Annual Report 2011

2011A L L T H E W A Y T O T H E T O Pa n n u a l r e p o r t

TAbLE Of COnTEnTs

1 Foreword

2 Awards and Distinctions

4 Investment Merits

5 Financial Highlights

6 Letter from the Chairman

8 Report of the President and

Chief Executive Officer

11 Operational Highlights

16 Board of Directors

18 Board of Directors’ Profiles

20 Executive Committee

21 Corporate Governance

23 Risk Management

25 Report of the Audit Committee

26 Senior Management

29 Management Directory

30 Products and Services

32 Subsidiaries

34 Corporate Social Responsibility

36 Statement of Management’s

Responsibility for Financial Statements

37 Independent Auditors’ Report

38 Financial Statements

45 Branch Directory

52 Investor Assistance

ALL THE WAY TO THE TOP

The Cover features the building blocks of SecurityBank’s success which are founded on Teamwork, Innovation and Business Expansion. These are the core foundations of a culture which enables the Bank to deliver Superior Customer Service through Customized Products and Solutions while emphasizing Security Bank’s pre-eminence as the Philippine banking industry’s benchmark for delivering the best Shareholder Value.

This is a testament to how Security Bankconstantly stretches its limits, in its pursuit ofexcellence, as it continues on its journey “All theWay to the Top”.

TO bE

… A world class bank that is the best of the best… A lifetime partner in fulfilling dreams, … Across generations, … Beyond borders.

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A L L T H E W A Y T O T H E T O P

Source: The Asian Banker, Strategic Business Intelligence for the Financial Services Community: The Asian Banker 500 is an annual study of the financial & business per-formance of the commercial banking industry in the Asia Pacific Region.

• TheAsianBanker500 Number 1 among 500 banks in Asia Pacific in terms of

Return on Assets Ranked number 5 in terms of Return on Equity The Philippines’ 3rd strongest Bank and 28th ranked in the region

• TheWorldFinanceBankingAward Best Banking Group in the Philippines for 2011

• CorporateGovernanceAsiaAnnualRecognitionAwards2011 Among the Best of Asia’s publicly listed companies in the region

• AsiamoneyBestBankAwards Best Domestic Debt House in 2011

• AsianBankingandFinanceRetailBankingAward2011 Best Online Banking Initiative in the Philippines and across

Asia for product innovation for DigiBanker Billing/Invoice Presentment and Payment System

• FinancialInsightsInnovationAwards(FIIA) DigiBanker Inter-Bank Fund Transfer (IBFT) Facility

Top Key Initiatives in Asia Pacific

• PhilippineDealingSystem(PDS)CesarE.A.VirataAward Best Securities House for seventh consecutive year

Top Rank in Four Categories: Top Fixed-Income Cash Settlement Bank 2011 Top Fixed-Income Brokering Participant 2011 Top 5 Spot Foreign Exchange Dealer 2011 (ranking 3rd) Top 5 Fixed-Income Dealing Participant 2011 (ranking 3rd)

• BureauofTreasury Best Performing Government Securities Eligible Dealer

for 6 consecutive years

• BangkoSentralngPilipinasStakeholdersAward2011 Special Recognition for Advocacy Support for participation in

BSP’s financial learning campaign

LIsT Of AWARDs AnD DIsTInCTIOns

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InVEsTMEnT MERITs

3.5%

25%

18.2%

0.9%315%

- Consistently highest in industry for the past 5 years

RETURNONASSETS- Ranked No. 1 among Philippine universal banks

CORECAPITALRATIO- Capitalized well above industry average and regulatory requirements

ASSETUALITY- Lowest NPL ratio in industry

- Highest coverage ratio, double of industry average

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fInAnCIAL HIGHLIGHTs

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10

09

119

111

109

Total Deposits(in Billion Pesos)

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10

09

215

166

146

Total Assets(in Billion Pesos)

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10

09

30

25

18

Capital Funds(in Billion Pesos)

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10

09

92

75

70

Loan Portfolio (Net)(in Billion Pesos)

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10

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208

158

139

Total Earning Assets(in Billion Pesos)

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10

09

6,701

7,160

3,062

Net Income(in Million Pesos)

2011 2010 2009FORTHEYEAR (in Million Pesos) Net Interest Income 7,537 6,100 6,003Other Income 4,121 6,751 1,896Operating Expenses 4,149 4,721 3,936Provision for Credit Losses 59 236 487Net Income 6,701 7,160 3,062 ATYEAR-END (in Million Pesos) Total Assets 215,255 166,492 146,250Total Earning Assets 207,514 157,506 138,564Loan Portfolio (net) 91,964 74,505 69,900Total Deposits 119,306 110,593 108,525Capital Funds 30,433 24,597 17,783 PERCOMMONSHARE Earnings per Share (Weighted / Adjusted) P13.34 P14.25 P6.82 Number of Shares Outstanding /Subscribed (in Millions) 502 418 418 FINANCIALRATIOS (%) Return on Average Assets 3.48% 4.91% 2.19%Return on Average Equity 24.64% 34.62% 20.92%Non-Performing Loans Ratio 0.86% 1.12% 1.27%

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Ourmarket capitalization at over Php 50 billion

(overUSD1.2billion)represents

250%growth

overthelast5years.

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We continued with our Php 2.00 cash dividend payment in 2011, our 20th consecutive cash dividend and a ten-fold growth from our initial cash dividend payment of Php 0.20 per share.

LETTER fROM THE CHAIRMAn

As 2011 unfolded, the global economy was facing the raging debt crisis in Europe, the continued sluggish US economy and steadily climbing crude oil prices while the domestic economy was trying to balance a strong consumption-led growth and weak government spending. The Bangko Sentral ng Pilipinas skillfully managed to deliver a stable monetary and price environment in an uncertain global economy. Impressively, domestic credit growth supported a robust service sector with continued foreign direct investments in manufacturing, energy and property sectors, while the Philippine equity market ranked as one of the best performing in the region.

It was against these business conditions that Security Bank sustained its performance excellence. At year-end, the total resources of your Bank reached Php 215 billion. Net income at Php 6.7 billion, represented a return on average equity of 25%. Capital funds of Php 30 billion translated to a healthy capital adequacy ratio of 20%, way in excess of regulatory requirements, and strongly positioned your Bank for further growth. Asset quality remained superior with non-performing loans ratio of less than 1%, with reserve cover of 315%.

While continuing to build a sustainable franchise, your Bank executed key strategic moves in 2011 to deliver long-term financial performance. Security Bank acquired Premiere Development Bank with its network of 38 branches. Regulatory approvals for the acquisition were obtained in January 2012 paving the way for the completion of the share purchase agreements. Together with the approval from the Bangko Sentral ng Pilipinas for 50 branch licenses in restricted areas, your Bank’s network of branches is projected to grow to 250 by mid-2014.

Along this thrust for expansion, your Bank likewise executed a joint venture agreement with Marubeni Corporation of Japan for the establishment of SBM Leasing. This will be Marubeni’s second leasing operation in the region after its success in the establishment of a leasing business in Indonesia.

To support our expansion objectives with a long-term funding base, we likewise obtained regulatory approvals for the issuance of Php 10 billion long-term negotiable certificates of deposits (LTNCD), with the first tranche of Php 5 billion issued in February 2012.

Security Bank takes pride in its recognition from The Asian Banker, The World Finance Banking Award, and the Corporate Governance Asia Recognition Awards. Security Bank has proven its excellence not only among Philippine banks, but is now a recognized name in the Asian banking stage. The awards are a fitting tribute to Security Bank on its 60th year. Security Bank has proven that a bank does not need to be the biggest to be the best.

Over the last five years, Security Bank has exceeded the expectations of our clients and our other stakeholders. Our market capitalization at over Php 50 billion (over USD 1.2 billion) represents 250% growth over a period

of five years. We continued with our Php 2.00 cash dividend payment in 2011, our 20th consecutive cash dividend and a ten-fold growth from our initial cash dividend payment of Php 0.20 per share.

On our 60th year, with funding provided by the Security Bank Foundation, Inc., our corporate social responsibility arm, we were deeply involved in giving back to the community as part of our advocacy for education and livelihood development, as well as support for environmental programs. The Foundation committed to fund the construction of 60 classrooms for public schools over a five-year period, and we piloted the project in 2011 with the turnover of 13 classrooms for two public elementary schools and one public high school in Cabiao, Nueva Ecija. The Foundation likewise supported the flood victims of Davao, Cagayan de Oro, Iligan and Dumaguete with cash donations used for the rebuilding of homes and schools.

Faced with shareholder expectations of sustaining your Bank’s unprecedented levels in return on equity and investment, your Bank will focus on its defined building blocks for continued success and leadership in shareholder value. We look forward to sustaining our solid growth and profitability in the coming years with the expanded branch network, the contribution of new businesses, and continued investments in people, infrastructure, products and services. We are committed to position Security Bank among the leading established financial institutions recognized and respected by both local and international peers as one of the best in Asia. Security Bank will continue to be a vital partner across generations, expanding our products and services beyond both physical and socio-economic borders, as we commit to lifetime partnerships to help fulfill every Filipino’s dreams.

We are most grateful for the loyalty and continued support of our customers and business partners over the last 60 years. We acknowledge the prudent risk management and governance of the members of the Board. We take pride and deeply appreciate the efforts of our Security Bankers who have responded to the challenge of working together to bring Security Bank to ever higher competitive levels.

Most importantly, we are thankful for the blessings received over the past 60 years from the Lord Almighty.

FREDERICK Y. DYChairman

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Our2011resultsreflectyourBank’s effortstosurpassthechallengesofexcellence, innovation, growthandexpansion.

Ourbuildingblocksforsuccess are in place tosustainourpositionofleadershipinthedeliveryofshareholder value in the comingyears.

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REPORT Of THE PREsIDEnT AnD CHIEf ExECuTIVE OffICER

It is clear that 2011 will be remembered for the external economic events that posed a threat to the global economy and yet the Philippine economy remained resilient. Despite surging crude oil prices due to Middle East tensions, the economy managed to carve a 3.7% growth supported by strong economic fundamentals and a healthy stock of buffers like overseas remittances and Business Process Outsourcing (BPO) revenues to withstand external shocks. The growth was on the foundation of robust household spending, continued gross investments and a flourishing service sector that was unaffected by the global slowdown that afflicted larger economies.

Security Bank faced the challenge of delivering another year of record financial performance amidst the global uncertainties and local competition. We succeeded in exceeding the expectations of our various stakeholders with the following financial highlights:

• NetincomeofPhp6.7billion,translatingtoanindustry-highReturnon Average Equity (ROE) of 25%

• NetinterestmarginsatPhp7.5billion,representingastrong24%improvement from 2010, driven by volume growth in the loan portfolio and investment securities, while net interest margins were still kept at above 4%.

• Corerevenues,netoftheone-timetradinganddisposalgains,reflecting a strong 21% improvement from 2010, supported by the Php 1.5 billion improvement in net interest margins and growth in other income, particularly from customer foreign exchange, advisory and stockbrokerage fees.

• Costtoincomeratio,sustainedat37%,withstrongrevenuesaccompanying a decline in operating expenses due to lower pension expenses, zero provision for credit losses, the reversal on impairment on investment properties held by an affiliate and various savings realized on cost efficiency projects.

• Totalresourcesreachedanall-timehighofPhp215billion,a30%increase from 2010.

• NetloansatPhp92billion,representingastrong23%improvementcoming from expansion in the corporate loan portfolio, particularly for the mining, power, real estate and trading industries.

• Assetqualitycontinuestobebestofindustry,withabsolutenon-performing loans at Php 800 million, translating to an NPL ratio of .9%. The allowance for credit losses amounted to Php 2.6 billion at year-end, resulting in more than adequate coverage of non-performing loans at 3.2 times.

• Depositsdeliveredbyournetworkof136branches,209automatedteller machines and various electronic channels amounted to Php 119 billion at year-end.

• Attheyear-endstockpriceofPhp97.45pershare,SECBsharesaretrading at 1.6 times book value and a price-earnings multiple of 7.3 times.

Php6.7Billion Net Income

25% (ROE)Industry-high Return on

Average Equity

Php215 BillionTotal Resources reached an

all-time high, a 30% increase from 2010

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Our 2011 performance is a result of the combined efforts

of all Security Bankers, working as one team, with the passion to constantly raise thelevelofperformance.

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Security Bank family numbers 2,500. Talent sourcing and management are

key priorities towards employee development and retention

ThE ChAllENgE fOR ExCEllENCE

The impressive display of Security Bank’s strength came at a time of challenges in the local and global economies. Our 2011 performance was a result of the combined efforts of all Security Bankers, working as one team, with the passion to constantly raise the level of performance.

In 2011, the Bank piloted its Accelerated Leadership Development Program which aims to prepare identified participants to assume bigger roles through formal mentoring and individual development plans. A number of program participants have seamlessly assumed division leadership roles as part of succession planning efforts.

Training programs related to risk management, leadership and customer service were the key thrusts of the organization. Various accreditation modules, product and process programs focused on the risk implications in the work environment.

In addition to professional development activities, as part of our talent retention thrusts, employee benefits were regularly reviewed for enhancements. Our Corporate Human Resources Group initiated events that promoted employee engagement, covering sports, essay writing contests, eco- waste management programs, in addition to work-life balance workshops, character-building programs, and employee volunteerism projects, including support for the Security Bank Foundation projects and participation in a blood-letting campaign in partnership with various hospitals.

Training was not limited to members of the Security Bank family, but was extended to benefit customers and the general banking public. The Bank-organized, twice-a-year Philippine Economic Forum had become a much-anticipated customer event. The Treasury Group actively participated in a nationwide financial literacy campaign via seminars on market trends, derivative products and strategies. This was part of our commitment to propel the domestic derivatives market, zeroing in on the prudent use of derivatives to manage and mitigate foreign exchange and interest rate risks. This initiative earned for the Bank a Special Recognition for Advocacy Support from the Bangko Sentral ng Pilipinas.

Towards cultivating a culture of Service Excellence, the Service Quality Circle was formed to ensure the adoption and implementation of the quick-win recommendations of the Senior Management Team from its Service Quality Workshop in 2010, as well as to develop the roadmap over the medium term to achieve a bank-wide service quality culture.

The achievement of business growth via organizational efficiency and service was addressed via the launch in branches of the BEST Program, an acronym standing for …

Be Well-Informed and Efficient/Error-Free, Serve with a Smile, and in a Timely manner

ThE ChAllENgE fOR gROwTh ANd ExPANSION

With the objective of growing the balance sheet and generating sustained revenues from its core businesses, Security Bank focused on building its customer base, strengthening its distribution capability with additional branches and ATMs, launching new products, and opening new business initiatives that contributed additional revenue streams.

In terms of reach, Security Bank’s nationwide network of branches totaled 136 by end of 2011, with 209 Automated Teller Machines and complemented by the Bancnet countrywide system. New branches were opened during the year in the high potential markets of Molino, Cavite; Dumaguete City; Ormoc, Leyte; Butuan City; Sta. Maria, Bulacan; Alicia, Isabela, with a relocated branch in Batino, Laguna.

The distribution channels were supported by sales officers deployed for the “feet on the street” strategy to increase new customer base, improve cross-selling activities and maximize product to customer ratio. Sales efforts were supported with the 2011 “Sellebration” Incentive Program to help build the portfolio of low cost deposit funds.

OPERATIOnAL HIGHLIGHTs

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To better service commercial loan segments, a geographical hub was set up in Tacloban in addition to existing hubs in the Visayas Area covering Cebu and Bacolod, and for the Mindanao Area, covering Davao, Cagayan de Oro, General Santos and Zamboanga. New hubs were also programmed for establishment in 2012 for Dumaguete, Ormoc, Lucena, Batangas and Bicol.

In line with the BSP’s liberalization thrust to open branches in declared restricted areas, the Bank was granted approval for 50 new restricted branch licenses under BSP Circular 728, with an investment of P20 million per branch license. Additional branches in the cities of Manila, Quezon City, Makati, Mandaluyong, Paranaque, Pasay, Pasig and San Juan will be opened on a staggered basis up to June 2014.

In a strategic move, your Board approved the acquisition of Premiere Development Bank during the year with its network of 38 branches, with 21 located in Metro Manila, and 17 branches in the provinces of Cavite, Laguna, Bulacan, Rizal and Batangas. The acquisition will also enable Security Bank to become more competitive in the consumer, small and mid-sized market. The BSP’s approval for the acquisition was obtained in January 2012, with closing for the acquisition of shares from the Premiere’s shareholders completed on February 1, 2012. Premiere Bank will be operated as a subsidiary savings bank to be renamed as Security Bank Savings. Integration activities covering the Bank’s loan and deposit operations are planned for implementation in 2012.

