Preliminary Information Statement - April 4, 2013

Transcription

UnionBank Plaza
Meraleo A venue cor. Onyx &
Sapphire Roads, Ortigas Center
Pasig City 1605
Tel: (632) 667 6388
Fax: (632) 636 6289
www.unionbankph.com
April 4, 2013
THE PHILIPPINE STOCK EXCHANGE, INC.
3rd Floor, Philippine Stock Exchange Plaza
Ayala Triangle, Ayala Avenue
Makati City
Attention
MS. JANET A. ENCARNACION
Head-Disclosure Department
Gentlemen:
Pursuant to existing rules and regulations, we are submitting to your good office
the following documents pertaining to Union Bank of the Philippines ("UnionBank")
Annual Stockholders' Meeting on May 24, 2013:
1.
Notice of Annual Meeting of Stockholders;
2.
Proxy Forn1*;
3.
Preliminary Information Statement (SEC Form 20-IS)*;
4.
SEC Form 17-A *; and
5.
Audited Financial Statements as of December 31,2012*.
Please acknowledge receipt hereof.
Thank you.
Very tru1mi\'
ATTY. FLINO
Senior Vice President/
General Counsel and
Corporate Secretary
* Subject to SEC comments and final approval.
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
TO:
ALL STOCKHOLDERS
Please be advised that the Annual Meeting of Stockholders of UnionBank of the Philippines will be
held at the 11'" Floor of UnionBank Plaza, Meralco Avenue comer Onyx and sapphire Streets,
Ortigas Center, Pasig City on Friday, May 24, 2013 at 1:00 p. m.
The Agenda for the said meeting will be as follows:
I.
II.
III.
IV.
V.
VI.
VII.
calling the Roll
Proof of Notice of Meeting
Approval of the Minutes of the Annual Stockholders' Meeting held on May 2S, 2012
Chairman/CEO's Report to Stockholders - Mr. Justo A. Ortiz
Annual Report of Management on Operations for 2012- President Victor B. Valdepeiias
Ratification of Past Actions of the Board and of Management
Ratification/Confirmation of Appointment of External Auditor (Punong Bayan & Araullo) by the
Board of Directors
VIII.
For Approval: Amendment of UnionBank's Articles of Incorporation (Page 2, Item 4) - to
extend its corporate term for another fifty (50) years.
IX.
X.
Xl.
For Approval:
Increase of Directors Per Diems for Attendance in Meetings
Election of Directors for 2013 - 2014 term
Adjournment
Only stockholders of record as of April 10, 2013 will be entitled to attend and participate at the
above meeting.
To avoid inconvenience in registering your attendance at the meeting, you or your proxy/ies are
requested to bring identification paper(s) containing a photograph and signature, e.g. passport, driver's
license, or credit card.
For your information and guidance.
Very truly M
/
ATTY. FE AUNO
Corporate Secretary
PROXY
KNOW ALL MEN BY THESE PRESENTS:
That I, the undersigned, a shareholder of UNION BANK OF THE PHILIPPINES
(“UnionBank”), do hereby nominate, constitute and appoint ____________________________,
with power of substitution, as my Attorney and Proxy to represent me and vote all shares
registered in my name in the books of UnionBank or owned by me, at the Annual Meeting of
Stockholders of UnionBank to be held on Friday, 24 May 2013 at 1:00 P.M. at the 11th
Floor of UnionBank Plaza, Meralco Avenue corner Onyx and Sapphire Streets,
Ortigas Center, Pasig City, and any adjournment thereof, as fully to all intents and
purposes as I might or could lawfully do if present and acting in person, and hereby ratifying
and confirming any and all matters which may properly come before said meeting, or
adjournment thereof. In case of the non-attendance of my attorney or proxy above-named at
said meeting, I hereby authorize and empower the Chairman of the meeting or, in his absence,
the Corporate Secretary, to fully exercise all rights as my attorney or proxy at said meeting.
This Proxy authorizes my attorney to act among other things on the following matters:
1.
Election of Directors
To vote for nominees listed below (except if the box corresponds to “Do Not Vote”)
Nominees
Justo A. Ortiz
Jon Ramon M. Aboitiz
Stephen G. Paradies
Erramon I. Aboitiz
Iker M. Aboitiz
Sabin M. Aboitiz
Juan Antonio E. Bernad
Vicente R. Ayllon
Mayo Jose B. Ongsingco
Emilio S. De Quiros, Jr.
Eliza Bettina R. Antonino
Victor B. Valdepeñas
2.
Vote in Favor
□
□
□
□
□
□
□
□
□
□
□
□
Do not Vote
□
□
□
□
□
□
□
□
□
□
□
□
Election of Independent Directors
To vote for nominees listed below (except if the box corresponds to “Do Not Vote”)
Nominees
Armand F. Braun, Jr.
Carlos B. Raymond, Jr.
Reynato S. Puno
Vote in Favor
□
□
□
Do not Vote
□
□
□
INSTRUCTION: Mark the box under “Vote in Favor” to vote for any nominee. If the
votes will be cumulated, write the number of votes desired to be given to a
nominee in the “Vote in Favor” space. Mark the box under “Do not Vote” if the
nominee will not be voted under this Proxy.
3.
Other Items
Vote for
Approval
Vote
Against
Abstain
a. Approval of the Minutes of the Annual
Stockholders’ Meeting held on May 25, 2012
b. Annual Report of Management on Operations for
2012
c. Ratification of Past Actions of the Board and of
Management
d. Ratification/Confirmation of the Appointment of
External Auditor (Punong Bayan & Araullo) by the
Board of Directors
e. For Approval: Amendment of UnionBank’s
Articles of Incorporation (Page 2, Item 4) – to
extend its corporate term for another fifty (50)
years
f. For Approval: Increase of Directors Per Diems
for Attendance in Meetings
INSTRUCTION:
Please check the appropriate column, otherwise you shall be
deemed to have conferred discretionary authority in favor of the Chairman of the
Meeting or in his absence, the Corporate Secretary to vote your shares in favor of
the approval of the above matters.
4.
Revocability of Proxy
The person/stockholder giving the proxy has the right to revoke the proxy by personally
appearing during the meeting or by execution of another proxy at a later date, subject
to the pertinent requirements of law and SEC Circular No.5, Series of 1996.
5.
Persons Making the Solicitation
1. This solicitation is being made by the Bank. No director has informed the Bank in
writing of his intention to oppose any action intended to be taken up by the Bank at
the annual meeting.
2. No regular employees of the Bank or any other participant in a solicitation have been
or will be employed to solicit proxies.
3. Not applicable. (Please see Item No. 2)
4. The total estimated amount to be spent in connection with the release and sending
of this Proxy Statement is approximately P500,000.00
5. There is no other participant in the solicitation as mentioned earlier in Item no. 2.
6.
Interest of Certain Persons in Matters to be Acted Upon
Other than the election of Directors and the Annual Report of Management on
Operations for 2012, there are no substantial interest, by security holdings or otherwise,
of UnionBank, any Director or Officer thereof, nominee for election as Director,
participant in the solicitation, or associate of any of the foregoing persons, in any matter
to be acted upon at the Annual Meeting.
2
The power and authority hereby granted shall remain valid and effective until such time that
the same is withdrawn by me through notice in writing delivered to the Corporate Secretary
before the date of any such meeting or adjournment(s) thereof. Likewise, the said authority is
effective for subsequent annual meetings within a period of five (5) years from the date of this
Proxy unless otherwise instructed, as follows:
[]
THIS PROXY IS TO BE USED ONLY FOR THE 2013 ANNUAL STOCKHOLDERS’
MEETING OF UNIONBANK.
In case the security holder fails to indicate his vote on the matters in the Agenda by placing the
corresponding marks on the columns provided therein, the same is considered a waiver on his
right to manifest his vote thereon and management can exercise its discretion in voting on such
matters.
Important: The Office of the Corporate Secretary must receive this Proxy not later than 14
May 2013.
THIS PROXY IS BEING SOLICITED ON BEHALF OF MANAGEMENT
________________________________
PRINTED NAME OF SHAREHOLDER
Dated this ________ day of ____, 2013
________________________________
SIGNATURE OF SHAREHOLDER OR
AUTHORIZED SIGNATORY
3
COVER SHEET
"
(Ctlmpany's Full Name)
Atty. Fe B. Maealino
(632) 667-6388
(Contact Person)
(t'ompany 'rclcphone Number)
rn
.tlt""h
(Form Type)
/),\"
Month
(Fiscal Yearl
Day
(Annual Mccting)
I__I
tScculldaf) l.icense T)pe. If Applicablc)q
1__-
Amended Articles Number/Seclion
Dept. Requiring this Doc.
Total Amoullt of Borrowings
__II_-
1__1
Total No. (If Stockholders
Domestic
Foreign
Leu
Cashier
r-----------------------I
.
,
I
i
I
STA1rs
I
,
.
I
I
Remarks: Please use BLACK ink for scanning purposes
SECURITIES AND EXCHANGE COMMISSION
SEC FORM 20-IS
INFORMATION STATEMENT PURSUANT TO SECTION 20
OF THE SECURITIES REGULATION CODE
1.
Check the appropriate box:
[ X ] Preliminary Information Statement
[
] Definitive Information Statement
2.
Name of Registrant as specified in its charter UNION BANK OF THE PHILIPPINES
3.
Metro Manila, Philippines
Province, country or other jurisdiction of incorporation or organization
4.
SEC Identification Number 36073
5.
BIR Tax Identification Code 047-000-508-271
6.
UnionBank Plaza, Meralco Ave. cor. Onyx Street, Ortigas Center, Pasig City
Address of principal office
7.
Registrant’s telephone number, including area code (632) 667-6388
8.
MAY 24, 2013– 1:00 P.M. at the 11/F UnionBank Plaza, Meralco Ave. cor Onyx St. Ortigas Center,
Pasig City
Date, time and place of the meeting of security holders
9.
Approximate date on which the Information Statement is first to be sent or given to security holders
on or before 29 April 2013
10.
In case of Proxy Solicitations:
1605
Postal Code
Name of Person Filing the Statement/Solicitor: UnionBank of the Philippines
Address and Telephone No.: 21st Floor, UnionBank Plaza, Meralco Avenue corner Onyx Street.,
Ortigas Center, Pasig City – 667-6388
11.
Securities registered pursuant to Sections 8 and 12 of the Code (information on number of shares and
amount of debt is applicable only to corporate registrants):
Title of Each Class
Common
12.
Number of Shares of Common Stock
Outstanding or Amount of Debt Outstanding
641,422,420
Are any or all of registrant's securities listed in a Stock Exchange?
Yes
x
No _______
If yes, disclose the name of such Stock Exchange and the class of securities listed therein:
Philippine Stock Exchange – Common
Page 1
UNION BANK OF THE PHILIPPINES
SEC FORM 20-IS
INFORMATION REQUIRED IN INFORMATION STATEMENT
General Information
DATE, TIME AND PLACE OF MEETING OF SECURITY HOLDERS
The enclosed proxy is solicited for the annual meeting of stockholders of Union Bank of the Philippines
(“UnionBank” or “Bank”) which will be held on May 24, 2013 at the 11th Floor of UnionBank Plaza, Meralco
Avenue corner Onyx and Sapphire Streets, Ortigas Center, Pasig City at 1:00 p.m., or any adjournment
thereof (“Annual Meeting”), or any subsequent annual stockholders’ meeting within a period no longer
than five (5) years from the date of the proxy, to the extent the stockholder granting the proxy so
authorizes.
The address of the principal office of Union Bank of the Philippines is at UnionBank Plaza, Meralco Avenue
corner Onyx Street, Ortigas Center, Pasig City with telephone number at (632) 667-6388 (PLDT). This
proxy statement and enclosed proxy will be mailed to stockholders entitled to notice of and vote at the
Annual Meeting on or before 29 April 2013.
RECORD DATE
The record date for the purpose of determining the stockholders entitled to notice of and to vote at the
Annual Meeting is April 10, 2013 (the “Record Date”).
Solicitation Information
DISSENTER’S RIGHT OF APPRAISAL
At the scheduled meeting, there are no corporate matters or actions that will entitle dissenting
stockholders to exercise their right of appraisal as provided in Sections 81 and 82, Title X of the
Corporation Code of the Philippines which state that “Sec. 81. Instances of appraisal of right. Any
stockholder of the Bank shall have the right to dissent and demand payment of the fair value of his
shares in the following instances: 1) amendment to the Articles of Incorporation which has the effect of
changing or restricting the rights of stockholders or extending corporate life of the corporation; 2) sale,
transfer or lease of all or substantially all of the corporate properties; and 3) in case of merger or
consolidation. Section 82. How right is exercised. The appraisal right may be exercised by any stockholder
who shall have voted against the proposed corporate action by making a written demand on the
corporation within thirty (30) days after the date on which the vote was taken for payment of the fair
value of his shares xxx.”
INTEREST OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS TO BE ACTED UPON
(a) No current director or officer of UnionBank, or nominee for election as director of the Bank or any
associate of any of the foregoing persons has any substantial interest, direct or indirect, by security
holdings or otherwise, in any matter to be acted upon in the stockholders’ meeting, other than
election to office.
(b) No director has informed UnionBank in writing that he intends to oppose any action to be taken by
the Bank at the meeting.
Page 2
I.
Outstanding Number of Common Stock Shares
Title of Class
No. of shares outstanding
Common Shares
641,422,420
The record date with respect to this solicitation is April 10, 2013. Only stockholders of record at the close
of business on April 10, 2013 will be entitled to notice and to vote at the meeting.
A stockholder entitled to vote at the meeting has the right to vote in person or by proxy. With respect to
the election of directors, in accordance with Section 24 of the Corporation Code of the Philippines and
pursuant to Article IV, Section 1(e) of the Bank’s amended by-laws, a stockholder may vote the number
of shares held in his name in the Company’s stock books as of April 10, 2013, and may vote such number
of shares for as many persons as there are directors to be elected, or he may cumulate said shares and
give one candidate as many votes as the number of directors to be elected multiplied by the number of
his shares shall equal, or he may distribute them on the same principle among as many candidates as he
shall see fit; Provided, that the total number of votes cast by him shall not exceed the number of shares
owned by him as shown in the books of the Bank multiplied by the total number of directors to be
elected. Discretionary authority to cumulate votes is solicited.
The total number of votes that may be cast by a stockholder of the Bank is computed as follows: no. of
shares held on record as of record date x 15 directors. The deadline for submission of proxies is May 14,
2013.
II.
Security Ownership of Certain Record and Beneficial Owners
The following are known to the registrant to be directly or indirectly the record or beneficial owner of
more than 5 per cent of registrant’s voting securities (registrant has only one class of voting security, i.e.
common shares) as of March 31, 2013:
Title of Class
Common
Name, address of
Record Owner
& Relationship
with Issuer
Name, address of
Beneficial Owner
& Relationship
with Record Owner
Citizenship
No. of Shares
Held
Percent
of
Class
Aboitiz Equity Ventures, Inc.**
110 Legaspi Street,
Legaspi Village, Makati City
Principal Shareholders
110 Legaspi Street,
Filipino
277,552,776
43.27%
Common PCD Nominee Corporation*
37/F Tower 1 Enterprise Center
6766 Ayala Avenue, Makati City
Minority Shareholders
PCD Nominee Corporation*
Filipino
115,152,654
17.95%
Common The Insular Life Ass. Co., Ltd**
IL Corporate Center
Insular Life Drive
Filinvest, Alabang, Muntinlupa
The Insular Life Ass. Co., Ltd**
IL Corporate Center
Insular Life Drive
Filipino
103,359,204
16.11%
NOTE: Social Security System (SSS) is the only entity/person which holds more than 5% of the company’s
outstanding capital shares under the PCD Nominee Corporation with 33,210,913 shares (5.1776976%)
Page 3
Common Social Security System**
East Avenue, Diliman
Quezon City
Social Security System**
Quezon City
Filipino
69,777,289
10.88%
**The respective proxies of these corporate shareholders are appointed by their respective Board of
Directors and the Company becomes aware of the identity of such proxies only when the corresponding
proxy appointments are received by the Company. Based on previous meetings, Mr. Jon Ramon M.
Aboitiz and/or Erramon I. Aboitiz have been appointed proxies for Aboitiz Group, while Mr. Vicente R.
Ayllon has been appointed proxy for the Insular Life Ass., Co., Inc and Mr. Emilio S. de Quiros, Jr. has
been appointed proxy for the SSS Group.
*The PCD, represented by its Associate Directors, Cornelia C. Dagdag and Josephine F. dela Cruz, only
holds a legal title, not beneficial ownership of the lodged shares.
*UnionBank has no stock options, warrants, rights or similar declarations as of report date.
III.
Security Ownership of Management
The following are the number of shares comprising the Bank’s capital stock (all of which are voting
shares) owned of record by the directors, Chief Executive Officer, corporate officers of the Bank, and
nominees for election as director as of March 31, 2013:
Title of
Class
Name of Beneficial
Owner
Number of Shares,
Amount and Nature of
legal and beneficial
Ownership
Citizenship
% of
Class
Common
194
P1,940.00
(r)
Filipino
0.000%
Common
(r)
Filipino
0.714%
Common
Stephen G. Paradies
(r)
Filipino
0.001%
Common
Stephen G. Paradies
( b)
Filipino
0.065%
Common
Erramon I. Aboitiz
(r)
Filipino
0.000%
Common
Erramon I. Aboitiz
(b)
Filipino
0.423%
Common
Iker Markel Aboitiz
(r)
Filipino
0.000%
Common
Iker Markel Aboitiz
(b)
Filipino
0.050%
Common
(r)
Filipino
0.000%
Common
(b)
Filipino
0.000%
Common
Justo A. Ortiz
(r)
Filipino
0.773%
Common
Justo A. Ortiz
4,579,378
P45,793,780.00
4,068
P40,680.00
420,000
P4,200,000.00
194
P1,940.00
2,715,808
P27,158,080.00
100
P1,000.00
322,207
P3,222,070.00
2,126
P21,260.00
682
P6,820.00
4,959,673
P49,596,730.00
5,555
P55,550.00
(b)
Filipino
0.001%
Page 4
Common
Common
Common
Mayo Jose B.
Ongsingco
Common
Common
Vicente R. Ayllon
Common
Carlos B. Raymond Jr.
Common
Reynato S. Puno
Common
Eliza R. Antonino
Common
Emilio S. De Quiros Jr.
Common
Daniel Edralin
Common
Fe B. Macalino
Common
Edwin R. Bautista
Common
Catalino S. Abacan
Common
Roberto F. Abastillas
Common
Ramon G. Duarte
Common
Joyce S. Gonzalez
Common
Cesar G. Ilagan
Common
Genaro V. Lapez
Common
Common
Angelo Dennis L.
Matutina
Teodoro M. Panganiban
Common
Beatriz B. Romulo
Common
Manuel De Guzman
Santiago Jr.
Common
Ceferino P. Tolentino Jr.
Common
Jose Levi S. Villanueva
361
P3,610.00
164
P1,640.00
3,540,502
P35,405,020.00
908
P9,080.00
118
P1,180.00
65
P650.00
65
P650.00
1
P10.00
1
P10.00
4,094
P40,940.00
97,052
P970,520.00
270,000
P2,700,000.00
79,529
P795,290.00
272,192
P2,721,920.00
59,529
P595,290.00
153,457
P1,534,570.00
90,274
P902,740.00
142,210
P1,422,100.00
29,216
P292,160.00
597,496
P5,974,960.00
331,857
P3,318,570.00
11,905
P119,050.00
59,529
P595,290.00
39,407
P394,070.00
(r)
Filipino
0.000%
(r)
Filipino
0.000%
(r)
Filipino
0.552%
(b)
Filipino
0.000%
(r)
Filipino
0.000%
(r)
Filipino
0.000%
(r)
Filipino
0.000%
(r)
Filipino
0.000%
(r)
Filipino
0.000%
(r)
Filipino
0.001%
(r)
Filipino
0.015%
(r)
Filipino
0.042%
(r)
Filipino
0.012%
(r)
Filipino
0.042%
(r)
Filipino
0.009%
(r)
Filipino
0.024%
(r)
Filipino
0.014%
(r)
Filipino
0.022%
(r)
Filipino
0.005%
(r)
Filipino
0.093%
(r)
Filipino
0.052%
(r)
Filipino
0.002%
(r)
Filipino
0.009%
(r)
Filipino
0.006%
Page 5
Common
Myrna E. Amahan
Common
Common
Michaela Sophia E.
Rubio
Jesus Roberto S. Reyes
Common
Common
Eugene Acevedo
2,432
P24,320.00
15,545
P155,450.00
164,632
P1,646,320.00
25,030
P250,300.00
97,938
P979,380.00
(b)
Filipino
0.000%
(r)
Filipino
0.002%
(r)
Filipino
0.026%
(b)
Filipino
0.004%
Filipino
0.015%
(r)
The aggregate number of shares owned of record by the Chief Executive Officer, key officers and
directors as a group as of March 31, 2013 is 19,095,494 shares equivalent to Php190,954,940.00 @
P10.00/share which is approximately 2.98% of the Bank’s outstanding capital stock.
“r” represents record ownership
“b” represents beneficial ownership at par value of P10.00/share
3. There is no existing voting trust agreement involving shares of the Bank.
4. There was no change in control that occurred in the Bank since the beginning of the last fiscal year.
Directors and Executive Officers
A. Directors and Nominees:
The following are the names of the nominee Directors of the Bank who have been pre-screened
and certified qualified by the Nominations Committee of the Board pursuant to SRC Rule No. 38, the BSP’s
Manual of Regulations for Banks, SEC Code of Corporate Governance and the Bank’s Revised Manual on
Corporate Governance, at the meeting held on March 07, 2013 by the following Nomination Committee
Members:
1.
2.
3.
4.
5.
6.
7.
Justo A. Ortiz
Erramon I. Aboitiz
Vicente R. Ayllon
Michaela Sophia E. Rubio
INCUMBENT/
NOMINEES
Justo A. Ortiz
Vicente R. Ayllon
Jon Ramon M.
Aboitiz
-
Chairman
Member
Member
Member
Member
Member/ Independent Director
Non-Voting Member (HR Director)
AGE
CITIZENSHIP
POSITION
55
Filipino
82
64
Filipino
Filipino
Chairman
&
CEO
Vice-Chairman
Vice-Chairman
Director
Period during which
individual has served as such
July 23, 1993 to present
June 27, 1991 to present
May 24, 1996 to January 01,
1998
October 11, 1988 to May 31,
2001
Page 6
Iker M. Aboitiz
Erramon I.
Aboitiz
Sabin M. Aboitiz*
Juan
Antonio
Bernad
E.
41
57
Filipino
Filipino
Director
Director
48
56
Filipino
Filipino
Director
Director
Filipino
Filipino
Director
Director
May 29, 2009 to present
October 11, 1988 to April 23,
1993
For election on May 24, 2013
October 22, 1999 to present
January 27, 1995 to August 23,
1999
Filipino
Filipino
Director
Director
December 17, 2010 to present
Filipino
President
COO
Filipino
Director
Stephen G. Paradies
59
Emilio S. de Quiros,
64
Jr.
Eliza R. Antonino
35
Mayo
Jose
B.
61
Ongsingco
Victor B.
66
Valdepeñas
INDEPENDENT DIRECTORS
75
&
January 01, 1998 to present
January 1998 to June 2001
April 03, 1990 to December 31,
1997
Vice-Chairman
President
Carlos B. Raymond,
72
Filipino
Independent
Jr.
Director
Reynato S. Puno
73
Filipino
Independent
Director
* vice Mr. Daniel L. Edralin, age 62, SSS-nominee director from April 7, 2011 to May 24, 2013.
UnionBank’s Independent Directors, namely, Messrs. Armand F. Braun, Jr., Mr. Carlos B.
Raymond, Jr., and retired Supreme Court Chief Justice Reynato S. Puno possess the qualifications and
none of the disqualifications of an independent director. They have complied with all the requirements of
the Bangko Sentral ng Pilipinas (BSP), the Securities and Exchange Commission (SEC), and the Bank’s
Manual on Corporate Governance for their respective positions. They were nominated by the nominees
to the Board of Directors of Aboitiz Equity Ventures, Inc. (AEV) thru Mr. Jon Ramon M. Aboitiz, The
Insular Life Assurance Company Ltd., (IL) thru Mr. Vicente R. Ayllon and SSS President and CEO, Mr.
Emilio S. de Quiros, Jr. They are not related to the nominees. They are eligible for election as
Independent Directors at the forthcoming Annual Stockholders’ meeting on May 24, 2013.
BUSINESS EXPERIENCE:
The following is a brief description of the business experience of each of the directors/nominees
of the Bank:
Justo A. Ortiz, serves as the Chairman of the Board and Chief Executive Officer of the Bank. He is also
currently the Chairman of Union Properties, Inc. (UPI), a director in Aboitiz Equity Ventures,
Inc.,* Megalink and LGU Guarantee Corporation. Mr. Ortiz is a member of World Presidents Organization.
Prior to joining the Bank, he had 16 years of business experience at Citibank (Manila).
Jon Ramon M. Aboitiz, serves as the Vice-Chairman of the Board of the Bank. He is currently Chairman
of Aboitiz & Co., Inc. and Aboitiz Equity Ventures, Inc.,* a Cebu-based investment and management
enterprise, engaged in numerous and diverse business concerns ranging from power-generation and
distribution, banking and financial services, real estate development, construction, food, ship building,
* Listed Companies in the Philippine Stock Exchange
Page 7
ship management/ crewing/ international shipping closely linked to nation building and progress. Mr.
Aboitiz began his career with the Aboitiz Group in 1970. From manager of the Aboitiz Shipping
Corporation, Mr. Aboitiz was promoted to President of the company in 1976 and became President of
Aboitiz & Company in 1991 until 2008. He was President and CEO of Aboitiz Equity Ventures from 19932008. Currently, Mr. Aboitiz holds various positions in the Aboitiz Group including Chairman of the Board,
Aboitiz Jebsen Bulk Transport Corporation. He is Vice-Chairman of Aboitiz Power Corporation* and
Director of City Savings Bank. He is also a Director of the International Container Terminal Services,
Inc.* and Bloomberry Resorts Corporation.* He serves as President/Trustee of the Aboitiz, Foundation,
Inc., Vice President and Trustee of the Ramon Aboitiz Foundation, Inc. and in the Board of Trustees of
Santa Clara University, Santa Clara, California, USA. He is a member of the board of Advisors for the
Association of Foundations as well as the Coca Cola Bottlers Philippines, Inc. Mr. Aboitiz holds a B.S.
Commerce degree major in Management from the University of Santa Clara, California.
Vicente R. Ayllon, serves as the Vice-Chairman of the Board of the Bank. He is currently the Chairman
of the Board and Chief Executive Officer of The Insular Life Assurance Co., Ltd. He also sits as Chairman
and President of the Insular Property Holdings, Inc. (formerly Vigan Realty, Inc.) and is the Chairman of
Insular Investment Corporation, Insular Health Care, Inc., Insular Foundation, ILMADECO and Home
Credit Mutual Building & Loan Association, Inc. Mr. Ayllon is also Vice Chairman of Mapfre Insular
Insurance Corporation. From 2003 to 2004, he was director of the Philippine Stock Exchange, Inc.*
From 1995 to 2003, he served as Chairman of the Board and President of The Insular Life Assurance Co.,
Ltd. His other directorships include Pilipinas Shell Petroleum Corporation, Shell Company of the
Philippines, Ltd., Rockwell Land Corporation* and The Palms Country Club.
Victor B. Valdepeñas, serves as the President and Chief Operating Officer of the Bank. He is also
currently director of Union Properties, Inc. (UPI). He served as Executive Vice President and Chief
Financial Officer of the Bank from 1993 to 1998. Prior to joining the Bank, he was the Vice-President and
the Country Treasurer of Citibank Manila from 1987 to 1994, Deputy Treasurer/Group Head of all Trading
Divisions of Citibank Manila from 1981 to 1986, Country Economist of Citibank Manila from 1974 to 1980.
Prior to Citibank he was the Assistant Director of National Economic & Development Authority’s Economic
Planning & Research, Consultant to the Chairman of the National Economic Council and was a Faculty
Member of the University of the Philippines and professorial lecturer at the University of Santo Tomas. He
was previously the President of the Philippine Economics Society and Foreign Exchange Association of the
Philippines. He was likewise Chairman and President of UBP Currency Brokers, Inc.
Erramon I. Aboitiz, serves as Director of the Bank. He currently sits as President and Chief Executive
Officer of Aboitiz Equity Ventures, Inc.* and he holds the same position for Aboitiz Power Power
Corporation* and Aboitiz & Company, Inc. He is also the Chairman of Aboitiz Renewables, Inc., Therma
Power, Inc., SN Aboitiz Power, Davao Light & Power Co., Cotabato Light & Power Co., Subic EnerZone
Corp., City Savings Bank, Visayan Electric Co., San Fernando Electric Light and Power Co., and Aboitiz
Foundation, Inc. He also sits as Director of Pilmico Foods Corp., Aboitiz Land, Inc., and Family Business
Development Center (Ateneo de Manila University).
Iker M. Aboitiz, serves as Director of the Bank. He is also currently First Vice President/Chief Financial
Officer/Corporate Information Officer of Aboitiz Power Corporation.* He is also the Director and Chief
Financial Officer of Abovant Holdings, Inc. and East Asia Utilities Corporation; Chief Financial Officer and
Treasurer of Hijos de F. Escaño; and Director of Cebu Private Power Corporation, Cotabato Light & Power
Company, Southern Philippines Power Corporation, Hedcor Benguet, Inc., Therma Power, Inc. and Aboitiz
Renewables, Inc.; and Board of Adviser of Aboitiz & Co., Inc. Mr. Aboitiz began his career with the
Aboitiz & Company, Inc. in 1994. He held various positions in the Aboitiz & Company, Inc. including
Analyst - Corporate Planning Department from 1994-1995, Trader - Treasury Department from Feb. 1995
to June 1995, Assistant Treasurer - Treasury Department from 1995 to 1997 and Assistant Vice-President,
Head - Corporate Finance Dept. from 1998 to 1999. He served also as Treasurer of Davao Light & Power
Page 8
Company, Inc. and Cotabato Light & Power Company from 1998 to 1999. He was previously Adviser to
the Board of Directors of City Savings Bank from 1998 to 1999. Mr. Aboitiz was also Executive Assistant
to the Chairman & CEO of Union Bank of the Philippines and Member of Union Bank Asset and Liability
Committee (ALCO) from 1999 to 2000. He served as Analyst – Corporate Finance Group of Credit
Lyonaisse SA Exchange Capital Corp. from 2000 to 2003 and Chief Finance Officer of Aboitiz Construction
Group Inc. from 2003 to 2007. He worked for FBMA Marine Inc. in several positions including Chief
Finance Officer, Member of the Board of Directors and Executive Committee from 2003 to 2007. Mr.
Aboitiz has a Bachelor of Science Degree in Business Management major in Finance, Cum Laude from the
Boston College, Newton, Massachusetts.
Sabin M. Aboitiz is the President and Chief Executive Officer of Pilmico Foods Corporation, a whollyowned subsidiary of Aboitiz Equity Ventures (AEV)* and Aseagas Corporation, a joint venture between
AEV and UK-based Gazasia. Concurrently, he is the President of Philippine Flour Millers Association, Inc.
(PAFMIL). He also sits as Director of Aboitiz Jebsen Company, Inc., SN Aboitiz Power Group and Manila
Oslo Renewable Energy. He spent most of his professional life with Aboitiz Transport, Inc. and his last
position was as President and Chief Executive Officer of one of its subsidiaries, Aboitiz One, Inc., (owner
of the 2GO brand) which is now called 2GO Group, Inc. He graduated from Gonzaga University in the
USA with a degree of B.S. Business Administration major in Finance.
Juan Antonio E. Bernad, serves as Director of the Bank. He is also currently Senior Vice - President of
Aboitiz Equity Ventures, Inc.* (since 1995), Executive Vice - President – Strategy & Regulatory Affairs of
Aboitiz Power Corporation* (since 1998) and Director Cotabato Light & Power Corporation (since 1989).
His other directorships include Visayan Electric Co. (since 2009), San Fernando Electric Company (since
2001), Mamerto Escano Inc. (since 1987) and EVP-Regulatory Affairs of Davao Light & Power Corporation
(since 1989).
Stephen G. Paradies, serves as Director of the Bank. He also serves as Director of Union Properties,
Inc., Chairman of the Operations Risk Management Committee and Vice Chair of the Audit Committee of
the Bank. He is a director of several Aboitiz subsidiaries including Pilmico Foods Corp., Pilmico Animal
Nutrition Corp., Aboitiz Construction Group Inc. and City Savings Bank. He sits on the board of Int'l.
Container Terminal Services Inc.* and several of its subsidiaries, including ICTSI Int'l. He is currently
Senior Vice President/Finance of Aboitiz and Co. Inc, and Senior Vice President/Chief Finance Officer of
Aboitiz Equity Ventures, Inc.*
Emilio S. de Quiros, Jr., serves as Director of the Bank. He also sits as Director of Philhealth Insurance
Corporation, Belle Corporation* (September 30, 2010 to present). He is the President and CEO of the
Social Security System from August 16, 2010 to present.
Eliza R. Antonino, serves as Director of the Bank. She is also a Director of Philex Mining Corporation*
and Philamlife Tower Management Corporation. In addition, she has been a sitting Commissioner of the
Social Security Commission since September 2010.
Mayo Jose B. Ongsingco, serves as Director of the Bank. He has been the President and Chief
Operating Officer, and a Trustee of Insular Life Assurance Co. Ltd since 2004. He concurrently holds the
position of Chairman of the Board for Insular Life Employees’ Retirement Fund and Insular Life General
Insurance Agency, Inc. He is Vice Chairman and President of Insular Life Management & Development
Corp. He is also Vice Chairman of Insular Health Care, Inc., Insular Life Property Holdings, Inc. and Home
Credit Mutual Building & Loan Association. His other directorships include Insular Investment Corporation,
Insular Life Foundation, Keppel Philippines Holdings, Inc.,* Mapfre Insular Insurance Corp., Pilipinas Shell
Petroleum Corp. and PPI Prime Venture, Inc.
Page 9
Armand F. Braun, Jr., serves as Independent Director of the Bank. He is also currently the Chairman
and President of AF Braun Company and Holdings, Inc. He was the President of UnionBank from 1990 to
1997. His business experience includes directorships in UBP Capital Corporation and Union Properties, Inc.
before their merger in December, 2004, after which merger, he was a director of the surviving entity,
Union Properties, Inc., until July 2005; Alrose Foods Corp., Iligan Pizza Corp., North Iligan Food Services,
Inc., Central Iligan Fast foods, Bern Bakery Specialists, Inc. – Store 1, Bern Bakery Specialists, Inc. –
Store 2, Beefoods Corp., and Philam Asset Management, Inc.
Carlos B. Raymond, Jr. retired from Eli Lilly and Company on February 28, 2003 after almost 24 years
with the company. Eli Lilly is a U.S. multinational pharmaceutical company based in Indianapolis,
Indiana. His last position was President and General Manager of Eli Lilly Philippines. His previous
assignments with Lilly included positions in Puerto Rico, Indianapolis, Singapore as Regional Head of
Southeast Asia Operations and at Lilly Taiwan as President/General Manager. He graduated from the
University of the Philippines with a degree of B.S. Business Administration. Prior to joining Lilly, he
worked at Unicor Inc. (Doctors Pharmaceuticals' marketing arm) for 11 years (July 1968 to May 1979)
with his last position as General Manager.
Reynato S. Puno, serves as Independent Director of the Bank. He was a former Chief Justice of the
Supreme Court from 2007 to 2010. He also serves as an Independent Director of San Miguel
Corporation,* San Miguel Corporation (Hongkong) and Apex Mining.* He was also reappointed on 2012
as Regent of the UP Board of Regents. He was then an Independent Director of Manila Bulletin* from
2010 to 2011. He also held various positions in the government such as – Assistant Solicitor General in
the Office of the Solicitor General from 1971 to 1982; Associate Justice in the Intermediate Appellate
Court from 1983 to 1984; Deputy Minister in the Ministry of Justice from 1984 to 1986; and Associate
Justice of the Court of Appeals from 1986 to 1993 and Associate Justice of the Supreme Court from 1993
to 2007.
(b)
EXECUTIVE OFFICERS:
The Executive Officers of the Bank, and their respective age, citizenship and position as of March
31, 2013, are as follows:
NAME
Justo A. Ortiz
AGE
55
CITIZENSHIP
Filipino
Victor B.
Valdepeñas
66
Filipino
Edwin R. Bautista
52
Filipino
POSITION
Chairman
&
Chief
Executive
Officer
President
&
Chief
Operations
Officer
SEVP
–
Transaction
Banking,
Commercial
Banking and
Channel
Management
Centers
Period during which individual
has served as such
November 1, 2011 to present
Page 10
Eugene S. Acevedo
49
Filipino
Jose Roberto S.
Reyes
Genaro V. Lapez
54
Filipino
55
Filipino
Teodoro M.
Panganiban
61
Filipino
Beatriz B. Romulo
59
Filipino
Catalino S. Abacan
59
Filipino
Roberto
F.
Abastillas
Ramon G. Duarte
51
Filipino
48
Filipino
Joyce S. Gonzalez
54
Filipino
Atty.
Cesar
Ilagan
Atty. Fe B.
