Canlaon City, so that they can help Canlaon City in economic progress. • I’m in favor of DCDB opening a branch in Canlaon City because there is no existing bank here. • Include assistance to farmers with affordable interest rate.

Give agricultural loan assistance to Canlaon City farmers with an affordable interest rate.

I want to have a bank in Canlaon City so that I can easily save very money or deposit, instead of going to San Carlos.

APPENDIX B Banking Laws

APPENDIX C BSP Forms

APPENDIX D Permits, Clearances, Licenses

APPENDIX E Taxation

APPENDIX F Map & CDS of Canlaon City

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