Premiere Bank will be operated as a savings

bank subsidiary which will be renamed SecurityBankSavings.

Opening new branches to build customer base, strengthen distribution capability and expand markets.

Expansion also came in the form of a new leasing business. During the year, SBM Leasing Inc. (formerly Security Finance, Inc.) was established as a joint venture arrangement with the Marubeni Corporation of Japan, one of Japan’s biggest conglomerates involved in a broad range of sectors, including power generation, infrastructure development, and industrial machinery, among others. Security Bank owns 60% of the new leasing company, with Marubeni having 40% ownership. SBM Leasing will focus on heavy equipment financial leases covering the construction, mining and public transport industries. In the future, it may move towards leasing of hospital equipment, printing, shipping and aviation, manufacturing and agri-related industries.

Our investment bank, SB Capital Investment Corp., holds the distinction of underwriting two of the largest equity issues in the history of the Philippines, making it one of the top underwriters of equity for 2011. SB Capital was the joint lead underwriter and joint issue manager for the Php 15 billion San Miguel Purefoods Perpetual Preferred share issue, the largest of its class in share issue in the country. The deal was followed by the Php 16 billion SMC Secondary offering with SB Capital as domestic joint bookrunner for the transaction. SB Capital likewise acted as the joint deal manager for the Php 323.5 billion ROP Debt Exchange.

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In 2011, we granted a 20-year loan financing to the Water and Waste Water Plan of Boracay Island Water Company, a subsidiary of Manila Water Company. Through the Philippine Water Revolving Fund, the Bank was able to co-finance the loan in partnership with the Development Bank of the Philippines and the Japan International Cooperation Agency (JICA).

Treasury focused on the delivery of its accrual income commitment with portfolio growth as projected in the 2011 plan. Despite contraction in spreads, trading turnover improved from developing market coverage. New accounts were tapped dealing in traditional treasury products and financial derivatives. With the expertise of the treasury marketing team, customers were presented with customized financial solutions consistent with their financial objectives and within their acceptable tolerance of risks.

Other income, net of securities trading gains, supported the net margin growth with its 11% improvement from prior year. The increase in service charges, fees and commissions resulting from the increase in customer base and fees earned from capital market deals softened the impact of lower trading gains. Account relationships were not only managed in terms of loans and deposits, but also by developing custom fit cash management solutions in teamwork with the Transaction Banking Group and through the establishment of derivative and capital market solutions in partnership with the Treasury Group and SB Capital.

Volumes distributed by the Fixed Income Securities Division (FISD) showed marked growth from active participation in the primary offers market especially for non-government Peso and US Dollar bond sales. This was supported as well by expanding the onshore and offshore

institutional client market for the distribution of papers from the underwriting deals of SB Capital, and from contribution of Treasury Specialists assigned outside of the Metro Manila area in designated provincial regions.

ThE ChAllENgE fOR INNOvATION

Security Bank takes pride in its employment of the smart use of technology to be at par, if not better than competitor banks in terms of product innovation and development. The Digibanker PAS5 ePayment system is the first online Custom Duties and Taxes (CDT) module with the capability to effect real time confirmation and approval for every CDT transaction prior to final payment processing of the Bank. Security Bank is also the first domestic bank to operate a fully customized, internet based Electronic Invoice Presentment and Payment System (known as BIPPS) that won the Asian Banking and Retail Banking Awards for the Philippines and the Bronze Award for the Asia Pacific.

Security Bank owns 60% of the new leasing company, with Marubeni having a 40% ownership.

Strong customer relationships sealed our partnership for some of the most successful deals of the year.

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DigiBanker provides customized business solutions using iPad applications for fast payment approvals, as well as to reconcile, track and view transaction details in real-time.

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For the retail market, enhancements for the Security Bank online facility include the increase in bills payment merchants, the introduction of a virtual keyboard and additional credit functionalities including electronic statement of accounts, online statement viewing, credit card transaction history, and an enhancement that allows payroll account holders to open accounts.

The MasterCard CheckSure provides checking accountholders fast and convenient access to their available credit card cash advance limit to fund their checking account. The transaction is seamless with its pre-authorized, automatic charging feature ensuring unparalleled customer convenience. CheckSure works by linking a client’s pre-enrolled current account to his SB MasterCard credit card, enabling the client to draw against the credit card’s available cash advance limit. Meanwhile, electronic cash cards and gift cards were actively promoted to new markets that the previous monthly average for new cards generated has grown by 50%.

The value of this creative electronic banking product became even more evident and proved to be life-saving during recent typhoons, when access to cash was an immediate need of affected communities with operations of most banks and ATMs disrupted for days due to flooding. Communities in Iligan City discovered that they can make withdrawals immediately from funds sent by relatives through selected Security Bank ATMs even without an ATM card.

Innovation will continue to be the thrust as variants for new usage, new markets and alternative fulfillment points are explored. Opportunities for expanding corporate relationships with financial institutions and government will be pursued. New products targeted towards specific financing requirements for distributors and dealers, growers, and other parties in the supply chain are likewise being developed.

2011 marked the Bank’s celebration of our 60th year through a series of anniversary events for customers, partners and employees. We hosted “Decades: A Musical Concert of Broadway Showtunes” in Manila, Cebu and Davao for our valued clients and business partners. We also sponsored an exclusive movie screening of “Pirates of the Caribbean:

On Stranger Tides” on its world premiere to show our appreciation to our customers and partners from the business sector, the financial community, and government for 60 years of lasting relationships. As a tribute to our various stakeholders on our sixth decade, we distributed a set of special 60th Anniversary Commemorative Stamps and First Day Cover Envelope. Its design depicted the first Security Bank main office at the Plaza Goiti in Manila in 1951 side by side the current corporate headquarters in Makati, as well as the evolution of the corporate logo over the past six decades developing into a stable and trusted brand. As part of the anniversary celebration, we hosted a “Run for Fun” marathon with 5K, 10K, 15K and one-mile events for the members of the Security Bank family and selected clients. As part of being responsible corporate citizens, we sponsored an exhibit at the Ateneo Art Gallery to support Filipino artists and promote awareness of modern Philippine culture and continued our support to the Filipino Heritage Festival for the preservation of our intangible cultural heritage. We likewise joined hands with Ateneo for the “Build a School, Build a Nation: The 60 Classrooms Project” which reinforced our Bank’s 60th anniversary theme of “Lasting Relationships” in the communities that we serve through our commitment of socio-economic development and poverty alleviation through education.

Our 2011 results reflect your Bank’s efforts to surpass the challenges of excellence, innovation, growth and expansion. Our building blocks for success are in place to sustain our position of leadership in the delivery of shareholder value in the coming years. As we continually raise the bar each year, we acknowledge the contribution of all Security Bankers and the guidance of the Board of Directors. To our customers and business partners, we are thankful for your continued patronage and we express our commitment to value creation in the years ahead.

ALBERTO S. VILLAROSAPresident and Chief Executive Officer

50% growthinnewcardsgenerated

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bOARD Of DIRECTORs

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7. RAFAEL F. SIMPAO JR. Director

8. DIANA P. AGUILAR Director

9. JOEL RAYMOND R. AYSON Corporate Secretary

10. JOSE R. FACUNDO Director

11. JOSE PERPETUO M. LOTILLA Independent Director

12. EDUARDO I. PLANA Director

1. FREDERICK Y. DY Chairman

2. ALBERTO S. VILLAROSA President & Chief Executive Officer

3. PHILIP T. ANG Independent Director

4. ANASTASIA Y. DY Executive Director

5. PAUL Y. UNG Vice Chairman

6. JAMES J.K. HUNG Independent Director

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4

5

6

7 8

9

10

11 12

23

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bOARD Of DIRECTORs’ PROfILEs

Ms.DianaP.Aguilar was elected to the Board on November 3, 2010. She is a member of the Bank’s Audit and Corporate Governance Committees. She was appointed as a Commissioner of the Social Security System in August 2010. She is also a member of the Board of Directors of the Phoenix Petroleum Philippines, Inc. (since 2010), Phil. Seven Corporation (since 1999), Phil. Seven Holdings Corp. (since 1999), Gate Distribution Enterprise, Inc. (since 1997) and DAJ Property Holdings Corp. (since 1996). She is also a Director and Treasurer of Foundation for International Research Skills and Training, Inc. (since 2007), Electronic Commerce Payment Networks, Inc. (since 2004), Wenphil Corporation (since 1998) and Asian Holdings Corp. (since 1994). She was elected as Director of Coastal Road Corp. (from 1999 to 2002), CLSA Exchange Capital Corp. (from 1998 to 2001), Heritage Park Memorial Corp. (from 1998 to 2001), ERA Phils., Inc. (from 1998 to 2005) and Artemis Electronic Systems Inc (from 2004 to 2006). She was a Director and Treasurer in Land & Housing Development Corp. (from 1998 to 2002), Franchise One Corporation, (from 2002 to 2006), Cable Entertainment Corp. (from 1998 to 2006) and Southwest Towers, Inc. (from 1988 to 1998). She has a Masters Degree in Business Administration major in International Business from Pepperdine University and holds an undergraduate degree in Computer Science from De La Salle University.

Ms.AnastasiaY.Dy is the Bank’s Executive Director, appointed on September 1994. She was the Bank’s Corporate Treasurer (from 1994 to September 2004). She is a member of the Risk Management, Technology Steering, Management and Personnel Committees and alternate member of the Executive Committee. She is a Director of Woodchild Holdings (since 1991), Woodson Holdings (since 1991), Ponderosa Leather Goods, Co., Inc. (since 1995) and Eastway Travel Goods (since (1993). She is also the Chairman/President of Tany Foundation Inc. (since January 2007) and a Trustee and President of Security Bank Foundation, Inc. (since 2001), a Trustee/Assistant Corp. Secretary of New Tribes Church Planters of the Phils. (since 2004) and a Trustee/Treasurer of Percept Ministries International of the Phil. Islands (since 2005). She graduated from the University of the Philippines with a Degree in Business Administration and earned units for Masters Degree in Business Administration from De La Salle University.

Mr.JoseR.Facundowas elected to the Board on March 2001. He is also the Chairman of the Bank’s Trust Committee and a member of the Risk Management Committee. He is likewise a member of the Board of Directors of Aboitiz Power Corporation (since 2008), Siemens Philippines Inc. (since 2003) and Alaska Milk Corporation (since 1996). Prior to joining the Bank, he was the Senior Managing Director of Ayala Corporation (from 1996 to 1999); a Director of Temic Philippines, Inc. (from 1980 to 2002); the President/CEO of CityTrust Banking Corporation for more than twenty (20) years until its merger with Bank of the Philippine Islands; a Director and a member of the Executive Committee of the Bank of the Philippine Islands (from 1996 to 1999); the President of BPI Capital Corporation (from 1996 to 1999); a Trustee of the Junior Achievement of the Philippines (from 1976 to 2006); and a Consultant to Siemens Philippines, Inc. (from 2000 to October 2001). He graduated

Mr.FrederickY.Dywas elected Vice Chairman of the Board on April 4, 1989 before assuming the Chairman’s position on April 30, 1991. He is also a member of the Bank’s Executive Committee. He is likewise the Chairman of St. Luke’s Medical Center (since August 2011), Chairman of City Industrial Corporation (since June 1994), Independent Director of Nickel Asia Corporation (since September 2010) and a Director of Ponderosa Leather Goods Co., Inc. (since May 1980).

Mr.PaulY.Ungwas elected Vice Chairman of the Board on September 29, 1998. He is also the Chairman of the Risk Management Committee and a member of the Corporate Governance, Executive and Trust Committees. He is likewise an Independent Director of Cityland, Inc. (since 2008). He was a Chairman of Century Chemical Corp. (from 1989 to 2005), and Em-Pol Corporation (from 1989 to 2005) and a Director of SB Cards Corporation (from 2003 to 2007). He was President and General Manager of Pacific Paint & Oil Manufacturing, Inc. (from 1967 to 2002), JWL Chemical Corporation (from 1988 to 2005) and Pacific Land (1989 to 2005), He was a Vice President of Atlantic Coatings (from 1989 to 2005) and a Secretary of Road Leader (from 1990 to 2005). He graduated from the University of the Philippines with a Bachelor of Science Degree in Chemistry.

Mr.AlbertoS.VillarosaMr. Alberto S. Villarosa was elected President and Chief Executive Officer of the Bank on January 5, 2004. Prior to this, he was Senior Executive Vice President and Chief Operating Officer (from 2002 to 2003). He is currently the Chairman of the Bank’s Assets and Liabilities, Credit, Management, Personnel, and Technology Steering Committees and a member of the Executive, Trust, Restructuring and Risk Management Committees. He is also the Chairman of SB Capital Investment Corporation (since April 2004), SBM Leasing, Inc. (since 2011), Premiere Development Bank (since February 2012) and Philippine Dealing System (since April 2012); a Trustee of Security Bank Foundation, Inc. (since August 2003) and SBC Retirement Plan (since September 2003); and a member of the Society of Fellows of the Institute of Corporate Directors (since July 2006). He is also a Director of Catholic Travel Inc. (since 2008) and President and Director of the Bankers Association of the Philippines (since April 2012). Mr. Villarosa has extensive banking experience in the areas of Treasury, Investment Banking and Consumer Banking. Prior to joining the Bank, he was the Executive Vice President and Treasurer of Bank of the Philippine Islands (BPI) (from October 1996 to October 2002). During that time, he was also a Director in several BPI subsidiaries, among which were BPI Family Bank, BPI Forex Corporation and BPI Investment Management, Inc. Prior to joining BPI, he was Director/President in CityTrust Securities Corp. (from 1998 to 2003) and with CityTrust Banking Corporation (from 1987 to 1996) where the last position he held was Executive Vice President/Treasurer and President of CityTrust Investment Philippines. Prior to this, he was a Vice President of Citibank N.A. (from 1984 to 1987). He graduated from the Asian Institute of Management with a Masters Degree in Business Management.

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from the Ateneo de Manila University with a degree of Bachelor of Arts in Engineering and took post graduate studies in Statistics from the University of the Philippines, and in Engineering at the Technical University of Munich.

Mr.EduardoI.Plana was elected to the Board on May 1999. He is a member of the Bank’s Audit and Restructuring Committees. He was a former Director/Compliance Officer of the Bank (from May 1999 to May 31, 2004), and Executive Vice President (from July 1993 to August 1998) when he retired. He is currently a Director of The Real Bank (A Thrift Bank), Inc. (since March 2005) and of Banko Sual (A Rural Bank), Inc. (since April 12, 2007). He is also a member of the Advisory Board of San Bartolome Rural Bank, Inc. of Magalang, Pampanga (since July 2010) and serves as Consultant to Rural Bank of Oroqueta in Misamis Occidental (since June 2011). Prior to joining the Bank, he was with the Metrobank Group (from 1974 to 1990) where the last position he held was Senior Vice President/Controller of First Metro Investment Corporation. Prior to this, he was with the BSP as Supervising Bank Examiner (from 1964 to 1973). He is a Certified Public Accountant and graduated from the University of the East with a degree in Business Administration.

Mr.RafaelF.SimpaoJr.was the President of the Bank from October 31, 1995 to January 4, 2004. He is currently the Chairman of the Bank’s Executive and Restructuring Committees, and a member of the Risk Management Committee. He is also the Chairman of Security Bank Foundation, Inc. (since 1997) and Security Land Corporation (since 2011); a Director of SB Capital Investment Corporation (since 1995); a Trustee and Treasurer of International Graduate School of Leadership (since 1994); a Trustee and Treasurer of New Tribes Church Planters of the Philippines (since 2004); and a Trustee of Tany Foundation, Inc. (since January 2007). He was a former Director of the Bankers’ Association of the Philippines (from 2002 to 2004), a Director and Treasurer of LGU Guaranty Corporation (from 2000 to 2005) and a Trustee and Treasurer of Christ’s Commission Fellowship (from August 2006 to January 2009). He graduated from the Ateneo de Manila University with a Bachelor of Science degree in Economics and is a candidate for a Masters Degree in Business Administration from De La Salle University.

InDEPEnDEnT DIRECTORs

Mr.PhilipT.Ang was elected to the Board on February 21, 1980. He is the Chairman of the Corporate Governance Committee and member of the Bank’s Executive and Audit Committees. He is also the Chairman and Director of Hinatuan Mining Corporation and Cagdianao Mining Corporation (since September 29, 2008); Vice Chairman and Director of Nickel Asia Corporation (since February 2007) and Taganito Mining Corporation (since May 2005). He is likewise the Independent Director of SB Capital Investment Corporation (since February 2010), SBM Leasing, Inc. (since May 2010). He was the Chairman and President of Solid Mills, Inc. until his retirement in late 2002. He graduated from the Oregon University with a degree in Business Administration and a Masters Degree in Business Administration from University of Denver.