Macalino
G.
59
59
Filipino
Filipino
EVP – Retail
Banking
Center
SEVP – Retail
&
Corporate
Banking
Centers
SEVP
–
Treasurer
EVP
Consumer
Finance
Center, Credit
Cards
Marketing
&
Global Filipino
Businesses
EVP – Chief
Risk Officer
April 27, 2001 to October 31, 2011
EVP – Channel
Management
Center
Senior
VicePresident
EVP
–
Commercial
Banking
Center
Senior
VicePresident
Senior
VicePresident
Senior
VicePresident
Senior Vice
President
August 22, 1997 to April 26, 2001
September 1, 2011 to present
August 28, 2006 to present
First Vice
President
Senior
VicePresident/
Controller
May 24, 2002 to June 1, 2010
First
VicePresident/
Controller
Senior
VicePresident/
General
Counsel
&
Corporate
Secretary
July 23, 2003 to July 14, 2004
September 1, 2004 to Present
Page 11
Angelo Dennis
Matutina
Manuel
Santiago, Jr.
Ceferino P.
Tolentino, Jr.
Jose
Levi
Villanueva
Michaela Sophia
Rubio
L.
49
Filipino
G.
53
Filipino
56
Filipino
S.
56
Filipino
E.
48
Filipino
52
Filipino
Myrna E.
Amahan
Robert
Ramos
Rol
Atty. Dexter Tay
B.
39
Filipino
39
Filipino
FVP, General
Counsel &
Corporate
Secretary
Senior
Vice
President
Senior
VicePresident
Senior
VicePresident
Senior
VicePresident
First
VicePresident / HR
Director
Vice-President
&
Internal
Auditor
October 2, 1989 to August 31, 2004
From May 1, 2009 to present
April 27, 2001 to Present
AVP & Internal
Auditor
March 31, 2006 to June 23, 2006
AVP & OICInternal
Auditor
Vice President
& Trust Officer
February 9, 2001 to March 31, 2006
Senior
Manager/OICCompliance
and
Governance
The following is a brief description of the business experience of each of the Executive Officers of
the Bank:
Justo A. Ortiz, serves as the Chairman of the Board and Chief Executive Officer of the Bank. He is also
currently the Chairman of Union Properties, Inc. (UPI), a director in Aboitiz Equity Ventures,
Inc., Megalink and LGU Guarantee Corporation. Mr. Ortiz is a member of World Presidents Organization.
Prior to joining the Bank, he had 16 years of business experience at Citibank (Manila).
Victor B. Valdepeñas, serves as the President and Chief Operating Officer of the Bank. He is also
currently director of Union Properties, Inc. (UPI). He served as Executive Vice President and Chief
Financial Officer of the Bank from 1993 to 1998. Prior to joining the Bank, he was the Vice-President and
the Country Treasurer of Citibank Manila from 1987 to 1994, Deputy Treasurer/Group Head of all Trading
Divisions of Citibank Manila from 1981 to 1986, Country Economist of Citibank Manila from 1974 to 1980
and the Assistant Director of National Economic & Development Authority’s Economic Planning &
Research. He was also Consultant to the Chairman of the National Economic Council and was a Faculty
Member of the University of the Philippines and professional lecturer at the University of Santo Tomas.
He was previously the President of the Philippine Economics Society and Foreign Exchange Association of
the Philippines. He was likewise Chairman and President of UBP Currency Brokers, Inc.
Page 12
Edwin R. Bautista, serves as Senior Executive Vice-President, Head of the Transaction Banking,
Commercial Banking and Channel Management Centers of the Bank. Following the Merger, he was also
appointed as President of International Exchange Bank. He was Senior Vice-President of the Bank from
1997 to 2001. He previously worked as Senior Brand Manager at Procter and Gamble Mfg. from 1983 to
1987, Marketing and Sales Director of the Philippines and Guam at American Express International from
1990 to 1991, and the Vice-President and Group Head of Transaction Banking at Citibank, Philippines
from 1991 to 1997.
Eugene S. Acevedo, serves as Senior Executive Vice-President, Head of the Retail Banking and
Corporate Banking Centers. He was previously President, Vice Chairman and Chief Executive Officer of
Philippine National Bank from May 2010 to July 2011. Before that he was with Citibank for 23 years and
his last posts with the firm were as Managing Director and Country Treasurer for Hong Kong, and Global
Markets Head for Hongkong-Taiwan Cluster. From 1984 to 1985, he was a Physics lecturer at the
University of the Philippines.
Jesus Roberto S. Reyes, serves as Senior Executive Vice-President and Treasurer of the Bank. Prior to
joining the Bank, he spent 10 years in Security Bank and his last position was Head of Treasury and
Investment Banking Segment. Prior to Security Bank, he was Deputy Treasurer of HSBC-Manila from
1994-1999.
Genaro V. Lapez, serves as Executive Vice-President and Center Head for Consumer Finance, Credit
Cards Marketing and Global Filipino of the Bank. Prior to joining the Bank, he was an experienced
Business Leader in leading Local and Multinational Companies – both at multi-country and single-country
level – with extensive Marketing/New Business Development experience and solid track-record in
Turnarounds. His career has spanned to numerous consumer product categories from personal care,
OTC (over-the-counter) pharmaceuticals, “content” products (publishing & music and video licensing),
food & beverage (both alcoholic and non-alcoholic), and “e-financial” services.
Teodoro M. Panganiban, serves as Executive Vice-President and the Chief Risk Officer of the Bank. He
was Senior Vice-President of the Bank from 1997 to 2001. Prior to joining the Bank, he was Vice-President
and Senior Country Operations Officer at Citibank N.A., Philippines. He held several positions at Citibank
N.A. from 1971 to 1997 in Manila, Cebu, Hong Kong, Belgium and New Zealand. He is currently Director
of the Philippine Clearing House Corporation and Member of the Operations Committee of the Bankers
Association of the Philippines.
Beatriz R. Barredo-Romulo, serves as Executive Vice-President and the Head of the Commercial
Banking Center of the Bank. She was previously the Executive Vice President and the Head of the
Corporate Banking Cluster of International Exchange Bank. Prior to that, she was the Senior VicePresident and the Head of the Account Management Division of United Coconut Planters Bank ("UCPB")
from 1991 to 1995. She was also the Vice Chairman of UCPB Leasing and Finance Corporation and was a
Director for various subsidiaries of UCPB from 1992 to 1995.
Catalino S. Abacan is Senior Vice-President and Head of Channels Management Center effective
September 2011. His past positions in Union Bank are the following: Vice-President/Region
Service Operations Officer in 1997 to 2000, Vice President/Operations Head of Union Bank Visa Credit
Card Unit in 2000 to 2004 and Senior Vice-President/Head of Liabilities Products/Branch/Credit Card
Operations in 2004 to September 2011. From 1994 to 1997, he was Vice-President for Operations, Manila
Offshore Banking Unit of Lippo Bank of Indonesia. From November 1996 to April 1997, he was
instrumental in setting up a branch of Lippo Bank in Phnom Penh, Cambodia. He held several positions
in Philippine Banking Corporation from 1975 to 1993 namely Credit Investigator-Appraiser, Head of Credit
Investigation-Appraisal Unit, Branch Cashier, Branch Manager and Area Head for Manila branches. The
last position he held was Group Head for Operations in Transaction Banking, International / FCDU and
Treasury.
Page 13
Roberto F. Abastillas, serves as Senior Vice-President of the Bank. He was previously Senior VicePresident and Head of the Account Management Center I at International Exchange Bank. From 1987 to
1995, he was Vice-President and Head of the Account Management Group for United Coconut Planters
Bank.
Ramon G. Duarte, serves as Senior Vice-President and Head of Retail Product Development of the
Bank. He was previously Chief Technology Officer of Dotenable, Inc. from 2000-2001; Head of Electronic
Banking Transaction Services at ABN AMRO Philippines from 1999 to 2000; and Assistant Vice-President
of Product Management under Global Transaction Services at Citibank from 1996 to 1999.
Joyce S. Gonzalez, serves as Senior Vice-President of the Bank and Deputy Center Head of Retail
Banking Center of the Bank. She started her career in Unionbank as Branch Manager of the Main Office
Branch in 1994. After a few months, she was given an expanded role as Sales Director of the Makati 1
Region. Her stint as Sales Director over the years saw major growth in the deposit and fund generation
business, and the development of a very capable sales management team. In recognition of her
contribution to the business, Joyce was promoted to Senior Vice President and was given an additional
task to develop and lead Customer Segment Management and bring greater customer centricity in
UnionBank's pursuit in delighting its customers, given her seasoned abilities, and exposure in the business
of Retail Banking.
Atty. Cesar G. Ilagan serves as Senior Vice President and Financial Controller of the Bank. Prior to this,
he was the Asia Regional Controller for Cypress Semiconductor Philippines, Inc. from 1998 to 1999. He
served as Controller, General Counsel and Corporate Secretary of Intel Philippines Manufacturing, Inc.
and Intel Technology Philippines, Inc. from 1982 to 1998. He was Vice President for Finance and
Administration of Fil-Hispano Ceramics, Inc. and Fil-Mosaic Corporation, where he worked from 1978 to
1982.
Atty. Fe B. Macalino, serves as Senior Vice-President, Corporate Secretary and General Counsel of the
Bank. She began her career with the Bank in 1989. Her business experience includes an extensive legal
and corporate practice in the fields of banking, investment and financial leasing services, manufacturing,
trading, air chartering, cargo and bulk handling, shipping, security services. She previously worked at the
Family Savings Bank prior to its acquisition by the Bank of the Philippine Islands from 1979 to 1982. She
was Assistant Vice-President in charge of legal and collection at the State Investment House, Inc. from
1982 to 1985. She also served as the President of the Bank Administration Institute (“BAI”), Philippine
Chapter. She was also the Corporate Secretary, Vice President and Corporate Legal Counsel for the
Philippines in Asian Alcohol Corporation, Far East Molasses Corporation, Ayala Molasses Company, Total
Bulk Corporation, Asian Air Charters, Inc., and Chairman and CEO of Bulldog Security Agency, Inc.
Angelo Dennis L. Matutina, holds the position of Senior Vice-President and head of Branch Operations
Management. He was hired in Unionbank on March 2002 as First Vice President; previously he was
Assistant Vice President in Citibank and prior thereto as Product Manager.
Manuel G. Santiago, Jr., holds the position of Senior Vice-President and Credit Cards Product Business
Head. He previously worked as Director for Operations in American Express Bank in Indonesia and prior
thereto, Director for Operations in American Express International, Manila.
Ceferino P. Tolentino, Jr., serves as Senior Vice-President of the Bank. Prior to joining the Bank, he
was Vice President in charge of the technical services at Dynamic Software Solutions International from
1987 to 1989 and Assistant Vice-President of technology services of Metrobank from 1989 to 1994.
Jose Levi S. Villanueva is Senior Vice-President and Head of Retail Banking Center of the Bank. Prior to
joining the Bank, he was General Manager for PILTEL in the Visayas Region, Segment Manager for IBM-
Page 14
VISMIN and Vice-President for Sales Management and Control under the Consumer Banking Group in
Citibank.
Michaela Sophia E. Rubio, serves as First Vice President of the Bank and HR Director. She joined the
Bank in 2004 as Vice President and handled the Human Resource Services, Training and Organization
Development divisions. Subsequently, she became the Deputy HR Director. Prior to joining the Bank, she
was the Vice President and Country Human Resource, Quality and Corporate Communications Head in the
Philippines of the global electrical and power company, Asea Brown Boveri (ABB) from 1999 - 2001. She
worked from 2001 - 2003 as a Senior Consultant in OTi Consulting Singapore working with government
owned and private organizations on Singapore Quality Class/Award, People Developer, Industry
Capability Upgrading (ICAP) and Work Life and Work Redesign of which she was certified by SPRING
Singapore. Before a career in Human Resource, she worked for 10 years in the semiconductor and
electronics manufacturing industry handling engineering and managerial functions in Statistical Process
Control and Quality.
Myrna E. Amahan, serves as Vice-President and Internal Auditor of the Bank. She is a Certified Public
Accountant (CPA), Certified Internal Auditor (CIA), Certified Information Systems Auditor (CISA) and has
the designation of Certification in the Governance of Enterprise Information Technology (CGEIT). On top
of these certifications in the field of internal audit and information technology, Mrs. Amahan is a qualified
internal audit external validator for having undertaken the necessary training as well as passing the
required exams. As qualified external validator, Mrs. Amahan is qualified to conduct a quality assessment
of internal audit units as required under the International Standards for the Professional Practice of
Internal Auditing. She previously worked as supervising IS auditor at Equitable-PCI Bank from 1996 to
2000 and was Head of the System Consultancy Services of the Commission on Audit from 1993 to 1996.
Also while with the Commission on Audit, Mrs. Amahan was among the government auditors sent to
various United Nations agencies to conduct information systems audit. Mrs. Amahan graduated Magna
Cum laude with the degree of Bachelor of Science in Commerce Major in Accounting from the University
of San Carlos. She obtained a Masters Degree in Public Management from the Development Academy of
the Philippines in 1994.
Robert B. Ramos, serves as Vice-President and Trust Officer of the bank. From 1995, Mr. Ramos held
various positions performing corporate finance, product/business development and wealth management
functions. Mr. Ramos is a Registered Financial Consultant and a CFA Charterholder. Mr. Ramos also
completed the one year course on Trust Operations with distinction
Atty. Dexter A. Tay, serves as the Officer-in-Charge of the Compliance and Corporate Governance of
the Bank. He has held this post since July 16, 2012. He previously served as Corporate Counsel for One
Global Contact Center and earlier as Director IV of the Presidential Anti-Graft Commission – Office of the
President of the Philippines.
Involvement in Certain Legal Proceedings
The Bank is not aware of any of the following events wherein any of its directors, nominees for
election as director, executive officers, underwriter or control person were involved during the past five
(5) years:
any bankruptcy petition filed by or against any business of which a director, person
nominated to become a director, executive officer, or control person of the Corporation was
a general partner or executive officer either at the time of the bankruptcy or within two
years prior to that time;
any conviction by final judgment in a criminal proceeding or being subject to a pending
criminal proceeding of any director, person nominated to become a director, executive
officer, or control person of the Bank;
Page 15
any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any
court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or
otherwise limiting the involvement of any director, person nominated to become a director,
executive officer, or control person of the Corporation in any type of business or banking
activities.
The Bank is a defendant/respondent in various legal actions, most of which are claims for damages
arising in the ordinary course of business. The results of these actions, however, will not have a material
effect on the Bank’s financial position.
Family Relationship among Directors
Chairman and CEO Justo A. Ortiz is a relative in the 6th degree of consanguinity (second cousin) of
Directors Stephen G. Paradies, Erramon I. Aboitiz, Iker M. Aboitiz and Jon Ramon M. Aboitiz.
Certain Relationship and Related Transactions
1. There were no transactions during the last two (2) years with any director, officers or any principal
stockholders (owning at least 10% of the total outstanding shares of the company) which were not in
the ordinary course of business. All related transactions, pursuant to the Bank’s Revised Manual on
Corporate Governance, are all entered into on arm’s length standard. These transactions shall only be
made and entered into substantially on the same terms and conditions as transactions with other
individuals and businesses of comparable risks.
2. The Bank has no parent company.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Information as to the aggregate compensation paid or accrued during the last two calendar years and to
be paid in the ensuing calendar year to the Bank’s Chief Executive Officer and four other most highly
compensated executive officers are as follows:
Name
Principal
Position
Year
2013
Justo A. Ortiz
Victor B. Valdepenas
Edwin R. Bautista
Eugene S. Acevedo
Jesus Roberto Reyes
Aggregate
Compensation
(net of bonuses)
181,650,732.96*
Bonuses
45,412,683.24*
Chairman & CEO
President & COO
SEVP
–
Transaction
Banking,
Commercial
Banking
and
Channels
Management
Centers
SEVP
–
Retail
Banking
and
Corporate Banking
Centers
SEVP – Office of
the
bank
Treasurer
Page 16
Justo A. Ortiz
Edwin R. Bautista
Eugene S. Acevedo
Jesus Roberto Reyes
Justo A. Ortiz
Edwin R. Bautista
Herminio M. Pugeda
Guia C. Lim
All other officers &
directors as a group
unnamed
2012
171,368,616.00
2011
158,181,609.60
2013
2012
2011
1,296,231,136.68*
1,222,859,562.90
1,329,689,797.32
42,842,154.00
Chairman & CEO
President & COO
SEVP
–
Transaction
Banking,
Commercial
Banking
and
Channels
Management
Centers
SEVP
–
Retail
Banking
and
Corporate Banking
Centers
SEVP – Office of
the
bank
Treasurer
39,545,402.40
Chairman & CEO
President & COO
EVP
–
Retail
Banking Center
EVP – Corporate
Product Banking
Center
EVP – Corporate
Banking Center
324,057,784.17*
305,714,890.73
332,422,449.33
*estimated amount
The directors receive per diems for attendance in meetings of the Board and its committees in accordance
with the Bank’s By-Laws but do not receive compensation from the Bank for services rendered.
The executive officers receive salaries, bonuses, and other standard bank benefits that are already
included in the amounts stated above. There is no contract covering their employment.
There are no warrants or options held by the Bank’s officers and directors.
INDEPENDENT PUBLIC ACCOUNTANTS
The current external auditor is Punong Bayan & Araullo (P & A).
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There are neither changes in, nor disagreements with, the external auditors on any of the accounting or
financial disclosures.
Page 17
Availability of Accountants
Representatives of P & A are expected to be present at the forthcoming Annual Stockholders Meeting and
will have the opportunity to make a statement if they desire to do so and will be available to respond to
appropriate questions. P & A has been appointed by the Board of Directors to act as Independent Public
Accountant for FY 2012, and duly ratified by the Stockholders of the Bank at the last Annual Stockholders’
meeting. The stockholders, pursuant to their authority to appoint UnionBank’s Independent Public
Accountant have delegated the selection or appointment of Independent Public Accountants to the Board
of Directors.
The Bank undertakes to comply with SEC SRC Rule 68 (3)(b)(ix) which prescribes the period for the
assignment of the Engagement Partner of the external auditors. Should the 5-year limitation of such
assigned partner be attained, the Bank will require the rotation of such engagement partner pursuant to
said SRC Rule.
MEMBERS OF AUDIT COMMITTEE:
The following are the members
1. Armand F. Braun
2. Stephen G. Paradies
3. Mayo Jose B. Ongsingco
4. Eliza Bettina R. Antonino
5. Carlos B. Raymond, Jr.
of
-
the Audit Committee:
Chairman/Independent Director
Vice Chairman
Regular Member
Regular Member
Regular Member/Independent Director
ALTERNATE MEMBERS:
1. Jon Ramon M. Aboitiz
2. Iker M. Aboitiz
ACTION WITH RESPECT TO REPORTS
The following matters will be submitted for approval of the stockholders at the Annual
Stockholders Meeting on May 24, 2013:
1.
2.
3.
4.
5.
6.
Approval of the minutes of the annual meeting of stockholders held on May 25, 2012;
Chairman/CEO’s report to stockholders;
President’s annual report on management operations for 2012;
Ratification of Past Actions of the Board and of Management;
Ratification/confirmation of the appointment of external auditor by the Board of
Directors;
For Approval: Amendment of UnionBank’s Articles of Incorporation (Page 2, Item 4) – to
extend its corporate term for another fifty (50) years.
Page 2, Item 4 of the Articles of Incorporation when amended shall now read as follows:
“4.
That the term for which the Corporation is to
exist shall be fifty (50) years from and after the date of
expiration of its term on May 08, 2018 or until May 8, 2068.”
7.
For Approval: Increase of Directors Per Diems for Attendance in Meetings to
align to market practice as follows:
A.
NON EXECUTIVE & INDEPENDENT BOARD OF DIRECTOR PER DIEM
• P80,000.00 per Director for attending a main Board of Director meeting;
Page 18
•
•
P80,000.00 per Director who is Chairman or in the latter’s absence, Director
presiding during the Committee meeting; and
P40,000.00 per Director who is Member of a committee for attending a
committee meeting.
Board of Director per diems shall be subject to applicable taxes.
B.
8.
INDEPENDENT DIRECTOR’S RETAINER FEES
To provide Independent Directors, starting the year 2013, P1,500,000.00 per
year. Independent Director’s retainer fee shall be subjected to applicable taxes.
Election of directors for 2013-2014.
In the May 25, 2012 Annual Stockholders’ Meeting the following matters were presented before
the body:
1.
2.
3.
4.
5.
6.
Approval of the minutes of the annual meeting of stockholders held on May 27, 2011;
Chairman/CEO’s report to stockholders;
President’s annual report on management operations for 2011;
Ratification of Past Actions of the Board and of Management;
Ratification/confirmation of the appointment of external auditor by the Board of
Directors; and
Election of directors for 2012-2013.
VOTING PROCEDURES
Vote Requirement
1.
2.
For election of Directors
Pursuant to Section 24 of the Corporation Code, the fifteen (15) nominees receiving the
highest number of votes shall be declared elected.
For other matters submitted to a vote, a majority vote of the shareholders present either
in person or by proxy is necessary for the approval of such matter.
The method of counting the votes of the shareholders shall be in accordance with the general
provisions of the Corporation Code of the Philippines. Counting will be done by tabulation of the votes by
the Corporate Secretary with the assistance of her staff and the stock and transfer agent.
The Bank undertakes to provide without charge to each person solicited, upon written
request of such person, a copy of the Bank’s annual report on SEC Form 17-A. Requests may
be sent to Ms. Virgie San Pascual 18th Floor, UnionBank Plaza, Meralco Avenue, Ortigas
Center, Pasig City.
The Bank likewise undertakes to provide without charge to each person solicited,
during the Annual Stockholder’s Meeting, a copy of SEC Form 17Q containing UnionBank’s
Interim Financial Statements, Management Discussion and Analysis of Financial Condition
and Results of Operation.
Page 19
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information
set forth in this report is true, complete and correct. This report is signed in Pasig City, Metro Manila on
April 04, 2013.
UNION BANK 0if.\T PH/UPPINES
By:
Date:
April 04, 2013
IrnV
FE T. BECINA-MACAUNO
Corporate secretary
Page 20
COVER SHEET
7
3
S.E.C. Registration Number
(Company's Full Name)
CESAR G. ILAGAN
(632)667..6388
Contact Person
Company Telephone Number
G:QGQ
Month
WGJ [iliJ
SEC FORM 17A
Month
FORM TYPE
Day
Day
Annual Meeting
Fiscal Year
UNDERWRITER OF SECURITIES
Secondary License Type. If Applicable
CiliIQ]
Amended Articles Number/Section
Dept Requiring this Doc.
TotalountofBorrowingsc--
as of 12.31.2012
Domestic
Total No. of Stockholders
___
w
__ • __ ••••••••••••• __
_
_ •••• _
-._- ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• _
To be accomplished by SEC Personnel concerned
LCU
Cashier
Document 1.0.
;
,
1
STAMPS
___
__II_-
5.353
J
Remarks = pis. use black ink for scanning purposes
Foreign
_
.
SECURITIES AND EXCHANGE COMMISSION
SEC FORM 17-A
ANNUAL REPORT PURSUANT TO SECTION 11 OF THE REVISED SECURITIES ACT AND SECTION
141 OF CORPORATION CODE OF THE PHILIPPINES
1. For the calendar year ended December 31, 2012
2. SEC Identification Number 36073
3. BIR Tax Identification No. 000-508-271-000
4. UNION BANK OF THE PHILIPPINES
Exact name of registrant as specified in its charter:
5. METRO MANILA, PHILIPPINES
Province, Country or other jurisdiction or incorporation or organization
6. (SEC Use Only)
Industry Classification Code
1605
7. UnionBank Plaza, Meralco Ave. cor. Onyx and Sapphire Streets,
Postal Code
Ortigas Center, Pasig City
Address of Principal Office
8. (632) 667-6388
Registrant’s telephone number, including area code
9. Not applicable
Former name, former address, and former fiscal year, if changed since last report.
10. Securities registered pursuant to Sections 4 and 8 of the RSA
Title of Each Class
Common Stock
P10.00 par value
Number of Shares of Common Stock
Outstanding and Amount of Debt Outstanding
641,422,420 shares
11. Common Stocks are listed at the Philippine Stock Exchange.
12. Check whether the issuer:
(a) Has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17 thereunder or Section
11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of the Corporation Code of the
Philippines during the preceding twelve (12) months (or for such shorter period that the registrant was
required to file such reports);
Yes [ X ]
No [ ]
(b) - Has been subject to such filing requirements for the past ninety (90) days.
Yes [ X ]
No [ ]
13. The aggregate market value as of December 31, 2012 of the voting stock held by non-affiliates
P72,288,306,734.00
1
UNIONBANK OF THE PHILIPPINES
TABLE OF CONTENTS
SEC FORM 17-A
Page
Part I – BUSINESS AND GENERAL INFORMATION
Item 1
Item 2
Item 3
Item 4
Business
Properties
Legal Proceedings
Submission of Matters to a Vote of Security Holders
3
14
15
16
Part II – OPERATIONAL AND FINANCIAL INFORMATION
Item 5
Item 6
Item 7
Item 8
Market for Registrant’s Common Equity and Related Stockholder Matters
Management’s Discussion and Analysis or Plan of Operation
Financial Statements
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
16
18
23
23
Part III – CONTROL AND COMPENSATION INFORMATION
Item 9
Item 10
Item 11
Item 12
Directors and Executive Officers of the Issuer
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management
Certain Relationships and Related Transactions
24
33
34
37
Part IV – CORPORATE GOVERNANCE
Item 13
Discussion on Compliance with leading practice
on corporate governance
38
Undertaking to Provide Copies of the Annual Report and Interim
Financial Statements
42
Part V – EXHIBITS AND SCHEDULES
Item 14 Exhibits and Reports on SEC Form 17- C
43
SIGNATURES
45
Index to Exhibits
46
Index to Financial Statements and Supplementary Schedules
65
2
PART I – BUSINESS AND GENERAL INFORMATION
Item 1. Business
A. Description of business
UnionBank of the Philippines (UnionBank) is a publicly-listed universal bank. The Bank distinguishes itself
through superior technology, unique branch sales and service culture, and centralized backroom operations.
UnionBank’s superior technology allows delivery of online, real time business solutions to meet the customers’
changing and diverse needs through innovative and customized cash management products and service offerings.
The Bank’s unique branch sales and service culture ensures efficient and quality service as well as mitigates
operational risk. Its distinct centralized backroom operations enables the Bank to provide responsive, scalable, and
secure transaction processing.
Aligned with its thrust of being at the forefront of technology-based banking in the Philippines, the Bank endeavors
to elevate its systems and processes to be at par with international standards and best practices. It obtained ISO
9001:2000 Quality Management System (QMS) Certification for its Central Processing Services in 2008, making it
then the FIRST and ONLY bank awarded for its entire centralized backroom operations. In 2010, the Bank received
ISO 9001:2008 certification, an upgrade from the previous. Thereafter, UnionBank was certified for ISO
27001:2005 Information Security Management System, attesting to the Bank’s unwavering commitment to become
an acknowledged leader and benchmark for service quality, technological advancement, and operational excellence.
The Bank also achieved ISO 9001:2008 certifications for its Customer Service Group in 2012 and Branch
Operations Management in 2013, and has consistently been certified as having zero non-conformance every year
from date of certification during quality audits, demonstrating the Bank’s dedication to uphold quality in its business
processes.
UnionBank’s clientele encompasses retail, middle-market and corporate customers, as well as major government
institutions. The Bank believes that its use of technology, and marketing and operational structure has enabled it to
capture and secure a loyal customer base, and to achieve high levels of efficiency and productivity.
Historical Background
UnionBank, originally known as “Union Savings and Mortgage Bank”, was incorporated in the Philippines on
August 16, 1968. The Bank’s common shares were listed in the Philippine Stock Exchange (PSE) on June 29, 1992.
It was granted the license to operate as a universal bank on July 15, 1992. UnionBank became the 13th and
youngest universal bank in the country in only its 10th year of operation as a commercial bank.
The Bank’s major shareholder groups include Aboitiz Equity Ventures, one of the largest conglomerates in southern
Philippines engaged primarily in the business of power generation and distribution, financial services, food
manufacturing and industrial production; Social Security System, the country’s provider of social security to
workers in the private sector; and Insular Life Assurance Co., Ltd., one of the leading and largest Filipino-owned
life insurance companies in the Philippines.
UnionBank has undertaken two bank mergers with International Corporate Bank ("Interbank") in 1993 and
International Exchange Bank (“iBank”) in 2006, catapulting it to being one of the 10 largest universal banks in the
Philippines based on asset size.
On April 26, 2007, UnionBank embarked on a primary offering of 90 million new common shares in order to
strengthen its capital adequacy ratio in anticipation of Basel II requirements and thereby enhance its financial
flexibility. The offering expanded the shareholder base by 16.3% and raised additional equity worth over Php5.1
billion. The new shares were listed in the Philippine Stock Exchange on May 10, 2007.
The Bank issued Php3.75 billion worth of unsecured subordinated notes, eligible as Lower Tier 2 capital, on
October 14, 2009, with an interest rate of 7.375% per annum. Proceeds of the notes were used to strengthen
UnionBank's capital base. UnionBank, as Successor-of-Interest, exercised the call option on iBank’s unsecured
subordinated notes and redeemed all of the outstanding notes amounting to Php1.287 billion on September 26, 2011.
3
On January 8, 2013, UnionBank’s Board of Directors approved the purchase of City Savings Bank (CitySavings), a
premier thrift bank specializing in granting teacher’s loans under the Department of Education’s Automatic Payroll
Deduction System, at a purchase price of Php5.734 billion based on 2.5 times the audited book value of
CitySavings’ shares as of December 31, 2012. The transaction was approved by the Monetary Board of Bangko
Sentral ng Pilipinas (BSP) on March 21, 2013. The acquisition of CitySavings is aligned with the Bank’s business
plans and long-term strategy of building businesses based on consumers.
B. Business of Issuer
Principal products and services
UnionBank offers a broad range of products and services, which include deposit and related services; corporate and
middle market lending, consumer finance loans such as mortgage, auto loans and credit card; investment, treasury &
capital market; trust and fund management; remittance, cash management and electronic banking; as well as preneed insurance through its subsidiary, First Union Plan, Inc.
The Bank continues to reinvent itself from a traditional two-product bank (deposit-taking and lending) to a multiproduct financial services company that leverages on technology.
Deposits and Related Services
Savings Accounts: Regular Savings Account · UnionBank Access
Checking Accounts: Regular Checking · Power Checking · Premium Deposits
Investment Accounts: Time Deposit · Peso Optimizer · Hi-Five
Corporate, Middle-market and Consumer Lending
Corporate Banking Loans
Commercial Banking Loans
SME Banking Solutions: BusinessLine · BusinessLine MD · BusinessLine for Franchisee · BusinessLine for
Retail Gas Dealers · BusinessLine for Feeds Distributors · BusinessLine FUP Loan Program
Consumer Finance: Auto Loans · Mortgage
Credit Cards
Credit Cards: Classic · Gold · Platinum
Co-brand and Affinity Cards: in partnership with companies that are involved in retail, home-building,
hotel, medical and fitness, health and financial security, airline, educational and service-oriented
institutions, and non-profit organizations focusing on religious, humanitarian, cause-oriented activities, and
promotion of professional organization
Speciality Cards: Omnipass · Titanium · Bai · Shop&Talk · Great + Rewards (GTR) · Miles · Miles+
Platinum
Corporate Card Program
Investment Products
Short-term: Money Market Fund · T-Bill 91 Fund · Infinity Fund
Medium-term: Peso Bond Fund · Philippine Dollar Bond Fund
Long-term: Long Term Current Income Fund · Large Capital Equity Fund
Others: Institutional Tax Exempt Bond Fund · Peso Balanced Fund
Cash Management Services
Corporate Collections: Business Deposits · Checkhouse · Cash Pick-up and Delivery · Road Runner · Auto
Debit Arrangement (ADA) · Corporate Bills Payment · eSettlement · Business Partner Advantage
Corporate Payouts: Checkwriter · Electronic Invoice Presentment and Payment (EIPP) · Government
Service Insurance System (GSIS) eCard · Payroll Solutions (ePaycard, ePayKiosk, eCrediting) · Corporate
eBanking · OneHub.Gov · eGobyerno · BusinessOnline
4
Remittance Products and Services
Bank to Bank Remittance · Pinoy Money Card · Visa Money Transfer · Receipt via Paypal
Pre-Need Insurance Product
IncomeFund
Segment Information
UnionBank’s main operating businesses are organized and managed separately according to the nature of services
provided and the different markets served, with each segment representing a strategic business unit. The main
business segments are as follows:
Consumer Banking – principally handles individual customers’ deposits and provides consumer type loans, such as
automobiles and mortgage financing, credit cards and funds transfer facilities. This segment contributes 26.5% of
revenues.
Corporate & Commercial Banking - principally handles loans and other credit facilities, deposit and current
accounts for corporate, institutional, small and medium enterprises, and middle market customers. This segment
contributes 12.0% of revenues.
Treasury – principally manages the Bank’s liquidity and funding requirements, and handles transactions in the
financial markets covering foreign exchange, fixed income trading and investments, and derivatives. This segment
contributes 44.1% of revenues.
Headquarters – includes corporate management, support and administrative units not specifically identified with
Consumer Banking, Corporate and Commercial Banking or Treasury. This segment contributes 17.4% of revenues.
There are no revenues of the Bank which come from foreign sales.
Subsidiaries and Affiliates
The Parent Company’s subsidiaries and the effective percentage of ownership follow:
Subsidiary
Effective
Percentage of Ownership
As of December 31, 2012
Union Properties, Inc. (UPI)
100%
100%
100%
100%
100%
100%
100%
60%
First Union Direct Corporation (FUDC)*
First Union Plans, Inc. (FUPI)*
UBP Insurance Brokers, Inc. (UBPIBI)
UBP Securities, Inc. (UBPSI)
UnionBank Currency Brokers Corporation (UCBC)
UnionDataCorp (UDC)
Interventure Capital Corporation (IVCC)
Nature of Business
Real estate administration
Financial products marketing
Pre-need
Insurance brokerage
Securities brokerage
Foreign currency brokerage
Data processing
Venture Capital
*FUPI and FUDC are wholly-owned subsidiaries of UPI.
The Parent Company’s subsidiaries and their status follow:
(a) UPI was incorporated and registered with the Securities and Exchange Commission (SEC) on
December 23, 1993. It is presently engaged in the administration and management of the Parent
Company’s premises and other properties such as buildings, condominium units and other real estate,
wholly or partially owned by the Group. Pursuant to the action of the Board of Directors (BOD) of
UPI approving the amendment of its Articles of Incorporation on May 13, 2004, the primary purpose
5
of UPI was changed from a real estate developer to a real estate administrator. The SEC approved
such amendment on December 13, 2004. Through its wholly-owned subsidiaries, FUPI and FUDC,
UPI is also engaged in the sale of pre-need plans and marketing of financial products.
(b) UBPIBI was organized to engage in the insurance brokerage business. It was incorporated and
registered with the SEC on February 27, 1992. In 1995, the BOD of UBPIBI approved the cessation of
its operations.
(c) UBPSI was incorporated and registered with the SEC on March 2, 1993. It was organized to engage in
the business of buying, selling or dealing in stocks and other securities. In January 1995, as approved
by UBPSI’s stockholders and BOD, UBPSI sold its stock exchange seat in the PSE to an affiliate of
the Parent Company. Accordingly, UBPSI ceased its stock brokerage activities and has settled and
liquidated its customers’ positions.
(d) UCBC was registered in the SEC on June 14, 1994. It was organized to engage in the foreign currency
brokerage business. On March 23, 2001, the BOD of UCBC approved the cessation of its business
operations effective on April 16, 2001. Since then, UCBC’s activities were significantly limited to the
settlement of its liabilities.
(e) UDC was registered with the SEC on September 8, 1998. It was organized to handle the centralized
branch accounting services as well as the processing of credit card application forms of the Parent
Company and the entire backroom operations of FUPI. On July 1, 2003, the BOD of UDC approved
the cessation of its business operations effective on August 30, 2003. The services previously handled
by UDC are presently under the Centralized Processing Service unit of the Parent Company.
(f) IVCC was incorporated and registered with the SEC on October 16, 1980. It was organized to develop,
promote, aid and assist financially any small or medium scale enterprise, and to purchase, receive, take
or grant, hold, convey, sell, lease, pledge, mortgage and otherwise deal with such real and personal
property, including securities and bonds of other corporations as the transaction of the lawful business
of the corporation may reasonably and necessarily require, subject to the limitations prescribed by law
and the constitution. IVCC has ceased operation since 1992.
The Parent Company is presently assessing the business prospects and environment as a basis in formulating future
plans for UBPIBI, UBPSI, UCBC, UDC and IVCC. Accordingly, such dormant companies are maintained as shell
companies.
Distribution Network of Products and Services
UnionBank provides its relevant target customers’ information and transaction needs through strategically located
branch network and automated teller machines (ATMs), supplemented by a call center under the Bank’s ISOcertified Customer Service Group. To complement its brick and mortar presence and strengthen its digital footprint,
UnionBank has a Web site, www.unionbankph.com.
