SGV & Co
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
February 25, 2000
The Stockholders and the Board of Directors
Urban Bank, Inc.
We have audited the accompanying statements of condition of Urban Bank, Inc. of December 31, 1999 and 1998, and the related statements of income, changes in capital funds and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Bank's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 8 to the financial statements, in 1999, the Bank has set up provision for probable loan and other losses amounting to P450 million by a charge to surplus. Likewise, in 1998 the Bank has set up provision for probable loan and other losses totaling P335 million of which P135 million was charged to current operations and P200 million was charged to surplus. Generally accepted accounting principles require that provisions for probable losses be charged to current operations.
In our opinion, except for the effects on the statements of income, changes in capital funds, and cash flows for the years ended December 31, 1999 and 1998 of recognizing provision for probable losses as a direct charge to surplus as explained in the preceding paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of Urban Bank, Inc., as of December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999 in conformity with generally accepted accounting principles.
As discussed in Note 5 to the financial statements. the Bangko Sentral ng Pilipinas approved the request of the Bank to revert to its previous status as a regular commercial bank. Accordingly, the financial statements as of December 31. 1999 and for each of the three years in the period ended December 31, 1999 were restated to reflect the deconsolidation of the Bank's subsidiaries.
SYCIP GORRES VELAYO & CO
PTR No. 1874107 January 3, 2000
URBAN BANK, INC.
STATEMENTS OF CONDITION
Cash and Other Cash Items P110,014,928 P92,210,932
Due from Bangko Sentral ng Pilipinas 291,718,411 344,641,357
Due from Other Banks 609,107,195 647,132,997
Interbank Loans Receivable - 78,501,478
Investment Securities - net
(Notes 2 and 16) 1,943,340,993 832,481,714
Receivables from Customers - net
(Notes 3 and 17) 5,612,019,961 6,271,816,737
Bank Premises, Furniture and
Equipment - net (Note 4) 1,290,127,390 1,256,431,895
Equity Investments - net (Note 5) 1,051,036,985 1,396,042,908
Real and Other Properties
Owned or Acquired – net (Note 6) 473,958,766 490,486,491
Other Resources - net (Note 7) 552,059,001 502,295,894
LIABILITIES AND CAPITAL FUNDS
Demand P716,297,990 P1,080,431,166
Savings 4,190,713,378 4,323,880,622
Time 2,904,343,711 2,636,521,847
Interbank Loans Payable 1,183,000,000 220,000,000
Bills and Acceptances Payable 358,852,620 757,364,197
Due to Bangko Sentral ng Pilipinas
(Note 9) 25,809,091 45,812,228
Manager's Checks 94,029,819 112,380,386
Accrued Taxes, Interest & Other Expenses 89,837,895 62,416,041
Other Liabilities (Note 10) 150,718,022 162,876,568
Capital Funds (Note 11) 2,219,781,104 2,510,359,348
See accompanying Notes to Financial Statements.