Mr.JamesJ.K.Hung was elected to the Board on April 24, 1990. He is a member of the Bank’s Corporate Governance and Trust Committees. He is also the Chairman of Asia Securities Global Group (Hong Kong, since 1993) and Xingya Real Estate Development Co, (China, since 1993) and a Director of Franklin Templeton Investment Fund (Luxembourg, since 2001). He was a Director in Templeton Emerging Markets Trust Placements (from 1989 to 1999) and Taiwan Index Fund Limited (from 1991 to 2003) He graduated from Babson College with a Masters degree in Business Administration major in Finance.

Mr.JosePerpetuoM.Lotillawas elected to the Board on May 28, 2002. He is the Chairman of the Bank’s Audit Committee and a member of the Corporate Governance Committee. He is a Senior Partner at Sycip, Salazar, Hernandez & Gatmaitan Law Offices. He became a partner in the firm’s Corporate, Special Projects and Banking, Finance and Securities Practice Groups in 1989. He is also an Independent Director of SB Capital Investment Corporation (since April 2004) and SBM Leasing, Inc. (since May 2010); a Director of Ericsson Telecommunications, Inc. (since August 1988), Ericsson Services, Phils. Inc. (since August 2000), Summit Rural Bank of Lipa City, Inc. (since 1997), UEM Mara Phils. Corp. (since 1996), Belle Systems Corp. (since 2004), Medimarketing, Inc. (since 2006), PEA Tollway Corporation (since 2007), Wiselink Investment Holdings, Inc. (since 2010), UEM Development Phils. Inc. (since 2010) and Paxys, Inc. (since May 2011). He is also Chairman and Director in Janlo Corp. (since 1994) and Corporate Secretary of Coastal Road Corp. (since 1999), Woodchild Holdings Inc. (since 1997), Distilled Spirits Association of the Phils., Inc. (since 2009). He graduated from the University of the Philippines with a Bachelor’s degree in Laws and from the Ateneo de Manila University with a Bachelor of Arts degree in Economics. He has been involved in the major mergers and acquisitions, banking, finance and securities and capital markets transactions in the Philippines and continues to have an active practice in these fields. He was a former Governor of the Integrated Bar of the Philippines for Western Visayas, Director of the Philippine Bar Association and Chairman of the Committee on Bar Discipline of the Integrated Bar of the Philippines.

19


ExECuTIVE COMMITTEE

Standing from L to R: Paul Y. Ung, Philip T. Ang

Seated from L to R: Rafael F. Simpao Jr.

Alberto S. Villarosa, Frederick Y. Dy

20

The performance of Security Bank Corporation was achieved in the spirit of compliance with the principles of good corporate governance with the belief that good corporate governance leads to sustained creation of long-term shareholder value.

The members of the Security Bank Group of Companies are governed by a Board-approved Manual of Corporate Governance, originally approved in 2002 and last amended in 2009. The Manual states that the Board of Directors is the highest authority in matters of governance and oversight over management of the Bank’s businesses. It likewise states the specific roles of Board Committees that will assist the Board in the compliance of the principles of good corporate governance.

Security Bank’s Board of Directors is composed of 11 members, 3 of whom are independent directors. Early in January 2012, independent director JPM Lotilla tendered his resignation from the Board effective 31 December 2011. Director Lotilla has been with the Board of Security Bank since 2002. The Board wished him well in his new position at the Department of Transportation and Communication. The independent director position in the Board vacated by Atty. Lotilla will be replaced during the Annual Meeting of Shareholders.

The roles of the President and the Chairman are separate and clearly defined. The Board members are highly qualified business professionals with a broad range of expertise. They have all passed through a screening and evaluation process and have attended the required training on corporate governance.

The Board of Security Bank regularly meets every last Tuesday of the month based on the schedule indicated in the by-laws. A total of 12 meetings were held in 2011 with 7 directors attending all 12 meetings, and the other 4 directors posting 1 to 2 absences during the year. All directors were present during the Annual Shareholders’ meeting in May 2011.

2011 Record of Attendance for Board MeetingsNumber of Meetings in 2011 : 12Chairman Frederick Y. Dy 12Vice Chairman Paul Y. Ung 12Members Philip T. Ang 10 Diana P. Aguilar 10 Anastasia Y. Dy 11 Jose R. Facundo 12 Jose Perpetuo M. Lotilla 10 James JK Hung 12 Eduardo I. Plana 12 Rafael F. Simpao Jr. 12 Alberto S. Villarosa 12

To carry out its functions, the Board has delegated its responsibilities to the following Board Committees: the Executive Committee, Corporate Governance Committee, Risk Management Committee, Audit Committee, Trust Committee and Restructuring Committee.

The Executive Committee is the highest credit decision-making body of the universal bank, responsible for approval of loan accounts and credit policies, and notation of industry updates and credit risk reports. Among the credit policies approved during the year were credit authority limits,

CORPORATE GOVERnAnCE

industry concentration limits, collateral appraisal, acceptable collaterals covering cash secured loans, internal real estate loan limits, client call program, rate reasonability policy and amendments to personal loan policies.

A total of 47 meetings of the Executive Committee were held in 2011 (from 45 in 2010) with average attendance by Committee members at 85% (from 83% in 2010).

Executive Committee Meetings in 2011Number of meetings in 2011 : 47Chairman Rafael F. Simpao Jr. 45Members Philip T. Ang 35 Frederick Y. Dy 36 Paul Y, Ung 39 Alberto S. Villarosa 45Alternate Anastasia Y. Dy 4

The Risk Management Committee is responsible for the development and oversight of the risk management program of the Bank and its subsidiaries, approving risk management strategies, policies and implementing guidelines where applicable, for managing and controlling the major risks, preventing losses and minimizing the impact of losses when they occur.

Among the policies deliberated and approved during the year were policies covering risk ratings, debt and equity allocation, risk limits, contingency funding plan, business continuity management, information system management and ORM framework and manuals covering debt and equity arrangements and underwriting.

Risk reports covering a monthly Market Risk Management Report, a quarterly Credit Risk Report, Operational Risk Management Reports, Liquidity and Price Risk Reports, and annual Back Testing Reports are presented during the monthly Board meetings for discussion. A total of 14 meetings (from 13 in 2010) of the Risk Management Committee were held in 2011 with attendance record at 100% (from 98% in 2010)

Risk Management CommitteeNumber of Meetings in 2011 : 14Chairman Paul Y. Ung 14Members Anastasia Y. Dy 14 Jose R. Facundo 14 Rafael F. Simpao Jr. 14 Alberto S. Villarosa 14 Gina S. Go (Chief Risk Officer) 14 Carlo M. Borromeo (Chief Financial Officer) 14

The Charter of the Corporate Governance Committee defines the responsibility of the Committee in ensuring the Board’s effectiveness and due observance of corporate governance principles and guidelines. This function covers the oversight over the Bank’s compliance function, over all applicable rules and regulations, codes of conduct and standards of good practice; the nomination and evaluation of performance of Board members and senior management; and development of policies covering board and management professional development.

21


The Audit Committee is responsible for reviewing the financial reporting process, the system of internal control and management of risks, the audit process, and the Company’s monitoring of compliance with laws and regulations, and its own code of business conduct.

The Bank’s Audit Division reports directly to the Board through the Audit Committee. The Audit Division is responsible for the development and execution of a comprehensive program of internal auditing assisting the organization by evaluating risk exposures and the adequacy and effectiveness of controls relating to the reliability and integrity of financial and operational data, and effectiveness and efficiency of operations. The Audit Division’s performance of duties is in accordance with standards set forth by the Bank’s internal policies, the Audit Manual, and by the International Standards for the Professional Practice of Internal Audit (ISPPIA).

The Report of the Audit Committee is presented separately in the Annual Report.

The Audit Committee had a total of 6 meetings in 2011 (from 5 meetings in 2010) with average attendance of 88% (from an average 94% in 2010).

Audit CommitteeNumber of Meetings in 2011 : 6Chairman Jose Perpetuo M. Lotilla 5Members Philip T. Ang 5 Diana P. Aguilar 5 Eduardo I. Plana 6

The Trust Committee’s responsibilities and authorization include the review of assets placed under fiduciary custody and the investment /reinvestment and disposition of funds or property. During the year, the Committee reviewed the performance of all managed accounts, accounts opened and closed during the period, the general investment outlook and strategy, stress testing for UITFs, amendments to trust risk policies and the trust manual, as well as the appropriateness of the Trust organization to carry the plans of the business.

During the year, 4 meetings were held with a 100% attendance from the members (unchanged from 2010).

Trust CommitteeNumber of Meetings in 2011 : 4Chairman Jose R. Facundo 4Members James JK Hung 4 Paul Y. Ung 4 Alberto S. Villarosa 4

The Restructuring Committee is responsible for the approval of the remedial strategy and action plans for accounts, including accounts recommended for write off, compromise settlements, or with moratorium arrangements. The Committee had a total of 9 meetings with 100% attendance (from 4 meetings in 2010 with 100% attendance).

Restructuring CommitteeNumber of Meetings in 2011 : 9Chairman Rafael F. Simpao Jr. 9Members Eduardo I. Plana 9 Alberto S. Villarosa 9

In 2011, the Corporate Governance Committee deliberated and approved Board nominations and the evaluation of performance of the Board and its members, various personnel related matters covering the organization structure, officer assignments, promotions and benefits, and approved manuals covering the Compliance Programs and the Money Laundering and Terrorist Financing Prevention Programs. Quarterly reports by the Compliance Office are elevated to the Corporate Governance Committee.

The Compliance Office reports to the Corporate Governance Committee. It is responsible for coordinating the identification and management of the compliance risk of the Bank and its subsidiaries. The Compliance Program covers compliance risk identification and assessment, compliance testing and training on compliance matters. The regular report of the Compliance Officer to the Corporate Governance Committee covers results of bankwide compliance with rules and regulations and the impact in terms of monetary penalties in the event of non-compliance, including feedback on reports to the AML Committee on covered and suspicious transactions, as well as risk rating for branches covering audit of KYC documents.

The Compliance Office is responsible for creating a compliance supporting culture for the Bank and its subsidiaries. Compliance is the responsibility of all members of the organization, with the Board and Senior Management taking the lead in building a strong culture of compliance with applicable rules and regulations, with the processes and systems designed to operate to comply with these rules and regulations, and with employees adhering to a code of conduct encouraging a behavior of compliance to external and internal regulations to sustain excellence in performance. The Bank’s Code of Conduct encourages the values of honesty, industry and integrity to demonstrate competence, discipline and efficiency. In 2011, amendments to the Code of Conduct relating to personal investments for conflict of interest issues, and the relating guidelines for preferential rates for employees for availment of bank products and services were approved by the Board.

As part of the compliance culture as a listed company, Security Bank is committed to fully disclose all material information for the benefit of the investors. The Bank is in compliance with reporting requirements of various regulatory agencies. Market sensitive information is disclosed to the Securities and Exchange Commission and the Philippine Stock Exchange in compliance with its Disclosure Rules. All public disclosures are posted in the Corporate website as part of transparency to investors. There were no monetary penalties charged to the Bank as a publicly listed company for non-compliance to disclosure rules.

The Corporate Governance Committee had a total of 11 meetings (unchanged from 2010) with average attendance at 89% (from 95% in 2010).

Corporate Governance CommitteeNumber of Meetings in 2011 : 11Chairman Philip T. Ang 9Members Diana P. Aguilar (May to December) 6 James JK Hung 11 Jose Perpetuo M. Lotilla 8 Eduardo I. Plana (January to April) 4 Paul Y. Ung 11

22

RISKMANAGEMENTFRAMEWORK(ProcessFlow)

RIsk MAnAGEMEnT

CREDIT MARKET LIQUIDITY OPERATIONAL

POLICY DEVELOPMENT

RISKCONTROL RISKMANAGEMENT BUSINESSMANAGEMENT

RISKMANAGEMENT

RISKMONITORING

REPORTINGRISK

MITIGATION

DECISIONMAKING ANDMONITORING

COREPRINCIPLE

ACTIVITIES

• Awarenessandcommitmenttoasinglemission,commonobjectives,sharedvaluesandaCodeofConductthatarereviewedand

renewed periodically;

• Asuiteofpoliciesandprocedureswhicharesupplementedbysupportivesystems;

• Humanresourcespracticesintendedtorecruit,trainandretainemployeeswiththerequiredspecialistskills;

• DelegationofresponsibilitythroughouttheBankandaccountabilityforoutcomes;

• Controlprocessesincludingstructuredmanagementreporting,asystemofindependentreviewandBoardoversight;and

• Anoperationalphilosophythatseekstoanticipateandmitigaterisksbeforetheyoccurandthatreflectsthelessonslearnedwhen

problems arise.

Alongside the Group’s exceptional track record of continued growth and superior revenue performance, the Risk Management Committee closely worked with the Senior Management, officers and staff through the Bank’s Risk Management Group, to ensure effective implementation of its risk management framework.

23


We manage our strategic and capital risk by setting clearly defined strategic plans approved by the Board of Directors after reviewing the business environment to identify opportunities and accompanying risks. We incorporate these strategies and identified risks in our capital planning under a business - as - usual as well as stressed scenarios. We regularly monitor performance results and issues of the strategies and make adjustments as needed.

We manage our reputational risk through our policies and procedures that set service standards and define appropriate business conduct. We closely monitor compliance and legal issues especially high profile cases. We ensure that we communicate in an accurate and timely manner relevant information to our stakeholders.

The Group’s risk profile and capital cover remain strong. • Wehavemaintainedourfocusonourlendingactivitywithout

compromising credit quality. o Our NPL ratio is the lowest in the industry while our reserve

cover is the highest. o Concentration indices are within acceptable levels and properly

mitigated. • Wehavekeptutilizationofmarketandliquidityrisklimitswithinour

benchmark % to capital and operating profits. Excess during the first month of the year was mainly due to the early adoption of PFRS9.

• Wekeptourcorerevenuecontributiontototalrevenueswithintargets.• SecurityBank’scapitaladequacyratiostoodat20.3%.

A more detailed explanation of the Bank’s risk management activities and profile are contained in the disclosures to the financial statements.

All in all, our unwavering commitment to pursuing our growth strategies coupled with sensible risk management and judicious capital planning make Security Bank Corporation well-positioned for the challenges of 2012.

Guided by our core risk principles, the following structures and activities are in place across all risk areas defined by the Bank to be the most critical, i.e., credit, market, liquidity and operational risks.

RESPONSIBILITIES AND GOVERNANCE:

1. Board Responsibility and Oversight are exercised through various committees it created, specifically:

a. Risk Management Committee - reviews, and approves, and ensures effective implementation of the risk management framework. It approves risk - related policies and discretionary authorities delegated to management, and evaluates the magnitude, distribution and direction of the Group’s risks.

b. Executive Committee - approves credit risk limits for large exposures of the Group, except for DOSRI loans which are approved by the Board of Directors regardless of amount

c. Loan Restructuring Committee - approves remedial strategies on large non-performing exposures of the Group

d. Audit Committee- through Internal Audit, oversees all aspects of internal control and provides independent assessment of the effectiveness of and compliance with the Group’s risk and capital management policies and processes

e. Corporate Governance Committee - oversees the compliance function, evaluates qualification of Board and senior management nominees, and Board performance evaluates

2. Independence of the Group’s risk management function- The Risk Management Group headed by the Chief Risk Officer reports directly to the Risk Management Committee.

3. Board approved Strategic Plans and ICAAP (Internal Capital Adequacy and Assessment Process) define the Group’s strategies and ensures alignment of strategic, risk management and capital management activities.

4. Policy and Procedures Manuals set out the framework for the management of credit, market, liquidity and operational risks, the provisions of which are regularly reviewed and updated to reflect changing risk conditions.

5. Product manuals ensure that products rolled out are risk - assessed, identified risks are sufficiently mitigated, acceptance of residual risks are properly approved, and all business, operational, legal, and regulatory requirements are sufficiently met.

6. Delegation Framework ensures that larger and more complex exposures or transactions are reviewed and/or approved by Senior Management and appropriate Board - constituted committees.

7. Clearly defined roles for front, middle and back offices ensure that systems for internal control and accountability are in place.

8. Specialized departments or units are in place for the risk management of people, process and physical assets, and for implementation and review of the internal control framework.