Branch Network: UnionBank ended 2012 with 186 branches nationwide. Select branches were relocated to
strategic areas situated within and outside of Metro Manila to maximize visibility and expand customer reach. The
branches have user-friendly terminals and a Web-based Signature Verification System (SVS), which promotes
efficient processing of teller transactions. Customers can do over-the-counter (OTC) withdrawals and check
encashment at any UnionBank branch. High-volume transaction branches are provided with Transaction Assistant
Portal (TAP), an in-house developed self-service innovation, which aims to facilitate faster processing time through
paperless transactions and use of a card that stores bills payment and account information. The Bank’s Check
Verification System utilizes Philippine Clearing House Corporation’s check images, instrumental in enabling fast
and reliable check clearing. (Please refer to the list of branches filed as part of this report)
ATM Network: UnionBank’s network of 232 ATMs, as of yearend 2012, supplements its branch network in
providing banking services to its customers anytime, anywhere. With the Bank’s interconnection with Megalink
6
ATM consortium, the Bank’s cardholders have access to almost 13,000 ATMs nationwide. In addition,
UnionBank’s ATM card functions as a VISA debit card that allows electronic purchase and payment transactions.
(Please refer to the attached list of ATM Terminal as Exhibit 1)
Call Center: Retail customer relationship and care is handled by the Bank's 24-hour call center, catering to deposit
and card product queries, among others. The call center utilizes a mix of phone, postal mail, email, fax and internet
as customer touch points. In handling customer complaints, it adheres to certain Service Level Agreements such as
feedback or resolution of ATM-related concerns within five banking days and redelivery of card within Metro
Manila after five days. Customer complaint handling is continuously improved through resolution tracking.
E-Banking: UnionBank financial services portal (www.unionbankph.com), the first in the Philippines, provides a
wide range of financial services to its individual, business, corporate, and investor customers. These services
include online corporate cash management, bills payment, fund transfer, loan application, transaction information,
basic request and information services, insurance, and wireless access.
Competition
The Philippine Banking System (PBS) is composed of 696 banking institutions as of end-December 2012, of which
37 are categorized as universal and commercial banks, 71 as thrift banks and 589 as rural and cooperative banks. To
ensure stability and resilience of the PBS, it operates within a highly-regulated environment. As such, deposit and
loan products of banking institutions are highly homogenous, differentiated mainly through product pricing and
service delivery.
The universal and commercial banks’ total resources (valued at gross of amortization, depreciation and allowance
for probable losses), which accounts for almost 90% of the total banking system, stands at about Php7.5 trillion, an
increase of 9.6% year-on-year. Total loans outstanding, excluding reverse repurchase agreements, grew by 16.2%
ending the year at more than Php3.2 trillion.
As of yearend 2012, the Bank ranks 9th largest in resources, 8th largest in deposits, and 5th largest in capital, per
published consolidated financial statements (parent bank and financial subsidiaries), as reflected in the market shares
shown below.
2012*
Assets
Net Loans**
Deposits
Capital
Billion Pesos
275.0
116.9
190.0
44.6
2011*
%
3.5
3.1
3.5
5.1
Billion Pesos
269.1
101.8
206.8
39.4
%
3.8
3.1
4.1
5.3
* Based on Consolidated Financial Reporting Package submitted to BSP
** Includes loans and discounts, net of general loan loss provision and reverse repurchase
agreements but excludes interbank loans receivables
Amidst this operating environment, UnionBank leverages on its competitive advantages anchored on its superior
technology, unique branch sales and service culture, and centralized backroom operations. As a result, the Bank has
been acknowledged as a leader in developing innovative products and services; and recognized as among the
industry’s lowest cost producers measured by revenue-to-expense ratio and most profitable in terms of return on
equity, return on assets, and absolute income.
The Bank’s corporate vision is to become one of the top three universal banks in the Philippines in respect of market
capitalization, profits and customer coverage, grounded on its purpose of “Making the Diff!” by connecting and
enabling communities through Smart Banking in the spirit of UBUNTU. To achieve this vision, UnionBank has
adopted five key strategic imperatives, referred to as “FOCUS”, which is an acronym for “Financial Value,
Operational Excellence, Customer Franchise, UnionBank Brand/Experience, and Superior Innovation”.
7
Transactions with and/or dependent on related parties
The information required is contained in item 12 on page 37.
Patents, trademarks and tradenames
Union Prime Fund
Customizer
UBP
The Port
UNIONBANK OF THE
PHILIPPINES & Logo
Unionbank Business Check
Check Writing System and Device
UNIONBANK /
Class 36: Banking Services
UNIONBANK Logo
Color: Orange, Blue
PINOY MONEY CARD/International
Class 36
Union eon Cyber Account
Registration Date
August 13, 1996
August 13, 1996
April 4, 2002
January 18, 2004
Expiration Date
August 13, 2016
August 13, 2016
April 4, 2022
January 18, 2014
November 13, 2003
November 13, 2023
July 1, 2004
July 1, 2014
December 19, 2005
December 19, 2025
October 21, 2010
October 21, 2020
November 22, 2012
November 22, 2022
Awaiting further
actions/instructions
from Intellectual
Property Office (IPO)
Need for government approval
The Bangko Sentral ng Pilipinas (BSP), Securities and Exchange Commission (SEC), Philippine Deposit Insurance
Company (PDIC), Philippine Stock Exchange (PSE) and the Bureau of Internal Revenue (BIR), are but a number of
the major regulatory agencies and/or companies that provide rules, regulations and guidelines in the Bank’s business
activities.
UnionBank has always obtained the necessary approvals, grants or permits for all its products and services offered
to the public.
Effect of existing or probable governmental regulations on the business
Existing regulations make the Bank more meticulous and wary of processes in the conduct of transactions. New
regulations also provide the Bank with apt guidelines in the submission of up-to-date and appropriate reports.
Notable regulations applicable to its business activities are the following:
BSP Circular No. 754: Updated Rules Implementing the Truth in Lending Act
The BSP, on 17 April 2012, has issued BSP Circular No. 754, updating sections of the Truth in Lending Act
(Republic Act No. 3765) to enhance transparency in loan prices and transactions. In complying with this Circular,
the Bank calculates interest based on a loan’s outstanding balance at the beginning of the interest period, to put
effective interest rates in loan documents and marketing collaterals, to list repayment schedules in all loan contracts
and to provide borrowers with a copy of the disclosure statement. This is required for all credit-granting institutions
in the Philippines.
8
In issuing credit cards, the Bank discloses the following information to its credit card holders pursuant to the subject
circular: finance charges, non-finance charges, percentage of the finance charge to the total amount to be covered,
number of installments, amount due per installment period, due dates, default rate and penalties imposed on default
or late payment, and method of determining outstanding balance.
BSP Circular No. 753: Statutory/Legal and Liquidity Reserve Requirements
The Bank has consistently complied with the reserve requirements of the BSP. On 29 March 2012, the BSP issued
Circular No. 753 which provided for the unification of the statutory/legal and liquidity reserves requirement.
Circular No. 753 also provides guidelines for the non-remuneration of the Unified Reserve Requirement (URR),
exclusion of vault cash and demand deposits as eligible forms of reserve requirement compliance. The
rationalization of the reserve requirements is seen to increase the effectiveness of reserve requirement as a monetary
policy tool, simplify its implementation, and improve the monitoring of banks’ compliance.
Based on the new reserve requirement guidelines, the rate of required reserves against deposit and deposit substitute
liabilities for universal/commercial banks is eighteen percent (18%). This will be applied to demand deposits,
"NOW" accounts, savings deposit, time deposits and negotiable CTDs, peso deposits and deposit substitutes. The
rate for LTNCDs is three percent (3%) and for bonds, the rate is four percent (4%). Banks may continue to utilize
government securities as compliance with the regular and/or liquidity reserve requirement as part of transitory
provisions. Reserve ratio has been cut by three percentage points from twenty one percent (21%) to eighteen percent
(18%).
BSP Circular No. 639: Internal Capital Adequacy Assessment Process (ICAAP)
On 15 January 2009, the BSP issued Circular No. 639 articulating the need for banks to adopt and document an
internal capital adequacy assessment process. All universal and commercial banks are expected to perform a
thorough assessment of all their material risks, as well as maintain capital adequate to support these risks. This is
intended to complement the current regulatory capital requirement of at least 10% of risk assets, which covered only
credit, market and operational risks. The banks are required to submit their ICAAP Document, describing the
assessment process and results, not later than January 31 of each year. On 29 December 2009, BSP issued Circular
No. 677 effectively extending the implementation of the ICAAP from January 2010 to January 2011.
The Bank complied with the implementation deadline by submitting its first ICAAP Document on January 31, 2011.
In 2012, the Bank’s ICAAP Document was presented to and approved by its Board of Directors on January 27, 2012
and submitted to the BSP on January 31 of the same year.
Anti-Money Laundering Law/s and Know Your Customer Procedures
Union Bank of the Philippines complies with anti-money laundering (AML) statutes (Republic Act No. 9160, as
amended, otherwise known as the Anti-Money Laundering Act of 2001) and pertinent regulations, such as the
Updated Anti-Money Laundering Rules and Regulations (BSP Circular No. 706) to the fullest extent. Industry best
practices, as well as established KYC (know your customer) and customer due diligence (CDD) policies and
procedures undergone from the beginning of the bank-client relationship to the end, are also adhered to. The Bank
also incorporates internationally-accepted standards into its own forms and documents (i.e., those provided in the
FATF’s 40 Recommendations + 9 Special Recommendations, etc.).
The Bank makes use of an electronic Anti-Money Laundering Monitoring System, a specialized transaction
monitoring system. This system generates alerts which could identify unusual activities which entail further
diligence processes to provide the Bank information in ascertaining whether a transaction or activity is suspicious
and whether the same requires reporting to the Anti-Money Laundering Council (AMLC).
In pursuit of best practices and industry standards, the Bank, on 28 October 2011, has updated its Money Laundering
and Terrorist Financing Prevention Program (MLPP) by incorporating new processes and requirements. This allows
the Bank to stay up-to-date with new trends and requirements in money laundering and terrorist financing
prevention.
9
Further, the Bank takes note of bulletins and watch lists of individuals and entities engaged in illegal activities or
terrorist related activities as circularized by the BSP, AMLC, and other international entities or organizations such as
the Financial Action Task Force (FATF), Office of Foreign Assets Control (OFAC) of the U.S. Department of the
Treasury, United Nations Sanctions List, and other such agencies or organizations duly competent and/or recognized
to produce related lists.
Capital Adequacy
Per existing BSP regulations, the combined capital accounts of each commercial bank should not be less than an
amount equal to 10% of its risk assets. Risk assets consist of total resources after exclusion of cash on hand, due
from BSP, loans covered by holdout on or assignment of deposits, loans or acceptances under letters of credit to the
extent covered by margin deposits and other non-risk items as determined by the Monetary Board of the BSP.
Under BSP Circular No. 538, Series of August 4, 2006, the Bank’s capital-to-risk assets ratio (CAR) as of December
2011, 2010 and 2009 were 18.21%, 17.04% and 16.11%, respectively. As of 31 December 2012, the Bank’s CAR
was pegged at 20.68%.
Compliance with other regulations and policies
The Bank also complies with other regulations, policies and industry standards, not only those from the SEC, PSE,
BIR, PDIC and PCHC, but also from other corporations and organizations such as MegaLink, Visa, the Bankers
Association of the Philippines (BAP), Association of Bank Compliance Officers of the Philippines (ABCOMP),
Good Governance Advocates and Practitioners of the Philippines (GGAPP), and others.
Research and Development Activities
The amount spent on research and development activities (in thousand pesos) and its percentage to revenues for the
last three years has been as follows:
Cost
Ratio to Revenues
2012
2011
2010
461,291
432,149
338,450
4.24%
3.68%
2.87%
Employees
As of December 31, 2012, the Bank employed 2,816 people, 123 as Executives, 1,859 as Officers, 834 as Clerical
Staff and covered by CBA. Of these, 1965 are in Operations, 283 are in Non-Operations, and 568 are in
Sales/Marketing. The Bank does not foresee an increase in the number of headcount within the ensuing twelve (12)
months.
The Collective Bargaining agreement started on June 01, 2010 and will expire on May 31, 2015.
Risk Management
The Bank is exposed to a range of potential risks arising from its business activities. Its goal in risk management is
to ensure that it identifies, understands, measures and monitors the various risks that arise from its business
activities, such as credit risk, market risk, interest rate risk, operational risk, liquidity risk, strategic/business risk,
reputation risk and compliance risk.
10
Risk Management Structure
The Board of Directors (“BOD”) is primarily responsible for approving the Bank’s risk parameters, credit
policies and the overall risk taking capacity. To oversee its various risk management activities, the Board of
Directors has established the following risk committees:
(a)
The Executive Committee (“EXCOM”), composed of seven members of the BOD, exercises certain
functions as delegated by the BOD including, among others, the approval of credit transactions within
its delegated authority limit, asset recovery transactions, and sale of real and other properties acquired.
(b)
The Risk Management Committee (“RMC”), composed of seven members of the BOD, is responsible
for the development and oversight of the risk management program. It assists the BOD in overseeing
all matters relating to risk management including providing a comprehensive and bank-wide oversight
of all risks and the management of such risks, formulating and reviewing all of the material risk
policies, strategies and procedures.
(c)
The Market Risk Committee (“MRC”), composed of the Chairman, the President and three other
members of the BOD, sets policies and standards for market risk identification, analysis and
management. The MRC also monitors the sensitivity of the Group’s financial condition to the effects
of market volatility and adverse price changes on the Group’s portfolio of financial instrument and
oversees the Group’s liquidity position through the Asset and Liability Committee (“ALCO”).
(d)
The Operations Risk Management Committee (“ORMC”), composed of three members of the BOD
and two members from Senior Management, reviews various operations risk policies and practices,
including Business Continuity Plans and Strategies.
(e)
The Audit Committee is a committee of the BOD that plays a key role in corporate governance. It is
composed of five members, two of whom are independent directors, including the Chairman. It is
responsible for performing an independent review of the risk management process, financial reporting
process and the audit process.
(f)
The Corporate Governance Committee (“CGC”) is composed of seven members of the Board, two of
whom are independent Directors, and one Director belonging to the Bank’s senior management. It is
primarily responsible in assisting the BOD in fulfilling its corporate governance responsibilities.
The Risk Management units (RMU) are responsible for identifying, assessing, monitoring and managing
the credit risk, market risk, liquidity risk and operational risk of the Bank in accordance with well-defined
policies and procedures, and, in coordination with the respective business units, is also responsible for risk
policy development, risk analysis, implementation of risk methodologies and risk reporting to senior
management and the various committees.
Credit Risk
Credit risk is the risk of loss resulting from the failure of a borrower or counterparty to honor its financial or
contractual obligation. The risk may arise from lending, trade finance, treasury, investments, derivatives and
other activities undertaken by the Bank. Credit risk is managed through strategies, policies and limits that are
approved by the BOD. Further, the Bank has a standardized credit approval process and credit rating or
scoring system for each of its business and/or product segments. The Risk Management units independently
perform credit analysis and review for both retail and corporate financial products to ensure consistency in the
Bank’s risk assessment process. It also ensures that credit policies and procedures are adequate and are
constantly updated to meet the changing demands of the business.
11
Corporate Loans
Corporate lending activities are undertaken by the Bank’s Corporate Banking Center. The customer
accounts under this group belong to the top tier corporations, conglomerates and large multinational
companies. The Bank undertakes a comprehensive procedure for the credit evaluation and risk
assessment of large corporate borrowers based on its Internal Credit Risk Rating System. The rating
system assesses risks on a three-dimensional level: Borrower Risk, Facility Risk and Security Risk.
It also has established concentration limits depending on the Borrower Risk Rating and overall credit
quality.
Commercial Loans
Commercial banking activities are undertaken by the Bank’s Commercial Banking Center. The
customer accounts under this group belong to small and medium scale enterprises (“SMEs”). The
products and services provided to commercial banking customers include similar products and
services provided to large corporate customers, including trade finance-related products and
services. The Bank uses a separate 10-scale credit scoring system for commercial accounts. The
rating system consists of an Obligor Risk Rating (“ORR”), a Facility Risk Adjustment (“FRA”), a
Final Risk Rating (“FRR”) and an Estimated Cash Risk Position, which takes into account the
collateral.
Consumer Loans
The consumer loan portfolio of the Bank is composed of three main product groups: credit cards,
auto and residential mortgage loans. Each of these product groups has its own risk guidelines and
risk assessment system. Although each loan application is evaluated through an individual credit
risk assessment process (combined manual and automated process), the consumer loans are managed
on a single portfolio basis with respect to defaults as well as accept, reject and review standards.
For the credit card business, the main risk assessment tool is the applications scoring model which
has been revised and fine-tuned through the years using the Bank’s own credit experience in the
credit card business. The current applications scoring model uses nine variables which have been
identified as likely predictors of credit behavior of credit card applicants. The Bank utilizes
statistical modeling in updating its application score cards.
Liquidity Risk
Liquidity risk is the risk that there are insufficient funds available to adequately meet the credit demands of
the Bank’s customers and repay deposits on maturity. The ALCO and the Treasurer of the Bank ensure that
sufficient liquid assets are available to meet short-term funding and regulatory requirements. A contingency
plan is formulated to set out the amount and the sources of funds (such as unused credit facilities) that are
available to the Bank and the circumstances under which the Bank may use such funds. The Bank also
manages its liquidity risks through the use of a Maximum Cumulative Outflow (“MCO”) limit which
regulates the outflow of cash on a cumulative basis and on a tenor basis. To maintain sufficient liquidity in
foreign currencies, the Bank has also set an MCO limit for certain designated foreign currencies. The MCO
limits are endorsed by the MRC and approved by the BOD.
Market Risk
Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to
changes in market variables such as interest rate, foreign exchange rates and equity prices. The Bank
classifies exposures to market risk into either trading book or banking book. The market risk for the trading
portfolio is managed and monitored based on a Value-at-Risk (VaR) methodology. Meanwhile, the market
risk for the non-trading positions are managed and monitored using other sensitivity analyses. The Bank
12
applies a VaR methodology to assess the market risk positions held and to estimate the potential economic
loss based upon a number of parameters and assumptions for various changes in market conditions. VaR is a
method used in measuring financial risk by estimating the potential negative change in the market value of a
portfolio at a given confidence level and over a specified time horizon.
The Bank uses the parametric VaR approach in assessing the possible changes in the market value of heldfor-trading and AFS securities based on historical data for a rolling one year period. The VaR models are
designed to measure market risk in a normal market environment. The VaR figures are backtested daily
against actual and hypothetical profit and loss of the trading book to validate the robustness of the VaR
model. To supplement the VaR, the Bank performs stress tests wherein the trading portfolios are valued
under extreme market scenarios not covered by the confidence interval of the Bank’s VaR model. VaR limits
have been established annually for all financial trading activities and exposures against the VaR limits and are
monitored on a daily basis.
Interest Rate Risk
Interest Rate risk refers to the risk associated with fluctuations in market interest rates and its impact on the
Bank’s net interest income. The Bank employs “gap analysis” to measure the interest rate sensitivity of its
resources and liabilities. The gap analysis measures, for any given period, any mismatch between the
amounts of interest-earning resources and interest-bearing liabilities which would mature or reprice during
the period. A positive gap occurs when the amount of interest rate sensitive assets exceeds the amount of
interest rate sensitive liabilities while a negative gap occurs when the amount of interest rate sensitive
liabilities exceeds the amount of interest rate sensitive assets.
Foreign Exchange Rate Risk
Foreign exchange risk is the risk to earnings or capital arising from changes in foreign exchange rates. The
Bank’s net foreign exchange exposure, taking into account any spot or forward exchange contracts, is
computed as foreign currency assets less foreign currency liabilities. The foreign exchange exposure is
limited to the day-to-day, over-the-counter buying and selling of foreign exchange, as well as foreign
exchange trading with corporate accounts and other financial institutions. The Group is also permitted to
engage in proprietary trading to take advantage of foreign exchange fluctuations.
Operational Risk
Operational risk is the risk of loss arising from direct or indirect loss from inadequate or failed internal
processes, people, and systems or external events. This also covers potential losses that could occur as a
result of the Bank’s exposure in the use of technology-related products, services, delivery channels, and
processes. The Bank is moving towards the use of mathematical models for managing operational risk. It is
centralizing all information related to losses and near losses that the Bank has experienced. This will be the
basis for creating metrics that will enable the Bank to monitor and assess its operational risks and manage this
more effectively.
Legal Risk
Legal risk pertains to the Bank’s exposure to losses arising from cases where significant legal costs have
already been incurred, or in some instances, where the Bank may be required to pay damages. The Bank is
often involved in litigation in enforcing its collection rights under loan agreements in case of borrower
default. The Bank has established measures to avoid or mitigate the effects of these adverse decisions
through the engagement of qualified legal advisors. It also ensures that material adjustments or disclosures to
the financial statements are made in case of significant commitments and contingencies arising from legal
proceedings involving the Bank.
13
Regulatory and Compliance Risk
Regulatory risk refers to the risk of a financial loss due to changes in the laws or monetary, tax or other
governmental regulations of a country. The monitoring of the Bank’s compliance with these regulations, as
well as the study of the potential impact of new laws and regulations, is the primary responsibility of the
Bank’s Chief Compliance Officer. The Chief Compliance Office is responsible for communicating and
disseminating new rules and regulations to all units, analyzing and addressing compliance issues, performing
periodic compliance testing on branches and Head Office units, and reporting compliance findings to the
Audit Committee and the BOD.
Item 2 - Properties
The UnionBank Plaza is now the Union Bank of the Philippines' Head Office. UnionBank Plaza is a 50-storey office
condominium building with an estimated usable area of 51,068.82 square meters. It is one of the most
modern intelligent buildings in the Ortigas Business Center with electronically equipped building utility systems.
UnionBank Plaza is also a PEZA proclaimed "IT Building" under Presidential Proclamation No. 900 dated Aug. 25,
2005. The Bank occupies around 14,718.88 square meters. The Bank’s leased area, including units for lease, cover
an estimated total area of 28,896.11 square meters
As of December 31, 2012 and 2011, the Bank paid P399.28 million and P P400.47 million in rentals, respectively,
mainly for its branches.
Other properties owned by the bank are as follows:
Name of Property
Location
Tektite Condo Unit
W-1501, PSE Centre, Exchange Road Ortigas Center, Pasig City
Pacific Plaza (Condo Unit)
Makati Avenue Corner Buendia, Makati City
Peak Tower
8th/9th Floor, Salcedo Village,Makati City
Europa Mines View Flat
Laussane #1506 Baguio City
Monterraza Property
#6 Jasmine St. Monterraza Subd. Itogon, Baguio City
Cebu Business Park
Rosales Avenue, Cebu Business Part Cebu City
CPS Cebu_SSM Building
M. Logarta Avenue, Subangdaku, Mandaue City, Cebu
Olongapo Branch
87 Magsaysay Drive, Olongapo City
Cagayan de Oro Branch
Lapasan National Highway Cagayan de Oro City
Iligan Branch
Quezon Avenue, Iligan City
Iloilo City Branch
General Luna St.,Iloilo City
Southwest Tower - Richville
Branch
UGI and UG 4 Condo Units Alabang Zapote Road
14
Madrigal Business Park Alabang, Muntinlupa City
Condo Unit-GID and parking lot B209
Emerald Branch
Wynsum Corporate Plaza Emerald Avenue, Ortigas Center Pasig City
Cabanatuan Branch
P. Burgos St., Poblacion, Cabanatuan City
Davao-Magsaysay Branch
Cor Magsaysay Ave and E. Jacinto St. Davao City
Dumaguete Branch
Real and San Juan street., two major road in the city., Dumaguete City
Puerto Princesa
Unionbank Bldg., along J.P. Rizal Avenue, Brgy. Maningning, Puerto
Princesa City, Palawan
Primetime Properties_ARG car
display warehouse
Malugay St. Baranggay San Antonio, Makati City
Dasmarinas
G. A. Cu-Unjieng Bldg., Q. Paredes St., corner Dasmarinas St., Binondo
Manila
There are also Bank premises which are leased as per attached report (Annex 3).
All the facilities are in good condition. Likewise, there are no properties owned by the Bank that are mortgaged to
third parties nor are there adverse claims on such properties. The Bank has no plan for additional purchase of land,
building, etc. in the next 12-months.
Item 3 -Legal Proceedings
The Bank is not aware of any of the following events wherein any of its directors, nominees for election as director,
executive officers, underwriter or control person where involved during the past five (5) years:
•
any bankruptcy petition filed by or against any business of which a director, person nominated to
become a director, executive officer, or control person of the Corporation was a general partner or
executive officer either at the time of the bankruptcy or within two years prior to that time;
•
any conviction by final judgment in a criminal proceeding or being subject to a pending criminal
proceeding of any director, person nominated to become a director, executive officer, or control person
of the Bank;
•
any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise
limiting the involvement of any director, person nominated to become a director, executive officer, or
control person of the Corporation in any type of business or banking activities.
The Bank is a defendant/respondent in various legal actions, most of which are claims for damages arising in the
ordinary course of business. The results of these actions, however, will not have a material effect on the Bank’s
financial position.
15
Item 4 - Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the fourth quarter covered by this report.
PART II - OPERATIONAL AND FINANCIAL INFORMATION
Item 5 -Market for Registrant’s Common Equity and Related Stockholder Matters
(1)
Market Information
UnionBank’s shares were officially listed and first traded at the Philippine Stock Exchange on May 21,
1992.
The price performance of the shares has been as follows:
(2)
(Philippine Peso)
HIGH
LOW
As of April 02, 2013
125.5
124.00
Quarter ended March 2013
125.00
123.00
Quarter Ended December 2012
118.00
105.00
Quarter Ended September 2012
107.00
98.95
Quarter ended June 2012
108.00
94.60
140.00
66.00
Quarter Ended December 2011
67.10
58.10
Quarter Ended September 2011
63.20
58.00
Quarter ended June 2011
62.60
58.80
62.05
56.05
Holders
The Bank has 5,319 shareholders of record as of March 31, 2013 The number of common shares outstanding as of said
date stood at 641,422,420 shares.
The top twenty (20) stockholders of the Bank as of March 31, 2013 are the following:
16
STOCKHOLDERS
NATIONALITY
SHARES
%
1
ABOITIZ EQUITY VENTURES, INC.
FILIPINO
277,552,776
43.27%
2
THE INSULAR LIFE ASSURANCE CO., LTD.
FILIPINO
103,359,204
16.11%
3
PCD NOMINEE CORPORATION
FILIPINO
96,622,367
15.06%
4
SOCIAL SECURITY SYSTEM
FILIPINO
69,777,289
10.88%
5
SOCIAL SECURITY SYSTEM (1)
FILIPINO
19,952,256
3.11%
6
PCD NOMINEE CORPORATION
OTHER ALIEN
18,530,287
2.89%
7
JUSTO A. ORTIZ
FILIPINO
4,959,673
0.77%
8
VIC VALDEPENAS
FILIPINO
3,540,502
0.55%
9
SANFIL MANAGEMENT CORPORATION
FILIPINO
2,168,299
0.34%
10
FILIPINO
1,326,292
0.21%
11
MA. VICTORIA A. CODY
WINDEMERE MANAGEMENT
CORPORATION
FILIPINO
1,034,116
0.16%
12
DONYA I MANAGEMENT CORP.
FILIPINO
1,033,378
0.16%
13
RAMON ABOITIZ FOUNDATION, INC.
FILIPINO
1,011,482
0.16%
14
MOREFUND CORPORATION
FILIPINO
880,897
0.14%
15
LUIS MIGUEL O. ABOITIZ
FILIPINO
852,365
0.13%
16
CIA MANAGEMENT CORPORATION
FILIPINO
829,007
0.13%
ASPIRA MANAGEMENT, INC.
FILIPINO
829,007
0.13%
FORTES MANAGEMENT, INC.
FILIPINO
829,007
0.13%
17
AZURA MANAGEMENT, INC.
FILIPINO
829,006
0.13%
18
GUIA C. LIM
FILIPINO
802,338
0.13%
19
ANSO MANAGEMENT CORPORATION
FILIPINO
792,472
0.12%
20
HAWK VIEW CAPITAL, INC.
FILIPINO
776,924
0.12%
PORTOLA INVESTORS, INC.
FILIPINO
776,924
0.12%
Level of the Bank’s Public Float Pursuant to the Minimum Public Ownership (MPO) Rule of the PSE
As of March 31, 2013, the public ownership percentage representing the total number of shares owned by public in
the Bank’s shareholdings, computed based on the MPO Rule of the PSE is 35.24%.
17
(1)
Dividends
The following is a summary of the dividends declared and distributed by the Group in 2012, 2011, and
2010:
Date of
Declaration
January 27, 2012
January 28, 2011
January 22, 2010
Date of
Record
March 13, 2012
April 8, 2011
May 11, 2010
Date of
Payment
February 27, 2012
March 16, 2011
June 4, 2010
Date of
BSP Approval
April 11, 2012
May 6, 2011
April 14, 2010
Dividend
per Share
P
3.00
2.50
2.20
Shares
Outstanding
641,422,420
641,422,420
641,422,420
Total Amount
(in thousands)
P
1,924,267
1,603,556
1,411,129
On January 25, 2013, the Bank’s Board of Directors declared cash dividends of P3.50 per share in favor of all
shareholders of the Bank which shall be payable from the available retained earnings of the Bank as of December 31,
2012. Record Date for stockholders to be entitled to the aforesaid cash dividend declaration is on March 20, 2013
while payment date is on April 18, 2013.
The foregoing cash dividend declarations of the Bank were made within the allowable authority of the Bank to grant
dividends because the Bank as a publicly-listed company must ensure that adequate reserves are in place in compliance
with Bangko Sentral ng Pilipinas (BSP) regulations and for future Bank expansion requirements.
(2)
Recent Sales of Unregistered Securities
There were no recent sales of unregistered securities for the past three years.
(3)
Other Securities
UnionBank has no stock options, warrants, rights or similar declarations as of report date.
Item 6 -Management’s Discussion and Analysis or Plan of Operation.
Statement of Income for the Year Ended December 31, 2012 vs. December 31, 2011
The Bank posted a net income of Php7.59 billion for the year 2012, 15.01% higher than the Php6.60 billion recorded
a year ago, as growth in revenues more than offset the increase in operating expenses.
Total interest income declined by 7.51% to Php10.87 billion this year from Php11.75 billion earned the previous
year, due mainly to lower interest income on due from other banks. Interest income on due from other banks
decreased to Php0.11 billion from Php0.83 billion on lower average levels and yields, as a consequence of the nonremuneration of the unified reserve requirement arising from the implementation of BSP Circular No. 753. Lower
average yields of trading and investment securities accounted for the 6.63% decline in interest income on these
investments to Php3.75 billion from Php4.01 billion. Interest income on interbank loans receivable summed up to
Php0.02 billion, down by 22.64% from Php0.03 billion resulting from lower average levels.
Total interest expense amounted to Php3.56 billion, 25.40% lower this year compared to the Php4.77 billion
registered a year ago. This was driven principally by the 26.82% drop in interest expense on deposit liabilities to
Php3.18 billion on lower average levels and yields of high cost funds. Interest expense on bills payable and other
liabilities similarly dipped by Php0.04 billion to Php0.37 billion, as the Bank realized the full year cost benefit of
exercising the call option on its Php1.29 billion of unsecured subordinated debt in September 2011.
As a result of the foregoing, net interest income increased to Php7.31 billion this year as compared to the Php6.98
billion a year ago.
Total other income rose by 13.32% to Php10.83 billion this year, mainly driven by the 19.83% increase in securities
trading gains, which increased to Php6.47 billion from Php5.40 billion, as the Bank continued to take profit from its
securities position. Miscellaneous income grew by 17.20% to Php2.25 billion from Php1.92 billion, due largely on
higher market valuation of investment properties. Premium revenues, on the other hand, went down by 10.40% to
Php1.24 billion from Php1.39 billion, resulting from lower sales of First Union Plans, Inc.'s (FUPI) pre-need plans.
18
Total other expenses amounted to Php8.67 billion this year, an increase of 5.96% from Php8.18 billion last year, due
primarily to the 11.68% increase in salaries and employee benefits to Php3.30 billion. Taxes and Licenses also went
up by 20.22% to Php1.00 billion from Php0.83 billion on higher documentary stamps used and gross receipts taxes.
Corresponding to the decline in premium revenue, trust fund due fell by 10.37% to Php1.17 billion from Php1.30
billion.
Tax expense stood at Php0.33 billion from Php0.21 billion, owing to higher deferred income tax.
Statement of Comprehensive Income for the Year Ended December 31, 2012 vs. December 31, 2011
The Bank registered a total comprehensive income of Php6.93 billion for the year 2012, 18.03% lower than the
Php8.46 billion the Bank earned for the year 2011, as the strong earnings performance this year was outweighed by
the swing in net unrealized fair value gains (losses) on available-for-sale securities, to a loss of Php0.65 billion from
a gain of Php1.84 billion. With the Bank’s complete disposal of reclassified investments, transfer of unrealized fair
value losses to statements of income for the impairment of available-for-sale financial assets and amortization of
unrealized loss (gain) amounted to zero from last year’s Php0.02 billion and Php0.004 billion, respectively.
Statement of Condition as of December 31, 2012 vs. December 31, 2011
The Bank’s total resources reached Php279.74 billion as of end-December 2012, an increase of 2.61% from
Php272.63 billion as of end-December 2011.
Cash and other cash items increased by 15.06% to Php4.24 billion from Php3.69 billion on increased levels Cash in
Vault (CIV). Due from other banks, on the other hand, dropped by 6.67% to Php3.00 billion from Php3.21 billion,
mainly on account of higher working balances with foreign correspondent banks. Interbank loans receivable fell to
Php5.50 billion from Php12.99 billion due to lower overnight lending.
Financial assets at fair value through profit or loss grew by about half to Php0.40 billion from Php0.27 billion, as the
Bank booked more of these investments.
Loans and other receivables expanded by 14.00% to Php119.72 billion from Php105.01 billion, largely due to higher
outstanding levels of securities purchased under reverse repurchase agreements coupled with the increases in time
loans.
Bank premises, furniture, fixtures and equipment increased by 12.14% to Php3.11 billion from Php2.77 billion, in
view of reclassification of certain assets from investment properties. Investment properties were reduced to
Php11.56 billion from Php12.17 billion as a result of ROPA sales as well as the said reclassification to bank
premises. Non-current assets held for sale, in contrast, climbed to Php0.40 billion from Php0.20 billion on account
of auto loan foreclosures. Other resources reached Php7.93 billion from Php5.92 billion, primarily due to increase
in trust fund reserves, deferred tax assets and returned checks and other cash items.
Total liabilities amounted to Php231.90 billion as of end-2012 from Php229.79 billion as of end-2011. Total deposit
liabilities slid by 8.14% to Php189.84 billion, principally on lower outstanding level of demand deposits, which
went down to Php62.8 billion. Savings and time deposits expanded to Php23.87 billion and Php103.16 billion,
respectively. Bills payable went up to Php18.54 billion in view of higher local borrowings and increased foreign
repurchase agreements. Other liabilities similarly went up to Php19.77 billion on account of higher levels of preneed reserves related to the sales of FUPI’s pre-need plans, funds held by the Bank for remittance to BIR and
outstanding manager’s checks.
Total capital funds grew by 11.69% to Php47.85 billion in 2012 from Php42.84 billion in 2011, as the 20.15%
increase in surplus to Php33.66 billion from Php28.01 billion, on the back of higher net income for the year, more
than offset the 26.55% drop in net unrealized fair value gains on available-for-sale financial assets to Php1.81 billion
from Php2.46 billion. Surplus reserves, likewise, increased by 11.49% to Php0.15 billion from Php0.13 billion as a
result of the Bank’s growing trust business.
19
The Bank’s return on average equity (ROE) and return on average assets (ROA) improved to 17.0% and 3.0%, from
16.7% and 2.5%, respectively. Cost-to-income ratio further improved to 47.8% this year from 49.5% a year ago as
growth in revenues outpaced the increase in expenses. Non-performing loans (NPL) ratio and NPL cover were at
2.6% and 113.4%, respectively. The Bank’s capital position remained strong, ending the year 2012 with capital
adequacy ratio at 20.7% from 18.2% as of the previous year, providing more than adequate buffer in light of the
stringent capital requirements under the Basel III implementation in the Philippines come 2014. Earnings per share
rose to Php11.83 this year from Php10.28 a year ago.
Key performance indicators of the Bank are as follows:
Dec. 2012
Return on Average Assets
Return on Equity
Cost-to-Income Ratio
Non-Performing Loan Ratio*
Non-Performing Loan Cover*
Capital Adequacy Ratio
Dec. 2011
3.0%
17.0%
47.8%
2.6%
113.4%
20.7%
2.5%
16.7%
49.5%
2.3%
102.8%
18.2%
The manner by which the Bank calculates the above indicators is as follows:
Return on Average Assets:
Net income divided by average total resources for the period indicated
Return on Average Equity:
Net income divided by average total capital funds for the period indicated
Cost-to-Income Ratio:
Total operating expenses divided by the sum of net interest income and other
income
Non-Performing Loan Ratio*:
(Total non-performing loans less fully-covered loans classified as loss) divided
by (total loans inclusive of interbank loans receivables less fully-covered loans
classified as loss)
Non-Performing Loan Cover*:
(Total allowance for loan losses less fully-covered loans classified as loss)
divided by (total non-performing loans less fully-covered loans classified as
loss)
Capital Adequacy Ratio:
Total qualifying capital divided by total risk-weighted assets (inclusive of credit,
market and operational risk charge)
*Based on audited figures
As to material event/s and uncertainties, the Bank has nothing to disclose on the following apart from those already
disclosed elsewhere or presented in the accompanying unaudited financial statements:
•
•
•
•
•
•
•
Any known trends, demands, commitments, events or uncertainties that will have a material impact on
the issuer’s liquidity.
