a bank to any other bank, whether locally or abroad, shall be subject to the limits as herein prescribed or

P100 million, whichever is higher.

Note 6 : Loans and Receivables

Loans and Receivables are stated at amortized cost computed as the outstanding principal balances
reduced by loans and receivables discounts and related allowance for credit losses, broken down as
follows:

As Status Year 2016 Year 2015

Current P 113,469,284.40 81.74% 130,567,974.55 83.57%

Past Due 17,932,116.67 12.92% 18,409,197.27 11.78%
Items in Litigation 7,442,623.05 5.35% 7,266,402.84 4.65%

Total Loan Portfolio P 138,824,024.12 100.00% 156,243,574.66 100.00%

Allowance for Credit Losses (14,201,769.50) (16,765,557.08)

Loans and Receivables (Net) P 124,622,254.62 139,478,017.58

The above accounts earns interest of 6% for Hold-Out Deposits, 10% for loans secured by REM, 14% for
loans secured by CHM and 24% for Clean Loans. Maturity period of the above financial instruments is
presented in Note 4 of the Notes to Financial Statements.

The Allowance for Credit Losses of P 14,201,769.50 is composed of general and specific loan loss
provisions amounting to P 1,131,878.59 and P 13,069,890.91 respectively. The bank is required to set-up
loan loss provision in accordance with the BSP Manual of Regulations (Sec.X302.1 Appendix 18).

Below is the detailed computation of allowance for credit losses, both specific and general provision:

Specific Provision
Rate Load Balance Required Allowance

Unclassified 0% P 1,630,057.81 0.00

Loans Especially Mentioned 5% 3,649,000.00 182,450.00
Substandard Secured 10% 7,138,059.80 713,805.98
Substandard Unsecured 25% 2,203,644.08 550,911.02
Doubtful 50% 2,829,706.14 1,414,853.07
Loss 100% 10,207,870.84 10,207,870.24

Allowance for Credit Losses-Specific P 27,658,338.67 13,069,890.91

Booked Allowance 13,069,890.91
Excess/(Deficiency) P -

General Provision

Unclassified Restructed 5% P 0.00 0.00

Unclassified Other than Restructed 1% 111,165,685.45 1,111,656.85
Allowance for Credit Losses-General P 111,165,685.45 1,111,656.85
Booked Allowance 1,131,878.59
Excess/ (Deficiency) P 20,221.74

Total Allowance for Credit Losses P 138,824,024.12 14,181,547.76

Booked Allowance 14,201,769.50
Excess / (Deficiency) p 20,221.74

The following table presents the reconciliation of the movement of the allowance for credit losses for
loans and receivables:

AFS 2016_Towncall Rural Bank, Inc. Page 28 of 42

 Year 2016 Year 2015

At January 1 P 16,765,557.08 14,794,309.54

Provision during the year 0.00 2,681,118.59
Accounts written off (2,203,349.95) 0.00
Adjustments (360,437.63) (709,871.05)

At December 31 P14,201,769.50 16,765,557.08

The management believes that the bank had substantially complied with the loan loss provisioning as
required by the Bangko Sentral ng Pilipinas.

As to Maturity Year 2016 Year 2015

Due within (1) year 116,554,906.69 83.96% 124,051,736.11 79.40%

Due beyond (1) year 22,269,117.43 16.04% 32,191,838.55 20.60%

Total Loan Portfolio 138,824,024.12 100.00% 156,243,574.66 100.00%

As to Security Year 2016 Year 2015

Secured 124,827,796.31 89.92% 137,940,875.43 88.29%

Unsecured 13,996,227.81 10.08% 18,302,699.23 11.71%

Total Loan Portfolio P 138,824,024.12 100.00% 156,243,574.66 100.00%

The total secured loans of the bank are further classified as follows:

Year 2016 Year 2015

Real Estate Mortgage P 116,072,931.13 92.99% 128,817,574.87 93.39%

Chattel Mortgage 7,124,807.37 5.71% 8,003,300.56 5.80%
Hold out on Deposits 1,630,057.81 1.31% 1,120,000.00 0.81%

Total Secured Loans P 124,827,796.31 100.00% 137,940,875.43 100.00%

As to Concentration of Credit to certain Industry / Economic Sector:

Year 2016 Year 2015

Agriculture , Hunting & Forestry P 56,415,250.57 40.64% 69,743,119.67 44.64%

Manufacturing 1,360,693.14 0.98% 506,027.40 0.32%
Mining and Quarrying 14,840.13 0.01% 617,691.45 0.40%
Electricity , Gas & Water 30,000.00 0.02% 486,018.12 0.31%
Construction 3,620,416.04 2.61% 2,573,036.03 1.65%
Transportation, Storage and
Communication 182,027.16 0.13% 237,877.38 0.15%
Wholesale & Retails Trade , 0.00%
Repair of Vehicles& Personal
Goods 50,601,248.03 36.45% 51,274,502.32 32.82%
Real Estate, Renting& Business
Activities 1,407,802.90 1.01% 2,447,079.44 1.57%
Financial Intermediation 10,391,383.69 7.49% 12,828,571.43 8.21%
Education 5,104.35 0.00% 0.00 0.00%
Other Service Activities 0.00 0.00% 13,655,297.17 8.74%
Private Households with
Employed Persons 1,095,538.56 0.79% 0.00 0.00%
Other Community, Social &
Personal Service 13,699,719.55 0.00
Individual Consumption 0.00 0.00% 1,874,354.25 1.20%

Total Loan Portfolio P 138,824,024.12 90.13% 156,243,574.66 100.00%

AFS 2016_Towncall Rural Bank, Inc. Page 28 of 42

AFS 2016_Towncall Rural Bank, Inc. Page 28 of 42