9. The implementation of the Group’s risk management framework is independently assessed by Internal Audit and by the Regulator.

RISK IDENTIFICATION, MEASUREMENT, MONITORING AND REPORTING

1. Risk measurements are Basel II compliant. 2. Risk controls and limits set are based on best practices. 3. Measurement models are regularly tested.4. Monitoring and reporting infrastructure are in place.

RIsk MAnAGEMEnT

Measurement

a. Basic Indicator Approachb. Stress Testing

RiskControl&Mitigation

a. Risk Control and Self- Assessmentb. Issue Escalation Processc. Loss/Event Reportingd. Key Risk Indicatorse. Risk Mappingf. Business Continuity Planning

Monitoring&Reporting

a. Incident Reportsb. Corrective Action Trackingc. Management Reports for Operating Reviewd. ORM reports to the RMCe. Audit reports to the Audit Committee

OPERATIONALRISK

Measurement

a. Standardized approachb. 14 point internal risk rating modelc. Classification of creditsd. Concentrations by industry, large exposures, loan tenor, currency denomination, collateral covere. Residual risks on collateralf. Impairment Loss estimationg. Stress Testing

RiskControl&Mitigation

a. Limits: •Singlenameexposures •Groupexposures •Industryexposuresb. Mitigation: •Collateral •Nettingarrangements •Aggressiveprovisioning

Monitoring&Reporting

a. Risk rating reviewed at least annuallyb. Credit Classification done proactivelyc. Regular credit risk management report to the RMC and Managementd. Regular NPA status reportinge. Lessons Learnt Reporting to the PDO Committee

CREDITRISK

Measurement

a. Standardized approachb. Concentrations by type of investment, tenor, currency denominationc. Impairment Loss estimationd. Stress Testing

RiskControls

a. Limits: • Value-at-Risk(VAR) • EarningsatRisk(EAR) • MaximumCumulative Outflow (MCO)b. Management Action Triggers (MAT)c. Exposure / position limits to and duration limits on specific investment types and products as needed, position limitsd. Liquidity Contingency Plane. Back testing to manage model risk

MonitoringandReporting

a. Automated daily risk management reporting of limits and P&L to the President and other concerned partiesb. Weekly liquidity reports to ALCOc. Monthly Market and Liquidity Risk Management Report submitted to business unit, President, and Board/RMC

MARKETANDLIQUIDITYRISK

24

REPORT Of THE AuDIT COMMITTEE

ReportoftheAuditCommitteetotheBoardofDirectorsFor the year ended December 31, 2011

The Audit Committee, composed of four non-executive directors, assists the Board of Directors in its oversight responsibilities. This is to enhance shareholders’ and other stakeholders’ value, and protect their interest as it relates to the following:

a) Financial statements and the financial reporting process;

b) System of internal controls;

c) Risk management;

d) Performance of internal and external auditors; and,

e) Compliance with legal and regulatory matters.

In fulfilling these responsibilities, and in compliance with the Audit Committee Charter, the Committee held six meetings in 2011 with at least three (3) directors present, where the following significant matters were discussed and evaluated:

a) The approval of the overall scope and audit plans of the Company’s internal and external auditors, including the monitoring of its accomplishments;

b) The results of internal and external audits, ensuring that management is taking appropriate corrective actions in a timely manner including addressing risk exposures, internal control and compliance issues;

c) The results of external independent validation affirming that the internal audit activity generally Conforms to the Definition of Internal Auditing, the Code of Ethics, and the International Standards for the Professional Practice of Internal Audit (ISPPIA);

d) The recommendation for re-appointment of SGV and Co. as the Bank’s external auditor for 2011, based on the review of their performance and qualifications, including consideration of management’s recommendation; and,

e) The continuing improvement and enhancements to the Audit Charter and other various related audit policies.

The internal audit activity’s organizational independence was also confirmed by the Chief Audit Executive through the Audit Committee.

Further, the Audit Committee recommended to the Board of Directors the inclusion of the Company’s consolidated financial statements as of and for the year ended December 31, 2011 in the Company’s Annual Report to the Stockholders and for filing with the Securities and Exchange Commission.

PhilipT.AngChairman, Audit Committee

25


sEnIOR MAnAGEMEnT

ExECuTIVE VICE PREsIDEnTs

ALBERTO S. VILLAROSA President & Chief Executive Officer

RAFAEL S. ALGARRA JR.

ANASTASIA Y. DY Executive Director

EDUARDO M. OLBES

26

sEnIOR VICE PREsIDEnTs

JOSELITO E. MAPE

GINA S. GO

MELISSA R. AQUINO

MA. MYLENE C. SUBIDO MA. CRISTINA A. TINGSON BENJAMIN Y. YOUNG DANIEL U. YU

ALAN DAVID L. MATUTINA

JEANETTE S. KEH

BELEN W. AU

RAUL MARTIN A. PEDRO

BELEN C. LIM

LESLIE Y. CHAM

27


MARIE ROSE C. ANCHETA

RONALD I. AUSTRIA

ANGELITO MIGUEL D. DE LEON LUIS S. ELIZAGA PRIMITIVO NOEL S. LAGMAN JR. LORETTA G. MANGILIT

JASON T. ANG

BERNARD M. CARAGUE

MARIZA E. ARCILLA

HELEN L. CHUA EDUARDO C. CORTES

fIRsT VICE PREsIDEnTs

GREGORIO V. RUBIO WILFREDO S. TALAS TAS RICARDO G. TORRES OLIVIA B. YAO

28

MAnAGEMEnT DIRECTORY

President&ChiefExecutiveOfficerAlberto S. Villarosa

Executive directorAnastasia Y. Dy

Executive Vice PresidentRafael S. Algarra Jr.Eduardo M. Olbes

Senior vice PresidentsMelissa R. AquinoBelen W. AuLeslie Y. ChamGina S. GoJeanette S. KehBelen C. LimJoselito E. MapeAlan David L. MatutinaRaul Martin A. PedroMa. Mylene C. SubidoMa. Cristina A. TingsonBenjamin Y. YoungDaniel U. Yu

FirstVicePresidentsMarie Rose C. AnchetaJason T. AngMariza E. ArcillaRonald I. AustriaBernard M. CaragueHelen L. ChuaEduardo C. CortesAngelito Miguel D. De Leon*Luis S. ElizagaPrimitivo Noel S. Lagman Jr.Loretta G. MangilitGregorio V. RubioWilfredo S. TalastasRicardo G. TorresOlivia B. Yao

Vice PresidentsDelbert S. Ang ItAlan E. AtienzaFelipe R. BautistaMa. Lourdes V. BorromeoMylene G. BuencaminoSusan K. CapalaranFe V. CapistranoBee Bee S. ChuaAristotle I. CruzRaul Victor M. De GuzmanDennis Joy B. EjercitoRoberto Martin S. EnrileMa. Paz Victoria R. GonzalezDiana T. GueOrencio Andre’ P. Ibarra IIIRoussel E. LargerIrahlyn S. Lariba

Yvonne Joanna P. MarceloJose Ma. G. MontinolaAngel G. Muyot Jr.Henry Jesus S. NavarroSarah M. NavarroDiana L. Ong**Jorge Lindley S. OngMarlette A. PinedaRolando T. ReyesMai G. SangalangJoyce L. SoJoy V. Supan***Zenaida L. TanSimeon T. YapDaphnie C. Yu Kim Teng

Senior Assistant Vice PresidentsLeah M. AguilarJohn Francis B. AngelesIsabelita R. BrionesElsie D. CabalunaArlene D. CaringalPamela A. CasinEric T. ChiongMary Christine L. ChuaMonina J. DelarmenteMa. Victoria B. DimayugaRazelli A. EmbradorMarlene A. EsguerraMichael A. GamoSusan P. GoCristina V. HensonRicky K. KanMa. Sari V. MagnoArlene D. MapeRebecca P. MuyotNila Q. NarcisoAnaliza C. OblenidaSharon Melanie S. PeñaZenaida H. PerezRowena B. PinlacDon Mark C. RancesEmelita R. ReginoAster Lilli S. SamaniegoPearl C. San DiegoDecy Narne D. SarmientoWee Sing O. SyKaren H. TanMarilyn D. TanCleofe A. TanghalGerundio G. Velasquez Jr.Mae S. VillanuevaCarol P. Warner

Assistant Vice PresidentsCatherine N. AlbertoAgnes Adela V. AlcidRosalie B. AlmirañezMarizol G. AlonzoCorazon L. Ang

Cherry C. Ang ItKim H. ApolegaRica F. BaelloRicardo Josef S. Bandal IIEudora A. BarreraAmelia F. BarrozoDino V. BringasRenato P. Cabrera Jr.Felicitas P. CastilloManuel C. ChanAdrian S. ChingAileen R. ChuaLeonardo V. Dela CruzHarold S. De LeonCarlyn Therese X. DulayJenny G. DyMarjorie T. EsplanaDelia J. GarbanzosFe F. GolezSheila G. GomezWilma C. GomezMaria Lolita L. GutierrezJohanna S. HernandezMa. Christi-Anna L. IgnacioJasmin M. IsmaelMa. Theresa U. JavierDarius C. KennyMadeleine Sophie K. LaguraGerard G. LeeDiana C. LibunaoPacita G. LimMa. Carmencita R. LopezWilfredo S. MarcelinoJennifer Trinity S. MaynigoHelen B. MejiaElpidio B. Misolas Jr.Donna G. MunozRizalino A. Pablo IIIShirley Y. PoEmelita A. QuilalaPia Marie V. RamosSheilagh B. RiveraJosephine M. RobesMa. Teresita G. RuivivarRaymund O. SiaoLucy L. SyRoreen Y. TanLucy E. TiuAmalia V. TrinidadGinger F. TulioRosa Maria G. TumangdayFerdinand M. UyKristine Anne S. VainioJane T. ValerioElma G. VillaromanHanson D. YuRichmond B. Zabala

* seconded to SBM Leasing • ** seconded to SB Cards • *** seconded to SB Capital

29


PRODuCTs AnD sERVICEs

SavingsBuild-up Savings AccountDollar Savings AccountPeso Savings Account - CashLink ATM CardPeso Savings Account - PassbookThird Currency Savings AccountInvestment Savings AccountJunior One Savings AccountE-Secure Savings Account

CheckingAll-In-One-Checking AccountRegular Checking AccountRegular Checking Account with InterestSecurity Bank CheckOneSecurity Bank CheckPowerSecurity Bank CheckRight

TimeDepositsDollar Time DepositPeso Time DepositSecure Dollar Optima

CashManagementSolutionsLiquidity Management Solutions CASA Manager Inward Returned Items Report (IR2)Collection Management Solutions AutoDebit Collections Manager Postdated Checks (PDC) Manager AutoDebit Collections Manager Plus (ADCM Plus) Billing Invoice Presentment Payment System (BIPPS) RealTime Electronic Payment System (REPS) Bills Payment Collection FacilityDisbursement Management Solutions Check Payments Manager AutoCredit Payments Manager Payroll Manager Payroll Master EFPS Real Time SSS Real Time PAS5 ePayment PhilHealth Real Time Remittance Manager IBFT Facility Security Bank CheckRight

Electronic ChannelsSecurity DigiBanker (Corporate Internet Banking) Security Bank Online (Retail Internet Banking)Security MobileBankerSecurity TeleBankerAutomated Teller Machine Services (ATM)

DisbursementFacilitySecurity E-Payroll

Collection ServicesSecurity Collect-A-CheckSecurity Collect-On-Site (Deposit Pick-up)Security Pay-A-Bill (Bills Payment)

OtherBankingServicesAuto Credit and Auto Debit Arrangement (ADA) - Diners Club International / Security Bank MasterCardCardless Bills Payment FacilityCash Advance - Diners Club International / Security Bank MasterCardDollar Demand Draft (Worldlink)Electronic Payments via Debit Card POS TerminalsManager’s Check/Gift CheckNight Depository BoxSafety Deposit Boxes

Credit CardsDiners Club Diners Club International Diners Club Premiere Diners Club Sure Diners Club Corporate CardSecurity Bank MasterCard Security Bank Classic MasterCard Security Bank Gold MasterCard Security Bank Platinum MasterCard Security Bank Sure MasterCard Security Bank e-Secure MasterCard Security Bank Corporate Card MasterCard

Pre-paidandDebitCardsSecurity Bank CashCardSecurity Bank CashCard International MasterCardSecurity Bank CashLinkSecurity Bank CashLink International MasterCardSecurity Bank Gift CardSecurity Bank Gift Card International MasterCardSecurity Bank eGift Card

CreditFacilitiesWorking Capital FinancingLoan LineBills Discounting / Loan line vs. Third Party PDCsPurchase of ReceivablesOmnibus LineTrade FacilitiesLetters of Credit / Trust Receipt Facilities (Import and Domestic)Export Packing CreditExport Bills PurchaseDomestic Bills PurchaseFloor Stock Financing

GuaranteesStand By Letters of CreditCredit Line Certification

OtherStructuredLoanFacilitiesTrade Payables FinancingDistributors FinancingAdvances Secured by Trade Receivables (ASTRA)Loan Line with Third Party PDCs (PDC Discounting)Grower’s Poultry House Implements FinancingContract to Sell Financing Facility

30

SpecializedLending(ExternalFunders)–ThirdPartyFundingBangko Sentral ng Pilipinas - Rediscounting FacilityDevelopment Bank of the Philippines - Industrial Guarantee and Loan Fund - Wholesale LendingLandbank - Countryside Loan Fund Line - Credit Support for the Environment Agribusiness and SMEs (CLF-CREAM)

SBMLeasingDirect Lease FacilitySale and Leaseback Facility Lease SyndicationsLease Sub-leaseVendor Lease ProgramsMortgage LoansReceivables Discounting Facility

Trade ServicesLetters of Credit Domestic Letter of Credit Export Bills Purchase / Negotiation Export Letter of Credit Advising Import Letter of Credit Standby Letter of CreditDocumentary Collection Documents against Acceptance Documents against PaymentOpen Account Arrangement Trust Receipts FinancingRemittance / TransfersDirect Remittances – Trade-related Domestic Telegraphic Transfer Foreign Telegraphic Transfer - Inward - OutwardCoinstar Money Transferi-RemitRemit Agad (partnered with One Network Bank)

ConsumerLoansCar LoanDoctors’ FinancingHome LoanSalary LoanPersonal Loan

Treasury Services(Financial Instruments Actively Traded by SBC Treasury and Fixed Income Securities Division)

Fixed Income SecuritiesPeso Dominated Bonds Government Securities - Treasury Bills (T-Bills) - Retail Treasury Bonds (RTBs) - Fixed Rate Treasury Notes (FXTNs) - Zero Coupon Bonds GOCC-issued Bonds Philippine Corporate Bonds

Dollar Denominated Bonds Sovereign $ Bonds GOCC-issued $ Bonds Philippine Corporate $ Bonds Peso NotesDeposit Based Products Secure Premium Dollar Earner Secure Flex Time DepositForeign Exchange Foreign Currency Notes Foreign Exchange Spot Third Currency Demand Draft (Selected)Financial Derivatives Forwards - Foreign Exchange Forwards - Interest Rates Forwards - Non-Deliverable Forwards (NDF) Swap - Foreign Exchange Swaps - Interest Rate Swaps - Cross Currency Swaps Options - Foreign Exchange Options - Interest Rate Options - Bond Options

InvestmentBankingEquity Capital Markets (IPOs, Rights Offerings, Secondary Offerings, Follow-on Offerings, Preferred Share Issues)Debt Capital Markets (Registered Bond, Corporate Notes, Private Placements)Syndicated LoansProject FinanceFinancial AdvisoryMergers and Acquisitions

SB EquitiesStock Brokering

Trust ServicesInvestment Management Account (IMA)Directed Investment Management Account (DIMA)Personal Living Trust (PLT)Special Purpose Trust (SPT)Retirement PlansMortgage Trust Indenture / Collateral Trust IndentureFacility AgencyEscrow AgencyUnit Investment Trust Fund (UITF - Peso Denominated) SB Secure Peso Fund SB Peso Ease Fund SB Peso Asset Variety Fund SB Peso Equity FundUnit Investment Trust Fund (UITF - Dollar Denominated) SB Secure Dollar Fund SB Dollar Choice Fund

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subsIDIARIEs

SBCAPITALINVESTMENTCORPORATION

• 2011wasabreakoutyearforSBCapitalasitparticipatedinanunprecedentednumberofsignificantcapitalraisingtransactions.As a result, SB Capital generated its historically largest level of fee-based revenues.