Any events that will trigger direct or contingent financial obligation, including any default or
acceleration of an obligation.
Any material off-balance sheet transactions, arrangements, obligations (including contingent
obligations), and other relationships of the company.
Any material commitments for capital expenditures, the general purpose of such commitments and the
expected sources of funds for such expenditures.
Any known trends, events or uncertainties that have had or that are reasonably expected` to have a
material favorable or unfavorable impact on net sales/revenues/income from continuing operations.
Any significant elements of income or loss that did not arise from the issuer’s continuing operations.
Any seasonal aspects that had a material effect on the financial condition or results of operations.
20
Statement of Income for the Period Ended December 31, 2011 vs. December 31, 2010
The Bank recorded a net income of Php6.60 billion for the year 2011, 23.20% higher than the Php5.35 billion the
Bank earned a year ago, due primarily on higher trading gains this year.
Total interest income amounted to Php11.75 billion this year, slightly lower than the Php11.81 billion earned last
year despite expansion in average earning assets, due principally on lower average yields. Interest income on loans
and other receivables increased by 7.86% to Php6.88 billion from Php6.37 billion, as the Bank expanded its loan
portfolio led by the consumer finance and commercial lending businesses. Interest income on trading and
investment securities and due from other banks declined to Php4.01 billion and Php0.83 billion, respectively, as the
expansion in average levels was outweighed by lower average yields on these investments. On the other hand,
lower yields coupled with the decline in the average levels of interbank loans receivable resulted to the 39.79%
decline in interest income on these investments to Php0.03 billion from Php0.05 billion last year.
Total interest expense marginally increased to Php4.77 billion compared to the Php4.74 billion reported last year, as
the decline in interest expense on bills payable and other liabilities to Php0.42 billion from Php0.45 billion, resulting
from the exercise of the call option on the Php1.29 billion worth of unsecured subordinated debt in September 2011,
partly offset the increase in interest expense on deposit liabilities to Php4.35 billion from Php4.29 billion.
As a result of the foregoing, net interest income amounted to Php6.98 billion this year as compared to Php7.07
billion a year ago.
The Bank took advantage of its strong earnings performance and set aside Php1.55 billion in provision for
impairment losses, 195.45% higher than Php0.52 billion set aside last year.
Total other income amounted to Php9.56 billion this year, 55.80% higher from Php6.13 billion earned a year ago,
driven mainly by the improvement in trading gains, which almost doubled to Php5.40 billion, as the Bank continued
to take profit in its securities position. Higher premium revenues at Php1.39 billion from Php0.29 billion similarly
contributed to the substantial increase in non-interest income resulting from higher sales of First Union Plans, Inc.'s
(FUPI) pre-need plans. Service charges, fees and commission, likewise, grew by 24.11% to Php0.85 billion from
Php0.68 billion on increases in trade-related commissions, Visa credit card annual and interchange fees, and
collection of GSIS e-crediting this year. Miscellaneous income, on the other hand, declined by 17.10% to Php1.92
billion from Php2.32 billion on lower foreign exchange gains.
Total other expenses increased by 25.91% to Php8.18 billion this year from Php6.50 billion last year, predominantly
due to the substantial increase in trust fund due to Php1.30 billion from Php0.26 billion attributable to the higher sale
of FUPI’s pre-need plans. Salaries and employee benefits rose by 20.67% to Php2.96 billion from Php2.45 billion
due to increases in annual salary and bonuses on higher manpower headcount and in support of the Bank’s business
expansion. Occupancy cost went up by 7.05% to Php0.55 billion from Php0.51 billion due to the annual escalation
rate of rented office buildings and additional branches.
Tax expense fell by 74.25% to Php0.21 billion from Php0.83 billion, due in part to the derecognition of the deferred
tax asset on NOLCO in 2010 and in view of deferred tax asset set-up relative to the additional loan reserves booked
this year.
Statement of Comprehensive Income for the Period Ended December 31, 2011 vs. December 31, 2010
Total comprehensive income was higher by 38.28% at Php8.46 billion for the year 2011 from Php6.12 billion in
2010, mainly due to the considerable increase in net unrealized gain on available-for-sale (AFS) securities to
Php1.84 billion, in view of higher mark-to-market valuation on these securities, on top of the strong earnings
performance this year. Transfer of unrealized fair value losses to statements of income for the impairment of AFS
amounted to Php0.02 billion this year for the provisions set-up related to equity securities. On the other hand,
amortization of unrealized loss on reclassified investments booked this year decreased to Php0.004 billion as the
Bank unloaded some of the reclassified investments in 2011.
21
Statement of Condition as of December 31, 2011 vs. December 31, 2010
The Bank ended the year 2011 with Php270.19 billion in total resources, 6.79% higher than Php253.00 billion in
2010.
Cash and other cash items fell by 11.75% to Php3.69 billion from Php4.18 billion as funds were shifted to higher
yielding assets on lower client’s cash requirements. Due from BSP stood at Php28.77 billion, lower by 32.34%
from Php42.52 billion, as a result of lower placements in special deposits accounts. Due from other banks, on the
other hand, grew by 82.58% to Php3.21 billion mainly on account of higher working balances with foreign
correspondent banks. Interbank loans receivables similarly grew by 73.87% to Php12.99 billion from Php7.47
billion, as excess funds were shifted to this asset to maximize earnings.
Financial assets at fair value through profit or loss declined to Php0.27 billion from Php6.00 billion as the Bank
realized gains on the sale of these securities. Held to maturity (HTM) investments were reclassified to available-forsale (AFS) securities in accordance with the requirement of PAS 39 after the Bank disposed of more than an
insignificant amount of HTM securities in April 2011, as disclosed in the Notes to Financial Statements of SEC
Form 17-A. Correspondingly, AFS securities expanded to Php89.74 billion from Php33.81 billion a year ago.
Higher outstanding levels of loans and discounts, customers’ liabilities and bills purchased resulted to the 10.50%
expansion in loans and other receivables to Php105.01 billion from Php95.03 billion. Non-current assets held for
sale grew by 44.11% to Php0.20 billion from Php0.14 billion on higher auto loans foreclosures. Other resources
amounted to Php3.48 billion, up by 5.65% from Php3.29 billion, due principally to increased levels of deferred tax
assets.
Total liabilities stood at Php227.35 billion for the year 2011, 4.76% higher compared to Php217.01 billion for the
year 2010, driven primarily by the 6.06% growth in the Bank’s outstanding deposit base to Php204.21 billion from
Php192.54 billion. Demand and time deposits grew by 4.83% and 18.31%, respectively. Savings deposits, on the
other hand, contracted by 17.79% to Php20.08 billion from Php24.42 billion. Bills payable was lower at Php5.62
billion from Php7.40 billion on account of lower interbank borrowings from foreign banks. Notes Payable declined
by 25.55% to Php3.75 billion from Php5.04 billion, as the Bank exercised its call option on the Php1.29 billion
worth of unsecured subordinated debt in September 2011. Other liabilities went up by 14.30% to Php13.77 billion
from Php12.05 billion last year, due mainly on higher levels of pre-need reserves related to the sale of FUPI’s preneed plans.
The Bank’s capital base expanded to Php42.84 billion as of end 2011, 19.05% more than the Php35.99 billion as of
end 2010, mainly due to the 21.61% increase in surplus to Php28.01 billion from Php23.03 billion on higher retained
earnings. Surplus reserves rose by 11.66% to Php0.13 billion from Php0.12 billion in view of the Bank’s growing
trust business. Net unrealized gains on available-for-sale investments increased significantly to Php2.46 billion
from Php0.60 billion on higher mark-to-market valuation of investment securities.
The Bank’s return on average equity (ROE) and return on average assets (ROA) by end of 2011 were higher at
16.7% and 2.5%, way above industry standards of 12.58% and 1.52%, respectively. Cost-to-income ratio was
slightly higher at 49.5% this year from 49.2% a year ago, still better than the Bank’s target of 50%. Non-performing
loans (NPL) ratio and NPL cover improved to 2.3% and 102.8%, respectively. The Bank’s capital adequacy ratio
further strengthened to 18.2% from 17.0% notwithstanding the exercise of the call option on the Php1.29 billion of
unsecured subordinated debt in September 2011. Earnings per share rose to Php10.28 this year from Php8.35 a year
ago on strong earnings performance.
Key performance indicators of the Bank are as follows:
Return on Average Assets
Return on Average Equity
Cost-to-Income Ratio
Non-Performing Loan Ratio*
Dec. 2011
Dec. 2010
2.5%
16.7%
49.5%
2.3%
2.2%
15.5%
49.2%
3.7%
22
Non-Performing Loan Cover*
Capital Adequacy Ratio
102.8%
18.2%
84.0%
17.0%
The manner by which the Bank calculates the above indicators is as follows:
Return on Average Assets:
Net income divided by average total resources for the period indicated
Return on Average Equity:
Net income divided by average total capital funds for the period indicated
Cost-to-Income Ratio:
Total operating expenses divided by the sum of net interest income and other
income
Non-Performing Loan Ratio:
(Total non-performing loans less fully-covered loans classified as loss) divided
by (total loans inclusive of interbank loans receivables less fully-covered loans
classified as loss)
Non-Performing Loan Cover:
(Total allowance for loan losses less fully-covered loans classified as loss)
divided by (total non-performing loans less fully-covered loans classified as
loss)
Capital Adequacy Ratio:
Total qualifying capital divided by total risk-weighted assets
(inclusive of credit, market and operational risk charge)
*Based on audited figures
As to material event/s and uncertainties, the Bank has nothing to disclose on the following apart from those already
disclosed elsewhere or presented in the accompanying in audited financial statements:
•
•
•
•
•
•
•
Any known trends, demands, commitments, events or uncertainties that will have a material impact on
the issuer’s liquidity.
Any events that will trigger direct or contingent financial obligation, including any default or
acceleration of an obligation.
Any material off-balance sheet transactions, arrangements, obligations (including contingent
obligations), and other relationships of the company
Any material commitments for capital expenditures, the general purpose of such commitments and the
expected sources of funds for such expenditures.
Any known trends, events or uncertainties that have had or that are reasonably expected` to have a
material favorable or unfavorable impact on net sales/revenues/income from continuing operations.
Any significant elements of income or loss that did not arise from the issuer’s continuing operations.
Any seasonal aspects that had a material effect on the financial condition or results of operations.
Item 7 - Financial Statements
The consolidated financial statements and schedules listed in the accompanying Index to Financial Statements and
Supplementary Schedules are filed as part of this Form 17-A. Said statements were audited by the accounting firm
of Punongbayan & Araullo and signed by partner Mr. Leonardo D. Cuaresma, Jr.
Item 8 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There were no changes of and disagreements with the Bank’s external auditors, Punongbayan & Araullo (P&A), on
accounting principles or practices, financial statement disclosures, or auditing scope or procedure for the two (2)
most recent years ended December 31, 2012 and 2011.
(A) Audit and Audit Related fees
For the year 2012, audit fees billed by P&A amounted to P6,325,000 exclusive of VAT and out-of-pocket expenses.
For the year 2011, audit fees billed by P&A amounted to P5,725,000 exclusive of VAT and out-of-pocket expenses.
23
Fees for other audit, assurance and related services rendered by P&A for 2012 amounted to P1,500,000 (exclusive of
VAT and out-of-pocket expenses). This represents payment for the audit of the consolidated financial statements of
the UnionBank Group as of and for the year ended December 31, 2012 in accordance with accounting practices
prescribed by BSP.
Fees for other audit, assurance and related services rendered by P&A for 2011 were as follows:
1. P1,400,000 (exclusive of VAT and out-of-pocket expenses) for the audit of the consolidated financial
statements of the UnionBank Group as of and for the year ended December 31, 2011 in accordance with
accounting practices prescribed by BSP.
2. P648,414 for the review of the Bank’s internal credit risk rating system billed on January 11, 2011.
3. P179,859 for the audit of Gold Field Corporation’s (a wholly-owned subsidiary of UnionBank)
financial statements for the year ended December 31, 2009.
(B) Tax Fees
No tax service fees was paid by the Bank to its external auditors and other accounting firms for the years 2012 and
2011.
The following practice was agreed to and adopted by and between Management and the external auditor:
1. Before the start of each year’s audit, the external auditor presents to the Audit Committee for approval its
proposed audit plan, describing the areas of focus for the audit, as well as any new accounting standards, laws
and new regulatory rules that need to be taken into account in the course of the audit. The audit schedule is also
presented.
2. The audit fees are agreed with the external auditor by Management.
3. When the audit is substantially completed and before the Bank’s Board meeting in January of the following year,
the external auditor presents an initial report of its audit to the Audit Committee. The complete set of audited
financial statements and accompanying notes are submitted to the Board for notation in its March meeting, in
time for tax filing in April.
PART III – CONTROL AND COMPENSATION INFORMATION
Item 9 - Directors and Executive Officers of the Issuer
a) Directors and Nominees:
The following are the names of the nominee Directors of the Bank who have been pre-screened and certified
qualified by the Nominations Committee of the Board pursuant to SRC Rule No. 38, the BSP’s Manual of
Regulations for Banks, SEC Code of Corporate Governance and the Bank’s Revised Manual on Corporate
Governance, at the meeting held on March 07, 2013 by the following Nomination Committee Members:
1.
2.
3.
4.
5.
6.
7.
Justo A. Ortiz
Erramon I. Aboitiz
Vicente R. Ayllon
-
Chairman
Member
Member
Member
Member
Member/Independent Director
Non-Voting Member (HR Director)
24
INCUMBENT/
NOMINEES
Justo A. Ortiz
has served as such
AGE
CITIZENSHIP
POSITION
55
Filipino
Vicente R. Ayllon
Jon Ramon M.
Aboitiz
82
64
Filipino
Filipino
Chairman
&
CEO
Vice-Chairman
Vice-Chairman
Iker M. Aboitiz
Erramon I.
Aboitiz
Sabin M. Aboitiz*
41
57
Filipino
Filipino
Director
Director
Director
48
56
Filipino
Filipino
Director
Director
Filipino
Filipino
Filipino
Filipino
Director
Director
Director
Director
Filipino
President
COO
Filipino
Director
Stephen G. Paradies
59
Emilio S. de Quiros, Jr.
64
Eliza R. Antonino
35
Mayo
Jose
B.
61
Ongsingco
Victor B.
66
Valdepeñas
INDEPENDENT DIRECTORS
75
&
May 24, 1996 to January 01, 1998
October 11, 1988 to May 31, 2001
October 11, 1988 to April 23, 1993
For election on May 24, 2013
January 27, 1995 to August 23,
1999
January 1998 to June 2001
April 03, 1990 to December 31,
1997
Vice-Chairman
President
Carlos B. Raymond, Jr.
72
Filipino
Independent
Director
Reynato S. Puno
73
Filipino
Independent
Director
* vice Mr. Daniel L. Edralin, age 62, SSS-nominee director from April 7, 2011 to May 24, 2013.
UnionBank’s Independent Directors, namely, Messrs. Armand F. Braun, Jr., Mr. Carlos B. Raymond, Jr.,
and retired Supreme Court Chief Justice Reynato S. Puno possess the qualifications and none of the disqualifications
of an independent director. They have complied with all the requirements of the Bangko Sentral ng Pilipinas (BSP),
the Securities and Exchange Commission (SEC), and the Bank’s Manual on Corporate Governance for their
respective positions. They were nominated by the nominees to the Board of Directors of Aboitiz Equity Ventures,
Inc. (AEV) thru Mr. Jon Ramon M. Aboitiz, The Insular Life Assurance Company Ltd., (IL) thru Mr. Vicente R.
Ayllon and SSS President and CEO, Mr. Emilio S. de Quiros, Jr. They are not related to the nominees. They are
eligible for election as Independent Directors at the forthcoming Annual Stockholders’ meeting on May 24, 2013.
The following is a brief description of the business experience of each of the directors/nominees of the
Bank:
Justo A. Ortiz, serves as the Chairman of the Board and Chief Executive Officer of the Bank. He is also currently
the Chairman of Union Properties, Inc. (UPI), a director in Aboitiz Equity Ventures, Inc.,* Megalink and LGU
Guarantee Corporation. Mr. Ortiz is a member of World Presidents Organization. Prior to joining the Bank, he had
16 years of business experience at Citibank (Manila).
25
Jon Ramon M. Aboitiz, serves as the Vice-Chairman of the Board of the Bank. He is currently Chairman of Aboitiz
& Co., Inc. and Aboitiz Equity Ventures, Inc.,* a Cebu-based investment and management enterprise, engaged in
numerous and diverse business concerns ranging from power-generation and distribution, banking and financial
services, real estate development, construction, food, ship building, ship management/ crewing/ international
shipping closely linked to nation building and progress. Mr. Aboitiz began his career with the Aboitiz Group in
1970. From manager of the Aboitiz Shipping Corporation, Mr. Aboitiz was promoted to President of the company in
1976 and became President of Aboitiz & Company in 1991 until 2008. He was President and CEO of Aboitiz
Equity Ventures from 1993-2008. Currently, Mr. Aboitiz holds various positions in the Aboitiz Group
including Chairman of the Board, Aboitiz Jebsen Bulk Transport Corporation. He is Vice-Chairman of Aboitiz
Power Corporation* and Director of City Savings Bank. He is also a Director of the International Container
Terminal Services, Inc.* and Bloomberry Resorts Corporation.* He serves as President/Trustee of the Aboitiz,
Foundation, Inc., Vice President and Trustee of the Ramon Aboitiz Foundation, Inc. and in the Board of Trustees of
Santa Clara University, Santa Clara, California, USA. He is a member of the board of Advisors for the Association
of Foundations as well as the Coca Cola Bottlers Philippines, Inc. Mr. Aboitiz holds a B.S. Commerce degree
major in Management from the University of Santa Clara, California.
Vicente R. Ayllon, serves as the Vice-Chairman of the Board of the Bank. He is currently the Chairman of the Board
and Chief Executive Officer of The Insular Life Assurance Co., Ltd. He also sits as Chairman and President of the
Insular Property Holdings, Inc. (formerly Vigan Realty, Inc.) and is the Chairman of Insular Investment
Corporation, Insular Health Care, Inc., Insular Foundation, ILMADECO and Home Credit Mutual Building & Loan
Association, Inc. Mr. Ayllon is also Vice Chairman of Mapfre Insular Insurance Corporation. From 2003 to 2004,
he was director of the Philippine Stock Exchange, Inc.* From 1995 to 2003, he served as Chairman of the Board
and President of The Insular Life Assurance Co., Ltd. His other directorships include Pilipinas Shell Petroleum
Corporation, Shell Company of the Philippines, Ltd., Rockwell Land Corporation* and The Palms Country Club.
Victor B. Valdepeñas, serves as the President and Chief Operating Officer of the Bank. He is also currently director
of Union Properties, Inc. (UPI). He served as Executive Vice President and Chief Financial Officer of the Bank
from 1993 to 1998. Prior to joining the Bank, he was the Vice-President and the Country Treasurer of Citibank
Manila from 1987 to 1994, Deputy Treasurer/Group Head of all Trading Divisions of Citibank Manila from 1981 to
1986, Country Economist of Citibank Manila from 1974 to 1980. Prior to Citibank he was the Assistant Director of
National Economic & Development Authority’s Economic Planning & Research, Consultant to the Chairman of the
National Economic Council and was a Faculty Member of the University of the Philippines and professorial lecturer
at the University of Santo Tomas. He was previously the President of the Philippine Economics Society and Foreign
Exchange Association of the Philippines. He was likewise Chairman and President of UBP Currency Brokers, Inc.
Erramon I. Aboitiz, serves as Director of the Bank. He currently sits as President and Chief Executive Officer of
Aboitiz Equity Ventures, Inc.* and he holds the same position for Aboitiz Power Power Corporation* and Aboitiz
& Company, Inc. He is also the Chairman of Aboitiz Renewables, Inc., Therma Power, Inc., SN Aboitiz Power,
Davao Light & Power Co., Cotabato Light & Power Co., Subic EnerZone Corp., City Savings Bank, Visayan
Electric Co., San Fernando Electric Light and Power Co., and Aboitiz Foundation, Inc. He also sits as Director of
Pilmico Foods Corp., Aboitiz Land, Inc., and Family Business Development Center (Ateneo de Manila
University).
Iker M. Aboitiz, serves as Director of the Bank. He is also currently First Vice President/Chief Financial
Officer/Corporate Information Officer of Aboitiz Power Corporation.* He is also the Director and Chief Financial
Officer of Abovant Holdings, Inc. and East Asia Utilities Corporation; Chief Financial Officer and Treasurer of
Hijos de F. Escaño; and Director of Cebu Private Power Corporation, Cotabato Light & Power Company, Southern
Philippines Power Corporation, Hedcor Benguet, Inc., Therma Power, Inc. and Aboitiz Renewables, Inc.; and Board
of Adviser of Aboitiz & Co., Inc. Mr. Aboitiz began his career with the Aboitiz & Company, Inc. in 1994. He held
various positions in the Aboitiz & Company, Inc. including Analyst - Corporate Planning Department from 19941995, Trader - Treasury Department from Feb. 1995 to June 1995, Assistant Treasurer - Treasury Department from
1995 to 1997 and Assistant Vice-President, Head - Corporate Finance Dept. from 1998 to 1999. He served also as
Treasurer of Davao Light & Power Company, Inc. and Cotabato Light & Power Company from 1998 to 1999. He
was previously Adviser to the Board of Directors of City Savings Bank from 1998 to 1999. Mr. Aboitiz was also
26
Executive Assistant to the Chairman & CEO of Union Bank of the Philippines and Member of Union Bank Asset
and Liability Committee (ALCO) from 1999 to 2000. He served as Analyst – Corporate Finance Group of Credit
Lyonaisse SA Exchange Capital Corp. from 2000 to 2003 and Chief Finance Officer of Aboitiz Construction Group
Inc. from 2003 to 2007. He worked for FBMA Marine Inc. in several positions including Chief Finance Officer,
Member of the Board of Directors and Executive Committee from 2003 to 2007. Mr. Aboitiz has a Bachelor of
Science Degree in Business Management major in Finance, Cum Laude from the Boston College, Newton,
Massachusetts.
Sabin M. Aboitiz is the President and Chief Executive Officer of Pilmico Foods Corporation, a wholly-owned
subsidiary of Aboitiz Equity Ventures (AEV)* and Aseagas Corporation, a joint venture between AEV and UKbased Gazasia. Concurrently, he is the President of Philippine Flour
Millers Association, Inc. (PAFMIL). He also sits as Director of Aboitiz Jebsen Company, Inc., SN Aboitiz Power
Group and Manila Oslo Renewable Energy. He spent most of his professional life with Aboitiz Transport, Inc. and
his last position was as President and Chief Executive Officer of one of its subsidiaries, Aboitiz One, Inc., (owner of
the 2GO brand) which is now called 2GO Group, Inc. He graduated from Gonzaga University in the USA with a
degree of B.S. Business Administration major in Finance.
Juan Antonio E. Bernad, serves as Director of the Bank. He is also currently Senior Vice - President of Aboitiz
Equity Ventures, Inc.* (since 1995), Executive Vice - President – Strategy & Regulatory Affairs of Aboitiz Power
Corporation* (since 1998) and Director Cotabato Light & Power Corporation (since 1989). His other directorships
include Visayan Electric Co. (since 2009), San Fernando Electric Company (since 2001), Mamerto Escano Inc.
(since 1987) and EVP-Regulatory Affairs of Davao Light & Power Corporation (since 1989).
Stephen G. Paradies, serves as Director of the Bank. He also serves as Director of Union Properties, Inc., Chairman
of the Operations Risk Management Committee and Vice Chair of the Audit Committee of the Bank. He is a
director of several Aboitiz subsidiaries including Pilmico Foods Corp., Pilmico Animal Nutrition Corp., Aboitiz
Construction Group Inc. and City Savings Bank. He sits on the board of Int'l. Container Terminal Services Inc.* and
several of its subsidiaries, including ICTSI Int'l. He is currently Senior Vice President/Finance of Aboitiz and Co.
Inc, and Senior Vice President/Chief Finance Officer of Aboitiz Equity Ventures, Inc.*
Emilio S. de Quiros, Jr., serves as Director of the Bank. He also sits as Director of Philhealth Insurance
Corporation, Belle Corporation* (September 30, 2010 to present). He is the President and CEO of the Social
Security System from August 16, 2010 to present.
Eliza R. Antonino, serves as Director of the Bank. She is also a Director of Philex Mining Corporation* and
Philamlife Tower Management Corporation. In addition, she has been a sitting Commissioner of the Social Security
Commission since September 2010.
Mayo Jose B. Ongsingco, serves as Director of the Bank. He has been the President and Chief Operating Officer,
and a Trustee of Insular Life Assurance Co. Ltd since 2004. He concurrently holds the position of Chairman of the
Board for Insular Life Employees’ Retirement Fund and Insular Life General Insurance Agency, Inc. He is Vice
Chairman and President of Insular Life Management & Development Corp. He is also Vice Chairman of Insular
Health Care, Inc., Insular Life Property Holdings, Inc. and Home Credit Mutual Building & Loan Association. His
other directorships include Insular Investment Corporation, Insular Life Foundation, Keppel Philippines Holdings,
Inc.,* Mapfre Insular Insurance Corp., Pilipinas Shell Petroleum Corp. and PPI Prime Venture, Inc.
Armand F. Braun, Jr., serves as Independent Director of the Bank. He is also currently the Chairman and President
of AF Braun Company and Holdings, Inc. He was the President of UnionBank from 1990 to 1997. His business
experience includes directorships in UBP Capital Corporation and Union Properties, Inc. before their merger in
December, 2004, after which merger, he was a director of the surviving entity, Union Properties, Inc., until July
2005; Alrose Foods Corp., Iligan Pizza Corp., North Iligan Food Services, Inc., Central Iligan Fast foods, Bern
Bakery Specialists, Inc. – Store 1, Bern Bakery Specialists, Inc. – Store 2, Beefoods Corp., and Philam Asset
Management, Inc.
27
Carlos B. Raymond, Jr., serves as Independent Director of the Bank. He retired from Eli Lilly and Company on
February 28, 2003 after almost 24 years with the company. Eli Lilly is a U.S. multinational pharmaceutical
company based in Indianapolis, Indiana. His last position was President and General Manager of Eli Lilly
Philippines. His previous assignments with Lilly included positions in Puerto Rico, Indianapolis, Singapore as
Regional Head of Southeast Asia Operations and at Lilly Taiwan as President/General Manager. He graduated from
the University of the Philippines with a degree of B.S. Business Administration. Prior to joining Lilly, he worked at
Unicor Inc. (Doctors Pharmaceuticals' marketing arm) for 11 years (July 1968 to May 1979) with his last position as
General Manager.
Reynato S. Puno, serves as Independent Director of the Bank. He was a former Chief Justice of the Supreme Court
from 2007 to 2010. He also serves as an Independent Director of San Miguel Corporation,* San Miguel Corporation
(Hongkong) and Apex Mining.* He was also reappointed on 2012 as Regent of the UP Board of Regents. He was
then an Independent Director of Manila Bulletin* from 2010 to 2011. He also held various positions in the
government such as – Assistant Solicitor General in the Office of the Solicitor General from 1971 to 1982;
Associate Justice in the Intermediate Appellate Court from 1983 to 1984; Deputy Minister in the Ministry of Justice
from 1984 to 1986; and Associate Justice of the Court of Appeals from 1986 to 1993 and Associate Justice of the
Supreme Court from 1993 to 2007.
(b) Executive Officers:
The Executive Officers of the Bank, and their respective age, citizenship and position as of March 31, 2013, are as
follows:
NAME
Justo A. Ortiz
AGE CITIZENSHIP
55
Filipino
Victor B.
Valdepeñas
Edwin R. Bautista
Eugene S. Acevedo
Jose
Roberto
Reyes
Genaro V. Lapez
Teodoro M.
Panganiban
S.
66
Filipino
52
Filipino
POSITION
Chairman & Chief
Executive Officer
President & Chief
Operations Officer
SEVP – Transaction
Banking, Commercial
Banking and Channel
Management Centers
EVP – Retail Banking
Center
SEVP – Retail &
Corporate
Banking
Centers
SEVP – Treasurer
has served as such
49
Filipino
54
Filipino
55
Filipino
EVP - Consumer
Finance Center, Credit
Cards Marketing &
Global
Filipino
Businesses
61
Filipino
EVP – Chief Risk
Officer
September 1, 2011 to present
EVP
–
Channel
Management Center
28
Beatriz B. Romulo
59
Filipino
Catalino S. Abacan
Ramon G. Duarte
Joyce S. Gonzalez
59
51
48
54
Filipino
Filipino
Filipino
Filipino
Atty. Cesar G. Ilagan
59
Filipino
Senior Vice- President
EVP –
Commercial
Banking Center
Senior Vice President
August 22, 1997 to April 26, 2001
First Vice President
May 24, 2002 to June 1, 2010
Senior
VicePresident/ Controller
Atty. Fe B.
Macalino
59
Filipino
Angelo Dennis L.
Matutina
Manuel G. Santiago,
Jr.
Ceferino P.
Tolentino, Jr.
Jose
Levi
S.
Villanueva
Michaela Sophia E.
Rubio
Myrna E.
Amahan
49
Filipino
First Vice- President/
Controller
Senior
VicePresident/
General Counsel &
Corporate Secretary
FVP, General Counsel
&
Corporate Secretary
Senior Vice President
53
Filipino
56
Filipino
April 27, 2001 to Present
56
Filipino
48
Filipino
52
Filipino
First Vice-President /
HR Director
Vice-President
&
Internal Auditor
AVP
&
Internal
Auditor
AVP & OIC-Internal
Auditor
Vice President & Trust
Officer
Robert Rol B. Ramos
39
Filipino
Atty. Dexter Tay
39
Filipino
Senior Manager/OICCompliance
and
Governance
July 23, 2003 to July 14, 2004
September 1, 2004 to Present
October 2, 1989 to August 31, 2004
From May 1, 2009 to present
March 31, 2006 to June 23, 2006
February 9, 2001 to March 31, 2006
The following is a brief description of the business experience of each of the Executive Officers of the Bank:
Justo A. Ortiz, serves as the Chairman of the Board and Chief Executive Officer of the Bank. He is also currently
the Chairman of Union Properties, Inc. (UPI), a director in Aboitiz Equity Ventures, Inc., Megalink and LGU
Guarantee Corporation. Mr. Ortiz is a member of World Presidents Organization. Prior to joining the Bank, he had
16 years of business experience at Citibank (Manila).
29
Victor B. Valdepeñas, serves as the President and Chief Operating Officer of the Bank. He is also currently director
of Union Properties, Inc. (UPI). He served as Executive Vice President and Chief Financial Officer of the Bank
from 1993 to 1998. Prior to joining the Bank, he was the Vice-President and the Country Treasurer of Citibank
Manila from 1987 to 1994, Deputy Treasurer/Group Head of all Trading Divisions of Citibank Manila from 1981 to
1986, Country Economist of Citibank Manila from 1974 to 1980 and the Assistant Director of National Economic &
Development Authority’s Economic Planning & Research. He was also Consultant to the Chairman of the National
Economic Council and was a Faculty Member of the University of the Philippines and professional lecturer at the
University of Santo Tomas. He was previously the President of the Philippine Economics Society and Foreign
Exchange Association of the Philippines. He was likewise Chairman and President of UBP Currency Brokers, Inc.
Edwin R. Bautista, serves as Senior Executive Vice-President, Head of the Transaction Banking, Commercial
Banking and Channel Management Centers of the Bank. Following the Merger, he was also appointed as President
of International Exchange Bank. He was Senior Vice-President of the Bank from 1997 to 2001. He previously
worked as Senior Brand Manager at Procter and Gamble Mfg. from 1983 to 1987, Marketing and Sales Director of
the Philippines and Guam at American Express International from 1990 to 1991, and the Vice-President and Group
Head of Transaction Banking at Citibank, Philippines from 1991 to 1997.
Eugene S. Acevedo, serves as Senior Executive Vice-President, Head of the Retail Banking and Corporate Banking
Centers. He was previously President, Vice Chairman and Chief Executive Officer of Philippine National Bank
from May 2010 to July 2011. Before that he was with Citibank for 23 years and his last posts with the firm were as
Managing Director and Country Treasurer for Hong Kong, and Global Markets Head for Hongkong-Taiwan Cluster.
From 1984 to 1985, he was a Physics lecturer at the University of the Philippines.
Jesus Roberto S. Reyes, serves as Senior Executive Vice-President and Treasurer of the Bank. Prior to joining the
Bank, he spent 10 years in Security Bank and his last position was Head of Treasury and Investment Banking
Segment. Prior to Security Bank, he was Deputy Treasurer of HSBC-Manila from 1994-1999.
Genaro V. Lapez, serves as Executive Vice-President and Center Head for Consumer Finance, Credit Cards
Marketing and Global Filipino of the Bank. Prior to joining the Bank, he was an experienced Business Leader in
leading Local and Multinational Companies – both at multi-country and single-country level – with extensive
Marketing/New Business Development experience and solid track-record in Turnarounds. His career has spanned to
numerous consumer product categories from personal care, OTC (over-the-counter) pharmaceuticals, “content”
products (publishing & music and video licensing), food & beverage (both alcoholic and non-alcoholic), and “efinancial” services.
Teodoro M. Panganiban, serves as Executive Vice-President and the Chief Risk Officer of the Bank. He was
Senior Vice-President of the Bank from 1997 to 2001. Prior to joining the Bank, he was Vice-President and Senior
Country Operations Officer at Citibank N.A., Philippines. He held several positions at Citibank N.A. from 1971 to
1997 in Manila, Cebu, Hong Kong, Belgium and New Zealand. He is currently Director of the Philippine Clearing
House Corporation and Member of the Operations Committee of the Bankers Association of the Philippines.
Beatriz R. Barredo-Romulo, serves as Executive Vice-President and the Head of the Commercial Banking Center of
the Bank. She was previously the Executive Vice President and the Head of the Corporate Banking Cluster of
International Exchange Bank. Prior to that, she was the Senior Vice- President and the Head of the Account
Management Division of United Coconut Planters Bank ("UCPB") from 1991 to 1995. She was also the Vice
Chairman of UCPB Leasing and Finance Corporation and was a Director for various subsidiaries of UCPB from
1992 to 1995.
Catalino S. Abacan is Senior Vice-President and Head of Channels Management Center effective September 2011.
His past positions in Union Bank are the following: Vice-President/Region Service Operations Officer in 1997 to
2000, Vice President/Operations Head of Union Bank Visa Credit Card Unit in 2000 to 2004 and Senior VicePresident/Head of Liabilities Products/Branch/Credit Card Operations in 2004 to September 2011. From 1994 to
1997, he was Vice-President for Operations, Manila Offshore Banking Unit of Lippo Bank of Indonesia. From
November 1996 to April 1997, he was instrumental in setting up a branch of Lippo Bank in Phnom Penh, Cambodia.
He held several positions in Philippine Banking Corporation from 1975 to 1993 namely Credit InvestigatorAppraiser, Head of Credit Investigation-Appraisal Unit, Branch Cashier, Branch Manager and Area Head for Manila
30
branches. The last position he held was Group Head for Operations in Transaction Banking, International / FCDU
and Treasury.
Roberto F. Abastillas, serves as Senior Vice-President of the Bank. He was previously Senior Vice-President and
Head of the Account Management Center I at International Exchange Bank. From 1987 to 1995, he was VicePresident and Head of the Account Management Group for United Coconut Planters Bank.
Ramon G. Duarte, serves as Senior Vice-President and Head of Retail Product Development of the Bank. He was
previously Chief Technology Officer of Dotenable, Inc. from 2000-2001; Head of Electronic Banking Transaction
Services at ABN AMRO Philippines from 1999 to 2000; and Assistant Vice-President of Product Management
under Global Transaction Services at Citibank from 1996 to 1999.
Joyce S. Gonzalez, serves as Senior Vice-President of the Bank and Deputy Center Head of Retail Banking Center
of the Bank. She started her career in Unionbank as Branch Manager of the Main Office Branch in 1994. After a
few months, she was given an expanded role as Sales Director of the Makati 1 Region. Her stint as Sales Director
over the years saw major growth in the deposit and fund generation business, and the development of a very capable
sales management team. In recognition of her contribution to the business, Joyce was promoted to Senior Vice
President and was given an additional task to develop and lead Customer Segment Management and bring greater
customer centricity in UnionBank's pursuit in delighting its customers, given her seasoned abilities, and exposure in
the business of Retail Banking.
Atty. Cesar G. Ilagan serves as Senior Vice President and Financial Controller of the Bank. Prior to this, he was the
Asia Regional Controller for Cypress Semiconductor Philippines, Inc. from 1998 to 1999. He served as Controller,
General Counsel and Corporate Secretary of Intel Philippines Manufacturing, Inc. and Intel Technology Philippines,
Inc. from 1982 to 1998. He was Vice President for Finance and Administration of Fil-Hispano Ceramics, Inc. and
Fil-Mosaic Corporation, where he worked from 1978 to 1982.
Atty. Fe B. Macalino, serves as Senior Vice-President, Corporate Secretary and General Counsel of the Bank. She
began her career with the Bank in 1989. Her business experience includes an extensive legal and corporate practice
in the fields of banking, investment and financial leasing services, manufacturing, trading, air chartering, cargo and
bulk handling, shipping, security services. She previously worked at the Family Savings Bank prior to its
acquisition by the Bank of the Philippine Islands from 1979 to 1982. She was Assistant Vice-President in charge of
legal and collection at the State Investment House, Inc. from 1982 to 1985. She also served as the President of the
Bank Administration Institute (“BAI”), Philippine Chapter. She was also the Corporate Secretary, Vice President
and Corporate Legal Counsel for the Philippines in Asian Alcohol Corporation, Far East Molasses Corporation,
Ayala Molasses Company, Total Bulk Corporation, Asian Air Charters, Inc., and Chairman and CEO of Bulldog
Security Agency, Inc.
Angelo Dennis L. Matutina, holds the position of Senior Vice-President and head of Branch Operations
Management. He was hired in Unionbank on March 2002 as First Vice President; previously he was Assistant Vice
President in Citibank and prior thereto as Product Manager.
Manuel G. Santiago, Jr., holds the position of Senior Vice-President and Credit Cards Product Business Head. He
previously worked as Director for Operations in American Express Bank in Indonesia and prior thereto, Director for
Operations in American Express International, Manila.
Ceferino P. Tolentino, Jr., serves as Senior Vice-President of the Bank. Prior to joining the Bank, he was Vice
President in charge of the technical services at Dynamic Software Solutions International from 1987 to 1989 and
Assistant Vice-President of technology services of Metrobank from 1989 to 1994.
Jose Levi S. Villanueva is Senior Vice-President and Head of Retail Banking Center of the Bank. Prior to joining
the Bank, he was General Manager for PILTEL in the Visayas Region, Segment Manager for IBM-VISMIN and
Vice-President for Sales Management and Control under the Consumer Banking Group in Citibank.
Michaela Sophia E. Rubio, serves as First Vice President of the Bank and HR Director. She joined the Bank in
2004 as Vice President and handled the Human Resource Services, Training and Organization Development
31
divisions. Subsequently, she became the Deputy HR Director. Prior to joining the Bank, she was the Vice President
and Country Human Resource, Quality and Corporate Communications Head in the Philippines of the
global electrical and power company, Asea Brown Boveri (ABB) from 1999 - 2001. She worked from 2001 - 2003
as a Senior Consultant in OTi Consulting Singapore working with government owned and private organizations
on Singapore Quality Class/Award, People Developer, Industry Capability Upgrading (ICAP) and Work Life and
Work Redesign of which she was certified by SPRING Singapore. Before a career in Human Resource, she worked
for 10 years in the semiconductor and electronics manufacturing industry handling engineering and managerial
functions in Statistical Process Control and Quality.
Myrna E. Amahan, serves as Vice-President and Internal Auditor of the Bank. She is a Certified Public Accountant
(CPA), Certified Internal Auditor (CIA), Certified Information Systems Auditor (CISA) and has the designation of
Certification in the Governance of Enterprise Information Technology (CGEIT). On top of these certifications in
the field of internal audit and information technology, Mrs. Amahan is a qualified internal audit external validator
for having undertaken the necessary training as well as passing the required exams. As qualified external validator,
Mrs. Amahan is qualified to conduct a quality assessment of internal audit units as required under the International
Standards for the Professional Practice of Internal Auditing. She previously worked as supervising IS auditor at
Equitable-PCI Bank from 1996 to 2000 and was Head of the System Consultancy Services of the Commission on
Audit from 1993 to 1996. Also while with the Commission on Audit, Mrs. Amahan was among the government
auditors sent to various United Nations agencies to conduct information systems audit. Mrs. Amahan graduated
Magna Cum laude with the degree of Bachelor of Science in Commerce Major in Accounting from the University of
San Carlos. She obtained a Masters Degree in Public Management from the Development Academy of the
Philippines in 1994.
Robert B. Ramos, serves as Vice-President and Trust Officer of the bank. From 1995, Mr. Ramos held various
positions performing corporate finance, product/business development and wealth management functions. Mr.
Ramos is a Registered Financial Consultant and a CFA Charterholder. Mr. Ramos also completed the one year
course on Trust Operations with distinction
Atty. Dexter A. Tay, serves as the Officer-in-Charge of the Compliance and Corporate Governance of the Bank. He
has held this post since July 16, 2012. He previously served as Corporate Counsel for One Global Contact Center
and earlier as Director IV of the Presidential Anti-Graft Commission – Office of the President of the Philippines.
c)
Significant employee
No person who is not an executive officer of the Bank is expected to make a significant contribution to the
Bank.
d) Family Relationship among Directors
Chairman and CEO Justo A. Ortiz is a relative in the 6th degree of consanguinity (second cousin) of Directors
Stephen G. Paradies, Erramon I. Aboitiz, Iker M. Aboitiz, Sabin M. Aboitiz and Jon Ramon M. Aboitiz.
e)
Involvement in Certain Legal Proceedings
The Bank is a defendant/respondent in various legal actions arising in the ordinary course of business. In the
opinion of management, the ultimate liability arising from these claims will not have a material effect on the
Bank’s financial positions. Specifically, for the past five (5) years until to date, the Bank has not violated the
securities or commodities law. On the other hand, the directors and executive officers of the Bank have not been
involved in any legal proceedings which are material to the evaluation of the ability or integrity of any director or
executive officer of the Bank.
32
Item 10 - Executive Compensation
Information as to the aggregate compensation paid or accrued during the last two calendar years and to be paid in
the ensuing calendar year to the Bank’s Chief Executive Officer and four other most highly compensated executive
officers are as follows:
Aggregate Compensation
(net of bonuses)
Name
Justo A. Ortiz
Edwin R. Bautista
Eugene S. Acevedo
Jesus Roberto Reyes
Principal Position
Year
2013
Eugene S. Acevedo
Jesus Roberto Reyes
Herminio M. Pugeda
Guia C. Lim
All other officers & directors as a
group unnamed
171,368,616.00
42,842,154.00
Chairman & CEO
President & COO
Banking,
Commercial
Banking and Channels
Management Centers
SEVP – Retail Banking
and Corporate Banking
Centers
SEVP – Office of the
Bank Treasurer
2011
Justo A. Ortiz
Edwin R. Bautista
Bonuses
45,412,683.24*
Chairman & CEO
President & COO
Banking,
Commercial
Banking and Channels
Management Centers
SEVP – Retail Banking
and Corporate Banking
Centers
SEVP – Office of the
Bank Treasurer
2012
Justo A. Ortiz
Edwin R. Bautista
181,650,732.96*
158,181,609.60
39,545,402.40
Chairman & CEO
President & COO
EVP – Retail Banking
Center
EVP – Corporate Product
Banking Center
EVP
–
Corporate
Banking Center
2013
2012
2011
1,296,231,136.68*
1,222,859,562.90
1,329,689,797.32
324,057,784.17*
305,714,890.73
332,422,449.33
*estimated amount
The directors receive per diems for attendance in meetings of the Board and its committees in accordance with the
Bank’s By-Laws but do not receive compensation from the Bank for services rendered.
The executive officers receive salaries, bonuses, and other standard bank benefits that are already included in the
amounts stated above. There is no contract covering their employment.
There are no warrants or options held by the Bank’s officers and directors.
33
Item 11 - Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Record and Beneficial Owners:
The following are known to the registrant to be directly or indirectly the record or beneficial owner of more than 5
per cent of registrant’s voting securities (registrant has only one class of voting security, i.e. common shares) as of
March 31, 2013:
Title of Class
Common
Name, address of
Record Owner
& Relationship
with Issuer
Name, address of
Beneficial Owner
& Relationship
with Record Owner
Citizenship No. of Shares
Held
Percent
of
Class
110 Legaspi Street,
110 Legaspi Street,
Filipino
277,552,776
43.27%
Common
Minority Shareholders
Filipino
115,152,654
17.95%
Common
IL Corporate Center
Insular Life Drive
IL Corporate Center
Insular Life Drive
Filipino
103,359,204
16.11%
NOTE: Social Security System (SSS) is the only entity/person which holds more than 5% of the company’s
outstanding capital shares under the PCD Nominee Corporation with 33,210,913 shares (5.1776976%)
Common
Quezon City
Quezon City
Filipino
69,777,289
10.88%
**The respective proxies of these corporate shareholders are appointed by their respective Board of Directors and the Company becomes aware
of the identity of such proxies only when the corresponding proxy appointments are received by the Company. Based on previous meetings, Mr.
Jon Ramon M. Aboitiz and/or Erramon I. Aboitiz have been appointed proxies for Aboitiz Group, while Mr. Vicente R. Ayllon has been appointed
proxy for the Insular Life Ass., Co., Inc and Mr. Emilio S. de Quiros, Jr. has been appointed proxy for the SSS Group.
*The PCD, represented by its Associate Directors, Cornelia C. Dagdag and Josephine F. dela Cruz, only holds a legal title, not beneficial
ownership of the lodged shares.
*UnionBank has no stock options, warrants, rights or similar declarations as of report date.
(b) Security Ownership of Management
The following are the number of shares comprising the Bank’s capital stock (all of which are voting shares) owned
of record by the directors, Chief Executive Officer, key officers of the Bank, and nominees for election as director as
of March 31, 2013:
Title of Class
Common
Name of Beneficial
Owner
Number of Shares,
Amount and Nature of
legal and beneficial
Ownership
194
Citizenship
% of Class
(r)
Filipino
0.000%
(r)
Filipino
0.714%
P1,940.00
Common
4,579,378
34
Common
Stephen G. Paradies
P45,793,780.00
4,068
(r)
Filipino
0.001%
( b)
Filipino
0.065%
(r)
Filipino
0.000%
2,715,808
(b)
Filipino
0.423%
P27,158,080.00
100
P1,000.00
(r)
Filipino
0.000%
Filipino
0.050%
P40,680.00
Common
Stephen G. Paradies
420,000
P4,200,000.00
Common
Erramon I. Aboitiz
194
P1,940.00
Common
Erramon I. Aboitiz
Common
Iker Markel Aboitiz
Common
Iker Markel Aboitiz
Common
Common
322,207
P3,222,070.00
2,126
P21,260.00
(b)
(r)
Filipino
0.000%
682
(b)
Filipino
0.000%
(r)
Filipino
0.773%
(b)
Filipino
0.001%
Filipino
0.000%
(r)
Filipino
0.000%
P6,820.00
Common
Justo A. Ortiz
4,959,673
P49,596,730.00
Common
Justo A. Ortiz
Common
5,555
P55,550.00
361
(r)
P3,610.00
Common
Mayo Jose B. Ongsingco
164
P1,640.00
Common
3,540,502
(r)
Filipino
0.552%
Common
P35,405,020.00
908
P9,080.00
(b)
Filipino
0.000%
Common
Vicente R. Ayllon
118
(r)
Filipino
0.000%
(r)
Filipino
0.000%
P1,180.00
Common
Carlos R. Raymond Jr.
65
35
Common
Common
Reynato S. Puno
P650.00
65
(r)
Filipino
0.000%
Eliza R. Antonino
P650.00
1
(r)
Filipino
0.000%
1
(r)
Filipino
0.000%
P10.00
4,094
(r)
Filipino
0.001%
(r)
Filipino
0.015%
Filipino
0.042%
P10.00
Common
Common
Emilio S. De Quiros Jr.
Daniel Edralin
P40,940.00
Common
Fe B. Macalino
97,052
P970,520.00
Common
Edwin R. Bautista
270,000
P2,700,000.00
Common
Catalino S. Abacan
Common
(r)
79,529
(r)
Filipino
0.012%
P795,290.00
272,192
(r)
Filipino
0.042%
(r)
Filipino
0.009%
153,457
P1,534,570.00
(r)
Filipino
0.024%
90,274
(r)
Filipino
0.014%
142,210
(r)
Filipino
0.022%
P1,422,100.00
29,216
(r)
Filipino
0.005%
P292,160.00
597,496
(r)
Filipino
0.093%
(r)
Filipino
0.052%
(r)
Filipino
0.002%
P2,721,920.00
Common
Ramon G. Duarte
59,529
P595,290.00
Common
Common
Joyce S. Gonzalez
Cesar G. Ilagan
P902,740.00
Common
Genaro V. Lapez
Common
Angelo Dennis L.
Matutina
Common
Teodoro M. Panganiban
P5,974,960.00
Common
Beatriz B. Romulo
331,857
P3,318,570.00
Common
Manuel De Guzman
Santiago Jr.
11,905
P119,050.00
36
Common
Ceferino P. Tolentino Jr.
(r)
Filipino
0.009%
(r)
Filipino
0.006%
2,432
P24,320.00
(b)
Filipino
0.000%
15,545
(r)
Filipino
0.002%
59,529
P595,290.00
Common
Jose Levi S. Villanueva
39,407
P394,070.00
Common
Myrna E. Amahan
Common
P155,450.00
Common
164,632
(r)
Filipino
0.026%
Common
P1,646,320.00
25,030
P250,300.00
(b)
Filipino
0.004%
Common
Eugene Acevedo
Filipino
0.015%
97,938
(r)
P979,380.00
The aggregate number of shares owned of record by the Chief Executive Officer, key officers and directors as a
group as of March 31, 2013 is 19,095,494 shares equivalent to Php190,954,940.00 @ P10.00/share which is
approximately 2.98% of the Bank’s outstanding capital stock.
“r” represents record ownership
“b” represents beneficial ownership at par value of P10.00/share
There is no existing voting trust agreement involving shares of the Bank.
There has been no change in the control of the Bank for the past calendar year which may result in a change of
control thereat. Likewise, there has been no arrangement among shareholders which may result in a change of
control of the Bank.
Item 12 - Certain relationship and Related Transactions
In the ordinary course of business, the Group has loans, deposits and other transactions with its related parties and
with certain directors, officers, stockholders and related interests (DOSRI). Under the Group’s existing policies,
these transactions are made substantially on the same terms and conditions as transactions with other individuals and
businesses of comparable risks. The amount of individual loans to DOSRI, of which 70% must be secured, should
not exceed the amount of the deposit and book value of their investment in the Group. In the aggregate, loans to
DOSRI generally should not exceed the total equity or 15% of the total loan portfolio of the Group, whichever is
lower. As of December 31, 2012 and 2011, the Bank is in compliance with these regulatory requirements.
The summary of the Group’s significant transactions with its related parties are discussed in Note 34 of the Audited
Financial Statements.
37
PART IV – CORPORATE GOVERNANCE
Item 13 - Discussion on Compliance with leading practice on corporate governance
The Bank’s Corporate Governance Evaluation System
The Bank utilizes various measures to gauge its state of corporate governance. The annual conduct of selfassessment by the Board and its Committees as well as the external ratings and surveys of regulatory agencies and
private organizations form part of the Bank’s evaluation system to determine its level of corporate governance. The
Bank publicly projects and obtains independent feedback on the state of its corporate governance through the
following means:
First, the Bank complied with the requirement of the SEC on one-time submission of its Corporate Governance Self
Rating Form in July 2003.
Second, it participates annually in the Corporate Governance Scorecard Survey of the Institute of Corporate
Directors (ICD) for publicly listed companies (PLCs) as required by the SEC. The Corporate Governance Scorecard
Survey for PLCs evaluates a company’s corporate governance based on disclosure and transparency (25% weight),
board responsibilities (25%), rights of shareholders (20%), equitable treatment of shareholders (20%) and role of
stakeholders (10%). The Bank has been consistently recognized as a Silver Awardee in both 2009 and 2010
Corporate Governance Scorecard surveys for PLCs. In the last run of ICD’s corporate governance scorecard for
2011, the Bank received a gold award for garnering 96% rating. For 2012, the Bank participated in the ASEAN
corporate governance scorecard, the results of which are yet to be announced.
Thirdly, beginning 2010, the Bank accomplishes and submits its Corporate Governance Guidelines Disclosure (CG
Guidelines Disclosure) as required by the PSE. Since then, the Bank has been 97% compliant with the corporate
governance practices and recommendations of the PSE.
Finally, the Bank annually certifies the Bank’s compliance with the SEC’s Code of Corporate Governance. Last
January 30, 2012, the Bank, through its Chief Compliance & Corporate Governance Officer, certified that for the
year 2012, it complied with the provisions of the said code. Said certification was submitted to SEC and PSE.
Governance Processes and Policies
A culture of ethics and compliance is at the heart of corporate governance of the Bank. It sets the standards expected
of everyone in the Bank on whom the obligation for exercising good governance is vested. The Board of Directors
sets the tone at the top, which everyone has the responsibility to follow.
The Bank's well-structured and efficiently functioning Board serves as its foremost instrument in ensuring adherence
to adopted leading practices on good governance. The Board oversees the Bank’s governance and continuously
strives to create value for and enhance the long term interests of its stakeholders.
The Board consists of fifteen (15) members, including three (3) independent non-executive directors, eleven (11)
non-executive directors, and two (2) executive directors. They are each elected by stockholders entitled to vote at the
annual meeting. The qualifications and disqualifications of directors are set in the Manual on Corporate Governance
of the Bank. The Board members hold office for one (1) year or until their successors are elected and qualified, in
accordance with the Bank’s By-laws. The Bank adopted the Securities and Exchange Commission’s (SEC) Rule on
Term Limits of independent directors. Hence, starting effective January 2, 2012, independent directors shall only
serve for five consecutive years, after the completion of which, they shall undergo a cooling-off period of two (2)
years. After the cooling-off period, the same independent directors may again be re-elected and serve for another
five (5) consecutive years, provided they have not engaged in any activities that would disqualify him as an
independent director of the Bank.
To assist the Board in competently acting upon its responsibilities, it has established nine committees, namely,
Executive Committee, the Risk Management Committee, the Market Risk Committee, the Operations Risk
38
Management Committee, the Audit Committee, the Corporate Governance Committee, the Nominations SubCommittee, and the Compensation & Remunerations Sub-Committee. The Corporate Governance Committee,
chaired by an Independent Director, is primarily responsible for assisting the Board in undertaking its governance
responsibilities and fulfilling the Bank’s unyielding commitment to uphold sound governance. It serves as the
primary resource for the Board to study and evaluate its own and its Committees’ structures, policies and practices
for the purpose of raising the bar of the Bank’s corporate governance.
The Bank has also designed a corporate governance roadmap, which essentially covers three stages, namely,
compliance, competence and culture. Guided by its roadmap, the Bank is set to attain progressively ascending states
of corporate governance.
The Bank has the following policies and mechanisms aimed at bolstering its current resilient corporate governance
regime.
Manual on Corporate Governance
The Bank’s Manual on Corporate Governance embodies leading principles and practices on good corporate
governance. It lays down the details on the Bank’s governance and compliance system, organizational and
procedural controls, independent audit mechanism as well as the functions of the external auditor and of the
Chief Compliance & Corporate Governance Officer. It further provides for policies on disclosure and
transparency and the compliance system of the Bank. Most importantly, the CG Manual underscores its
recognition and continuous promotion of the rights of its stockholders, especially those of the minority.
The Manual is subject to review periodically especially when relevant regulations are issued by regulatory
agencies. In 2010, the Board, in compliance with the SEC’s Revised Code of Corporate Governance and
upon endorsement of the Corporate Governance Committee, approved the Revised Manual on Corporate
Governance. Policies on conflict of interest, related-party transactions and alternative dispute resolution
were among the adopted and strengthened governance policies. Recently, the Bank reviewed the Manual
vis-à-vis the Guidelines in Strengthening Corporate Governance Guidelines in BSP Supervised Financial
Institutions.
Enterprise Risk Management
The Bank has reinforced the objective of strengthening its corporate resilience by establishing a system for
Enterprise-wide Risk Management (ERM). ERM disciplines and processes are being institutionalized and
internalized throughout the Bank and embedded in each UnionBanker as an integral part of how the Bank
conducts business. The Bank’s Chief Risk Officer (CRO) has been specifically designated as the
Champion for its implementation.
The following have been placed under the CRO’s direct oversight:
1.
2.
3.
4.
5.
6.
7.
8.
Corporate Risk Management Policy
Formal ERM Strategy
Risk Appetite and Tolerance Strategy
Common Risk Management Language
Risk Management Education and Training
Periodic Risk Assessment and Risk Treatment, both strategic and operational, by Business units
Risk Strategies and Action Plans for Residual Risks
Business Continuity Planning and Management
At least on an annual basis, the CRO shall help the Board evaluate enterprise-wide risks and risk
management performance. This will then lead to senior management formulating and integrating
Enterprise-wide Risk Management Strategies with the Bank’s Strategic and Business Plans.
39
Compliance Program
The Bank has in place a Board-approved Compliance Program that adheres to external rules and
regulations especially those issued by the BSP, SEC, PSE, Philippine Deposit Insurance Corporation
(PDIC), Anti-Money Laundering Council (AMLC), and other regulatory agencies. The Compliance and
Corporate Governance Office, the Office of the Corporate Secretary, and the Bank’s various units, are
responsible for ensuring compliance with regulatory enactments, statutes or circulars, and other
requirements of these regulatory agencies. On 28 October 2011, the Board approved the Bank’s revised
Compliance Program, which is further designed to ensure adherence not only to all laws, regulations and
circulars relevant to its business, but also to the Bank’s internal policies, including its Code of Conduct, as
well as to industry-accepted best practices.
Disclosure and Transparency
The Bank considers timely and fair disclosure of material information relating to the Bank’s operations as
crucial for the protection of shareholders’ rights. It is thus compliant with regulations on disclosure. The
Bank submits various periodic and non-periodic reports required under applicable laws and regulations. It
submits current reports to the SEC and the PSE, as necessary, to make full, fair, accurate and timely
disclosures to the public on material facts or events that may reasonably be expected to affect investors’
decision in relation to the Bank’s securities.
Audit System
Directly reporting to the Board’s Audit Committee, the Bank’s Internal Audit Division provides reasonable
assurance to the Board, Senior Management, and its stockholders that the Bank’s risk management
activities are effective. This involves providing assurance that Bank’s key organizational and procedural
controls are effective, appropriate, and complied with. It also conducts special administrative investigations
when required to do so pursuant to the Bank’s Code of Conduct. The Division has its own charter which
directs performance of its functions.
The Bank engages the services of an independent external auditor, who examines the financial statements
of the Bank in accordance with generally accepted auditing standards and expresses its opinion on the
fairness of its presentation upon completion of such examination.
The Bank’s Audit Committee has the primary responsibility to recommend the appointment, reappointment and removal of external auditors, subject to approval by the Board of Directors and
confirmation of the stockholders.
Fair Securities Dealing
In order to continually uphold transparency and integrity in the trading of its securities, the Bank has
adopted a Trading Guidelines and Blackout Policy. This aims to apprise and to ensure compliance by all
“Covered Persons” with their obligations under the SRC and other securities rules and regulations relating
to the trading or dealing of the Bank’s shares. Covered Persons refer to directors, principal officers, and all
other employees of the Bank who are made aware of undisclosed material non-public information,
including their immediate families living in the same household.
To protect the investing public, the Chief Compliance and Corporate Governance Officer issues notices of
trading blackout which prohibits the trading of the Bank’s shares within defined periods before and after
material non-public information are disclosed and made available to the public.
Directors, principal officers of the Bank and the rest of the covered persons are also mandated to report to
the Stock Transfer Unit or the Human Resources Services their transactions involving the Bank’s shares or
any changes therein no later than one trading day after such transaction/s.
40
Anti-Money Laundering Efforts
The Bank has its own programs and procedures to support the anti-money laundering efforts of the BSP,
AMLC, and other regulatory agencies of the government.
Its Money Laundering and Terrorist Financing Prevention Program (MLPP), updated on 28 October 2011,
provides an easy access to laws and regulations pertinent to anti-money laundering, guidelines on knowyour-customer (KYC) requirements, the Bank’s anti-money laundering training programs, and other
relevant information. The Bank’s Anti-Money Laundering Committee reviews and evaluates the
correctness of designating as “suspicious” transactions reported as such, before the reports are forwarded to
AMLC.
The Bank has similarly improved its anti-money laundering orientation, training and refresher programs by
providing every officer and personnel easy intranet access to its anti-money laundering electronic learning
system (AML eLearning). The AML eLearning system gives a user-friendly, interactive approach in
proving each employee of the Bank information and education on the anti-money laundering efforts not
only of the Government, but also of the Bank. The employee is further gauged on his or her knowledge by
providing a graded test after the program.
Ethical Standards
The Bank’s philosophy for corporate governance extends beyond prescribed mandates and obligations. The
Bank has a Code of Conduct that outlines the expectations of and standards for employee behavior and
ethical conduct, as well as the systems used to ensure compliance therewith. It is divided into three parts,
namely, Ethical Standards, Disciplinary Action, and Procedure for Administrative Due Process.
Ethical standards part spells out the ethical behavior expected of everyone in the Bank in performing one’s
functions especially when dealing with co-employees, customers, suppliers, the government and the
community. The Disciplinary Action part provides for the particular offenses violative of the ethical
standards of the Bank, and their corresponding administrative penalties. Finally, the Administrative Due
Process part outlines the proper procedure to be followed in case of violation of the Code, which is in
accordance with what the laws prescribe.
Each copy of the Bank’s Code of Conduct distributed to employees is accompanied by two forms, i.e. copy
of certification of compliance with the Code of Conduct and Disclosure of Conflict of Interest, and a copy
of problem escalation report form.
Every employee is tasked to report any actual or suspected violation of the Bank’s code, other policies and
procedures, immediately upon discovery thereof, to his Unit Compliance Officer. The Unit Compliance
Officers and the Internal Audit Division conduct their fact-finding investigations for violation of the Code
for cases falling within their respective jurisdictions. Investigation reports of these bodies, consisting of
facts of the case, modifying circumstances, if any, provisions of the Code violated, decisions in previous
administrative cases, and any applicable laws and jurisprudence, are submitted to the Discipline
Committee.
The Discipline Committee, after determination that the investigation reports of the fact-finding bodies are
complete, shall deliberate on the propriety of the offense established by the fact-finding bodies and the
recommended disciplinary actions therefor. Should there be a need for further clarification, the Discipline
Committee will summon the employee concerned for clarificatory conference. The employee concerned
may be accompanied by a counsel or any Bank employee or union officer (for rank and file). The
Discipline Committee shall thereafter submit its recommendation on the case to the center head of the
employee involved.
Guided by its Code of Conduct, the Bank has consistently conducted its business in accordance with its
pledged values to its other stakeholders, thereby creating goodwill in the industry.
41
Strong Stakeholders Relations
Good corporate governance of the Bank rests on its stable relationship with its stakeholders to whom it has
duties and obligations. The Bank is devoted to high level of moral conduct and fair dealing with all its
stakeholders, who generally include its employees, depositors and other clients, suppliers, the state, and
the public at large. It understands the important role that its general stakeholders have in corporate
governance. The Bank has an Investor Relations Office that strengthens its relations with investors through
the development and implementation of investor relations programs.
CG Manual Deviations
The Bank is not aware of any deviation from its Corporate Governance Manual by any of its directors, officers and
employees.
Commitment to Enhanced Governance
The Bank recognizes the need to continuously adapt to changing times and milieu. It continues to enhance its
corporate governance structure based not just on what the law prescribes, but also on what the established best
practices demonstrate. It undertakes to consistently review and update its existing policies and practices to achieve
an improved state of governance.
The Bank continues to adopt means to improve its corporate governance. In 2011 and 2012, the Bank partnered with
the Institute of Corporate Directors (ICD) in conducting corporate governance orientation courses for its senior
management executives and other key officers.
The Bank is actively involved in associations advocating good corporate governance. The Bank is a member of
Good Governance Advocates and Practitioners of the Philippines. It participates in significant events and activities
promoting best governance practices. On June 30, 2012, the Bank’s Chairman and CEO, Mr, Justo A. Ortiz was the
keynote speaker in ICD’s Annual Dinner and Awards Night for the top-ranking companies in the 2012 Corporate
Governance Scorecard for PLCs, with the theme “Values-based Governance.” On September 11, 2012, Mr. Ortiz
was also chosen as one of the members of the panel in the ASEAN Corporate Governance Scorecard Roll-Out in the
Philippines. Among other key events participated in by the Bank were ICD’s Investor’s Forum on Corporate
Governance and the 2012 Bohol Working Session with the theme “Gearing Up for Asian Governance”; Asian
Institute of Management’s Hills Program on Governance’s “Corporate Governance Trends in the 100 Largest
Publicly Listed Companies in the Philippines”; and Corporate Governance Asia’s Philippine Forum 2012.
UNDERTAKING TO PROVIDE COPIES OF THE ANNUAL REPORT AND
INTERIM FINANCIAL STATEMENTS
The Bank undertakes to provide without charge to any stockholder who makes a written request for a copy of the
Bank’s annual report on SEC Form 17-A. Requests may be sent to Ms. Virgie San Pascual 18th Floor, UnionBank
Plaza, Meralco Avenue corner Onyx and Sapphire Streets, Ortigas Center, Pasig City.
The Bank likewise undertakes to provide without charge to any stockholder, during the Annual Stockholder’s
Meeting, a copy of SEC Form 17Q containing UnionBank’s Interim Financial Statements, Management Discussion
and Analysis of Financial Condition and Results of Operation.
42
PART V – EXHIBITS
Item 14 - Exhibits and Reports on SEC Form 17C
a) Exhibits – Please refer to the Index to Exhibits on page 46.
The other exhibits, as indicated in the Exhibit Table of Securities Regulation Code Forms are either not
applicable to the Bank or require no answer.
b) Report on SEC Form 17C
The following reports on SEC Form 17C (Current Report) were filed during the last six months of 2012
and 1st quarter of 2013
Date of Report
July 17, 2012
July 27, 2012
July 27, 2012
July 30, 2012
August 24, 2012
October 03, 2012
October 04, 2012
October 24, 2012
October 24, 2012
November 21, 2012
December 14, 2012
December 14, 2012
Event Reported
Resignation of Atty. Marissa B. Espino, Vice President/ Chief
Compliance and Governance Officer effective July 15, 2012 and
appointment of Atty. Dexter A. Tay as the Officer-in-Charge of
Compliance and Corporate Governance effective July 16, 2012.
Board approval on the designation of Independent Director Mr.
Carlos B. Raymond, Jr. as the new Chairman of the Corporate
Governance Committee, vice Independent Director Mr. Armand
F. Braun, Jr. effective July 30, 2012.
UnionBank Consolidated Statements of Financial Position as of
June 30, 2012 and Consolidated Statements of Income for the
six months period ended on the same date
UnionBank Balance Sheets (Parent and Bank with Financial
Subsidiaries) as of June 30, 2012
Board approval on the (1) resignation of Director Mr. Vicente
R. Ayllon as regular member and Vice Chairman of the Board’s
Executive Committee; (2) election of Director Mr. Mayo Jose B.
Ongsingco as the regular member and Vice Chairman of the
Executive Committee; and (3) election of Director Mr. Vicente
R. Ayllon as alternate member of the Executive Committee.
List of UnionBank Executives who participated in the Stocks
Investment Loan Program (SILP)
Self Assessment Questionnaire prepared based on the
requirements of SEC Memorandum Circular No. 4, Series of
2012.
Board approval on the election of Mr. Stephen G. Paradies as an
alternate member of the Board’s Corporate Governance
Committee.
September 30, 2012 and Consolidated Statements of Income for
the nine months period ended on the same date
Subsidiaries) as of September 30, 2012
Board approval on the resignation of Director Mr. Ricardo G.
Librea as Director of Unionbank effective December 31, 2012
and Election of Retired Chief Justice Reynato S. Puno as the
new and third Independent Director of UnionBank to fill up the
vacancy effective January 01, 2013.
Retired Executive with SILP availments – Mr. Mardonio C.
Cervantes
43
January 08, 2013
January 09, 2013
January 25, 2013
January 25, 2013
January 25, 2013
January 25, 2013
January 25, 2013
January 25, 2013
January 30, 2013
January 30, 2013
February 06, 2013
February 22, 2013
February 22, 2013
March 01, 2013
March 06, 2013
March 07, 2013
March 22, 2013
March 22, 2013
March 22, 2013
March 22, 2013
Board approval to purchase the 99.54% shares of Aboitiz Equity
Ventures, Inc. and Pilmico Foods Corporation in City Savings
Bank, Inc. by UnionBank.
Membership of Mr. Vicente R. Ayllon as alternate member of
Market Risk Committee and Operations Risk Management
Committee
Board approval/endorsement for stockholders approval on the
recommendation of Compensation and Remuneration
Committee for the increase in the per diem of Non-Executive
and Independent Directors and retainer’s feed of Independent
Directors.
December 31, 2012 and Consolidated Statements of Income for
the period ended on the same date
Retied Executives with SILP availments – Mr. Peter F.
Quiambao and Mr. Alejandro E. Reyes.
Board approval of the appointment of Mr. Rodrigo J. Montaniel,
Vice President, as AMLA Officer-in-Charge replacing Vice
President, Mr. Alejandro E. Reyes who will be retiring from
active service with the Bank on February 01, 2013.
Board approval/endorsement for stockholders’ approval the
proposed amendment of UnionBank’s Articles on Incorporation
(Page 2) – to extend its corporate terms for another fifty (50)
years.
Board approval on the cash dividend declaration of P3.50 per
share.
Subsidiaries) as of December 31, 2012
Correction on the rank of Mr. Rodrigo J. Montaniel from Vice
President to Assistant Vice President
Board approval on the request for UnionBank to proceed with
the transaction as proposed where the Bank cannot anymore
walk-away from the purchase transaction of CitySavings from
Selling Shareholders.
Retired Executive with SILP availment – Ms. Edna R.
Makalinaw
Resigned Executive with SILP availments – Mr. Leonides of
Intalan
Joining of Ms. Ana Marie R. Acuna as Head of Commercial
Risk with the rank of Vice President under the Enterprise Risk
Management effective March 01, 2013.
Board approval of the setting of the Record Date for
stockholders to entitled to cash dividend declaration to be March
20, 2013 while payment date is on April 18, 2013.
Board approval on the membership of Independent Director
Chief Justice Reynato S. Puno (ret.).
Retired Executive with SILP availments – Mr. Ramon R. Castro
Resigned Executive with SILP availments – Mr. Paul Patrick M.
Carague
Board approval of the record date of April 10, 2013 for Annual
Stockholders’ Meeting on May 24, 2013.
Deed of Sale of Shares of Stock by and between AEV, Pilmico
and UBP.
44
SIGNATURES
Pursuant to the requirements of Section 17 of the Code and Section 141 of the Corporation Code, this report is
signed on
behalf of the
issuer by the
undersigned,
thereunto duly authorized,
in
the
City of
Pasig on
J
s
ff}f1
Chauma andChiefEfv:lafficer
By:
;;RNAS
JEsJES
President and ChiejOperating Officer
SEVP, Treasur,erf:
ATTY/CESAR .ILAGAN
ATTY. FE B.
{(O
SVP-Financial Controller!
W
/
V
ACALINO
SVP-Corporate Secretary
Principal Accounting Officer l'
APR U 3 :013
SUBSCRIBED AND SWORN to before me this
__
affiants personally known to me and exhibiting to me their SSS 1.0.
of
April 2013
at Pasig City, the following
umber bearing their photographs and genuine
signatures as competent evidence of identity in accordance with the 2004 Rules on Notarial Practice.
SSS J.D. No.
Name
Doc No.
610
Justo A. Ortiz
03-4550955-4
03-3541239-2
03-5450675-5
Cesar G. Ilagan
03-2350789-5
Fe B. Macalino
03-5248240-2
_,
MIGUEL G. PADERNAL
Page No.
,,2
Book No. I t'iV II
Notary Public for Paslg, Tagulg,
San Juan and P8tIHO!
mmission Expires on Oec!mb!r 31, 2
Series of2013.
IBP No, 9088201 12.07.12
PTR No. 77075151 03.01.121 Puig
Roll of Attorneys No. 25837
Appointment No. 056 (2013.20
45
1
Index to Exhibits
Form 17A Item 14
Exhibit Number
(18)
Subsidiaries of the Registrant
(29)
Additional Exhibits
Annex 1 - List of ATM Terminal as of December 31, 2012
Annex 2 - List of Bank Owned Branches as of December 31, 2012
Annex 3 - List of Leased Branches as of December 31, 2012
46
Exhibit (18) Subsidiaries of the Registrant
UnionBank of the Philippines subsidiaries and affiliates include:
Percentage Ownership
Subsidiaries:
Union Properties, Inc. (“UPI”)
and subsidiaries:
100.0%
First Union Direct Corporation (“FUDC”)
First Union Plans, Inc (“FUPI”)
100.0%
100.0%
Union Bank Currency Brokers Corp (“UCBC”)
100.0%
Union Data Corporation (“UDC”)
100.0%
UBP Securities, Inc. (“UBPSI”)
100.0%
UBP – Insurance Brokers, Inc. (“UBPIBI”)
100.0%
Interventure Capital Corporation
60.0%
47
Annex 1
LIST OF ATM TERMINAL
As of December 31 2012
ATM TERMINAL
ADDRESS
1
ABOITIZ OFFSITE
Aboitiz & Co. Building Archbishop Reyes Avenue Banilad, Cebu City
2
C CUBE
Hinduja Cyberpark .,#86 E. Rodriguez Jr. Avenue.,Libis, Quezon City
3
CEBU BUSINESS PARK
OFFSITE
Cardinal Rosales Avenue., Cor. Samar Loop Cebu Business Park., Cebu City
4
CEBU E-MALL
Elizabeth Mall corner M. Pacalso, Leon Kilat, Cebu City
5
CEBU LEXMARK
Mactan Economic Zone II, Basak, Lapu-Lapu City
6
CEBU LEXMARK 2
LRDC Plaza 2 Bldg, Cebu Business Park, Cebu City
7
CITYWALK
2nd Floor Building B.,Citywalk 2 Mall, Eastwood.,Libis Quezon City
8
CLUB TROPICANA - LAS
PINAS
VIP Arcade, Ltd. Alabang – Zapote Rd., Las Piñas
9
CLUB TROPICANA - STA.