• In2011SBCapitaltookleadrolesinanumberoflandmarkdebtandequitytransactionssuchasthelargestbond-swaptransaction ever undertaken by the Republic of the Philippines, the largest ever equity raising transaction, and the largest ever issuance of preferred shares.

• Providesawiderangeofcapitalmarketsproductsandinvestmentbankingservicesaimedataddressingthediversefinancialneeds of corporate and public sector clients.

• Servicesincludeequityunderwriting,projectfinancestructuringandadvisory,privateplacements,debtunderwritingandsyndication, and mergers and acquisitions (M&A) advisory. Stock brokering services are likewise provided through its wholly-owned stock brokerage subsidiary, SB Equities, Inc. (SB Equities).

SBCARDSCORPORATION

• ApioneerinthecreditcardindustrywiththeintroductionofthefirstcreditcardinthePhilippines,DinersClub.• HoldsexclusivefranchiseofDinersClubcreditcardsinthecountry.• IncorporatedonOctober9,1980asSecurityDinersInternationalCorporationandformerlyknownasSecurityInternationalCard

Corporation, SB Cards now offers two of the major credit card brands in the market, Diners Club and MasterCard.

SB EQUITIES,INC.

• OneoftheleadingstockbrokeragehousesinthePhilippines.• Continuestomaintainitsplaceofdistinctionamongalllocalbank-ownedequitiesbrokeringunitsinthecountrybyranking

among the Top 15 Local Brokerage Houses in the Philippines. • Placed13thinoverallrankingin2011,basedontradedvalue,amongthemostactivemember-brokersinthePhilippineStock

Exchange (PSE). • Aconsistentrecipientofvariousawardsandrecognitionfromhighly-respectedinstitutions,oneofwhichis3rdBestLocal

Brokerage House in 2010 in a poll conducted by international financial publication Asiamoney.

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SECURITYLANDCORPORATION

• Amajority-ownedjointventurewithapublicly-listedSingaporeancorporatepartner.• ItistheownerofprimepropertieslocatedalongAyalaAvenueinMakatiCityandparcelsoflandinCavite.• TheCompanyhasanon-goingjointventurewithRobinsonsLandCorporationforthedevelopmentoftheSignaDesigner

Residences condominium located in its Ayala Avenue property. The Security Land building along Ayala Avenue is currently being retrofitted and renovated and will be leased out to corporate and business process outsourcing companies.

SBFOREX,INC.

• Awholly-ownedsubsidiaryofSecurityBankCorporation.• Engagedinforeignexchangedealershipandbrokerage,servicingthedollarandselectedthirdcurrencyrequirementsofbanks,

private companies and individuals.

SBMLEASING,INC.

• FormerlySecurityFinance,Inc.,SBMLeasingisajointventureleasingcompanyofSecurityBankCorporationandMarubeniCorporation of Japan.

• JointventurewasestablishedinMay2011.• Specializesinheavyequipmentleasing,offeringthefollowingservices:DirectLeaseFacility,SaleandLeasebackFacility,Lease

Syndication, Lease Sub-lease, Vendor Lease Programs, Mortgage Loans and Receivables Discounting Facility.

SBCAPITALINVESTMENTCORP.Chairman Alberto S. VillarosaPresident Eduardo M. OlbesExecutive Directors Emilio Federico C. Galang III Lorenzo Sixto T. LichaucoDirectors Gerald K. Abrogar Joy V. Supan Luis Martin E. Villalon

SB EQUITIES,INC.Chairman Eduardo M. Olbes President Warren T. Sy

SBMLEASING,INC.Chairman Alberto S. VillarosaPresident Angelito Miguel A. De Leon

SBCARDSCORP.Chairman Belen C. Lim President Godofredo R. Galindez Jr. Vice Presidents Sarah M. Navarro Diana L. Ong Catalina E. Papa

SECURITYLANDCORP.Chairman Rafael F. Simpao Jr. General Manager Jose Ma. G. Montinola

SBFOREX,INC.Chairman Rafael S. Algarra JrPresident Belen W. Au

MANAGEMENTDIRECTORY

33


CORPORATE sOCIAL REsPOnsIbILITY

DeepeningOurSocialCommitment and Nurturing Our Communities

In celebration of Security Bank Corporation’s 60th Anniversary, Security Bank Foundation, Inc. (SBFI) will provide the funding for the construction of 60 classrooms for public schools over a five-year period. “Build a School, Build a Nation: The 60 Classrooms Project”, is a partnership with Ateneo de Manila University which aims to address the lack of classrooms and develop programs to improve the academic performance of public school students.

In 2011, the Security Bank Foundation and Ateneo started the project by building 13 classrooms for two public elementary schools and one secondary public high school in Cabiao, Nueva Ecija in partnership with the Local Government of Cabiao, Nueva Ecija, and DepEd-Nueva Ecija. Programmed for 2012 are classrooms for public schools in Davao and the Bicol region.

Increasingourreach,educatingmorechildrenandyouth

SBFI continues to actively support the education of deserving students through its Scholarship Program and recognize students with exemplary academic performance through the Security Bank Student Excellence Award given to 12 top graduating students in business, management, finance and information Technology courses at the University of the Philippines, Ateneo de Manila University, University of Sto. Tomas, and the Centro Escolar University.

Investingineducation

13 public school classrooms constructed with funding from the Foundation 269 students provided with scholarships/educational assistance in 2011 399 student beneficiaries supported since 1994 12 awardees of the Student Excellence Awards in 2011 51 Student Excellence Awardees since 2007 3,500 slightly used educational materials and school supplies collected from the Resource Mobilization Campaign for Public Schools 500 recipients from public school elementary of brand new school supplies

In addition to scholarship support, the SBFI provided access to quality educational materials through donations of medical reference materials to the Library of the University of the Philippines College of

BUILDANATION:THE60-CLASSROOMSPROJECT

34

Medicine, educational and value-laden books to Ma. Lena M. Buhay Memorial Foundation in Quezon City for children with disabilities, as well as LCD projector units with wide screens to help the students of Marilao Central Elementary School in Bulacan and Quirino High School Quezon City better understand their lessons and learn from updated and quality sources of information.

Providingopportunitiesforwomenthroughlivelihoodprograms

SBFI provided the Correctional Institution for Women (CIW) with the opportunity to sell their paper products, elegant beaded handbags made of scrap fabrics at the three-day sale of the SB Cards Group. In addition, 26 beneficiaries from among the unemployed wives and relatives of the Security Bank Agency Personnel learned how to cook, package and market sapin-sapin, maja blanca, chocolate moron, puto pao and puto cheese to earn additional income.

Goinggreen

SBFI successfully launched a waste paper collection campaign as part of the Proper Waste Management and Recycling Program initiated by the Human Resource Development Division. Old magazines, phone directories and newspapers were donated to the CIW from which paper products were made for sale to support their activities. The campaign also promoted the practice of going green among employees and recycling in their homes and work place.

Deepeningourcommitmenttogoodcorporatecitizenship

The year 2011 marked the heightened social awareness and accountability within the Security Bank community, with more Bank employees and clients becoming engaged in the communities by working together to help others who are in need of assistance.

“Regalo Mo, Kinabukasan Ko (RMKK): Employee-Giving Project” also successfully raised over Php 800,000.00 cash donations from employees and clients to help continue the education of the 105 children of the Security Bank Group Agency Personnel in elementary, high school and college or vocational technological course for school year 2011-2012.

Security Bank employees from the five Bank branches in Cavite lent their time and resources to organize a painting outreach activity for Springville West II Community Day Care Center in Bacoor and Sta. Cruz Elementary School in Dasmariñas, Cavite. Head Office employees participated in the one-day painting outreach activity for the classrooms constructed in Cabiao, Nueva Ecija.

It was in the spirit of volunteerism that in June 2011, SBFI heeded the call for support for the victims of the flash flood which struck Davao City on June 29 by donating Php1-Million worth of relief goods. 580 affected families from five different barangays on the southern part of Davao benefited from the 2,740 pieces of plywood materials used to rebuild their homes, while 1,127 knapsack bags containing various school supplies were donated to the students of Matina Pangi Elementary School (MPES).

SBFI also gave Php2.3-Million worth of donations to Cagayan de Oro, Iligan and Dumaguete for the communities affected by Typhoon Sendong. Bank employees and clients in Metro Manila, Luzon and Visayas areas also donated in cash or in kind to help their fellow Security Bankers in CDO and Iligan who were affected by Typhoon Sendong.

SecurityBankFoundationcontinuestoactivelysupporttheeducationofneedybutdeservingstudentsthroughits ScholarshipProgram and recognizestudentswithexemplaryacademicperformancethroughtheSecurityBankStudentExcellenceAward.

35


sTATEMEnT Of MAnAGEMEnT’s REsPOnsIbILITYfOR fInAnCIAL sTATEMEnTs

36

InDEPEnDEnT AuDITORs’ REPORT

The Stockholders and the Board of DirectorsSecurity Bank Corporation6776 Ayala AvenueMakati City

ReportontheFinancialStatements

We have audited the accompanying consolidated financial statements of Security Bank Corporation and Subsidiaries (the Group) and the parent company financial statements of Security Bank Corporation (the Parent Company), which comprise the statements of financial position as at December 31, 2011 and 2010, and the statements of income, statements of comprehensive income, statements of changes in equity and statements of cash flows for each of the three years in the period ended December 31, 2011, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Philippine Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Group and of the Parent Company as at December 31, 2011 and 2010, and their financial performance and their cash flows for each of the three years in the period ended December 31, 2011 in accordance with Philippine Financial Reporting Standards.

ReportontheSupplementaryInformationRequiredUnderRevenueRegulations19-2011and15-2010

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information required under Revenue Regulations 19-2011 and 15-2010 in Note 39 to the financial statements is presented for purposes of filing with the Bureau of Internal Revenue and is not a required part of the basic financial statements. Such information is the responsibility of the management of the Parent Company. The information has been subjected to the auditing procedures applied in our audit of the basic financial statements. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

SYCIP GORRES VELAYO & CO.

Josephine Adrienne A. AbarcaPartnerCPA Certificate No. 92126SEC Accreditation No. 0466-AR-1 (Group A), February 11, 2010, valid until February 10, 2013Tax Identification No. 163-257-145BIR Accreditation No. 08-001998-61-2009, June 1, 2009, valid until May 31, 2012PTR No. 3174577, January 2, 2012, Makati City

February 28, 2012

37


Consolidated Parent Company As of December 31 2011 2010 2011 2010 (Amounts in Thousands)ASSETS CashandOtherCashItems (Note 16) P2,315,588 P2,420,849 P2,315,359 P2,420,642DuefromBangkoSentralngPilipinas (Note 16) 15,936,205 29,111,752 15,936,205 29,111,752DuefromOtherBanks 20,573,232 16,596,266 20,322,435 16,054,601InterbankLoansReceivableandSecurities PurchasedUnderResaleAgreementswiththe BangkoSentralngPilipinas 5,150,000 926,800 5,150,000 926,800FinancialAssetsatFairValuethroughProfitorLoss (Note 8) 17,509,651 22,937,711 17,506,096 22,933,894FinancialAssetsatFairValuethroughOther Comprehensive Income (Note 9) 103,475 90,980 50,815 48,810Investment Securities at Amortized Cost (Notes 10, 19 and 25) 56,381,157 13,428,717 56,381,157 13,389,501LoansandReceivables (Notes 11 and 30) 91,963,847 74,504,592 90,529,954 73,287,740InvestmentsinSubsidiaries,anAssociateandaJointVenture (Note 12) 148,732 1,805 2,106,772 1,979,244Property and Equipment (Note 13) 1,108,861 1,148,856 1,094,918 1,134,158Investment Properties (Note 14) 1,423,301 2,051,518 415,416 457,790DeferredTaxAssets (Note 26) 5,991 31,761 – 13,242IntangibleAssets (Note 15) 102,282 87,966 89,619 74,869OtherAssets (Note 15) 2,533,127 3,152,533 1,851,530 3,068,382TOTALASSETS P215,255,449 P166,492,106 P213,750,276 P164,901,425

LIABILITIESANDEQUITY LIABILITIES DepositLiabilities (Notes 16 and 30) Demand P34,430,553 P31,094,132 P34,999,696 P31,213,504Savings 58,048,714 55,802,605 58,181,574 55,949,619Time 26,827,154 23,696,570 26,827,154 23,696,570 119,306,421 110,593,307 120,008,424 110,859,693FinancialLiabilitiesatFairValuethroughProfitorLoss (Note 17) 2,312,351 4,693,385 2,312,351 4,693,385DerivativeLiabilitiesDesignatedasHedges (Note 18) 209,471 218,967 209,471 218,967BillsPayableandSecuritiesSoldUnder RepurchaseAgreements (Note 19) 52,207,470 16,676,786 51,981,970 16,325,786Acceptances Payable (Note 11) 179,678 653,946 179,678 653,946MarginDepositsandCashLettersofCredit 59,195 71,532 59,195 71,532Manager’sandCertifiedChecksOutstanding 1,105,876 705,621 1,105,876 705,621Income Tax Payable 307,089 11,149 294,867 3,952SubordinatedNote (Note 20) 2,986,875 2,980,959 2,986,875 2,980,959AccruedInterest,TaxesandOtherExpenses (Note 21) 1,549,813 1,477,082 1,493,007 1,411,116OtherLiabilities (Note 22) 3,696,429 2,993,594 3,356,303 2,825,242TOTALLIABILITIES 183,920,668 141,076,328 183,988,017 140,750,199

EQUITYATTRIBUTABLETOEQUITYHOLDERSOFTHEPARENTCOMPANY Capital stock (Note 24) 5,023,585 4,186,314 5,023,585 4,186,314Additional paid-in capital (Note 24) 3,236,905 3,236,905 3,236,905 3,236,905Surplus reserves (Note 24) 278,555 262,829 264,100 252,100Surplus (Note 24) 21,817,609 16,890,846 21,171,928 16,456,021Net unrealized gain on financial assets at fair value through other comprehensive income (Note 9) 21,975 20,470 21,975 20,470Net unrealized gain on a subsidiary’s financial assets at fair value through other comprehensive income (Note 9) 10,688 198 – –Cumulative foreign currency translation 43,766 (584) 43,766 (584) 30,433,083 24,596,978 29,762,259 24,151,226NON-CONTROLLINGINTEREST 901,698 818,800 – –TOTALEQUITY 31,334,781 25,415,778 29,762,259 24,151,226TOTALLIABILITIESANDEQUITY P215,255,449 P166,492,106 P213,750,276 P164,901,425 See accompanying Notes to Financial Statements.

sTATEMEnTs Of fInAnCIAL POsITIOn

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Consolidated Parent Company Years Ended December 31 2011 2010 2009 2011 2010 2009 (Amounts in Thousands)INTERESTINCOMEON Loans and receivables (Notes 11 and 30) P5,521,529 P5,145,739 P5,407,941 P5,272,445 P4,858,141 P5,086,369Financial investments (Note 6) 4,900,057 3,278,783 3,618,049 4,899,602 3,276,787 3,615,460Deposits with banks and others 196,249 390,613 435,370 173,381 370,267 419,624Interbank loans receivable and securities purchased under resale agreements with the Bangko Sentral ng Pilipinas 57,274 111,173 31,393 57,274 111,173 31,393 10,675,109 8,926,308 9,492,753 10,402,702 8,616,368 9,152,846INTERESTEXPENSEON Deposit liabilities (Notes 16 and 30) 1,345,641 1,601,019 2,382,560 1,350,104 1,604,506 2,390,540Subordinated notes, bills payable and securities sold under repurchase agreements and other borrowings (Notes 17, 19 and 20) 768,877 614,375 587,330 757,888 597,127 567,526Derivative instruments (Note 17) 921,823 537,417 452,381 921,823 537,417 452,381Derivatives designated as hedges (Note 18) 101,067 73,813 67,211 101,067 73,813 67,211 3,137,408 2,826,624 3,489,482 3,130,882 2,812,863 3,477,658NETINTERESTINCOME 7,537,701 6,099,684 6,003,271 7,271,820 5,803,505 5,675,188Gain on disposal of investment securities at amortized cost (Note 7) 1,356,655 – – 1,356,655 – –Service charges, fees and commissions (Note 28) 915,145 798,596 790,313 527,088 502,012 463,366Foreign exchange gain - net (Note 5) 827,774 774,046 700,098 816,038 761,618 686,985Trading and securities gain - net (Notes 5 and 7) 355,729 4,772,458 18,849 352,546 4,779,391 5,907Profit from assets sold/exchanged (Notes 14 and 15) 81,481 115,634 148,275 66,281 107,825 149,223Rent (Notes 14, 30 and 31) 63,191 68,990 56,790 45,471 50,964 47,883Share in net (loss) income of an associate and a joint venture(Note 12) (1,100) (7) 25 – – –Miscellaneous (Notes 14 and 29) 522,778 221,084 181,577 474,783 172,350 183,674TOTALOPERATINGINCOME 11,659,354 12,850,485 7,899,198 10,910,682 12,177,665 7,212,226OPERATINGEXPENSES Compensation and fringe benefits (Notes 27 and 30) 1,653,558 1,733,841 1,570,063 1,543,723 1,630,213 1,447,720Taxes and licenses 598,528 715,326 567,325 564,938 680,528 529,462Occupancy costs (Notes 14 and 31) 364,121 370,206 300,402 305,863 307,080 245,409Depreciation and amortization (Note 13) 279,753 264,163 256,580 265,369 251,019 237,950Provision for credit losses (Note 11) 59,093 236,134 487,440 – 159,198 376,589Amortization of software costs (Note 15) 19,658 22,915 33,207 17,870 19,611 26,464Provision for (recovery of) impairment losses (Notes 13, 14 , 15 and 33) (156,476) 11,157 24,944 (574) (12,194) 5,390Miscellaneous (Note 14 and 29) 1,389,896 1,603,688 1,183,134 1,111,327 1,319,123 926,612TOTALOPERATINGEXPENSES 4,208,131 4,957,430 4,423,095 3,808,516 4,354,578 3,795,596INCOMEBEFOREINCOMETAX 7,451,223 7,893,055 3,476,103 7,102,166 7,823,087 3,416,630PROVISIONFORINCOMETAX (Note 26) 667,575 732,154 414,180 615,998 707,187 390,705NETINCOME P6,783,648 P7,160,901 P3,061,923 P6,486,168 P7,115,900 P3,025,925ATTRIBUTABLETO: Equity holders of the Parent Company (Note 35) P6,700,750 P7,159,598 P3,061,659 Non-controlling interest 82,898 1,303 264 NETINCOME P6,783,648 P7,160,901 P3,061,923 Basic/DilutedEarningsPerShare (Note 35) P13.34 P14.25 P6.82 See accompanying Notes to Financial Statements.

sTATEMEnTs Of InCOME

39


sTATEMEnTs Of CHAnGEs In EQuITY

Balance at January 1, 2011 P4,186,314 P3,236,905 P262,829 P16,890,846 P20,470 P198 P– P– (P584) P24,596,978 P818,800 P25,415,778Total comprehensive income for the year – – – 6,700,750 1,505 10,490 – – 44,350 6,757,095 82,898 6,839,993Transfer from surplus to surplus reserves – – 15,726 (15,726) – – – – – – – –Stock dividend - 20% 837,271 – – (837,271) – – – – – – – –Cash dividends - P2.00 per share – – – (920,990) – – – – – (920,990) – (920,990)BalanceatDecember31,2011 P5,023,585 P3,236,905 P278,555 P21,817,609 P21,975 P10,688 P– P– P43,766 P30,433,083 P901,698 P31,334,781

Balance at January 1, 2010, as previously reported P4,186,314 P3,236,905 P251,950 P10,460,495 P– P– (P304,882) (P724) (P46,680) P17,783,378 P817,497 P18,600,875Effect of initial application of PFRS 9 (Note 2) – – – 118,895 10,454 (4,737) (11,487) 724 – 113,849 – 113,849Balance at January 1, 2010, as restated 4,186,314 3,236,905 251,950 10,579,390 10,454 (4,737) (316,369) – (46,680) 17,897,227 817,497 18,714,724Total comprehensive income for the year – – – 7,159,598 10,016 4,935 316,369 – 46,096 7,537,014 1,303 7,538,317Transfer from surplus to surplus reserves – – 10,879 (10,879) – – – – – – – –Cash dividends - P2.00 per share – – – (837,263) – – – – – (837,263) – (837,263) BalanceatDecember31,2010 P4,186,314 P3,236,905 P262,829 P16,890,846 P20,470 P198 P– P– (P584) P24,596,978 P818,800 P25,415,778

Balance at January 1, 2009 P3,293,457 P1,688,169 P234,900 P8,081,527 P– P– (P776,738) P316 P162,856 P12,684,487 P817,233 P13,501,720Total comprehensive income (loss) for the year – – – 3,061,659 – – 471,856 (1,040) (209,536) 3,322,939 264 3,323,203Issuance of common shares 892,857 1,548,736 – – – – – – – 2,441,593 – 2,441,593Transfer from surplus to surplus reserves – – 17,050 (17,050) – – – – – – – –Cash dividends - P1.75 per share – – – (665,641) – – – – – (665,641) – (665,641)BalanceatDecember31,2009 P4,186,314 P3,236,905 P251,950 P10,460,495 P– P– (P304,882) (P724) (P46,680) 17,783,378 P817,497 P18,600,875

Balance at January 1, 2011 P4,186,314 P3,236,905 P252,100 P16,456,021 P20,470 P– (P584) P24,151,226 Total comprehensive income for the year – – – 6,486,168 1,505 – 44,350 6,532,023Transfer from surplus to surplus reserves – – 12,000 (12,000) – – – –Stock dividend - 20% 837,271 – – (837,271) – – – –Cash dividends - P2.00 per share – – – (920,990) – – – (920,990) BalanceatDecember31,2011 P5,023,585 P3,236,905 P264,100 P21,171,928 P21,975 P– P43,766 P29,762,259

Balance at January 1, 2010, as previously reported P4,186,314 P3,236,905 P242,800 P10,072,279 P– (P304,882) (P46,680) P17,386,736Effect of initial application of PFRS 9 (Note 2) – – – 114,405 10,454 (11,487) – 113,372Balance at January 1, 2010, as restated 4,186,314 3,236,905 242,800 10,186,684 10,454 (316,369) (46,680) 17,500,108Total comprehensive income for the year – – – 7,115,900 10,016 316,369 46,096 7,488,381Transfer from surplus to surplus reserves – – 9,300 (9,300) – – – –Cash dividends - P2.00 per share – – – (837,263) – – – (837,263) Balance at December 31, 2010 P4,186,314 P3,236,905 P252,100 P16,456,021 P20,470 P– (P584) P24,151,226

Balance at January 1, 2009 P3,293,457 P1,688,169 P234,900 P7,719,895 P– (P776,738) P162,856 P12,322,539Total comprehensive income (loss) for the year – – – 3,025,925 – 471,856 (209,536) 3,288,245Issuance of common shares 892,857 1,548,736 – – – – – 2,441,593Transfer from surplus to surplus reserves – – 7,900 (7,900) – – – –Cash dividends - P1.75 per share – – – (665,641) – – – (665,641) Balance at December 31, 2009 P4,186,314 P3,236,905 P242,800 P10,072,279 P– (P304,882) (P46,680) P17,386,736 See accompanying Notes to Financial Statements.

Consolidated YearsEndedDecember31,2011,2010and2009 EquityAttributabletoEquityHoldersoftheParentCompany NetUnrealized NetUnrealized Gain(Loss)on Gainon FinancialAssets NetUnrealized FinancialAssets atFairValue NetUnrealized Gain(Loss)on atFairValue ThroughOther Gain(Loss)on Available throughOther Comprehensive Available- for-sale Cumulative Additional Surplus Comprehensive Incomeofa for-Sale Investments Foreign CapitalStock Paid-in-Capital Reserves Surplus Income Subsidiary Investments ofaSusidiary Currency Non-controlling (Note 24) (Note 24) (Note 24) (Note 24) (Note 9) (Note 9) (Note 34) (Note 34) Translation Total Interest Total Equity

Parent Company YearsEndedDecember31,2011,2010and2009 NetUnrealized Gainon FinancialAssets NetUnrealized atFairValue Gain(Loss)on Cumulative ThroughOther Available-for-Sale Foreign Additional Surplus Comprehensive Available-for-Sale Foreign CapitalStock Paid-inCapital Reserves Surplus Income Investments Currency (Note 24) (Note 24) (Note 24) (Note 24) (Note 9) (Note 34) Translation Total Equity

40

Balance at January 1, 2011 P4,186,314 P3,236,905 P262,829 P16,890,846 P20,470 P198 P– P– (P584) P24,596,978 P818,800 P25,415,778Total comprehensive income for the year – – – 6,700,750 1,505 10,490 – – 44,350 6,757,095 82,898 6,839,993Transfer from surplus to surplus reserves – – 15,726 (15,726) – – – – – – – –Stock dividend - 20% 837,271 – – (837,271) – – – – – – – –Cash dividends - P2.00 per share – – – (920,990) – – – – – (920,990) – (920,990)BalanceatDecember31,2011 P5,023,585 P3,236,905 P278,555 P21,817,609 P21,975 P10,688 P– P– P43,766 P30,433,083 P901,698 P31,334,781

Balance at January 1, 2010, as previously reported P4,186,314 P3,236,905 P251,950 P10,460,495 P– P– (P304,882) (P724) (P46,680) P17,783,378 P817,497 P18,600,875Effect of initial application of PFRS 9 (Note 2) – – – 118,895 10,454 (4,737) (11,487) 724 – 113,849 – 113,849Balance at January 1, 2010, as restated 4,186,314 3,236,905 251,950 10,579,390 10,454 (4,737) (316,369) – (46,680) 17,897,227 817,497 18,714,724Total comprehensive income for the year – – – 7,159,598 10,016 4,935 316,369 – 46,096 7,537,014 1,303 7,538,317Transfer from surplus to surplus reserves – – 10,879 (10,879) – – – – – – – –Cash dividends - P2.00 per share – – – (837,263) – – – – – (837,263) – (837,263) BalanceatDecember31,2010 P4,186,314 P3,236,905 P262,829 P16,890,846 P20,470 P198 P– P– (P584) P24,596,978 P818,800 P25,415,778

Balance at January 1, 2009 P3,293,457 P1,688,169 P234,900 P8,081,527 P– P– (P776,738) P316 P162,856 P12,684,487 P817,233 P13,501,720Total comprehensive income (loss) for the year – – – 3,061,659 – – 471,856 (1,040) (209,536) 3,322,939 264 3,323,203Issuance of common shares 892,857 1,548,736 – – – – – – – 2,441,593 – 2,441,593Transfer from surplus to surplus reserves – – 17,050 (17,050) – – – – – – – –Cash dividends - P1.75 per share – – – (665,641) – – – – – (665,641) – (665,641)BalanceatDecember31,2009 P4,186,314 P3,236,905 P251,950 P10,460,495 P– P– (P304,882) (P724) (P46,680) 17,783,378 P817,497 P18,600,875

Balance at January 1, 2011 P4,186,314 P3,236,905 P252,100 P16,456,021 P20,470 P– (P584) P24,151,226 Total comprehensive income for the year – – – 6,486,168 1,505 – 44,350 6,532,023Transfer from surplus to surplus reserves – – 12,000 (12,000) – – – –Stock dividend - 20% 837,271 – – (837,271) – – – –Cash dividends - P2.00 per share – – – (920,990) – – – (920,990) BalanceatDecember31,2011 P5,023,585 P3,236,905 P264,100 P21,171,928 P21,975 P– P43,766 P29,762,259

Balance at January 1, 2010, as previously reported P4,186,314 P3,236,905 P242,800 P10,072,279 P– (P304,882) (P46,680) P17,386,736Effect of initial application of PFRS 9 (Note 2) – – – 114,405 10,454 (11,487) – 113,372Balance at January 1, 2010, as restated 4,186,314 3,236,905 242,800 10,186,684 10,454 (316,369) (46,680) 17,500,108Total comprehensive income for the year – – – 7,115,900 10,016 316,369 46,096 7,488,381Transfer from surplus to surplus reserves – – 9,300 (9,300) – – – –Cash dividends - P2.00 per share – – – (837,263) – – – (837,263) Balance at December 31, 2010 P4,186,314 P3,236,905 P252,100 P16,456,021 P20,470 P– (P584) P24,151,226

Balance at January 1, 2009 P3,293,457 P1,688,169 P234,900 P7,719,895 P– (P776,738) P162,856 P12,322,539Total comprehensive income (loss) for the year – – – 3,025,925 – 471,856 (209,536) 3,288,245Issuance of common shares 892,857 1,548,736 – – – – – 2,441,593Transfer from surplus to surplus reserves – – 7,900 (7,900) – – – –Cash dividends - P1.75 per share – – – (665,641) – – – (665,641) Balance at December 31, 2009 P4,186,314 P3,236,905 P242,800 P10,072,279 P– (P304,882) (P46,680) P17,386,736 See accompanying Notes to Financial Statements.

Consolidated YearsEndedDecember31,2011,2010and2009 EquityAttributabletoEquityHoldersoftheParentCompany NetUnrealized NetUnrealized Gain(Loss)on Gainon FinancialAssets NetUnrealized FinancialAssets atFairValue NetUnrealized Gain(Loss)on atFairValue ThroughOther Gain(Loss)on Available throughOther Comprehensive Available- for-sale Cumulative Additional Surplus Comprehensive Incomeofa for-Sale Investments Foreign CapitalStock Paid-in-Capital Reserves Surplus Income Subsidiary Investments ofaSusidiary Currency Non-controlling (Note 24) (Note 24) (Note 24) (Note 24) (Note 9) (Note 9) (Note 34) (Note 34) Translation Total Interest Total Equity

Parent Company YearsEndedDecember31,2011,2010and2009 NetUnrealized Gainon FinancialAssets NetUnrealized atFairValue Gain(Loss)on Cumulative ThroughOther Available-for-Sale Foreign Additional Surplus Comprehensive Available-for-Sale Foreign CapitalStock Paid-inCapital Reserves Surplus Income Investments Currency (Note 24) (Note 24) (Note 24) (Note 24) (Note 9) (Note 34) Translation Total Equity

41


Consolidated Parent Company YearsEndedDecember31 2011 2010 2009 2011 2010 2009 (Amounts in Thousands)CASHFLOWSFROM OPERATINGACTIVITIES Income before income tax P7,451,223 P7,893,055 P3,476,103 P7,102,166 P7,823,087 P3,416,630Adjustments for: Unrealized market valuation (gain) loss on financial instruments at fair value through profit or loss (FVTPL) (1,588,569) 1,124,221 1,377,801 (1,588,569) 1,124,221 1,359,670Gain on sale investment securities at amortized cost (Note 7) (1,356,655) – – (1,356,655) – – Depreciation and amortization (Note 13) 279,753 264,163 256,580 265,369 251,019 237,950Gain on pre-termination of long term investment (Note 29) (219,418) – – (219,418) Provision for (recovery of) impairment losses (Notes 33, 13, 14 and 15) (156,476) 11,157 24,944 (574) (12,194) 5,390Profit from assets sold/exchanged (81,481) (115,634) (148,275) (66,281) (107,825) (149,223)Provision for credit losses (Note 11) 59,093 236,134 487,440 – 159,198 376,589Amortization of software costs (Note 15) 19,658 22,915 33,207 17,870 19,611 26,464Amortization of transaction cost on subordinated debt (Note 20) 5,916 5,412 4,767 5,916 5,412 4,767Share in net loss (income) of an associate and a joint venture (Note 12) 1,100 7 (25) – – –Trading and securities loss on available-for-sale (AFS) investments (Note 7) – (3,094,132) (82,000) – (3,094,132) (82,000)Trading and securities gain on held-to-maturity (HTM) investments (Note 7) – (804,645) – – (804,645) –Changes in operating assets and liabilities: Decrease (increase) in the amounts of: Financial assets at FVTPL 4,626,099 (9,329,999) (5,322,275) 4,625,837 (9,364,183) (5,286,551) Loans and receivables (17,341,486) (4,831,033) (3,060,803) (17,065,351) (5,002,841) (2,768,170) Other assets 1,161,160 (1,346,498) (1,410,600) 1,212,952 (1,338,626) (1,393,007) Increase (decrease) in the amounts of: Deposit liabilities 8,713,114 2,068,336 5,212,775 9,148,731 2,038,446 5,201,812 Financial liabilities at FVTPL – – (3,735,276) – – (3,735,276) Acceptances payable (474,268) 447,622 97,455 (474,268) 447,622 97,455 Margin deposits and cash letters of credit (12,337) (20,801) (346,427) (12,337) (20,801) (346,427) Manager’s and certified checks outstanding 400,255 (46,958) 206,060 400,255 (46,958) 206,060 Accrued interest, taxes and other expenses 72,731 142,609 (831,782) 81,891 145,128 (849,170) Other liabilities 670,263 (525,423) (441,680) 498,488 (423,610) (145,002)Net cash generated from (used in) operations 2,229,675 (7,899,492) (4,202,011) 2,576,022 (8,202,071) (3,822,039)Income taxes paid (345,866) (737,262) (414,313) (311,841) (716,894) (390,902)Net cash provided by (used in) operating activities 1,883,809 (8,636,754) (4,616,324) 2,264,181 (8,918,965) (4,212,941)