MESA
4166 GP Ramon Magsaysay Blvd., Sta Mesa, Manila
10
GSIS COMPLEX
GSIS financial Complex, Roxas Blvd.,Pasay City
11
GSIS COMPLEX 2
GSIS financial Complex, Roxas Blvd.,Pasay City
12
LA SALLE ZOBEL
Gate 5, La Salle Zobel,University Avenue, Ayala-Alabang Village.,Muntinlupa City
13
MAKATI MED OFFSITE
Makati Medical CenterNo. 2 Amorsolo Street Legaspi Village Makati City
14
MJC CARMONA
San Lazaro Leasure Park, Governor Drive., Carmona Cavite
15
PELCO
Pampanga I Electric Coop Inc, Sto Domingo Mexico Pampanga
16
QUALFON OFFSITE
Cardinal Rosales Avenue., Cor. Samar Loop Cebu Business Park., Cebu City
17
RESORTS WORLD
Resorts World Manila, Newport Boulevard, Newport City Pasay 1309, Metro Manila
18
SCHENKER
Km19 West Service Road Sabrina Compound Marcelo Green Paranaque
19
SITEL OFFSITE
Bldg. E, Ortigas Home Depot # 1 Doña Julia Vargas Avenue, Barangay Ugong Pasig City, 1604
Philippines
20
STARTEK MAKATI
Ground Floor, SM Makati CyberZone, Sen. Gil Puyat
Ave., Makati City
21
STARTEK ORTIGAS
Eton CyberPod, Corinthians Business Center, Along Ortigas Avenue (infront of Robinsons Galeria
)
22
STARTEK ORTIGAS 2
Eton CyberPod, Corinthians Business Center, Along Ortigas Avenue
23
TRANSCOM MANDALUYONG
Filinvest uilding EDSA 167 Brgy Wack Wack Greenhills Mandaluyong City
48
24
TRANSCOM ORTIGAS
Transcom Center Bldg. Las Fiestas Road, Frontera Verde Compound Pasig City
25
UDMC
290 N. Ramirez St., E. Rodriguez, QC in front of Welcome Rotonda
26
UST
Ground flr Vestibule building, UST Hospital, Lacson Avenue, Sampaloc Manila
27
2ND AVENUE BONIFACIO
GLOBAL CITY
2nd Ave. Bonifacio Global City, Taguig City 1201
28
32nd ST BONIFACIO GLOBAL
CITY
Unit, Trade and Financial Tower Bldg., 7th Ave. cor 32nd St., BGC, Taguig City
29
5TH AVE BONIFACIO
GLOBAL CITY
Unit 3 Ground Floor, One Global Place, 5th Avenue corner 25th Street bonifacio Global City,
Taguig City
30
ABS - CBN
ABS-CBN Compound. Mother Ignacio St. City, Quezon City 1100
31
ACROPOLIS
171 Bridgeview Building, E. Rodriguez Jr. Avenue, Bagumbayan, Q.C.
32
AGUIRRE
Republic Glass Bldg., 196 Aguirre cor. Salcedo St., Makati City
33
ALABANG TOWN CENTER
Alabang cor. Theater and Commerce Ave., Alabang Town Center, Muntinlupa City
34
AMORSOLO
G/F, Ibank Exchange Building.,142 Amorsolo str., Legaspi Village.,Makati City
35
ANNAPOLIS
G/F Mercedes ! Bldg., Annapolis Street, Greenhills.,San Juan, Metro Manila
36
ANTEL RESIDENCES
Antel Residences Branch Makati Ave Makati City
37
ARANETA AVENUE
Del Moral Building, 341 G. Araneta Ave., Quezon City
38
AURORA
708 A. Dona Consuelo Bldg.,Aurora Boulevard cor Hemady st., New Mla, Quezon City
39
AYALA ALABANG
G/F, NOL Building, Commerce Ave. Madrigal Business Park Alabang Muntinlupa City
40
AYALA AVENUE
G/F, Don Vicente Madrigal Building.,6793 Ayala Avenue, Makati City
41
AYALA AVENUE 2
G/F, Don Vicente Madrigal Building.,6793 Ayala Avenue, Makati City
42
AYALA RUFINO
Rufino Bldg. Ayala Ave. corner Herrera St., Makati City
43
BACLARAN
BACLARAN 2/F Baclaran Supermall, F.B. Harrison corner Taft Avenue Extension, Baclaran
Paranaque City
44
BAESA
Dra. Concordia Pascual Bldg., 142 Quirino Highway, Baesa, Q. C.
45
BANAWE
Banawe Street corner Quezon Avenue., Quezon City
46
BF HOMES
47
BICUTAN
48
BINONDO
49
BONI AVENUE
G/F Hap Hong Building, Q. Paredes cor. Dasmariñas St., Binondo, Manila
655 Boni Avenue corner Ligaya Street.,Mandaluyong City
50
BONIFACIO GLOBAL CITY
G/F MANCOR Corporate Center,32nd St. Bonifacio Global City, Taguig City 1201
51
BSA TOWER
GF BSA Tower, Bank Drive, Ortigas Center Pasig City
52
CARDINAL SANTOS
10 Wilson Street, Greenhills West, San Juan City
55 President's Avenue, BF Homes Subdivision., Paranaque City
28 Dona Soledad Avenue, Better Living Subd., Paranaque City
49
53
CITY PLACE SQUARE
Unit CP 3-3, Lucky Chinatown-Cityplace Square, Calle Felipe corner La Chambre Street, Barangay
293, Zone 28, Binondo, Manila
54
COMMONWEALTH AVENUE
G/F, JOCFER Building, Commonwealth Ave., Diliman Quezon City
55
CONGRESSIONAL
EXTENSION
Congressional Ave. Ext near cor. Mindanao Avenue
56
CUBAO
P. Tuazon St., corner 7th Avenue., Cubao Quezon City
57
CUBAO RUSTANS
Ground Floor, Rustans Superstore Bldg., Araneta Center, Cubao Quezon City
58
DASMARINAS BINONDO
6-A Cu-unjieng building Q. Paredes corner Dasmarinas streets., Binondo Manila
59
DEL MONTE
447 Del Monte Avenue corner Biak-Na-Bato St., Quezon City
60
DELA COSTA
G/F Lobby Unit, Singapore Airlines Bldg.HV dela Costa St, Salcedo Village, Makati City
61
DR. A. SANTOS LLANAS
G/F Lianas Supermarket,
62
E. RODRIGUEZ
Dr. A Santos Avenue cor. Canaynay Ave. Sucat, Parañaque
78-E E. Rodriguez Sr. Avenue, Q.C
63
EASTWOOD CITY
G/F Unit 1880-1a Eastwood Building, Eastwood Avenue, Eastwood Cyberpark, E. Rodriguez, Jr.
Avenue
64
EDSA KALOOKAN
512 EDSA corner Urbano Plata Street.,Kalookan City
65
EDSA PIONEER
Level 1, Space No. 107 ¬ Robinsons Cybergate Plaza, EDSA corner Pioneer
Street, Mandaluyong City 1550
66
EMERALD AVENUE
G/F, Corporate Plaza Building.,Emerald Ave., Ortigas Center Pasig City
67
ERMITA MABINI
1336 A. Mabini St., Ermita, Manila
68
ESCOLTA
G/F Regina Building, Escolta
69
EXCHANGE REGENCY
Exchange Regency - G/F The Exchange Regency, Meralco Ave cor Exchange Rd cor Jade Drive,
Ortigas Centre, Pasig City
70
GOTESCO COMMONWEALTH
Ever Gotesco Commonwealth, Don Antonio St., corner Commonwealth Ave.
71
GREENBELT
Aboitiz Bldg., 110 Legaspi St., Lagaspi Village, Makati city
72
GREENFIELD DISTRICT
Grand Soho Central Mandaluyong City
73
GREENHILLS
Ortigas Avenue near corner Wilson St.Greenhills, San Juan Metro Manila
74
ICTSI PORT AREA
G/F ICTSI Administration Building, Manila International Container Terminal, MICT South Access
Road, Manila
75
INSULAR AYALA PASEO
Insular Building Ayala Avenue., corner Paseo de RoxasMakati City
76
INSULAR AYALA PASEO 2
Insular Building Ayala Avenue., corner Paseo de RoxasMakati City
77
INTRAMUROS
G/F, BF Condominium Building.,A. Soriano Avenue, Intramuros, Manila
78
JP RIZAL
# 731 J.P. Rizal Street, Makati City
79
JULIA VARGAS
Centerpoint Cond., Doña Julia Vargas Ave. cor. Garnet St., Ortigas Center, Pasig City
80
KALOOKAN
11th 357 Rizal Ave. Ext. Grace Park, Kalookan City
50
81
KALOOKAN 9TH
9th Avenue near corner Rizal Avenue, Grace Park, Kalookan City
82
KAMIAS
G/F, TDS Building.,No. 72 Kamias Road, Quezon City
83
KATIPUNAN
335 AGCO Building, Katipunan Avenue., Loyola Heights., Quezon City
84
LAS PINAS PAMPLONA
Alabang-Zapote Road corner Crispina Avenue., Pamplona Las Pinas City
85
LIBERTAD MANDALUYONG
G/F Cluster El Dorado, Unit A2 California Garden Square, Libertad St., Mandaluyong City
86
LIBIS
184-B E. Rodriguez Jr. Avenue., Bagumbayan Quezon City
87
LOURDES HOSPITAL
No. 46 P. Sanches St., Sta. Mesa Manila, Metro Manila
88
LRT 2 AURORA
G/F Marsk Bldg Aurora Blvd corner Balete Drive Q.C. 1113
89
MAKATI AVENUE
Makati Avenue corner Durban Street., Makati City
90
MALABON
Gov. Pascual Avenue corner Rivera Street.,Malabon, Metro Manila
91
MALATE
G/F, Marioco Building.,1945 M. Adriatico Street, Malate, Manila
92
MALINTA
G/F, Mirjan Building, 295 Maysan Road.,Paso de Blas, Valenzuela City
93
MARIKINA
CND Building, 233 J.P. Rizal cor. Sta. Ines St., Sta. Elena
94
MASANGKAY
MASANGKAY 911-913 Masangkay St., Binondo, Manila
95
MAYHALIGUE
MAYHALIGUE Gr. Floor, One Masangkay Place, No. 1420 Masangkay near cor. Mayhaligue St.,
Sta. Cruz Manila
96
MC KINLEY HILLS
G/F Units 2WS A & 2WS B, Two World Square, McKinley Hill, Taguig City 1634
97
MEDICAL CITY
Medical City Hospital Compound, Lourdes St. cor. San Miguel Ave., Mandaluyong City
98
MUNOZ
Muñoz Market, EDSA, Quezon City
99
MUNTINLUPA
12 National Road Putatan Muntinlupa Metro Manila
100
NAVOTAS
807-817 M.Naval St., Navotas City
101
NEW DIVISORIA
Stall UG-05 to 06, Sto. Cristo cor. MD Santos Street, Binondo
102
NEW PORT CITY
G/F Star Cruises Building, Andrews Avenue, Pasay City 1300
103
NOVALICHES GULOD
854 Quirino Hiway, Gulod, Novaliches, Quezon City
104
ORTIGAS
21 San Miguel Avenue., Ortigas Center, Pasig City
105
PANDACAN
Unit ONP, 1763 Paz M. Guanzon St., Pandacan, Manila
106
PARANAQUE
Quirino Avenue, corner V. Medina Street, La Huerta Paranaque City
107
PASAY
2528 Taft Avenue, Pasay City
108
PASAY ROAD
Gemland Comml Building, 912 Pasay Road, San Lorenzo Vill., Makati City
109
PASEO DE MAGALLANES
Ground Floor, Maga Center Building, Paseo de Magallanes
51
110
PASONG TAMO JTKC
G/F, JTKC Center 2155 Pasong Tamo street., Makati City
111
PASONG TAMO EXTENSION
G/F, Priscilla 100 Building.,2297 Pasong Tamo Extension Makati City
112
PEREA
106 Perea St., Greenbelt Mansion.,Legaspi Village, Makati City
113
RADA
Prince Bldg.,117 Rada St.,Legaspi Village, Makati City
114
RENAISSANCE TOWERS
GF Renaissance 1000, Meralco Ave. Ortigas, Pasig City
115
RETIRO
Amoranto corner Mayon Street.,Quezon City
116
RICHVILLE
Upper G/F Richville Corporate Tower, Alabang, Zapote, Muntinlupa City
117
ROOSEVELT
244 Roosevelt Avenue, San Francisco del Monte, Quezon City
118
SALCEDO
Golden Rock Bldg., 168 Salcedo St., Legaspi Village, Makati City
119
SHANG TOWER 1 ST
FRANCIS
G/F Shang Tower 1 – St. Francis Square, Mandaluyong City
120
SHAW MANDALUYONG
PICPA Building, No. 700 Shaw Boulevard Mandaluyong City
121
SHAW PASIG
Chipeco Bldg., Shaw Blvd. cor. Meralco Ave., Pasig City
122
SHAW PASIG BLVD
131 - 133 Shaw Boulevard, Pasig City
123
SOLER
Topsco Building., Soler St. Binondo Manila
124
SOUTH TRIANGLE
Quezon Avenue corner Scout Albano., Quezon City
125
SSS AYALA
SSS (Makati) Building Ayala Avenue corner V.A. Rufino St. Makati City
126
ST LUKES
G/F St. Luke’s Medical Center, #279 E. Rodriguez Sr. Boulevard, Quezon City
127
STO. CRISTO
Units LG 01, 02, 06 Burke Plaza, Sto Cristo cor San Fernando Sts , Binondo Manila
128
SUCAT JAKA
JAKA Plaza, Dr. A. Santos Ave., Parañaque
129
T. ALONZO
593 T. Alonzo St., Sta. Cruz, Manila
130
TAFT AVENUE
G/F, Kassel Condo.,Taft Ave.near cor P.Ocampo St.(formerly VCruz St.) Malate, Manila
131
TEKTITE
G/F, West Tower Philippine Stock Exchange Ctr. Ortigas Center Pasig City
132
TIMOG
Cabrera Building II, 64 Timog Avenue, Q.C.
133
TOMAS MORATO
Tomas Morato near corner Scout Lozano., Quezon City
134
TUTUBAN
Unit LH-PL12 and LH-PL12A,Looproad Shophouse.,Prime Block Mall Tutuban corner CM Recto
135
UBP PLAZA
UBP Plaza Meralco Avenue., Ortigas Center, Pasig City
136
UBP PLAZA 2
137
UBP PLAZA 3
138
UBP PLAZA 4
52
139
UN AVENUE
UN Avenue corner M.H. del Pilar and M. Guerrero streets., Ermita Manila
140
VALENZUELA
KM 12, McArthur Hi-Way corner Serrano St.,Marulas Valenzuela City
141
VALERO
Le Grand Condominium 130 Valero St., Salcedo Village, Makati City
142
VALERO ANTEL
G/F Antel Platinum Tower.,154 Valero St., Salcedo Village, Makati City
143
VERTEX ONE
G/F Space 12 & 13 Vertex One Building, San Lazaro, Manila 1000
144
VITO CRUZ
G/F Kingswood Arcade Tower A, Vito Cruz Ext. cor. Pasong Tamo, Makati City
145
WACK WACK
6 Shaw Blvd. corner Laurel St., Mandaluyong City
146
WEST AVENUE
147
WEST AVENUE BALER
91 West Avenue.,Barangay Bungad Quezon City
148
WEST SERVICE ROAD
Rodeo Bldg., Km.18 west service road south superhiway, Paranaque City
149
WORLD CENTER
G/F World Centre Bldg., 330 Sen. Gil Puyat Ave., Makati City
150
WORLD CENTER 2
G/F World Centre Bldg., 330 Sen. Gil Puyat Ave., Makati City
151
ANGELES
#321 Miranda St.,Angeles City
152
BAGUIO
Antipolo Annex A Bldg., Session Road, Baguio City
153
BALIWAG
Benigno Aquino Avenue Poblacion Baliuag, Bulacan
154
CABANATUAN
P. Burgos Streets., Cabanatuan City
155
DAGUPAN
Angel B. Fernandez.,Dagupan City
156
LAOAG
Corner Rizal and Guerrero Streets., Laoag City., Ilocos Norte
157
MEYCAUAYAN
G/F, Marian Building, MacArthur Highway.,Calvario, Meycauayan, Bulacan
158
OLONGAPO
No. 87 Magsaysay Drive, Olongapo City
159
PAMPANGA
G/F, Mel-Vi Building, Olongapo-Gapan Road.,Dolores, San Fernando City, Pampanga
160
SAN FERNANDO CONSUNJI
3M Building Mac Arthur Hi-way San Augustine San Fernando Pampanga
161
SANTIAGO
Maharlika Highway Santiago Isabela City
162
TARLAC
Jaral Building McArthur Highway.,corner Juan Luna Street, Tarlac City
163
TUGUEGARAO 2
106 Bonifacio St., Tuguegarao City, Cagayan
164
VIGAN
Jose Singson Street., Vigan Ilocos Sur
165
BACOOR
Addio building, aguinaldo H-way talaba bacoor., Cavite
166
BATANGAS
GNG Realty Bldg., P. Burgos St. near cor.,D. Silang, Batangas City
167
BINAN CARMONA
Bo. Maduya, Governor's Drive.,Carmona, Cavite
27-A West Aveneu., Quezon City
53
168
CAINTA
F.Felix Avenue corner Karangalan Drive, Cainta, Rizal
169
CALAMBA PARIAN
G/F, Anderson Building.,Bgy. Parian, Calamba, Laguna
170
CALAMBA REAL
Marcelita Building, National Highway, Barangay Real, Calamba City
171
CAUYAN ISABELA
G/F ITC Building, along National Highway, Cauayan City, Isabela
172
DASMARINAS CAVITE
Aguinaldo Highway, cor Congressional Ave.,Dasmarinas, Cavite
173
IMUS CAVITE
G/F, Melta Building, Aguinaldo Highway.,corner Sampaguita Village, Imus, Cavite
174
LEGASPI
Sia Ko Pio Bldg., Rizal St., Legaspi City
175
LIPA
B. Morada Avenue.,Lipa City
176
LUCENA
Prestige Building Quezon Avenue., Cor Evangelista st. Lucena City
177
NAGA
Padian Street., Padian City
178
NAGA 2
Padian St., Naga City
179
OLONGAPO 2
180
PASEO DE STA ROSA
G/F Southern Luzon Hospital and Medical Center, United Boulevard, Sta. Rosa, Laguna
181
PUERTO PRINCESA 1
Puerto Princesa Palawan 5300
182
PUERTO PRINCESA 2
Puerto Princesa Palawan 5300
183
SAN FERNANDO LA UNION
Ground Floor, Shania Tower, Along Quezon Avenue, San Fernando La Union 2500
184
SAN PEDRO LAGUNA
San Pedro National Highway cor Cataquiz Ave.,San Pedro, Laguna
185
STA. ROSA
Poblacion St., Barangay II Sta. Rosa Laguna
186
SUBIC
187
TUGUEGARAO
106 Bonifacio St., Tuguegarao City, Cagayan
188
BACOLOD - ARANETA
First Provincial Finance Corp. Bldg., Araneta cor. Rosario Sts., Bacolod City
189
BACOLOD - ARANETA 2
1st Provincial Finance Corp. Bldg., Corner Rosario-Araneta Sts., Bacolod City
190
BACOLOD LACSON
G/F PhilAm Bldg., Lacson cor. Galo St.,Bacolod City
191
CEBU - NORTH ROAD FORMER MANDAUE
G/F, Khuz'ns Building, North Highway.,Estancia, Mandaue City
192
CEBU ASIATOWN
Unit GF -01, TGU Tower Jose Maria del Mar Street, Asiatown I.T. Park. Brgy. Apas, Cebu City
193
CEBU BANILAD
Gaisano Country Mall, Talamban Road, Banilad, Cebu City
194
CEBU BORROMEO
Plaza Borromeo Building Borromeo Street, Cebu City
195
CEBU CENTER MAXILOM
Gen. Maxilom Avenue.,Cebu City
196
CEBU FUENTE
G/F Benigno Du Building, Fuente, Osmena Boulevard, Cebu City
54
197
CEBU LAPU LAPU
Lot 2, Block 1, Phase 1, MEPZ II, SEPZ, Lapu-Lapu City, Cebu
198
CEBU LAPU LAPU 2
Lot 2, Block 1, Phase 1, MEPZ II, SEPZ, Lapu-Lapu City, Cebu
199
CEBU MANDAUE
Kentredder Bldg., A. Cortez St., Mandaue City
200
CEBU PLARIDEL
No. 104 Plaridel St., Brgy. Sto. Niño, Cebu City
201
CEBU SM
SM City Cebu, North Reclamation Area, Cebu City
202
DUMAGUETE 1
UnionBank Building, Real Street corner San Juan Street Dumaguete City, Negros Oriental
203
DUMAGUETE 2
UnionBank Building, Real Street corner San Juan Street Dumaguete City, Negros Oriental
204
ILOILO - IZNART
Villanueva Bldg., Iznart St.
205
ILOILO - IZNART 2
Villanueva Bldg., Iznart St.
206
ILOILO LEDESMA
Ledesma Street corner Liberation Road.,Iloilo City
207
ILOILO LEDESMA 2
Ledesma Street corner Liberation Road.,Iloilo City+D174
208
GF Insular Life Cebu Business Center, Mindanao Avenue cor. Biliran Road, Cebu Business park,
Cebu City
209
INSULAR LIFE CEBU
BUSSINESS PARK ( former
Lahug)
TACLOBAN
210
TACLOBAN 2
Josmar Bldg., M.H. del Pilar St. corner Zamora St.
211
TAGBILARAN
Torralba corner., C.P. Garcia Avenue., Tagbilaran City
212
TAGBILARAN 2
J.S. Torralba St. corner C.P.Garcia Ave, Tagbilaran City
213
BUTUAN 1
Ground Floor CAP Building corner of Jose C. Aquino & Jose Rosales Avenue, Libertad District,
Butuan City
214
BUTUAN 2
G/F CAP Bldg. J. Rosales Ave., cor. JC Aquino St., Butuan City
215
CDO LAPASAN
Lapasan National Highway, Cagayan de Oro City
216
CDO LAPASAN 2
Lapasan National Highway, Cagayan de Oro City
217
DAVAO MAGSAYSAY 1
Orion Cineplex Bldg., Pilar street., Zamboanga City
218
DAVAO MAGSAYSAY 2
Orion Cineplex Bldg., Pilar street., Zamboanga City
219
DAVAO MONTEVERDE
G/F, Mintrade Building.,Monteverde Avenue corner Sales Street.,Davao City
220
DAVAO QUIRINO
Quirino Avenue corner San Pedro Street.,Davao City
221
DAVAO RIZAL (PREV DAVAO
RECTO)
G/F and 2/F Quibod Commercial Complez, along Rizal Avenue, Davao City
222
DAVAO VICTORIA
Victoria Plaza Complex, J.P. Laurel Ave., Davao City
223
DAVAO VICTORIA 2
Victoria Plaza Complex, J.P. Laurel Ave., Davao City
224
GENERAL SANTOS SOUTH
G/F, Laiz Building, 127 Pioneer Avenue.,General Santos City
Josmar Bldg., M.H. del Pilar St. corner Zamora St.
55
225
GENERAL SANTOS SOUTH 2
G/F, Laiz Building, 127 Pioneer Avenue.,General Santos Cit
226
ILIGAN
Unionbank Bldg.,Pioneer Ave.,Gen. Santos City
227
ILIGAN 2
Quezon Avenue, Iligan City
228
OZAMIZ CITY
GF Insular Life Building, Don Anselmo Ave. corner Jose Abad Santos St., Ozamis City Misamis
Occidental 7200
229
PAGADIAN
Rizal Avenue, Pagadian City
230
PAGADIAN 2
Rizal Avenue, Pagadian City
231
ZAMBOANGA JALDON 1
G/F ZAEC Building.,Mayor Jaldon cor. Gov. Alvarez, St.,Zamboanga City
232
ZAMBOANGA JALDON 2
G/F ZAEC Building.,Mayor Jaldon cor. Gov. Alvarez, St.,Zamboanga City
56
Annex 2
LIST OF BANK OWNED BRANCHES
As of December 31 2012
1 OLONGAPO 87 Magsaysay Drive, Olongapo City 2 ILIGAN CITY Quezon Avenue, Iligan City 3 RICHVILLE Richville Corporate Tower, Madrigal Bus. Park, Alabang Zapote Rd., Alabang, Muntinlupa City 4 CAGAYAN DE ORO CITY ‐ LAPASAN Lapasan National Highway, Cagayan de Oro City 5 AMORSOLO G/F iBank Exchange Bldg., No. 142 Amorsolo St., Makati City 6 UNIONBANK PLAZA UnionBank Plaza Bldg., Meralco Ave. corner Onyx St., Pasig City 7 CABANATUAN P.Burgos St., Cabanatuan City 8 DAVAO ‐ MAGSAYSAY R. Magsaysay St. corner Jacinto St., Davao City 9 ILOILO General Luna Street, Brgy. Villa Anita, City Proper, Iloilo City 10 DUMAGUETE Calle Real corner Calle San Juan St. Dumaguete City 11 PUERTO PRINCESA CITY Unionbank Bldg., along J.P. Rizal Avenue, Brgy. Maningning, Puerto Princesa City, Palawan 12 DASMARINAS G.A.Cu‐Unjieng Bldg., Q. Paredes St. corner Dasmarinas St., Binondo, Manila BRANCH NAME ADDRESS 57
Annex 3
LIST OF LEASED BRANCHES
BRANCH NAME As of December 31 2012
MONTHLY ADDRESS RENTAL EXPIRATION OF LEASE GREENBELT Aboitiz Bldg., 110 Legaspi St., Legaspi Village, Makati city 215,565.74 July 31, 2013 2 CEBU ‐ SM SM City Cebu, North Reclamation Area Cebu City 144,133.50 April 30, 2014 3 LAPU ‐ LAPU NATIONAL HIGHWAY 57,750.00 February 28, 2016 4 VALENZUELA ‐ FATIMA 158,471.16 May 14, 2016 5 PASAY ROAD 180,600.00 May 30, 2018 6 BALIWAG 82,000.00 May 31, 2021 7 PANDACAN 106,367.02 May 31, 2016 100,000.00 May 31, 2016 189,874.91 May 31, 2016 143,545.50 May 31, 2016 184,262.47 July 31, 2016 230,946.19 August 31, 2016 379,221.36 September 13, 2011 95,318.30 September 30, 2013 82,752.00 November 30, 2016 154,843.85 December 5, 2016 236,111.93 December 31, 2016 75,037.44 December 31, 2016 120,420.00 December 31, 2016 247,134.69 February 23, 2017 126,879.38 February 28, 2017 1 8 NAVOTAS 9 LAS PIÑAS ‐ PAMPLONA 10 DAVAO ‐ MONTEVERDE 11 INTRAMUROS 12 BF HOMES 13 14 CEBU CENTER / MAXILOM ALABANG TOWN (Kiosk) 15 KAMIAS 16 BONI AVENUE 17 SOUTH TRIANGLE 18 MANDAUE NORTH 19 MEYCAUAYAN 20 TIMOG 21 JULIA VARGAS 22 TARLAC 23 AGUIRRE 24 WEST AVENUE GREENHILLS 25 M. L. Quezon National Highway, Pusok, Lapu‐Lapu City Km 12 McArthur Hi‐way, Marulas, Valenzuela Gemland Comml Building, 912 Pasay Road, San Lorenzo Vill., Makati City Benigno Aquino Ave., Poblacion, Baliwag Bulacan 1763 Paz M. Guazon St., Paco, Manila 807‐817 M. Naval St., Navotas, Metro Manila Alabang‐Zapote Rd. cor. Crispina Avenue, Las Piñas City Monteverde Avenue cor. Sales St., Davao City Gr. Floor, BF Condominium Bldg., A. Soriano Jr., Avenue, Intramuros, Manila 55 President Avenue, BF Homes, Parañaque City Gen. Maxilom Avenue, Cebu City Makati Supermart Alabang, Alabang Town Center, Muntinlupa City Gr. Floor, TDS Bldg., No. 72 Kamias Road, Quezon City Boni Avenue cor. Ligaya St., Mandaluyong City Quezon Ave. cor. Sct. Albano St., Quezon City Gr. Floor, Khuz'ns Bldg., North Hi‐way, Estancia, Mandaue City Gr. Floor, Marian Bldg., McArthur Hi‐way, Calvario, Meycauayan, Bulacan Cabrera Building II. 64 Timog Ave, Quezon City Centerpoint Condominium, Dona Julia Vargas Ave. cor. Garnet St. Ortigas Center, Pasig city Jaral Bldg. McArthur Ave. cor. Juan Luna St., Tarlac, Tarlac B&M Bldg., Aguirre St, Legaspi Village, Makati City 1‐Year 2‐Years 5‐Years 5‐Years 7‐Years 10‐Years 5‐Years 5‐Years 5‐Years 5‐Years 5‐Years 5‐Years 5‐Years 2‐Years 5‐Years 5‐Years 5‐Years 5‐Years 5‐Years 5‐Years 5‐Years 115,937.85 February 28, 2017 64,546.90 March 31, 2017 27‐A West Ave., Quezon City 88,010.43 March 31, 2017 Ortigas Ave. near cor. Wilson St., San Juan, Metro Manila 368,610.00 March 31, 2014 58
TERM OF RENEWAL 5‐Years 5‐Years 5‐Years 2‐Years 26 27 DAVAO ‐ VICTORIA PLAZA VALERO ‐ ANTEL PLATINUM 28 RADA 29 AYALA ‐ RUFINO 30 ERMITA MABINI (FAURA) 31 VALERO 32 WEST SERVICE ROAD 33 NOVALICHES 34 WORLD CENTER Victoria Plaza Complex, J.P. Laurel Ave., Davao City G/F Antel Platinum Tower, 154 Valero Street, Salcedo Village, Makati City Prince Bldg., 117 Rada St, Legaspi Village, Makati City Rufino Bldg. Ayala Ave. corner V Rufino St., Makati city 1336 A.Mabini St., Ermita Manila Le Grand Condominium, 130 Valero St., Salcedo Village, Makati City Rodeo Bldg., Km. 18 West Service Road, South Luzon Expressway, Parañaque City 854 Quirino Hiway, Gulod, Novaliches, Quezon City 330 Sen. Gil J. Puyat Ave., Makati City 93,883.13 April 13, 2013 265,984.37 May 15, 2017 155,860.78 May 31, 2017 196,540.40 June 30, 2017 127,405.25 July 31, 2017 163,921.91 July 31, 2017 82,799.36 July 31, 2017 151,460.12 July 31, 2019 130,622.55 September 30, 2017 105,238.64 February 28, 2015 57,083.21 November 15, 2015 CONGRESSIONAL EXTENSION VERTEX ONE ‐ SAN LAZARO G/F Diliman Commercial Center, Commonwealth Avenue 2/F Baclaran Supermall, F. B. Harrison cor. Taft Avenu Ext., Baclaran, Paranaque City Josmar Bldg., M.H. del Pilar St. corner Zamora St., Tacloban City Dra. C.Pascual Bldg., 142 Quirino Highway, Baesa, Quezon City Chipeco Bldg., Shaw Blvd corner Meralco Ave. Pasig City Prudentialife Bldg., Sto. Rosario St., San Jose, Angeles City Gr. Floor, One Masangkay Place, No. 1420 Masangkay near cor. Mayhaligue St., Sta. Cruz Manila Congressional Ave. Ext. near cor. Mindanao Avenue, Quezon City Space 12 & 13, Vertex One building, San Lazaro, Manila 44 TAGBILARAN CPG Avenue, Tagbilaran, Bohol City 76,212.24 September 29, 2012 45 J. P. RIZAL 731 J.P.Rizal St., Makati City 46,729.20 November 29, 2017 46 DAGUPAN A. B. Fernandez Avenue, Dagupan City 96,611.20 September 14, 2017 47 CEBU ‐ PLARIDEL No. 104 Plaridel St., Brgy. Sto. Niño, Cebu City 156,866.42 January 30, 2012 48 CEBU ‐ BORROMEO Plaza Borromeo, Borromeo St., Cebu City 47,544.65 June 29, 2012 49 BACOOR 83,160.00 March 30, 2011 50 PARAÑAQUE (LA HUERTA) 89,563.62 March 30, 2017 51 TAFT AVENUE 75,771.82 September 29, 2012 52 STA. ROSA 72,930.38 October 31, 2017 53 SANTIAGO 60,913.44 July 30, 2011 54 VIGAN Jose Singson St., Vigan, Ilocos Sur 66,172.60 August 29, 2016 MUNTINLUPA 12 National Road, Putatan, Muntinlupa city 157,420.03 September 29, 2011 35 COMMONWEALTH 36 BACLARAN ‐ F.B. HARRISON 37 TACLOBAN CITY 38 BAESA 39 SHAW PASIG 40 ANGELES 41 MAYHALIGUE 42 43 55 Addio Bldg., Aguinaldo Highway, Talaba, Bacoor, Cavite Quirino Ave. corner V. Medina St., La Huerta, Parañaque GO1 & LG1, The Kassel Condominium, No. 2625 Taft Avenue near cor. Vito Cruz St., Malate, Manila Poblacion St., Barangay II, Sta. Rosa, Laguna along Maharlika Highway, Santiago, Isabela 59
1‐Year 5‐Years 5‐Years 5‐Years 5‐Years 5‐Years 5‐Years 7‐Years 5‐Years 5‐Years 5‐Years 52,724.95 April 2, 2016 65,879.56 April 28, 2016 62,977.07 February 28, 2012 61,912.41 June 29, 2012 109,340.00 June 29, 2012 169,440.49 August 14, 2012 121,191.79 August 30, 2012 5‐Years 5‐Years 90‐day notification 90‐day notification 90‐day notification 90‐day notification 90‐day notification 90‐day notification 5‐Years 5‐Years 90‐day notification 90‐day notification 90‐day notification 5‐Years 90‐day notification 5‐Years 90‐day notification 5‐Years 90‐day notification 56 LIPA CITY 57 CUBAO ‐ RUSTANS 58 MARIKINA 59 ANNAPOLIS 60 ILOILO ‐ IZNART NORTH 61 CAINTA 62 BAGUIO CITY 63 KALOOKAN 64 TUGUEGARAO 65 SAN FERNANDO 66 ORTIGAS (SAN MIGUEL) 67 68 PAMPANGA WEST AVENUE ‐ BALER B. Morada Avenue, Lipa City, Batangas Rustan's Superstore Bldg., Araneta Center Cubao, Quezon City CND Building, 233 J.P. Rizal cor. Sta. Ines St., Sta. Elena, Marikina City Gr. Floor, Mercedes I Condominium, No. 39 Annapolis St., Greenhills, San Juan, Metro Manila Villanueva Bldg., Iznart St., Iloilo City 125,000.00 April 30, 2022 101,160.00 December 30, 2011 159,802.85 September 29, 2012 238,355.48 December 13, 2012 113,999.99 April 29, 2012 F.Felix Ave. corner Karangalan Drive, Cainta, Rizal Antipolo Annex A Bldg., 85 Session Road, Baguio City 357 Rizal Ave. Ext. Grace Park, Kalookan City 69,745.69 January 30, 2013 103,200.00 March 30, 2013 135,000.00 March 30, 2013 #106 Bonifacio Street,Tuguegarao City 49,248.52 April 29, 2013 31,800.11 May 30, 2013 154,781.05 May 30, 2013 GF Mel‐Vi Bldg., Olongapo‐Gapan Road, Dolores, City of San Fernando, Pampanga 104,186.25 May 30, 2013 #91 West Ave. Brgy Bungad, Quezon City 91,878.22 May 30, 2013 86,037.32 May 30, 2013 88,000.00 July 14, 2013 218,506.68 July 29, 2013 107,020.04 September 3, 2013 62,145.55 September 4, 2013 3M Bldg., MacArthur Highway, San Agustin, San Fernando, Pampanga 21 San Miguel Ave., Ortigas Center, Pasig City GSIS Main Office Financial Center, Pasay City No. 295, Maysan Road, Paso de Blas, Valenzuela City G/F JTKC Building, Pasong Tamo, Makati City G/F Laiz Building, Pioneer Avenue, General Santos City Gov. Pascual Avenue cor. River St., Malabon, Metro Manila GSIS 70 MALINTA 71 PASONG TAMO ‐ JTKC 72 GEN. SANTOS 73 MALABON 74 MASANGKAY 911‐913 Masangkay St., Binondo, Manila 150,000.00 September 13, 2013 75 NAGA CITY Padian St., Naga City 73,205.00 September 29, 2013 349,983.60 September 29, 2013 132,300.00 October 1, 2013 21,000.00 October 30, 2013 157,911.45 October 30, 2013 458,351.15 November 29, 2013 139,783.22 January 14, 2014 26,250.00 January 30, 2014 76 INSULAR‐AYALA PASEO 77 RETIRO 78 CEBU ‐ BANILAD 79 IMUS 80 AYALA SSS 81 KATIPUNAN 82 GOTESCO‐
COMMONWEALTH 83 CEBU ‐ ASIATOWN IT PARK 84 ABS‐CBN West Wing, G/F, ELJ Communications Center, Mother Ignacia St, Quezon City 60
90‐day notification 90‐day notification 90‐day notification 90‐day notification 5‐Years 5‐Years 5‐Years 5‐Years 5‐Years 69 Insular Life Building, Ayala Avenue corner Paseo de Roxas, Makati city Amoranto St., (formerly Retiro) near cor. Mayon Street, QC Gaisano Country Mall, Talamban Road, Banilad, Cebu City G/F Melta Building, Aguinaldo Hi‐way cor. Sampaguita Village, Imus, Cavite SSS (Makati) Building Ayala Avenue corner V.A. Rufino St, Makati city 335 Katipunan Avenue, Loyola Heights, Quezon City Ever Gotesco Commonwealth, Don Antonio St., corner Commonwealth Ave., Quezon City Unit GF‐01, TG Tower, Asiatown I.T. Park, Barangay Apas, Cebu City 10‐Years 90‐day notification 90‐day notification 5‐Years 5‐Years 5‐Years 3‐Years 5‐Years 5‐Years 5‐Years 5‐Years 3‐Years 5‐Years 10‐Years 15‐Years 8‐Years 5‐years 5‐years 157,023.04 January 30, 2014 71,440.00 February 27, 2014 5‐years 5‐years 85 BACOLOD ‐ ARANETA 1st Provincial Finance Corp. Bldg., Araneta St. corner Rosario St., Bacolod City 73,465.57 86 BONIFACIO GLOBAL CITY Mancor Corporate Center, along 32nd Street, Bonifacio Global City, Taguig City 173,250.00 87 G. ARANETA Del Moral Building, 341 G. Araneta Ave., Quezon City 85,743.55 April 29, 2014 88 E. RODRIGUEZ 78‐E E.Rodriguez Sr. Ave., Quezon City 47,628.13 May 30, 2014 60,946.11 May 30, 2014 129,012.22 May 30, 2014 54,285.00 June 29, 2014 81,682.02 June 29, 2014 330,241.32 June 29, 2014 31,500.00 August 8, 2014 89 MEDICAL CITY 90 BICUTAN 91 CALAMBA REAL 92 ACROPOLIS 93 AYALA ALABANG 94 BUTUAN 95 TUTUBAN 96 DAVAO ‐ QUIRINO 97 ZAMBOANGA CITY 98 99 BATANGAS CITY ‐ P. BURGOS PASONG TAMO EXTENSION 100 MALATE 101 PEREA 102 BACOLOD CITY 103 TOMAS MORATO March 30, 2014 5‐years The Medical Arts Tower, Medical City Hospital, Ortigas Avenue, Pasig city 28 Doña Soledad Ave., Better Living Subd., Bicutan, Paranaque City Marcelita Bldg., National Highway, Brgy Real, Calamba Laguna 171 Bridgeview Bldg., E. Rodriguez Jr. Ave, Bagumbayan, Quezon City G/F NOL Building, Commerce cor. Acacia, Alabang, Muntinlupa GF CAP Bldg. J.C. Aquino Ave corner J. Rosales St., Brgy Tandang Sora, Butuan City Units LH‐PL 12 & LH‐PL 12A, Looproad Shophouse, Prime Block Mall, Tutuban Center, C. M. Recto Ave., Mla. Quirino Avenue cor San Pedro St., Davao City Canelar Street corner Buenavista, Zamboanga City P. Burgos Street, near cor. D. Silang, Batangas City G/F Priscilla 100 Bldg., 2297 Pasong Tamo Ext., Makati City G/F Marioco Building, 1945 M. Adriatico St., Malate, Manila G/F Greenbelt Mansion, 106 Perea St., Legaspi Village, Makati City GF Philam Bldg., Lacson Street cor. Galo, Bacolod City T. Morato cor. Sct. Lozano, Quezon City Aguinaldo Hi‐way cor. Congressional Avenue, Dasmariñas, Cavite GF Maga Center, Paseo De Magallanes, Magallanes, Makati City April 28, 2014 5‐years 78,912.31 59,594.54 September 13, 2014 92,610.00 September 29, 2014 121,550.63 September 29, 2014 226,205.00 10/2/2014 141,960.00 October 14, 2014 157,437.00 October 14, 2014 76,041.00 November 13, 2014 169,400.00 November 29, 2014 92,775.54 November 29, 2014 43,050.00 December 14, 2014 MAGALLANES 106 LEGAZPI CITY Sia Ko Pio Bldg., Rizal St., Legaspi City 82,800.00 December 30, 2014 107 PAGADIAN CITY Rizal Ave., Pagadian City 76,768.82 December 30, 2014 117,489.82 December 30, 2014 250,228.00 December 30, 2014 121,550.63 December 30, 2014 40,000.00 December 30, 2014 109 UN AVENUE 110 LIBIS 111 DR. A. SANTOS 112 MCKINLEY HILL 113 LIBERTAD MANDALUYONG GF Cluster El Dorado, California Garden Square, Libertad, Mandaluyong City 61
5‐years 5‐years 5‐years 5‐years 5‐years 105 WACK ‐ WACK 5‐years August 22, 2014 DASMARIÑAS CAVITE 108 5‐years 5‐years 104 6 Shaw Blvd. corner Laurel St., Mandaluyong City M.H. del Pilar corner M. Guerrero Streets, U.N. Avenue, Ermita, Manila 184‐B E. Rodriguez Jr. Ave., Bagumbayan, Quezon City GF Lianas Supermarket, Dr. A. Santos Avenue corner Canaynay Road, Sucat, Parañaque City Unit 1A and 1B Two World Square, McKinley Hill, Taguig City 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 200,860.00 December 30, 2014 71,280.00 December 30, 2014 5‐years 5‐years 114 CUBAO 115 NEWPORT CITY 116 CEBU MANDAUE 117 NEW DIVISORIA 118 AURORA BLVD. 119 EDSA ‐ KALOOKAN 120 CEBU ‐ FUENTE 7th Avenue cor P. Tuazon, Cubao, Quezon City GF Star Cruises Centre, Newport City, Andrew Avenue, Pasay City Kentredder Bldg., A. Cortes St., Mandaue City, Cebu Stall UG‐05 to 06, Sto. Cristo cor. MD Santos Street, Binondo, Manila 677 Aurora Blvd., near cor. Broadway St., Bgy. Mariana, New Manila , Q.C. 131,670.00 January 30, 2015 274,560.00 January 30, 2015 89,250.00 February 27, 2015 24,758.45 February 27, 2015 57,750.00 March 13, 2015 EDSA cor. Urbano Plata St., Kalookan City 207,774.04 March 14, 2015 Fuente Osmeña, Cebu City 117,188.76 March 30, 2015 42,625.00 March 30, 2015 85,666.00 April 23, 2015 234,066.00 April 29, 2015 KALOOKAN 9TH AVENUE SAN FERNANDO LA UNION Insular Life Building, Don Anselmo Avenue corner Jose Abad Santos St., Brgy. Carmen, Ozamis City Upper GF Robinsons Cybergate Plaza, Robinsons Pioneer Complex, EDSA 9 97th Avenue near corner Rizal Avenue, Grace Park, Kalookan City GF Shania Tower, Quezon Avenue, San Fernando City, La Union 60,000.00 April 29, 2015 5TH AVENUE ‐ GLOBAL CITY BRANCH Unit 103 GF One Global Place, along 5th 170,130.00 Avenue, Bonifacio Global City, Taguig City April 29, 2015 126 SOLER 1148 Topsco Building, Soler Street, Binondo, Manila 48,620.25 May 30, 2015 127 ESCOLTA G/F Regina Building, Escolta, Manila 143,430.00 May 30, 2015 145,394.82 June 29, 2015 68,024.45 June 29, 2015 121 OZAMIS CITY 122 EDSA PIONEER 123 124 125 128 ROOSEVELT 129 BIÑAN‐CARMONA 130 CARDINAL SANTOS 131 PASEO DE STA. ROSA 132 DAVAO ‐ RIZAL 133 LUCENA 134 BANAWE 135 ICTSI ‐ PORT AREA 136 EASTWOOD CITY 137 AURORA ‐ BALETE DRIVE 138 TEKTITE 139 ST. FRANCIS SHANGRI‐
LA PLACE 140 SUCAT JAKA PLAZA 141 2ND AVENUE ‐ GLOBAL CITY BRANCH 244 Roosevelt Avenue, San Francisco del Monte, Quezon City Golden Mile Business Park, National Highway, Brgy. Brgy. Maduya, Carmona, Cavite G/F Cardinal Santos Medical Center, Wilson Street, Greenhills West, San Juan G/F Southern Luzon Medical Center, Sta. Roxa City, Laguna G/F Quibod Commercial Complez, Rizal Avenue, Davao City Prestige Bldg., Quezon Ave. corner Evangelista St.. Lucena City 420 Ever Group Bldg., Banawe cor. Quezon Ave., Quezon City Garden Area, Manila International Container Terminal, MICT South Access Road, Port Area, Manila Unit 1880‐1a, Eastwood 1880 Building, Eastwood Avenue, Eastwood City Cyberpark, E. Rodriguez jr. Ave. QC Marsk Realty Building, aurora Boulevard corner Balete Drive, Quezon City G/F PSE Center, Ortigas Complex, Pasig City Unit T1G1 G/F Tower 1, St. Francis Shangri‐La Place, Shaw Boulevard cor. St. Francis St. Mandaluyong City JAKA Plaza, Dr. A. Santos Ave, Parañaque City Unit GF‐A, GF Blue Sapphire Building, 2nd Avenue corner 30th Street, Bonifacio Global City, Taguig City 62
5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 76,803.00 June 30, 2015 31,500.00 June 30, 2015 65,000.00 July 4, 2015 44,200.23 July 30, 2015 223,222.44 August 13, 2015 34,046.21 August 25, 2015 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 177,372.00 August 30, 2015 46,326.00 September 13, 2015 561,550.00 September 29, 2015 170,000.00 October 14, 2015 5‐years 5‐years 5‐years 5‐years 90,370.48 October 27, 2015 174,247.00 October 30, 2015 5‐years 5‐years 142 T. ALONZO 625 T. Alonzo St., Sta. Cruz, Manila 122,500.00 November 13, 2015 143 AYALA AVE G/F Madrigal Building, 6793 Ayala Avenue, Makati City 443,960.00 November 14, 2015 144 PASAY (TAFT) along Taft Avenue, Pasay City 91,162.97 November 29, 2015 145 H.V. DELA COSTA 146 MANDALUYONG 147 VITO CRUZ 148 PASIG ‐ SHAW 149 GREENFIELD DISTRICT 150 CEBU BUSINESS PARK (INSULAR) 151 SALCEDO 152 STO. CRISTO 153 RENAISSANCE 154 DEL MONTE AVENUE 155 CITYPLACE SQUARE 156 ST. LUKES'S HOSPITAL ‐ E. RODRIGUEZ 157 LOURDES HOSPITAL 158 EXCHANGE REGENCY 159 32ND AVE. ‐ BGC 160 ANTEL RESIDENCES 161 CAUAYAN ‐ ISABELA 162 ZUELLIG 163 MULTINATIONAL BANCORPORATION 164 SAN PEDRO 165 MAKATI AVENUE 166 CALAMBA ‐ BGY. PARIAN 167 LAOAG 168 MAKATI MEDICAL CENTER Unit 101, Gr Fl Singapore Airlines House, H. V. dela Costa St., Salcedo Vill., Makati PICPA Bldg., 700 Shaw Blvd, Mandaluyong city Kingswood Arcade, Vito Cruz St. corner Pasong Tamo St., Makati City 101,521.69 December 31, 2015 154,065.42 January 30, 2016 57,066.23 January 30, 2016 131‐133 Shaw Boulevard, Pasig City 214,597.63 January 30, 2016 90,601.50 January 31, 2016 173,768.00 2/14/2016 G/F Grand Soho Central, Greenfield District, Shaw Blvd., Mandaluyong City G/F Insular Life Cebu Business Center, Mindanao Avenue corner Biliran Road, CBP‐IT Park, cebu City Golden Rock Bldg., 168 Salcedo St., Legaspi Village, Makati City Units LG 01, 02, 06 Burke Plaza, Sto Cristo cor San Fernando Sts , Binondo Manila G/F Renaissance Center, Meralco Ave., Pasig City 447 Del Monte Avenue cor. Biak na Bato, Quezon City 3rd Floor, Lucky Chinatown‐Cityplace Square, Calle Felipe cor. La Chambre Street, Brgy. 293, Zone 28, Binondo, Manila G/F St. Luke's Medical City Center located at 279 E. Rodriguez, Sr. Boulevard, Quezon City. G/F Medical Arts Building, Our Lady of Lourdes Hospital, Manila G/F The Exchange Regency along Exchange Road cor. Meralco Avenue and Jade Drive, Ortigas Center, Pasig City G/F The Trade & Financial Tower, 7th ave. cor. 32nd St., Fort Bonifacio, Taguig City Unit G2 of Antel Residences, Makati Avenue, Makati City G/F Trade Center Building, along National Highway, Cauayan City 32nd/F Zuellig Building, Makati Avenue, corner Paseo de Roxas, Makati City 6805 Ayala Avenue Makati City National Highway, near cor. Cataquiz Avenue, Brgy. Landayan, San Pedro, Laguna Makati Avenue corner Durban St., Makati City National Highway, Bo. Parian, Calamba, Laguna Rizal St. corner Guerrero St., Laoag City, Ilocos Norte G/F Makati Medical Center, No. 2 Amorsolo Street, Salcedo Village, Makati City 63
5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 148,637.94 February 27, 2016 188,633.38 February 28, 2016 135,075.00 February 28, 2016 152,792.80 April 29, 2016 125,600.00 June 30, 2016 5‐years 5‐years 5‐years 5‐years 5‐years 15,390.00 July 7, 2016 5‐years 20,000.00 July 7, 2016 147,900.00 July 7, 2016 5‐years 5‐years 323,000.00 September 30, 2016 5‐years 80,842.50 September 30, 2016 79,267.60 November 14, 2016 282,825.00 Sept. 30, 2017 54,024.00 Dec. 15, 2017 98,309.70 December 30, 2016 457,380.00 December 31, 2016 142,646.09 May 30, 2017 54,450.00 May 30, 2017 48,496.80 July 31, 2017 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 5‐years 169 BSA TOWER ‐ ORTIGAS Unit G2 and G3 BSA Twin Tower, Julia Vargas corner Bank Drive, Mandaluyong City 151,060.00 170 MUÑOZ Muñoz Market, EDSA, Quezon City 3,517.75 March 20, 2022 CEBU LAPU LAPU Lot 2, Block 1, Phase 1, MEPZ II, SEPZ, Lapu‐Lapu City, Cebu 15,531.56 May 30, 2026 SUBIC Manila Ave. Cor Dewey Ave. Canal Road, Subic Bay Freeport Zone, Zambales City 17,473.12 July 30, 2037 171 172 173 BINONDO CENTER 174 EMERALD G/F Hap Hong Building, Q. Paredes cor. Dasmariñas St., Binondo, Manila G/F Wynsum Corp. Plaza, Ortigas Center, Pasig City 64
December 31, 2017 5‐years 50‐Years 22‐Years 45‐Years 694,575.00 January 30, 2013 20,810.79 June 29, 2008 6‐Years 90‐day notification UNION BANK OF THE PHILIPPINES
Index to Financial Statements and Supplementary Schedules
Form 17-A Item 7
December 31, 2012
Page Number
Statement of Management’s Responsibility for Financial Statements
Independent Auditors’ Report
--- Punongbayan & Araullo
Statements of Financial Position
As of December 31, 2012 and 2011
Statements of Income
For the years ended December 31, 2012, 2011 and 2010
Statements of Comprehensive Income
Statements of Changes in Capital Funds
Statements of Cash Flows
Notes to Financial Statements
Supplementary Schedules
65
81,21%$1.2)7+(3+,/,33,1(6$1'68%6,',$5,(6
67$7(0(1762)),1$1&,$/326,7,21
'(&(0%(5$1'
$PRXQWVLQ7KRXVDQGVRI3KLOLSSLQH3HVRV
*5283
1RWHV
$V5HVWDWHG
6HH1RWH
3$5(17
$V5HVWDWHG
6HH1RWH
5(6285&(6
&$6+$1'27+(5&$6+,7(06
3
3
3
3
3
'8()520%$1*.26(175$/1*3,/,3,1$6
'8()52027+(5%$1.6
,17(5%$1./2$165(&(,9$%/(
75$',1*$1',19(670(176(&85,7,(6
$WIDLUYDOXHWKURXJKSURILWRUORVV
$YDLODEOHIRUVDOHILQDQFLDODVVHWVQHW
+HOGWRPDWXULW\LQYHVWPHQWVQHW
/2$16$1'27+(55(&(,9$%/(61HW
,19(670(176,168%6,',$5,(6
%$1.35(0,6(6)851,785(),;785(6
$1'(48,30(171HW
$66(76+(/')256$/(1HW
,19(670(173523(57,(6
*22':,//
27+(55(6285&(61HW
3
3
3
3
3
727$/5(6285&(6
)RUZDUG
*5283
1RWHV
3$5(17
$V5HVWDWHG
6HH1RWH
$V5HVWDWHG
6HH1RWH
3
3
3
3
3
/,$%,/,7,(6$1'&$3,7$/)81'6
'(326,7/,$%,/,7,(6
'HPDQG
6DYLQJV
7LPH
%,//63$<$%/(
127(63$<$%/(
27+(5/,$%,/,7,(6
7RWDO'HSRVLW/LDELOLWLHV
7RWDO/LDELOLWLHV
&$3,7$/)81'6
&RPPRQVWRFN
$GGLWLRQDOSDLGLQFDSLWDO
6XUSOXVIUHH
6XUSOXVUHVHUYHV
1HWXQUHDOL]HGIDLUYDOXHJDLQV
RQDYDLODEOHIRUVDOHILQDQFLDODVVHWV
7RWDO&DSLWDO)XQGV
727$//,$%,/,7,(6$1'&$3,7$/)81'6
3
3
3
3
3
6HH1RWHVWR)LQDQFLDO6WDWHPHQWV
81,21%$1.2)7+(3+,/,33,1(6$1'68%6,',$5,(6
67$7(0(1762),1&20(
)257+(<($56(1'(''(&(0%(5$1'
$PRXQWVLQ7KRXVDQGVRI3KLOLSSLQH3HVRV([FHSW3HU6KDUH'DWD
,17(5(67,1&20(21
/RDQVDQGRWKHUUHFHLYDEOHV
7UDGLQJDQGLQYHVWPHQWVHFXULWLHV
&DVKDQGFDVKHTXLYDOHQWV
,QWHUEDQNORDQVUHFHLYDEOH
,17(5(67(;3(16(21
'HSRVLWOLDELOLWLHV
%LOOVSD\DEOHDQGRWKHUOLDELOLWLHV
1RWHV
*5283
3$5(17
3
3
3
3
3
3
1(7,17(5(67,1&20(
,03$,50(17/266(6
1(7,17(5(67,1&20(
$)7(5,03$,50(17/266(6
27+(5,1&20(
7UDGLQJJDLQQHW
3UHPLXPUHYHQXHV
6HUYLFHFKDUJHVIHHVDQGFRPPLVVLRQV
0LVFHOODQHRXV
)RUZDUG
27+(5(;3(16(6
6DODULHVDQGHPSOR\HHEHQHILWV
7UXVWIXQGGXH
7D[HVDQGOLFHQVHV
2FFXSDQF\
'HSUHFLDWLRQDQGDPRUWL]DWLRQ
0LVFHOODQHRXV
1RWHV
*5283
3$5(17
3
3
3
3
3
3
3
3
3
3
3
3
352),7%()25(7$;
7$;(;3(16(
1(7352),7
%$6,&',/87('($51,1*63(56+$5(
81,21%$1.2)7+(3+,/,33,1(6$1'68%6,',$5,(6
67$7(0(1762)&2035(+(16,9(,1&20(
)257+(<($56(1'(''(&(0%(5$1'
1RWH
1(7352),7)257+(<($5
27+(5&2035(+(16,9(,1&20(/266
1HWXQUHDOL]HGIDLUYDOXHJDLQVORVVHVRQDYDLODEOHIRUVDOHILQDQFLDODVVHWV
7UDQVIHURIXQUHDOL]HGIDLUYDOXHORVVHVWRVWDWHPHQWVRILQFRPH
IRUWKHLPSDLUPHQWRIDYDLODEOHIRUVDOHILQDQFLDODVVHWV
$PRUWL]DWLRQRIXQUHDOL]HGORVVRQUHFODVVLILHGLQYHVWPHQWV
727$/&2035(+(16,9(,1&20()257+(<($5
*5283
3$5(17
3
3
3
3
3
3
3
3
3
3
3
3
81,21%$1.2)7+(3+,/,33,1(6$1'68%6,',$5,(6
67$7(0(1762)&+$1*(6,1&$3,7$/)81'6
)257+(<($56(1'(''(&(0%(5$1'
*5283
1RWHV
$
%& %#"'
(&&&')
*
%)
$
%& %'
(&&&')
*
%)
$
%& %'
(&&&')
*
%)
$GGLWLRQDO
3DLGLQ&DSLWDO
&RPPRQ6WRFN
6XUSOXV)UHH
6XUSOXV5HVHUYHV
1HW8QUHDOL]HG
)DLU9DOXH
*DLQV/RVVHVRQ
$YDLODEOHIRUVDOH
)LQDQFLDO$VVHWV
7RWDO
&DSLWDO)XQGV
!
!
!
!
# "
!
!
# "
!
!
# "
!
# " !
!
3
3
3
3
3
!
!
!
!
# "
!
!
# "
!
!
!
# "
!
!
!
!
!
!
# "
!
!
# "
# " !
!
# "
!
!
!
3
0123145!400!!0562060#05
5751450!06
1#4585#5656655725#,'%(.'(%(.''6(.'.
9!9
""
!
!#5
1RWHV
&DVKGLYLGHQGV
7RWDOFRPSUHKHQVLYHLQFRPHORVVIRUWKH\HDU
$SSURSULDWLRQIRUWUXVWEXVLQHVV
%DODQFHDW'HFHPEHU
%DODQFHDW-DQXDU\
&DVKGLYLGHQGV
7RWDOFRPSUHKHQVLYHLQFRPHIRUWKH\HDU
%DODQFHDW'HFHPEHU
%DODQFHDW-DQXDU\
&DVKGLYLGHQGV
7RWDOFRPSUHKHQVLYHLQFRPHIRUWKH\HDU
%DODQFHDW'HFHPEHU
&RPPRQ6WRFN
$GGLWLRQDO
3DLGLQ&DSLWDO
6XUSOXV)UHH
6XUSOXV5HVHUYHV
1HW8QUHDOL]HG
)DLU9DOXH
*DLQV/RVVHVRQ
$YDLODEOHIRUVDOH
)LQDQFLDO$VVHWV
7RWDO
&DSLWDO)XQGV
3
3 3 3
3
3
!'-%-*$
!'&+%)+$
!'%-*$%)&+
3
3 3
3
3 3
3
3
3
3
3
3 3
3 3 3
3
3
3
3
3
/
3
!&-%,**%.'$
3
3
81,21%$1.2)7+(3+,/,33,1(6$1'68%6,',$5,(6
67$7(0(1762)&$6+)/2:6
)257+(<($56(1'(''(&(0%(5$1'
&$6+)/2:6)52023(5$7,1*$&7,9,7,(6
3URILWEHIRUHWD[
$GMXVWPHQWVIRU
,PSDLUPHQWORVVHV
'LYLGHQGLQFRPH
)DLUYDOXHJDLQVRQLQYHVWPHQWSURSHUWLHV
'HSUHFLDWLRQDQGDPRUWL]DWLRQ
*DLQRQVDOHDQGH[FKDQJHRISURSHUWLHV
*DLQRQGLVSRVDORIKHOGWRPDWXULW\LQYHVWPHQWV
2SHUDWLQJSURILWEHIRUHZRUNLQJFDSLWDOFKDQJHV
'HFUHDVHLQFUHDVHLQILQDQFLDODVVHWVDWIDLUYDOXHWKURXJKSURILWRUORVV
'HFUHDVHLQFUHDVHLQORDQVDQGRWKHUUHFHLYDEOHV
,QFUHDVHLQDVVHWVKHOGIRUVDOH
'HFUHDVHLQFUHDVHLQLQYHVWPHQWSURSHUWLHV
'HFUHDVHLQFUHDVHLQRWKHUUHVRXUFHV
,QFUHDVHGHFUHDVHLQGHSRVLWOLDELOLWLHV
,QFUHDVHGHFUHDVHLQRWKHUOLDELOLWLHV
&DVKJHQHUDWHGIURPXVHGLQRSHUDWLRQV
'LYLGHQGVUHFHLYHG
&DVKSDLGIRULQFRPHWD[HV
3
1HW&DVK)URP8VHGLQ2SHUDWLQJ$FWLYLWLHV
&$6+)/2:6)520,19(67,1*$&7,9,7,(6