CASHFLOWSFROM INVESTINGACTIVITIES Acquisitions of: Investment securities at amortizedcost (66,028,473) (13,288,330) – (66,067,689) (13,288,330) – Investment in joint venture (Note 12) (119,858) – – (97,529) – – Financial assets at fair value through other comprehensive income (500) – – (500) – –

(Forward)

sTATEMEnTs Of CAsH fLOWs

42

Consolidated Parent Company YearsEndedDecember31 2011 2010 2009 2011 2010 2009 (Amounts in Thousands)

AFS investments P– (P7,289,556) (P13,857,567) P– (P7,253,446) (P13,818,378) HTM investments – – (411,128) – – (411,128) Property and equipment (Note 15) (200,071) (173,917) (167,924) (193,458) (163,425) (162,920)Software costs (Note 17) (32,974) (25,504) (30,449) (32,621) (20,742) (29,755)Proceeds from: Sale/maturities of investment securities at amortized cost 24,432,688 – – 24,432,688 – – Disposal of investment properties 294,407 115,594 385,360 91,643 98,602 385,360 Disposal of property and equipment 31,881 70,423 11,498 31,371 67,492 10,502 Liquidation of investment in an associate 1,831 – – – – – Sale of AFS investments – 38,756,558 20,314,191 – 38,756,558 20,273,191 Sale/maturities of HTM investments – 2,718,120 1,721,714 – 2,718,120 1,721,714Net cash provided by (used in) investing activities (41,621,069) 20,883,388 7,965,695 (41,836,095) 20,914,829 7,968,586CASHFLOWSFROM FINANCINGACTIVITIES Proceeds from bills payable and securities sold under repurchase agreements 2,983,196,174 1,426,847,203 2,328,432,668 2,980,559,674 1,422,479,201 2,327,963,668Settlements of bills payable and securities sold under repurchase agreements (2,947,665,490) (1,417,368,211) (2,326,186,762) (2,944,903,490) (1,412,882,209) (2,326,186,762)Dividends paid (918,416) (835,635) (664,070) (918,416) (835,635) (664,070)Proceeds from issuance of common shares (Note 24) – – 2,441,593 – – 2,441,593Net cash provided by financing activities 34,612,268 8,643,357 4,023,429 34,737,768 8,761,357 3,554,429Effect of exchange rate changes in cash and cash equivalents 44,350 46,095 (209,536) 44,350 46,095 (209,536)

NETINCREASE(DECREASE) INCASHANDCASHEQUIVALENTS (5,080,642) 20,936,086 7,163,264 (4,789,796) 20,803,316 7,100,538

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR Cash and other cash items 2,420,849 2,388,608 2,288,825 2,420,642 2,388,400 2,288,605Due from Bangko Sentral ng Pilipinas 29,111,752 12,062,184 11,677,975 29,111,752 12,062,184 11,677,975Due from other banks 16,596,266 5,261,789 2,691,517 16,054,601 4,852,895 2,345,361Interbank loans receivable and securities purchased under resale agreements with the Bangko Sentral ng Pilipinas 926,800 8,407,000 4,298,000 926,800 8,407,000 4,298,000 49,055,667 28,119,581 20,956,317 48,513,795 27,710,479 20,609,941

CASHANDCASH EQUIVALENTSATENDOFYEAR Cash and other cash items 2,315,588 2,420,849 2,388,608 2,315,359 2,420,642 2,388,400Due from Bangko Sentral ng Pilipinas 15,936,205 29,111,752 12,062,184 15,936,205 29,111,752 12,062,184Due from other banks 20,573,232 16,596,266 5,261,789 20,322,435 16,054,601 4,852,895Interbank loans receivable and securities purchased under resale agreements with the Bangko Sentral ng Pilipinas 5,150,000 926,800 8,407,000 5,150,000 926,800 8,407,000 P43,975,025 P49,055,667 P28,119,581 P43,723,999 P48,513,795 P27,710,479 OPERATIONALCASHFLOWS FROMINTERESTANDDIVIDENDS Interest received P9,599,163 P9,490,596 P9,768,734 P9,326,739 P9,180,244 P9,429,424Interest paid (3,067,866) (2,818,715) (4,156,945) (3,061,120) (2,803,947) (4,143,709)Dividends received 5,074 5,137 1,662 3,687 79,052 675

43


Consolidated Parent Company Years Ended December 31 2011 2010 2009 2011 2010 2009 (Amounts in Thousands)

NET INCOME FOR THE YEAR P6,783,648 P7,160,901 P3,061,923 P6,486,168 P7,115,900 P3,025,925OTHER COMPREHENSIVE INCOME (LOSS) (Note 34) Cumulative translation adjustments 44,350 46,096 (209,536) 44,350 46,096 (209,536)Net unrealized gain on financial assets at fair value through other comprehensive income, net of tax 1,505 10,016 – 1,505 10,016 –Net unrealized gain (loss) on a subsidiary’s:Financial assets at fair value through other comprehensive income 10,490 4,935 – – – –Available for sale investments – – (1,040) – – –Net unrealized gain on available-for-sale investments, net of tax – 316,369 471,856 – 316,369 471,856OTHER COMPREHENSIVE INCOME FOR THE YEAR 56,345 377,416 261,280 45,855 372,481 262,320TOTAL COMPREHENSIVE INCOME P6,839,993 P7,538,317 P3,323,203 P6,532,023 P7,488,381 P3,288,245ATTRIBUTABLE TO: Equity holders of the Parent Company P6,757,095 P7,537,014 P3,322,939 Non-controlling interest 82,898 1,303 264 P6,839,993 P7,538,317 P3,323,203

See accompanying Notes to Financial Statements.

sTATEMEnTs Of COMPREHEnsIVE InCOME

44

bRAnCH DIRECTORY

ALABANGACACIAG/F Kingston Tower, Acacia Avenue, Madrigal Business Park, Alabang, Muntinlupa CityTel. No. (02) 850-1727, 850-1729, 0922-8722032Fax No. (02) 842-1971

ALICIANational Highway (Maharlika Highway), Poblacion, Alicia, IsabelaTel. Nos. (078) 662-8206,0922-8722056Fax No. (078) 662-8207

ANGELESSBC Building, McArthur Highway, Balibago, Angeles CityTel. Nos. (045) 332-1074, 322-7110, 0922-8722082Fax No. (045) 892-2419

AYALAALABANGEl Molito Building, Madrigal Business Park, Madrigal Avenue, Ayala Alabang, Muntinlupa CityTel. Nos. (02) 772-1701, 772-1856, 0922-8722049Fax No. (02) 772-1705

BACOLOD SBC Building, BS Aquino Drive corner Hilado Extension, Bacolod CityTel. No. (034) 435-0856, 0922-8722146Fax No. (034) 434-2225

BACOLOD-RIZALSBC Building, corner Rizal Avenue and Locsin Streets, Bacolod CityTel. No. (034) 434-2225Fax No. (034) 435-0856

BAGUIOSBC Building, corner Chugum and Abanao Streets, Baguio CityTel. No. (074) 442-8053, 0922-8722084Fax No. (074) 442-2671

**BALANGAGaleria Victoria, J.P. Rizal Street, Poblacion Balanga City Tel. No. (047) 237-0060, (047) 237-0081, 0922- 8722281Fax No. (047) 2370059

BALIWAG317 B.S. Aquino Avenue, Baliwag, BulacanTel. Nos. (044) 766-3328, 0922-8722349Fax No. (044) 766-3297

BALUT#49 Honorio Lopez Boulevard corner Rosario Nicasio Streets, Balut, Tondo, ManilaTel. No. (02) 251-4596, 0922-8722042Fax No. (02) 251-4597

BANAWE-KITANLADNos. 34-36 Banawe corner Kitanlad Streets, Quezon CityTel. No. (02) 743-1755, 0922-8722154Fax No. (02) 743-1752

BATANGASRizal Avenue, Batangas CityTel. No. (043) 723-3143, 0922-8722108Fax No. (02) 520-6138

BATINO-CALAMBAG/F City Gold Building, Calamba Premier Industrial Park Complex, Batino, Calamba, LagunaTel. Nos. (049) 508-0567, 0922-8722245Fax No. (049) 508-0566

BEL-AIR#68, Jupiter St., Bel-Air, Makati CityTel. No. (02) 896-3130, 0922-8722015Fax No. (02) 896-3313

BFPARAÑAQUEPresident’s Avenue, BF Homes, Parañaque CityTel. No. (02) 820-6269, 0922-8722155Fax No. (02) 807-1444

BICUTAN#52 Doña Soledad Avenue, Better Living, Parañaque CityTel. No. (02) 822-1648, 0922-8722176Fax No. (02) 822-4938

BIÑANNational Highway, Barrio San Vicente, Biñan, LagunaTel. No. (049) 511-6400, 0922-8722107Fax No. (02) 520-8236

BINONDO#463-469 Ewan Building, Quintin Paredes Street, Binondo, ManilaTel. Nos. (02) 244-5201, 244- 5202, 0922-8722051Fax No. (02) 243-1388

BLUMENTRITTChinese General Hospital Compound, Blumentritt corner Aurora Boulevard,Sta. Cruz, ManilaTel. No. (02) 741-5522, 711-4141 loc 2605,0922-8722043Fax No. (02) 711-3365

BUTUANJ.C. Aquino Avenue, Butuan City, Agusan del NorteTel. No. (085) 815-5292, 0932-8353443Fax No. (085) 815-5291

CABANATUANG/F Insular Life Building, Rizal Street, Cabanatuan City, Nueva EcijaTel. No. (044) 463-7636, 0922-8722086Fax No. (044) 463-3610

45


bRAnCH DIRECTORY

CAGAYANDEORO-OSMEÑAOsmeña Street, Cagayan De OroTel. Nos. (08822) 723-411, (088) 856-3965, 0922-8722152Fax No. (08822) 723-411

CAGAYANDEORO-VELEZVelez corner Montalban Street, Cagayan de Oro CityTel. Nos. (088) 310-4294, (088) 856-6632, 0922-872-22976Fax No. (08822) 728-334

CALAMBANational Highway, Calamba, LagunaTel. Nos. (049) 545-2196, 0922-8722109Fax No. (02) 520-8818

CATARMANG.H. Del Pilar corner Marcos Streets, Catarman, Northern SamarTel. No. (055) 251-8841Fax No. (055) 251-8404

CAUAYANG/F Leoncia C. Uy Building, Maharlika Highway, Cauayan City, IsabelaTel. No. (078) 652-3950, 0922-8722267Fax No. (078) 652-3949

CEBU-BANILADTPR Building, A.S. Fortuna Avenue, Banilad, Cebu CityTel. No. (032) 345-0028, 0922-8722330Fax No. (032) 344-6283

CEBU-BUSINESSPARKMindanao Avenue, Cebu Business Park, Cebu CityTel. No. (032) 238-0409, 0922-8722136Fax No. (032) 238-0408

CEBU-JUANLUNA#99 Osmeña Boulevard, Cebu CityTel. No. (032) 254-4080, 0922-8722137Fax No. (032) 253-0053

CLARK-ANGELESClark Center Two Building - Retail 3, Berthaphil Compound III Clark Center, Jose Abad Santos Avenue, Clark Field Zone, Angeles City, PampangaTel. No. (045) 893-4343, 0922-8722238Fax No. (045) 499-1247

COMMONWEALTHLot 10 Block 9 Commonwealth Avenue, Quezon CityTel. No. (02) 932-9749, 0922-8722156Fax No. (02) 952-0295

CONGRESSIONALCongressional Avenue corner EDSA, Quezon CityTel. No. (02) 927-6720, 0922-8722034Fax No. (02) 927-9219

CUBAOQuezon Theater Building, General Roxas Street, Araneta Center, Cubao, Quezon CityTel. No. (02) 911-2879, 0922-8722177Fax No. (02) 911-2877

DAGUPANMH Del Pilar, Dagupan CityTel. Nos. (075) 522-0631, 515-3444, 0922-8722219Fax No. (075) 522-4783

DASMARIÑASGen. Emilio Aguinaldo Highway, Dasmariñas, CaviteTel. No. (046) 416-1143, 0922-8722114Fax No. (02) 529-8157

DAVAO-MAGSAYSAY#358 R. Magsaysay Avenue, Davao CityTel. No. (082) 221-8413, 0922-8722138Fax No. (082) 221-3443

DAVAO-MONTEVERDEMonteverde corner Bruno Gempesaw Street, Davao CityTel. No. (082) 222-2124, 0922-8722139Fax No. (082) 224-2966

DAVAO-PANABOQuezon Boulevard, Panabo, Davao Del NorteTel. No. (084) 822-2183, 0922-8722140Fax No. (084) 628-5377

DAVAO-RIZALAnda corner Rizal Street, Davao CityTel. No. (082) 221-0358, 0922-8722141Fax No. (082) 221-0357

DELMONTEG/F SBC Building, Lot 19-B Blk 344 Del Monte Avenue, Quezon CityTel. Nos. (02) 415-1789, 740-5985, 0922-8722179Fax No. (02) 740-6372

DELAROSAG/F King’s Court II Building, #2129 Pasong Tamo corner Dela Rosa Street, Makati CityTel. Nos. (02 ) 812-2620, 811-2913, 0922-8722017Fax No. (02 ) 893-2502

46

DIVISORIAIPasilio A Ledesma Building, #853 Tabora Street, Binondo, ManilaTel. Nos. (02) 243-2440, 243-3104, 0922-8722166Fax No. (02) 243-3105

DIVISORIAIIUG 3 & 4 S2 New Divisoria Market, M. de Santos Street, Binondo, ManilaTel. Nos. (02) 244-4515, 244-4517, 0922-8722167Fax No. (02) 244-4518

DUMAGUETEPortal West Building, Siliman Avenue corner Hibbard Avenue, Dumaguete CityTel. No. (035) 422-0001, 0922-8722372Fax No. (035) 422-0002

EASTWOODThe Eastwood Excelsior Building, Eastwood City, Bagumbayan, Quezon CityTel. Nos. (02) 584-3184, 0922-8722195Fax No. (02) 584-3183

E.RODRIGUEZ#970 E. Rodriguez Sr. Avenue, Quezon CityTel. No. (02) 724-3927, 0922-8722180Fax No. (02) 412-5030

EDSACENTRALUnits 7 & 8, Level 1, Soho Central, Shaw Boulevard, Greenfield District, Mandaluyong CityTel. Nos. (02) 661-5646, 696-6864, 0922-8722044Fax No. (02) 661-5640

EDSA-KALOOKANNo. 512 EDSA near corner Urbano Plata Street, Kalookan CityTel. No. (02) 364-0049, 0922-8722254Fax No. (02) 363-5525

ELCANOElcano corner San Nicolas Street, Binondo, ManilaTel. No. (02) 708-5046, 0922-8722205Fax No. (02) 708-5053

EMERALDG/F Taipan Place, Emerald Avenue, Ortigas Center, Pasig CityTel. No. (02) 470-3104, 0922-8722208Fax No. (02) 470-2678

ERMITAUN Avenue, corner Bocobo and Churruca Streets, Ermita, ManilaTel. Nos. (02) 523-6567, 523-6586, 0922-8722157Fax No. (02) 536-9060

EVANGELISTA-QUIAPOG/F Jack & Carlos Building, #609 Evangelista Street, Quiapo, ManilaTel. No. (02) 736-3071, 0922-8722182Fax No. (02) 736-3072

FORTBONIFACIO-INFINITYG/F The Infinity Tower, 26th Street, Fort Bonifacio Global City, Taguig CityTe. No. (02) 555-0933, 0922-8843986Fax No. (02) 553-0936

FORTBONIFACIO-NETCUBEG/F Net Cube Building, 3rd Avenue corner 30th Street, E Square Zone, Fort Bonifacio Global City, Taguig CityTel. No. (02) 659-5867 , 0922-8722061Fax No. (02) 659-6908

FORTBONIFACIO-ST.LUKE’SMEDICALCENTERG/F Medical Arts Building, St. Luke’s Medical Center, Fort Bonifacio Global City, TaguigTel. Nos. (02) 403-1668, 0922-8722252Fax No. (02) 403-3207

GREENHILLSGreenhills Mansion 37, Annapolis Street, San JuanTel. Nos. (02) 721-1353, 721-1463, 0922-8722045Fax No. (02) 721-1460

GUADALUPE#2185 Magsaysay Avenue, Guadalupe, Makati CityTel. No. (02) 882-1872, 729-5784, 0922-8722035Fax No. (02) 882-1868

HEADOFFICE-CCAD6776 Ayala Avenue, Makati CityTel. Nos. (02) 888-7276-77,82-83,85, 894-5301,891-1033, 1078, 867-6788 loc 2001-02, 0922-8722067Fax No. (02) 891-1078

HERRERAG/F Exchange Building, No. 107 V.A. Rufino corner Bolanos & Esteban Streets, Legaspi Village, Makati CityTel. Nos. (02) 892-1636, 892-3214, 0922-8722026Fax No. (02) 892-2190

HVDELACOSTAG/F Alpha Salcedo Building, HV Dela Costa Street, Salcedo Village, Brgy. Bel-Air, Makati CityTel. No. (02) 867-2156, 0922-8722027Fax No. (02) 867-3151

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ILIGANQuezon Avenue corner Miguel Obach Street, Poblacion, Iligan CityTel. No. (063) 221-5227, 0922-8722150Fax No. (063) 221-3007

ILOILOCharly Resources Building, corner Ledesma and Quezon Streets, Iloilo CityTel. No. (033) 337-9653, 0922-8722143Fax No. (033) 337-7068

IMUSG/F 680 Home Appliances Building, Aguinaldo Highway, Tanzang Luma, Imus, CaviteTel. No. (046) 471-5414, 0922-8722115Fax No. (02) 529-8613

KALOOKAN#266 Rizal Avenue Extension, between 5th & 6th Avenue, Grace Park, Caloocan CityTel. Nos. (02) 365-8703, 04, 05, 06, 0922-8722047Fax No. (02) 362-3666

KATIPUNANG/F Xanland Condominium Building, Katipunan Avenue, Quezon CityTel. No. (02) 426-7034, 0922-8722158Fax No. (02) 426-7036

KORONADAL601 General Santos Drive, Koronadal CityTe. Nos. (083) 520-2115 , 0922-8843972Fax No. (083) 228-7736

LAOAGG/F Ricafort Building, Gen. Segundo Avenue near Rizal Avenue, Laoag CityTel. No. (077) 770-3311, 0922-8722302Fax No. (077) 770-3200

LATRINIDADJC-084, Barangay Pico, KM. 5, La Trinidad, BenguetTel. No. (074) 422-1216, 0922-8722089Fax No. (074) 422-1586

LAUNIONG/F Kenny Plaza, Quezon Avenue, San Fernando City, La UnionTel. No. (072) 607-8802, 0922-8722090Fax No. (072) 700-5338

LIPACM Recto Avenue, Lipa City, BatangasTel. Nos. (043) 756-2113, 0922-8722131Fax No. (02) 520-6234

LUCENADoña Christina Building, corner Tagarao & Merchant Streets, Lucena CityTel. No. (042) 373-1077, 0922-8722132Fax No. (02) 250-8266

MAGDALENA1025-1027 Masangkay Street (near Soler St.), Binondo, ManilaTel. Nos. (02) 243-4822, 244-5473, 0922-8722159Fax No. (02) 244-5744

MALABON#2 Manapat Street corner Rizal Avenue Extension, Malabon CityTel. No. (02) 281-2880, 0922-8722185Fax No. (02) 281-5903

**MALABON-TUGATOG134 M.H Del Pilar Street, Brgy. Tugatog, Malabon CityTel. No. (02) 990-9653, 0932-8480042Fax No. (02) 990-3225

MALATEM. Adriatico corner San Andres Street, Malate, ManilaTel. Nos. (02) 524-8112, 567-6258, 0922-8722186Fax No. (02) 521-0745

MALINTA-PASODEBLAS#271 Paso de Blas, Valenzuela City Tel. No. (02) 292-5804, 0922-8722187Fax No. (02) 292-6133

MALOLOSFeliza Jazz Building, MacArthur Highway, Sumapang Matanda, Malolos City, BulacanTel. No. (044) 796-1983, 0922-8722095Fax No. (044) 796-1982

MANDALUYONGG/F Shaw Cinema Building, Shaw Boulevard corner Jose Tiosejo Street, Mandaluyong CityTel. No. (02) 534-3232, 0922-8722188Fax No. (02) 531-7381

MANDAUETipolo Square, Mandaue Highway, Tipolo, Mandaue City, CebuTel. No. (032) 345-0564, 0922-8722197Fax No. (032) 345-2582

MANDAUE-NORTHROADNational Highway, Brgy. Tabok, Mandaue CityTel. No. (032) 345-3092, 0922-8722329Fax No. (032) 344-7214

MARIKINABayan-Bayanan Avenue, Concepcion, MarikinaTel. No. (02) 942-2565, 0922-8722189Fax No. (02) 941-0689

bRAnCH DIRECTORY

48

MARKET!MARKET!157-A G/F Market! Market! Mall, Bonifacio Global City, Taguig CityTel. Nos. (02) 886-6685, 846-6413, 0923-8722190Fax No. (02) 887-1730

MAYPAJOAPN Building, #172 A. Mabini Street, Maypajo, Caloocan CityTel. No. (02) 285-6249, 0922-8722191Fax No. (02) 285-9065

MEDICALCITYG/F Medical Arts Tower, The Medical City Hospital Ortigas Avenue, Pasig CityTel. No. (02) 706-0445, 0922-8722165Fax No. (02) 706-0276

MEDICALPLAZAG-103 Medical Plaza Building, Dela Rosa corner Amorsolo Street, Makati CityTel. Nos. (02) 813-6536, 813-6549, 0922-8722028Fax No. (02) 813-6544

MENDIOLASan Beda College Compound, Mendiola Street, San Miguel, ManilaTel. No. (02) 734-7507, 0922-8722160Fax No. (02) 735-2746

MEYCAUAYANMeycauayan College Building, Calvario, Meycauayan, BulacanTel. No. (044) 840-9417, 0922-8722098Fax No. (044) 228-3516

MOLINOG/F E.V.Y. Building, Molino Boulevard, Molino, Bacoor, CaviteTel. No. (046) 477-2449, 0922-8843957Fax No. (046) 477-2166

NAGALAM Building, Peñafrancia Avenue,Zone 4 San Francisco, Naga CityTel. No. (054) 472-4210, 0922-8722099Fax No. (02) 250-8008

NAIA2/F Arrival Lobby, NAIA Complex, Pasay CityTel. No. (02) 833-1190, 0922-8722036Fax No. (02) 833-1191

NIEVAG1 & G2 Asian Mansion 2, Dela Rosa corner Nieva Street, Legaspi Village, Makati CityTel. No. (02) 843-6537, 0922-8722029Fax No. (02) 843-6322

NINOYAQUINOAVENUEG/F PAIR-PAGS Centre, NAIA Complex, Ninoy Aquino Avenue, Parañaque CityTel. Nos. (02) 852-1286, 852-9463, 0922-8722037Fax No. (02) 851-7370

NOVALICHESKrystle Building, 858 Quirino Highway, Novaliches, Quezon CityTel. No. (02) 936-3506, 0922-8722192Fax No. (02) 936-6374

ORMOCReal Street, Poblacion, Ormoc City, LeyteTel. Nos. (053) 255-4118, 09328453442Fax No. (053) 561-0369

ORTIGASSBC Building, #228 Ortigas Avenue, Greenhills, San JuanTel. No. (02) 721-4148, 0922-8722038Fax No. (02) 721-1967

PANDACAN#2339 Palumpong Street, Pandacan, ManilaTel. No. (02) 564-4891, 0922-8722193Fax No. (02) 563-3391

PASAYLIBERTADLibertad corner Colayco Street, Pasay CityTel. No. (02) 831-0471, 0922-8722194Fax No. (02) 831-8163

PASAYMACAPAGALAVENUEM1-A, 8 Macapagal Place, Hobbies of Asia, No. 8 Pres. D. Macapagal Boulevard, Pasay CityTel. No. (02) 556-4291, 0922-8722198Fax No. (02) 556-4304

PASEODEROXASCorporate Business Center, #151 Paseo de Roxas corner Arnaiz, Makati CityTel. Nos. (02) 815-1002, 815-1003, 840-1970, 0922-8722030Fax No. (02) 840-1969

PASIG-SANTOLANG/F Unit 101 - A AD Center Square, Amang Rodriguez corner Evangelista Street, Santolan, Pasig CityTel. No. (02) 681-4618, 0922-8722175Fax No. (02) 646-4113

PASONGTAMOEXT.G/F Narra Building, Pasong Tamo Extension, Makati CityTel. Nos. (02) 892-8535, 814-0267, 0922-8722040Fax No. (02) 892-8536

49


QUEZONAVENUE–CAPITOLMEDICALG/F Capitol Medical Center,Quezon Avenue corner Scout Magbanua, Quezon CityTel. No. (02) 441-4729, 0922-8722206Fax No. (02) 441-4728

QUIRINOHIGHWAY#360 Quirino Highway, Sangandaan, Novaliches, Quezon CityTel. No. (02) 454-0981, 0922-8722041Fax No. (02) 939-1262

REINAREGENTE#1040 Reina Regente, Binondo, ManilaTel. Nos. (02) 244-8827, 244-8850, 0922-8722207Fax No. (02) 244-8825

ROMANSQUARERoman Square Building, #979-981 Soler corner Roman Street, Binondo, ManilaTel. Nos. (02) 244-1395, 244-1396, 0922-8722048Fax No. (02) 244-3734

ROSARIOG/F SBC Building, Gen. Trias Drive, Rosario, CaviteTel. No. (046) 438-5434, 0922-8722085Fax No. (02) 529-8854

SALCEDOLPL Plaza Building, #124 L.P. Leviste Street, Salcedo Village, MakatiTel. Nos. (02) 840-3720, 840-3242, 0922-8722031Fax No. (02) 812-4045

SANFERNANDOG/F Doña Sevilla Building, MacArthur Highway, Brgy. Dolores, San Fernando City, PampangaTel. No. (045) 961-8692, 0922-8722087Fax No. (045) 961-8693

SANMIGUELAVENUE#101 Medico Building, San Miguel corner Lourdes Street, Pasig CityTel. Nos. (02) 633-3876, 633-6822, 0922-8722209Fax No. (02) 631-3876

SANPABLORizal Avenue corner P. Zamora Street, San Pablo, LagunaTel. No. (049) 562-5327, 0922-8722091Fax No. (02) 520-6052

SANPEDROMabini Street, Poblacion, San Pedro, LagunaTel. No. (02) 808-4811, 0922-8722092Fax No. (02) 520-1296

SANTIAGOG/F Flora Sy Building, Maharlika Highway, Victory Norte, Santiago City, IsabelaTel. Nos. (078) 682-8142, 246-2001, 0922-8722093Fax No. (078) 682-8590

SOLERLe Mar Ben II Building, along San Bernardo Street, Sta. Cruz, ManilaTel. Nos. (02) 733-2704, 733-2718, 0922-8722161Fax No. (02) 733-2694

STA.ELENA168 Shopping Mall, Sta. Elena Street, Binondo, ManilaTel. Nos. (02) 245-5506, 245-5509, 0922-8722212Fax No. (02) 243-5678

STA.MARIAF. Halili Avenue, Brgy. Bagbaguin, Sta. Maria, BulacanTel. Nos. (044) 641-1718, 0922-8722368Fax No. (044) 641-4279

STA.ROSABrgy. Pulong, Sta. Cruz, Sta. Rosa, LagunaTel. No. (049) 539-1562, 0922-8722096Fax No. (02) 520-8164

SUBICG/F Subic International Hotel Building, 888 Sta. Rita Road, Subic Bay Freeport Zone, ZambalesTel. No. (047) 252-3431, 0922-8722097Fax No. (047) 252-6086

SUCATSBC Building, Dr. A. Santos Avenue corner St. Peter Street, Sucat, Parañaque CityTel. No. (02) 820-6269, 0922-8722213Fax No. (02) 825-3163

SUMULONGG/F Silicon Building, #167 Sumulong Highway, Mayamot, Antipolo, RizalTel. No. (02) 682-3011, 0922-8722214Fax No. (02) 682-3017

TACLOBANG/F Roqson Building corner P. Burgos Street and Rizal Avenue, Tacloban CityTel. No. (053) 321-4527, 0922-8722261Fax No. (053) 531-0112

TAGAYTAYSBC Building, Aguinaldo Highway, Mendez Crossing, Tagaytay CityTel. No. (046) 413-1859, 0922-8722144Fax No. (02) 529-8170

bRAnCH DIRECTORY

50

TAGBILARAN#27 CPG Avenue, Tagbilaran City, BoholTel. No. (038) 411-2930, 0922-8722148Fax No. (038) 501-7060

TAGUMG/F Uy Ching Siong Commercial Building, Pioneer Avenue corner Quezon Street, Tagum CityTel. Nos. (084) 218-8294, 0922-8722016Fax No. (084) 218-8293

TARLACG/F Intellect Building, along McArthur Hi-way, Brgy. San Sebastian, Tarlac CityTel. No. (045) 628-0147, 0922-8722094Fax No. (045) 628-0396

TAYTAYKm. 23 Ortigas Avenue Extension, Taytay, RizalTel. Nos. (02) 658-0031, 658-0032, 0922-8722215Fax No. (02) 660-2287

TEKTITEG/F East Tektite Towers, Exchange Road, Ortigas Center, Pasig CityTel. Nos. (02) 636-1653, 631-5854, 0922-8722050Fax No. (02) 636-1655

TOMASMORATOG/F Maine Building, 236 Tomas Morato Avenue, South Triangle, Quezon CityTel. No. (02) 426-2866, 0922-8722162Fax No. (02) 415-2556

TUGUEGARAOA. Bonifacio corner Washington Street, Tuguegarao, CagayanTel. Nos. (078) 844-2320, 844-1016, 0922-8722149Fax No. (078) 844-8753

URDANETAG/F CSI Building, McArthur Highway, Urdaneta City, PangasinanTel. No. (075) 656-8001, 656-8002, 0922-87222328Fax No. (075) 568-2284

USTG/F UST Main Building, España, ManilaTel. Nos. (02) 731-3118, 749-9739, 0922-8722163Fax No. (02) 749-9703

VALENZUELAKm. 14 McArthur Highway, Malinta, Valenzuela CityTel. No. (02) 292-1911, 0922-8722151Fax No. (02) 292-7311

VALLEVERDEE. Rodriguez Jr. Avenue corner Borres Street, Bgy. Bagong Ilog, Pasig CityTel. No. (02) 671-7135, 0922-8722216Fax No. (02) 671-7134

VISAYASAVENUE#241 Visayas Avenue (near corner Tandang Sora), Quezon CityTel. No. (02) 928-1226, 0922-8722217Fax No. (02) 455-0471

WACKWACKG/F Lee Gardens Condominium, corner Shaw Boulevard and Lee Street, Wack Wack, Mandaluyong CityTel. No. (02) 584-2153, 0922-8722181Fax No. (02) 584-2109

ZAMBOANGAVeterans Avenue, Zamboanga CityTel. Nos. (062) 991-0056, 991-0183, 0922-8722147Fax No. (062) 993-2970

*ZAMBOANGA-CANELARMayor Jaldon St., Barangay Canelar, Zamboanga CityTel. No. (062) 991- 1217Fax No. (062) 991-4919

* As of March 2012** Opened in 2012

51


InVEsTOR AssIsTAnCE

SHAREHOLDERINFORMATION

You can find out more about Security Bank Corporation quickly and easily on the

corporate website www.securitybank.com where annual reports, quarterly results,

financial highlights, company news and events are published.

SHAREHOLDERSERVICES

For inquiries regarding dividend payments, change of address and accounts status,

lost or damaged stock certificates, please write or call:

Security Bank Corporation

Office of the Corporate Secretary

8th Floor, Security Bank Centre

Ayala Avenue, Makati City

Tel. Nos. (632) 888-7335, 888-7215

Stock Transfer Service, Inc.

34th Floor Rufino Pacific Tower

6748 Ayala Avenue, Makati City

Tel. Nos. (632) 403-2410 to 12

INVESTORRELATIONS

For investor-related concerns, please call (632) 888-7221 or

e-mail [email protected].

52

www.securitybank.com

Security Bank Centre6776 Ayala Avenue, Makati City, 0719 Philippines

Tel Nos. (632) 867-6788 / 888-78 / 88-791-88Fax No. (632) 893-2563

Annual Report 2011

Documents

Transcript of Annual Report 2011