$FTXLVLWLRQVRIEDQNSUHPLVHVIXUQLWXUHIL[WXUHVDQGHTXLSPHQW
'HFUHDVHLQFUHDVHLQDYDLODEOHIRUVDOHILQDQFLDODVVHWV
3URFHHGVIURPVDOHRIEDQNSUHPLVHVIXUQLWXUHIL[WXUHVDQGHTXLSPHQW
1HWGLVSRVDOVDFTXLVLWLRQVRIKHOGWRPDWXULW\LQYHVWPHQWV
1HWPDWXULWLHVRIKHOGWRPDWXULW\LQYHVWPHQWV
1HW&DVK)URP8VHGLQ)LQDQFLQJ$FWLYLWLHV
())(&762))25(,*1(;&+$1*(5$7(&+$1*(6
21&$6+$1'&$6+(48,9$/(176
1(7'(&5($6(,1&$6+$1'&$6+(48,9$/(176 &DUULHG)RUZDUG
3$5(17
3
3
3
3
3
1HW&DVK8VHGLQ,QYHVWLQJ$FWLYLWLHV
&$6+)/2:6)520),1$1&,1*$&7,9,7,(6
1HWDYDLOPHQWVSD\PHQWVRIELOOVSD\DEOH
'LYLGHQGVSDLG
1HWSD\PHQWVRIQRWHVSD\DEOH
*5283
1RWHV
3 3 3 3 3 3
1RWHV
&$6+$1'&$6+(48,9$/(176$7(1'2)<($5
&DVKDQGRWKHUFDVKLWHPV
'XHIURP%DQJNR6HQWUDOQJ3LOLSLQDV
'XHIURPRWKHUEDQNV
*5283
3$5(17
3 3 3 3 3 3
1(7'(&5($6(,1&$6+$1'&$6+(48,9$/(176 %URXJKW)RUZDUG
&$6+$1'&$6+(48,9$/(176$7%(*,11,1*2)<($5
'XHIURP%DQJNR6HQWUDOQJ3LOLSLQDV
'XHIURPRWKHUEDQNV
3
3
3
3
3
3
6XSSOHPHQWDO,QIRUPDWLRQRQ1RQFDVK2SHUDWLQJDQG,QYHVWLQJ$FWLYLWLHV
$GGLWLRQVWRLQYHVWPHQWSURSHUWLHVLQVHWWOHPHQWRIORDQVDQGUHFHLYDEOHDPRXQWHGWR3LQ3LQDQG3LQLQWKH*URXSDQG3DUHQW&RPSDQ\
ILQDQFLDOVWDWHPHQWVVHH1RWH
,QWKH%DQNGLVSRVHGRIPRUHWKDQDQLQVLJQLILFDQWDPRXQWRILWVKHOGWRPDWXULW\LQYHVWPHQWVDPRXQWLQJWR3&RQVHTXHQWO\WKHUHPDLQLQJKHOGWRPDWXULW\LQYHVWPHQWV
SRUWIROLRDPRXQWLQJWR3ZHUHUHFODVVLILHGWRDYDLODEOHIRUVDOHILQDQFLDODVVHWVVHH1RWHVDQG
,Q'HFHPEHUWKH*URXSSDUWLFLSDWHGLQDERQGH[FKDQJHSURJUDPE\WKH%XUHDXRI7UHDVXU\ZKHUHLQFHUWDLQLQYHVWPHQWVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRUORVVDYDLODEOHIRUVDOH
DQGKHOGWRPDWXULW\ZLWKFDUU\LQJDPRXQWVRI33DQG3UHVSHFWLYHO\ZHUHH[FKDQJHGIRUQHZLQYHVWPHQWVZLWKORQJHUWHUPVDQGKLJKHU\LHOGUDWHVZLWKIDLUYDOXHV
RI3DQG3DQG3UHVSHFWLYHO\7KHLQYHVWPHQWVSUHYLRXVO\GHVLJQDWHGDVIDLUYDOXHWKURXJKSURILWRUORVVDQGDYDLODEOHIRUVDOHZHUHH[FKDQJHGIRULQYHVWPHQWVGHVLJQDWHG
DVDYDLODEOHIRUVDOHZKLOHWKHLQYHVWPHQWVSUHYLRXVO\FODVVLILHGDVKHOGWRPDWXULW\ZHUHDOVRH[FKDQJHGIRUKHOGWRPDWXULW\LQYHVWPHQWVVHH1RWHVDQG7KHLQYHVWPHQWVXQGHU
WKHERQGH[FKDQJHSURJUDPZHUHDOOVXEVWDQWLDOO\GLVSRVHGRILQ
,QDQGFHUWDLQLQYHVWPHQWSURSHUWLHVZLWKFDUU\LQJYDOXHVRI3DQG3UHVSHFWLYHO\ZHUHUHFODVVLILHGWR%DQN3UHPLVHV)XUQLWXUHV)L[WXUHVDQG(TXLSPHQWVHH1RWH
81,21%$1.2)7+(3+,/,33,1(6$1'68%6,',$5,(6
127(672),1$1&,$/67$7(0(176
'(&(0%(5$1'
$PRXQWVLQ7KRXVDQGVRI3KLOLSSLQH3HVRV([FHSW3DU9DOXH
3HU6KDUH'DWD([FKDQJH5DWHVDQGDV,QGLFDWHG
&25325$7(,1)250$7,21
,QFRUSRUDWLRQDQG2SHUDWLRQV
8QLRQ%DQNRIWKH3KLOLSSLQHVWKH%DQN8QLRQ%DQNRUWKH3DUHQW&RPSDQ\ZDV
LQFRUSRUDWHGLQWKH3KLOLSSLQHVRQ$XJXVWDQGRSHUDWHVDVDXQLYHUVDOEDQN
WKURXJKLWVXQLYHUVDOEDQNLQJOLFHQVHDFTXLUHGLQ-XO\
7KH%DQNSURYLGHVH[SDQGHGFRPPHUFLDOEDQNLQJSURGXFWVDQGVHUYLFHVVXFKDV
ORDQVDQGGHSRVLWVFDVKPDQDJHPHQWUHWDLOEDQNLQJIRUHLJQH[FKDQJHFDSLWDO
PDUNHWVFRUSRUDWHDQGFRQVXPHUILQDQFHLQYHVWPHQWPDQDJHPHQWDQGWUXVWEDQNLQJ
$VRI'HFHPEHUWKH%DQNKDVEUDQFKHVDQGRQVLWHDQGRIIVLWH
DXWRPDWHGWHOOHUPDFKLQHV$70VORFDWHGQDWLRQZLGH
7KH%DQN·VFRPPRQVKDUHVDUHOLVWHGLQWKH3KLOLSSLQH6WRFN([FKDQJH36(7KH
%DQNLVHIIHFWLYHO\RZQHGE\$ERLWL](TXLW\9HQWXUHV,QF$(9,D
FRPSDQ\LQFRUSRUDWHGDQGGRPLFLOHGLQWKH3KLOLSSLQHV$(9,LVWKHKROGLQJDQG
PDQDJHPHQWFRPSDQ\RIWKH$ERLWL]*URXSRI&RPSDQLHV
7KH%DQN·VVXEVLGLDULHVDOOLQFRUSRUDWHGLQWKH3KLOLSSLQHVHIIHFWLYHSHUFHQWDJHRI
RZQHUVKLSDQGWKHQDWXUHRIWKHVXEVLGLDULHV·EXVLQHVVHVIROORZ
8QLRQ3URSHUWLHV,QF83,
)LUVW8QLRQ'LUHFW&RUSRUDWLRQ)8'&
)LUVW8QLRQ3ODQV,QF)83,
8%3,QVXUDQFH%URNHUV,QF8%3,%, 8%36HFXULWLHV,QF8%36,
8QLRQ%DQN&XUUHQF\%URNHUV
&RUSRUDWLRQ8&%&
8QLRQ'DWD&RUS8'&
,QWHUYHQWXUH&DSLWDO&RUSRUDWLRQ,9&&
6XEVLGLDU\
:KROO\RZQHGVXEVLGLDULHVRI83,
(IIHFWLYH
3HUFHQWDJH RI2ZQHUVKLS 1DWXUHRI%XVLQHVV 5HDOHVWDWH
DGPLQLVWUDWLRQ
)LQDQFLDOSURGXFWV
PDUNHWLQJ
3UHQHHG
,QVXUDQFHEURNHUDJH
6HFXULWLHVEURNHUDJH
)RUHLJQFXUUHQF\
EURNHUDJH
'DWDSURFHVVLQJ
9HQWXUHFDSLWDO
&RUSRUDWH,QIRUPDWLRQ
2WKHUUHOHYDQWLQIRUPDWLRQDERXWWKHVXEVLGLDULHV·QDWXUHRIEXVLQHVVDQGWKHLUVWDWXV
RIRSHUDWLRQVDUHGLVFXVVHGLQWKHVHFWLRQVWKDWIROORZ
83,ZDVLQFRUSRUDWHGDQGUHJLVWHUHGZLWKWKH6HFXULWLHVDQG([FKDQJH
&RPPLVVLRQ6(&RQ'HFHPEHU,WLVSUHVHQWO\HQJDJHGLQWKH
DGPLQLVWUDWLRQDQGPDQDJHPHQWRIWKH3DUHQW&RPSDQ\·VSUHPLVHVDQGRWKHU
SURSHUWLHVVXFKDVEXLOGLQJVFRQGRPLQLXPXQLWVDQGRWKHUUHDOHVWDWHZKROO\RU
SDUWLDOO\RZQHGE\WKH*URXS3XUVXDQWWRWKHDFWLRQRIWKH%RDUGRI'LUHFWRUV
%2'RI83,DSSURYLQJWKHDPHQGPHQWRILWV$UWLFOHVRI,QFRUSRUDWLRQRQ
0D\WKHSULPDU\SXUSRVHRI83,ZDVFKDQJHGIURPDUHDOHVWDWH
GHYHORSHUWRDUHDOHVWDWHDGPLQLVWUDWRU7KH6(&DSSURYHGVXFKDPHQGPHQW
RQ'HFHPEHU7KURXJKLWVZKROO\RZQHGVXEVLGLDULHV)83,DQG
)8'&83,LVDOVRHQJDJHGLQWKHVDOHRISUHQHHGSODQVDQGPDUNHWLQJRI
ILQDQFLDOSURGXFWV
D
8%3,%,ZDVRUJDQL]HGWRHQJDJHLQWKHLQVXUDQFHEURNHUDJHEXVLQHVV,WZDV
LQFRUSRUDWHGDQGUHJLVWHUHGZLWKWKH6(&RQ)HEUXDU\,QWKH
%2'RI8%3,%,DSSURYHGWKHFHVVDWLRQRILWVRSHUDWLRQV
E
F
8%36,ZDVLQFRUSRUDWHGDQGUHJLVWHUHGZLWKWKH6(&RQ0DUFK,WZDV
RUJDQL]HGWRHQJDJHLQWKHEXVLQHVVRIEX\LQJVHOOLQJRUGHDOLQJLQVWRFNVDQG
RWKHUVHFXULWLHV,Q-DQXDU\DVDSSURYHGE\8%36,·VVWRFNKROGHUVDQG
%2'8%36,VROGLWVVWRFNH[FKDQJHVHDWLQWKH36(WRDQDIILOLDWHRIWKH
3DUHQW&RPSDQ\$FFRUGLQJO\8%36,FHDVHGLWVVWRFNEURNHUDJHDFWLYLWLHVDQG
KDVVHWWOHGDQGOLTXLGDWHGLWVFXVWRPHUV·SRVLWLRQV
G
8&%&ZDVUHJLVWHUHGLQWKH6(&RQ-XQH,WZDVRUJDQL]HGWRHQJDJH
LQWKHIRUHLJQFXUUHQF\EURNHUDJHEXVLQHVV2Q0DUFKWKH%2'RI
8&%&DSSURYHGWKHFHVVDWLRQRILWVEXVLQHVVRSHUDWLRQVHIIHFWLYHRQ
$SULO6LQFHWKHQ8&%&·VDFWLYLWLHVZHUHVLJQLILFDQWO\OLPLWHGWRWKH
VHWWOHPHQWRILWVOLDELOLWLHV
H
8'&ZDVUHJLVWHUHGZLWKWKH6(&RQ6HSWHPEHU,WZDVRUJDQL]HGWR
KDQGOHWKHFHQWUDOL]HGEUDQFKDFFRXQWLQJVHUYLFHVDVZHOODVWKHSURFHVVLQJRI
FUHGLWFDUGDSSOLFDWLRQIRUPVRIWKH3DUHQW&RPSDQ\DQGWKHHQWLUHEDFNURRP
RSHUDWLRQVRI)83,2Q-XO\WKH%2'RI8'&DSSURYHGWKH
FHVVDWLRQRILWVEXVLQHVVRSHUDWLRQVHIIHFWLYHRQ$XJXVW7KHVHUYLFHV
SUHYLRXVO\KDQGOHGE\8'&DUHSUHVHQWO\XQGHUWKH&HQWUDOL]HG3URFHVVLQJ
6HUYLFHXQLWRIWKH3DUHQW&RPSDQ\
I
,9&&ZDVLQFRUSRUDWHGDQGUHJLVWHUHGZLWKWKH6(&RQ2FWREHU,W
ZDVRUJDQL]HGWRGHYHORSSURPRWHDLGDQGDVVLVWILQDQFLDOO\DQ\VPDOORU
PHGLXPVFDOHHQWHUSULVHVDQGWRSXUFKDVHUHFHLYHWDNHRUJUDQWKROGFRQYH\
VHOOOHDVHSOHGJHPRUWJDJHDQGRWKHUZLVHGHDOZLWKVXFKUHDODQGSHUVRQDO
SURSHUW\LQFOXGLQJVHFXULWLHVDQGERQGVRIRWKHUFRUSRUDWLRQVDVWKHWUDQVDFWLRQ
RIWKHODZIXOEXVLQHVVRIWKHFRUSRUDWLRQPD\UHDVRQDEO\DQGQHFHVVDULO\
UHTXLUHVXEMHFWWRWKHOLPLWDWLRQVSUHVFULEHGE\ODZDQGWKHFRQVWLWXWLRQ,9&&
KDVFHDVHGRSHUDWLRQVVLQFH
&RUSRUDWH,QIRUPDWLRQDQG
6XPPDU\RI6LJQLILFDQW$FFRXQWLQJ3ROLFLHV
7KH3DUHQW&RPSDQ\LVSUHVHQWO\DVVHVVLQJWKHEXVLQHVVSURVSHFWVDQG
HQYLURQPHQWDVDEDVLVLQIRUPXODWLQJIXWXUHSODQVIRU8%3,%,8%36,8&%&8'&
DQG,9&&$FFRUGLQJO\VXFKGRUPDQWFRPSDQLHVDUHPDLQWDLQHGDVVKHOOFRPSDQLHV
7KHWRWDODVVHWVOLDELOLWLHVDQGFDSLWDOIXQGVRIWKHVHVXEVLGLDULHVDPRXQWHGWR3
3DQG3UHVSHFWLYHO\DVRI'HFHPEHUDQG33DQG3
UHVSHFWLYHO\DVRI'HFHPEHU
7KH%DQN·VUHJLVWHUHGDGGUHVVZKLFKLVDOVRLWVSULQFLSDOSODFHRIEXVLQHVVLVDW
8QLRQ%DQN3OD]D0HUDOFR$YHQXHFRUQHU2Q\[6WUHHWDQG6DSSKLUH5RDG2UWLJDV
&HQWHU3DVLJ&LW\$(9,·VUHJLVWHUHGDGGUHVVLVORFDWHGDW$ERLWL]&RUSRUDWH&HQWHU
*RY0DQXHO$&XHQFR$YHQXH&HEX&LW\
$SSURYDORI)LQDQFLDO6WDWHPHQWV
7KHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVRI8QLRQ%DQNRIWKH3KLOLSSLQHVDQG
6XEVLGLDULHVWKH*URXSDQGWKHILQDQFLDOVWDWHPHQWVRI8QLRQ%DQNRIWKH
3KLOLSSLQHVIRUWKH\HDUHQGHG'HFHPEHULQFOXGLQJWKHFRPSDUDWLYHVIRUWKH
\HDUVHQGHG'HFHPEHUDQGZHUHDXWKRUL]HGIRULVVXHE\WKH%DQN·V
%2'RQ0DUFK
6800$5<2)6,*1,),&$17$&&2817,1*32/,&,(6
7KHVLJQLILFDQWDFFRXQWLQJSROLFLHVWKDWKDYHEHHQXVHGLQWKHSUHSDUDWLRQRIWKHVH
ILQDQFLDOVWDWHPHQWVDUHVXPPDUL]HGEHORZ7KHSROLFLHVKDYHEHHQFRQVLVWHQWO\
DSSOLHGWRDOOWKH\HDUVSUHVHQWHGXQOHVVRWKHUZLVHVWDWHG
%DVLVRI3UHSDUDWLRQRI)LQDQFLDO6WDWHPHQWV
D
6WDWHPHQWRI&RPSOLDQFHZLWK)LQDQFLDO5HSRUWLQJ6WDQGDUGVLQWKH3KLOLSSLQHVIRU%DQNV
7KHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVRIWKH*URXSDQGWKHILQDQFLDOVWDWHPHQWV
RIWKH%DQNKDYHEHHQSUHSDUHGLQDFFRUGDQFHZLWK)LQDQFLDO5HSRUWLQJ
6WDQGDUGVLQWKH3KLOLSSLQHV)563IRUEDQNV)563IRUEDQNVDQG3KLOLSSLQH
)LQDQFLDO5HSRUWLQJ6WDQGDUGV3)56DUHWKHVDPHH[FHSWIRUWKHH[HPSWLRQ
IURPWKHWDLQWLQJSURYLVLRQRI3KLOLSSLQH$FFRXQWLQJ6WDQGDUG3$6
)LQDQFLDO,QVWUXPHQWV5HFRJQLWLRQDQG0HDVXUHPHQWDVDOORZHGE\%DQJNR6HQWUDOQJ
3LOLSLQDV%63DQGWKH6(&
7KHIROORZLQJUHFRQFLOLDWLRQVDQGH[SODQDWRU\LQIRUPDWLRQWKHUHWRGHVFULEHWKH
GLIIHUHQFHLQWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQEHWZHHQ)563IRUEDQNV
DQG3)56KDGWKH%DQN·VKHOGWRPDWXULW\+70SRUWIROLREHFDPHWDLQWHG,Q
DQGWKHUHLVQRGLIIHUHQFHEHWZHHQ)563IRUEDQNVDQG3)56VLQFH
WKH%DQNRQO\KDGWUDQVDFWLRQVLQLQZKLFKWKHUHOLHIIURPWKHWDLQWLQJ
SURYLVLRQXQGHU3$6JUDQWHGE\WKH%63DQGWKH6(&ZDVDSSOLHG
VHHDOVR1RWH
*URXS
3DUHQW
&DSLWDOIXQGVXQGHU)563IRUEDQNV
$GMXVWPHQWRQQHWXQUHDOL]HGIDLU
YDOXHJDLQKDGWKH%DQN·VHQWLUH
+70SRUWIROLREHHQWDLQWHG
3 3
&DSLWDOIXQGVXQGHU3)56
3
3
'LIIHUHQFHVLQWKHPHDVXUHPHQWRILWHPVLQWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQ
DVRI'HFHPEHUDUHVXPPDUL]HGEHORZ
IRUEDQNV 'LIIHUHQFH 3)56
*URXS
&KDQJHVLQUHVRXUFHV
$YDLODEOHIRUVDOH$)6
ILQDQFLDODVVHWV
+70LQYHVWPHQWV
7RWDODGMXVWPHQWVWRFDSLWDOIXQGV 3DUHQW&RPSDQ\
)563
&KDQJHVLQUHVRXUFHV
$)6ILQDQFLDODVVHWV
+70LQYHVWPHQWV
7RWDODGMXVWPHQWVWRFDSLWDOIXQGV 3 3 3 3 3 3 3 3 3 3 3 3 3)56DUHDGRSWHGE\WKH)LQDQFLDO5HSRUWLQJ6WDQGDUGV&RXQFLO)56&IURP
WKHSURQRXQFHPHQWVLVVXHGE\WKH,QWHUQDWLRQDO$FFRXQWLQJ6WDQGDUGV%RDUG
,$6%
7KHILQDQFLDOVWDWHPHQWVKDYHEHHQSUHSDUHGXVLQJWKHPHDVXUHPHQWEDVHV
VSHFLILHGE\3)56IRUHDFKW\SHRIUHVRXUFHOLDELOLW\LQFRPHDQGH[SHQVH
7KHPHDVXUHPHQWEDVHVDUHPRUHIXOO\GHVFULEHGLQWKHDFFRXQWLQJSROLFLHVWKDW
IROORZ
E
3UHVHQWDWLRQRI)LQDQFLDO6WDWHPHQWV
7KHILQDQFLDOVWDWHPHQWVDUHSUHVHQWHGLQDFFRUGDQFHZLWK3$63UHVHQWDWLRQRI
)LQDQFLDO6WDWHPHQWV7KH*URXSSUHVHQWVDOOLWHPVRILQFRPHDQGH[SHQVHVLQ
WZRVWDWHPHQWVDVWDWHPHQWRILQFRPHDQGDVWDWHPHQWRIFRPSUHKHQVLYH
LQFRPH
7ZRFRPSDUDWLYHSHULRGVDUHSUHVHQWHGIRUWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQ
ZKHQWKH*URXSDSSOLHVDQDFFRXQWLQJSROLF\UHWURVSHFWLYHO\PDNHVD
UHWURVSHFWLYHUHVWDWHPHQWRILWHPVLQLWVILQDQFLDOVWDWHPHQWVRUUHFODVVLILHV
LWHPVLQWKHILQDQFLDOVWDWHPHQWV,QWKH*URXSUHVWDWHGLWVDQG
FRQVROLGDWHGILQDQFLDOVWDWHPHQWVWRDSSURSULDWHO\UHFRJQL]HWKHWUXVWIXQG
DVVHWVRI)83,VHH1RWH$FFRUGLQJO\WZRFRPSDUDWLYHSHULRGVDUH
SUHVHQWHGIRUWKH*URXS·VVWDWHPHQWRIILQDQFLDOSRVLWLRQ,QWKLVFRQQHFWLRQ
WKH*URXSHDUO\DGRSWHG3$6$PHQGPHQWZKLFKQRORQJHUUHTXLUHVWKH
UHODWHGQRWHVRQWKHRSHQLQJFRQVROLGDWHGVWDWHPHQWRIILQDQFLDOSRVLWLRQWREH
SUHVHQWHG>VHH1RWHF@
7KHUHVWDWHPHQWKDVQRHIIHFWRQWKHILQDQFLDOVWDWHPHQWVRIWKH3DUHQW
&RPSDQ\7KXVWZRFRPSDUDWLYHSHULRGVZHUHQRWSUHVHQWHGIRUWKH3DUHQW
&RPSDQ\
F
)XQFWLRQDODQG3UHVHQWDWLRQ&XUUHQF\
7KHVHILQDQFLDOVWDWHPHQWVDUHSUHVHQWHGLQ3KLOLSSLQHSHVRVWKH3DUHQW
&RPSDQ\·VIXQFWLRQDODQGSUHVHQWDWLRQFXUUHQF\DQGDOOYDOXHVUHSUHVHQW
DEVROXWHDPRXQWVH[FHSWZKHQRWKHUZLVHLQGLFDWHGVHHDOVR1RWH
,WHPVLQFOXGHGLQWKHILQDQFLDOVWDWHPHQWVRIWKH*URXSDUHPHDVXUHGXVLQJ
IXQFWLRQDOFXUUHQF\RIWKH3DUHQW&RPSDQ\WKHFXUUHQF\RIWKHSULPDU\
HFRQRPLFHQYLURQPHQWLQZKLFKWKH*URXSRSHUDWHV
$GRSWLRQRI1HZDQG$PHQGHG3)56
D
(IIHFWLYHLQWKDWDUH5HOHYDQWWRWKH*URXS
,QWKH*URXSDGRSWHGWKHIROORZLQJDPHQGPHQWVWR3)56WKDWDUH
UHOHYDQWWRWKH*URXSDQGHIIHFWLYHIRUILQDQFLDOVWDWHPHQWVIRUWKHDQQXDO
SHULRGEHJLQQLQJRQRUDIWHU-XO\RU-DQXDU\
3)56$PHQGPHQW
3$6$PHQGPHQW
)LQDQFLDO,QVWUXPHQWV'LVFORVXUHV²
7UDQVIHUVRI)LQDQFLDO$VVHWV
,QFRPH7D[HV²'HIHUUHG7D[HV
5HFRYHU\RI8QGHUO\LQJ$VVHWV
'LVFXVVHGEHORZDUHUHOHYDQWLQIRUPDWLRQDERXWWKHVHDPHQGHGVWDQGDUGV
L
E
3)56$PHQGPHQW)LQDQFLDO,QVWUXPHQWV'LVFORVXUHV²7UDQVIHUVRI
)LQDQFLDO$VVHWV7KHDPHQGPHQWUHTXLUHVDGGLWLRQDOGLVFORVXUHVWKDWZLOO
DOORZXVHUVRIILQDQFLDOVWDWHPHQWVWRXQGHUVWDQGWKHUHODWLRQVKLSEHWZHHQ
WUDQVIHUUHGILQDQFLDODVVHWVWKDWDUHQRWGHUHFRJQL]HGLQWKHLUHQWLUHW\DQG
WKHDVVRFLDWHGOLDELOLWLHVDQGWRHYDOXDWHWKHQDWXUHRIDQGULVNDVVRFLDWHG
ZLWKDQ\FRQWLQXLQJLQYROYHPHQWRIWKHUHSRUWLQJHQWLW\LQILQDQFLDODVVHWV
WKDWDUHGHUHFRJQL]HGLQWKHLUHQWLUHW\7KH*URXSGLGQRWWUDQVIHUDQ\
ILQDQFLDODVVHWLQYROYLQJWKLVW\SHRIDUUDQJHPHQWKHQFHWKHDPHQGPHQW
GLGQRWUHVXOWLQDQ\VLJQLILFDQWFKDQJHLQWKH*URXS·VGLVFORVXUHVLQLWV
ILQDQFLDOVWDWHPHQWV
LL 3$6$PHQGPHQW,QFRPH7D[HV²'HIHUUHG7D[HV5HFRYHU\RI8QGHUO\LQJ
$VVHWV7KHDPHQGPHQWSURYLGHVDQH[FHSWLRQWRWKHH[LVWLQJSULQFLSOHLQ
3$6WKDWUHFRYHU\RIWKHFDUU\LQJDPRXQWRILQYHVWPHQWSURSHUW\
PHDVXUHGDWIDLUYDOXHXQGHU3$6,QYHVWPHQW3URSHUW\ZLOOEHRU
QRUPDOO\EHWKURXJKVDOH7KHDPHQGPHQWLQWURGXFHVDUHEXWWDEOH
SUHVXPSWLRQWKDWWKHPHDVXUHPHQWRIDGHIHUUHGWD[OLDELOLW\RUDVVHWRQ
DQLQYHVWPHQWSURSHUW\PHDVXUHGDWIDLUYDOXHVKRXOGUHIOHFWWKHWD[
FRQVHTXHQFHRIUHFRYHULQJWKHFDUU\LQJDPRXQWHQWLUHO\WKURXJKVDOH7KH
SUHVXPSWLRQLVUHEXWWHGIRUGHSUHFLDEOHLQYHVWPHQWSURSHUW\
HJEXLOGLQJPHDVXUHGDWIDLUYDOXHWKDWLVKHOGZLWKDQREMHFWLYHWR
FRQVXPHVXEVWDQWLDOO\WKHHFRQRPLFEHQHILWVHPERGLHGLQWKHDVVHWRYHU
WLPHUDWKHUWKDQWKURXJKVDOH$VDUHVXOWRIWKHDPHQGPHQW6WDQGLQJ
,QWHUSUHWDWLRQV&RPPLWWHH6,&,QFRPH7D[HV²5HFRYHU\RI5HYDOXHG
1RQ'HSUHFLDEOH$VVHWVLVDFFRUGLQJO\ZLWKGUDZQDQGLVLQFRUSRUDWHGXQGHU
3$67KHDPHQGPHQWKDVQRVLJQLILFDQWLPSDFWRQWKH*URXS·V
ILQDQFLDOVWDWHPHQWVDVWKH*URXS·VLQYHVWPHQWSURSHUWLHVZKLFKDUH
PHDVXUHGDWIDLUYDOXHDUHWD[DEOHZLWKWKHVDPHUDWHUHJDUGOHVVRIZKHWKHU
WKHVHDVVHWVZLOOEHVROGRUXVHGLQRSHUDWLRQV
(IIHFWLYHLQWKDWLVQRW5HOHYDQWWRWKH*URXS
3)56)LUVWWLPH$GRSWLRQRI3)56ZDVDPHQGHGWRSURYLGHUHOLHIIRU
ILUVWWLPHDGRSWHUVRI3)56IURPKDYLQJWRUHFRQVWUXFWWUDQVDFWLRQVWKDW
RFFXUUHGEHIRUHWKHGDWHRIWUDQVLWLRQWR3)56DQGWRSURYLGHJXLGDQFHIRU
HQWLWLHVHPHUJLQJIURPVHYHUHK\SHULQIODWLRQHLWKHUWRUHVXPHSUHVHQWLQJ
3)56ILQDQFLDOVWDWHPHQWVRUWRSUHVHQW3)56ILQDQFLDOVWDWHPHQWVIRUWKH
ILUVWWLPH7KHDPHQGPHQWEHFDPHHIIHFWLYHIRUDQQXDOSHULRGVEHJLQQLQJRQ
RUDIWHU-XO\EXWLVQRWUHOHYDQWWRWKH*URXS·VILQDQFLDOVWDWHPHQWV
F
(DUO\$GRSWLRQRI3$6$PHQGPHQW
,QWKHSUHSDUDWLRQRIWKHILQDQFLDOVWDWHPHQWVWKH*URXSDGRSWHGHDUO\
WKHDPHQGPHQWPDGHWR3$6LVVXHGE\WKH)56&DVSDUWRIWKH$QQXDO
,PSURYHPHQWVWR3)56&\FOHZKLFKZLOOEHHIIHFWLYHIRUWKHDQQXDO
SHULRGEHJLQQLQJRQRUDIWHU-DQXDU\7KHDPHQGPHQWFODULILHVWKDW
ZKHQDQHQWLW\DSSOLHVDQDFFRXQWLQJSROLF\UHWURVSHFWLYHO\RUPDNHVD
UHWURVSHFWLYHUHVWDWHPHQWRUUHFODVVLILFDWLRQRILWHPVLQLWVILQDQFLDOVWDWHPHQWV
WKDWKDVDPDWHULDOHIIHFWRQWKHLQIRUPDWLRQLQWKHVWDWHPHQWRIILQDQFLDO
SRVLWLRQDWWKHEHJLQQLQJRIWKHSUHFHGLQJSHULRGLHRSHQLQJVWDWHPHQWRI
ILQDQFLDOSRVLWLRQLWVKDOOSUHVHQWDWKLUGVWDWHPHQWRIILQDQFLDOSRVLWLRQDVDW
WKHEHJLQQLQJRIWKDWSUHFHGLQJSHULRG2WKHUWKDQGLVFORVXUHVRIFHUWDLQ
VSHFLILHGLQIRUPDWLRQDVSURYLGHGLQ1RWHWKHUHODWHGQRWHVWRWKHRSHQLQJ
VWDWHPHQWRIILQDQFLDOSRVLWLRQDUHQRORQJHUUHTXLUHGWREHSUHVHQWHG
(IIHFWLYH6XEVHTXHQWWREXWQRW$GRSWHG(DUO\
G
7KHUHDUHQHZ3)56DQGDPHQGPHQWVDQQXDOLPSURYHPHQWVDQG
LQWHUSUHWDWLRQVWRH[LVWLQJVWDQGDUGVWKDWDUHHIIHFWLYHIRUSHULRGVVXEVHTXHQW
WR0DQDJHPHQWKDVLQLWLDOO\GHWHUPLQHGWKHIROORZLQJSURQRXQFHPHQWV
ZKLFKWKH*URXSZLOODSSO\LQDFFRUGDQFHZLWKWKHLUWUDQVLWLRQDOSURYLVLRQVWR
EHUHOHYDQWWRLWVILQDQFLDOVWDWHPHQWV
L
3$6$PHQGPHQW)LQDQFLDO6WDWHPHQWV3UHVHQWDWLRQ²3UHVHQWDWLRQRI,WHPV
RI2WKHU&RPSUHKHQVLYH,QFRPHHIIHFWLYHIURP-XO\7KH
DPHQGPHQWUHTXLUHVDQHQWLW\WRJURXSLWHPVSUHVHQWHGLQRWKHU
FRPSUHKHQVLYHLQFRPHLQWRWKRVHWKDWLQDFFRUGDQFHZLWKRWKHU3)56V
DZLOOQRWEHUHFODVVLILHGVXEVHTXHQWO\WRSURILWRUORVVDQGEZLOOEH
UHFODVVLILHGVXEVHTXHQWO\WRSURILWRUORVVZKHQVSHFLILFFRQGLWLRQVDUH
PHW7KH*URXS·VPDQDJHPHQWH[SHFWVWKDWWKLVZLOOQRWDIIHFWWKH
SUHVHQWDWLRQRILWHPVLQRWKHUFRPSUHKHQVLYHLQFRPHVLQFHDOORIWKH
*URXS·VRWKHUFRPSUHKHQVLYHLQFRPHZKLFKLQFOXGHXQUHDOL]HGIDLU
YDOXHJDLQVDQGORVVHVRQ$)6ILQDQFLDODVVHWVFDQEHUHFODVVLILHGWR
SURILWRUORVVZKHQVSHFLILHGFRQGLWLRQVDUHPHW
LL
3$65HYLVHG(PSOR\HH%HQHILWVHIIHFWLYHIURP-DQXDU\7KH
UHYLVLRQPDGHDQXPEHURIFKDQJHVDVSDUWRIWKHLPSURYHPHQWV
WKURXJKRXWWKHVWDQGDUG7KHPDLQFKDQJHVUHODWHWRGHILQHGEHQHILW
SODQVDVIROORZV
x HOLPLQDWHVWKHFRUULGRUDSSURDFKXQGHUWKHH[LVWLQJJXLGDQFHRI
3$6DQGUHTXLUHVDQHQWLW\WRUHFRJQL]HDOODFWXDULDOJDLQVDQG
ORVVHVDULVLQJLQWKHUHSRUWLQJSHULRG
x VWUHDPOLQHVWKHSUHVHQWDWLRQRIFKDQJHVLQSODQDVVHWVDQGOLDELOLWLHV
UHVXOWLQJLQWKHGLVDJJUHJDWLRQRIFKDQJHVLQWRWKUHHPDLQ
FRPSRQHQWVRIVHUYLFHFRVWVQHWLQWHUHVWRQQHWGHILQHGEHQHILW
REOLJDWLRQRUDVVHWDQGUHPHDVXUHPHQWDQG
x HQKDQFHVGLVFORVXUHUHTXLUHPHQWVLQFOXGLQJLQIRUPDWLRQDERXWWKH
FKDUDFWHULVWLFVRIGHILQHGEHQHILWSODQVDQGWKHULVNVWKDWHQWLWLHVDUH
H[SRVHGWRWKURXJKSDUWLFLSDWLRQLQWKRVHSODQV
&XUUHQWO\WKH*URXSLVXVLQJWKHFRUULGRUDSSURDFKDQGLWV
XQUHFRJQL]HGDFWXDULDOORVVDVRI'HFHPEHUDPRXQWHGWR
3VHH1RWHZKLFKZLOOEHUHWURVSHFWLYHO\UHFRJQL]HGLQ
DVORVVLQRWKHUFRPSUHKHQVLYHLQFRPH,IWKHLQIRUPDWLRQLQWKH
UHFHQWDFWXDULDOYDOXDWLRQZLOOEHXVHGLQWRHIIHFWWKHUHWURVSHFWLYH
DSSOLFDWLRQWKHHVWLPDWHGLPSDFWWRWKHFRQVROLGDWHGWRWDOUHVRXUFHVDQG
FRQVROLGDWHGWRWDOFDSLWDOIXQGVZRXOGEHDGHFUHDVHRI3DQG
3UHVSHFWLYHO\DVRI'HFHPEHUDQG3DQG
3UHVSHFWLYHO\DVRI'HFHPEHUZKLOHWRWKH
FRQVROLGDWHGQHWSURILWDQGFRQVROLGDWHGRWKHUFRPSUHKHQVLYHLQFRPH
ORVVZRXOGEHDQLQFUHDVHGHFUHDVHRI3DQG3LQ
DQG3DQG3LQ
LLL &RQVROLGDWLRQ6WDQGDUGV
7KH*URXSLVFXUUHQWO\UHYLHZLQJWKHLPSDFWRQLWVILQDQFLDOVWDWHPHQWV
RIWKHIROORZLQJFRQVROLGDWLRQVWDQGDUGVZKLFKZLOOEHHIIHFWLYHIURP
-DQXDU\
x 3)56&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV7KLVVWDQGDUGEXLOGVRQ
H[LVWLQJSULQFLSOHVRIFRQVROLGDWLRQE\LGHQWLI\LQJWKHFRQFHSWRI
FRQWURODVWKHGHWHUPLQLQJIDFWRULQZKHWKHUDQHQWLW\VKRXOGEH
LQFOXGHGZLWKLQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV7KHVWDQGDUG
DOVRSURYLGHVDGGLWLRQDOJXLGDQFHWRDVVLVWLQGHWHUPLQLQJFRQWURO
ZKHUHWKLVLVGLIILFXOWWRDVVHVV
x 3)56'LVFORVXUHRI,QWHUHVWLQ2WKHU(QWLWLHV7KLVVWDQGDUGLQWHJUDWHV
DQGPDNHVFRQVLVWHQWWKHGLVFORVXUHUHTXLUHPHQWVIRUDOOIRUPVRI
LQWHUHVWVLQRWKHUHQWLWLHVLQFOXGLQJMRLQWDUUDQJHPHQWVDVVRFLDWHV
VSHFLDOSXUSRVHYHKLFOHVDQGXQFRQVROLGDWHGVWUXFWXUHGHQWLWLHV7KLV
DOVRLQWURGXFHVQHZGLVFORVXUHUHTXLUHPHQWVDERXWWKHULVNVWRZKLFK
DQHQWLW\LVH[SRVHGIURPLWVLQYROYHPHQWZLWKVWUXFWXUHGHQWLWLHV
x 3$6$PHQGPHQW6HSDUDWH)LQDQFLDO6WDWHPHQWV7KLVUHYLVHG
VWDQGDUGQRZFRYHUVWKHUHTXLUHPHQWVSHUWDLQLQJVROHO\WRVHSDUDWH
ILQDQFLDOVWDWHPHQWVDIWHUWKHUHOHYDQWGLVFXVVLRQVRQFRQWURODQG
FRQVROLGDWHGILQDQFLDOVWDWHPHQWVKDYHEHHQWUDQVIHUUHGDQGLQFOXGHG
LQ3)561RQHZPDMRUFKDQJHVUHODWLQJWRVHSDUDWHILQDQFLDO
VWDWHPHQWVKDYHEHHQLQWURGXFHGDVDUHVXOWRIWKHUHYLVLRQ
x 3$6$PHQGPHQW,QYHVWPHQWVLQ$VVRFLDWHDQG-RLQW9HQWXUH7KLV
UHYLVHGVWDQGDUGLQFOXGHVWKHUHTXLUHPHQWVIRUMRLQWYHQWXUHVDVZHOO
DVDVVRFLDWHVWREHDFFRXQWHGIRUXVLQJHTXLW\PHWKRGIROORZLQJWKH
LVVXDQFHRI3)56-RLQW$UUDQJHPHQW
6XEVHTXHQWWRWKHLVVXDQFHRIWKHIRUHJRLQJFRQVROLGDWLRQVWDQGDUGVWKH
,$6%PDGHVRPHFKDQJHVWRWKHWUDQVLWLRQDOSURYLVLRQVLQ,QWHUQDWLRQDO
)LQDQFLDO5HSRUWLQJ6WDQGDUG,)56,)56DQG,)56ZKLFK
ZHUHDOVRDGRSWHGE\WKH)56&7KHJXLGDQFHFRQILUPVWKDWDQHQWLW\LV
QRWUHTXLUHGWRDSSO\3)56UHWURVSHFWLYHO\LQFHUWDLQFLUFXPVWDQFHV
DQGFODULILHVWKHUHTXLUHPHQWVWRSUHVHQWDGMXVWHGFRPSDUDWLYHV7KH
JXLGDQFHDOVRPDGHFKDQJHVWR3)56DQG3)56ZKLFKSURYLGH
VLPLODUUHOLHIIURPWKHSUHVHQWDWLRQRUDGMXVWPHQWRIFRPSDUDWLYH
LQIRUPDWLRQIRUSHULRGVSULRUWRWKHLPPHGLDWHO\SUHFHGLQJSHULRG
)XUWKHULWSURYLGHVUHOLHIE\UHPRYLQJWKHUHTXLUHPHQWWRSUHVHQW
FRPSDUDWLYHVIRUGLVFORVXUHVUHODWLQJWRXQFRQVROLGDWHGVWUXFWXUHG
HQWLWLHVIRUDQ\SHULRGEHIRUHWKHILUVWDQQXDOSHULRGIRUZKLFK3)56
LVDSSOLHG
LY 3)56$PHQGPHQW)LQDQFLDO,QVWUXPHQWV'LVFORVXUHV²2IIVHWWLQJ
)LQDQFLDO$VVHWVDQG)LQDQFLDO/LDELOLWLHVHIIHFWLYHIURP-DQXDU\
7KHDPHQGPHQWUHTXLUHVTXDOLWDWLYHDQGTXDQWLWDWLYHGLVFORVXUHVUHODWLQJ
WRJURVVDQGQHWDPRXQWVRIUHFRJQL]HGILQDQFLDOLQVWUXPHQWVWKDWDUH
VHWRIILQDFFRUGDQFHZLWK3$6)LQDQFLDO,QVWUXPHQWV3UHVHQWDWLRQ7KH
DPHQGPHQWDOVRUHTXLUHVGLVFORVXUHRILQIRUPDWLRQDERXWUHFRJQL]HG
ILQDQFLDOLQVWUXPHQWVVXEMHFWWRHQIRUFHDEOHPDVWHUQHWWLQJDUUDQJHPHQWV
RUVLPLODUDJUHHPHQWVHYHQLIWKH\DUHQRWVHWRIILQWKHVWDWHPHQWRI
ILQDQFLDOSRVLWLRQLQFOXGLQJWKRVHZKLFKGRQRWPHHWVRPHRUDOORIWKH
RIIVHWWLQJFULWHULDXQGHU3$6DQGDPRXQWVUHODWHGWRDILQDQFLDO
FROODWHUDO7KHVHGLVFORVXUHVZLOODOORZILQDQFLDOVWDWHPHQWXVHUVWR
HYDOXDWHWKHHIIHFWRUSRWHQWLDOHIIHFWRIQHWWLQJDUUDQJHPHQWVLQFOXGLQJ
ULJKWVRIVHWRIIDVVRFLDWHGZLWKUHFRJQL]HGILQDQFLDODVVHWVDQGILQDQFLDO
OLDELOLWLHVRQWKHHQWLW\·VILQDQFLDOSRVLWLRQ7KH*URXSKDVLQLWLDOO\
DVVHVVHGWKDWWKHDGRSWLRQRIWKHDPHQGPHQWZLOOQRWKDYHDVLJQLILFDQW
LPSDFWRQLWVILQDQFLDOVWDWHPHQWVVLQFHWKHUHDUHQRVLJQLILFDQWLWHPVRI
ILQDQFLDODVVHWVDQGOLDELOLWLHVWKDWDUHRIIVHW
Y 3)56)DLU9DOXH0HDVXUHPHQWHIIHFWLYHIURP-DQXDU\7KLV
VWDQGDUGDLPVWRLPSURYHFRQVLVWHQF\DQGUHGXFHFRPSOH[LW\E\
SURYLGLQJDSUHFLVHGHILQLWLRQRIIDLUYDOXHDQGDVLQJOHVRXUFHRIIDLU
YDOXHPHDVXUHPHQWDQGGLVFORVXUHUHTXLUHPHQWVIRUXVHDFURVV3)56
7KHUHTXLUHPHQWVGRQRWH[WHQGWKHXVHRIIDLUYDOXHDFFRXQWLQJEXW
SURYLGHJXLGDQFHRQKRZLWVKRXOGEHDSSOLHGZKHUHLWVXVHLVDOUHDG\
UHTXLUHGRUSHUPLWWHGE\RWKHUVWDQGDUGV0DQDJHPHQWLVLQWKHSURFHVV
RIUHYLHZLQJLWVYDOXDWLRQPHWKRGRORJLHVIRUFRQIRUPLW\ZLWKWKHQHZ
UHTXLUHPHQWVDQGKDV\HWWRDVVHVVWKHLPSDFWRIWKHQHZVWDQGDUGRQ
WKH*URXS·VILQDQFLDOVWDWHPHQWV
YL 3$6$PHQGPHQW)LQDQFLDO,QVWUXPHQWV3UHVHQWDWLRQ²2IIVHWWLQJ
)LQDQFLDO$VVHWVDQG)LQDQFLDO/LDELOLWLHVHIIHFWLYHIURP-DQXDU\
7KHDPHQGPHQWSURYLGHVJXLGDQFHWRDGGUHVVLQFRQVLVWHQFLHVLQ
DSSO\LQJWKHFULWHULDIRURIIVHWWLQJILQDQFLDODVVHWVDQGILQDQFLDOOLDELOLWLHV
,WFODULILHVWKDWDULJKWRIVHWRIILVUHTXLUHGWREHOHJDOO\HQIRUFHDEOHLQ
WKHQRUPDOFRXUVHRIEXVLQHVVLQWKHHYHQWRIGHIDXOWDQGLQWKHHYHQW
RILQVROYHQF\RUEDQNUXSWF\RIWKHHQWLW\DQGDOORIWKHFRXQWHUSDUWLHV
7KHDPHQGPHQWDOVRFODULILHVWKHSULQFLSOHEHKLQGQHWVHWWOHPHQWDQG
LQFOXGHVDQH[DPSOHRIDJURVVVHWWOHPHQWV\VWHPZLWKFKDUDFWHULVWLFV
WKDWZRXOGVDWLVI\WKHFULWHULRQIRUQHWVHWWOHPHQW7KH*URXSGRHVQRW
H[SHFWWKLVDPHQGPHQWWRKDYHDVLJQLILFDQWLPSDFWRQLWVILQDQFLDO
VWDWHPHQWV
YLL 3)56)LQDQFLDO,QVWUXPHQWV&ODVVLILFDWLRQDQG0HDVXUHPHQWHIIHFWLYHIURP
-DQXDU\7KLVLVWKHILUVWSDUWRIDQHZVWDQGDUGRQILQDQFLDO
LQVWUXPHQWVWKDWZLOOUHSODFH3$6LQLWVHQWLUHW\7KLVFKDSWHUFRYHUV
WKHFODVVLILFDWLRQDQGPHDVXUHPHQWRIILQDQFLDODVVHWVDQGILQDQFLDO
OLDELOLWLHVDQGLWGHDOVZLWKWZRPHDVXUHPHQWFDWHJRULHVIRUILQDQFLDO
DVVHWVDPRUWL]HGFRVWDQGIDLUYDOXH$OOHTXLW\LQVWUXPHQWVZLOOEH
PHDVXUHGDWIDLUYDOXHZKLOHGHEWLQVWUXPHQWVZLOOEHPHDVXUHGDW
DPRUWL]HGFRVWRQO\LIWKHHQWLW\LVKROGLQJLWWRFROOHFWFRQWUDFWXDOFDVK
IORZVZKLFKUHSUHVHQWSD\PHQWRISULQFLSDODQGLQWHUHVW7KH
DFFRXQWLQJIRUHPEHGGHGGHULYDWLYHVLQKRVWFRQWUDFWVWKDWDUHILQDQFLDO
DVVHWVLVVLPSOLILHGE\UHPRYLQJWKHUHTXLUHPHQWWRFRQVLGHUZKHWKHURU
QRWWKH\DUHFORVHO\UHODWHGDQGDVVXFKWKHHQWLW\VKDOODSSO\
PHDVXUHPHQWWRWKHHQWLUHK\EULGFRQWUDFWGHSHQGLQJRQZKHWKHUWKH
FRQWUDFWLVDWIDLUYDOXHRUDPRUWL]HGFRVW
)RUOLDELOLWLHVWKHVWDQGDUGUHWDLQVPRVWRIWKH3$6UHTXLUHPHQWV
ZKLFKLQFOXGHDPRUWL]HGFRVWDFFRXQWLQJIRUPRVWILQDQFLDOOLDELOLWLHV
ZLWKELIXUFDWLRQRIHPEHGGHGGHULYDWLYHV7KHPDLQFKDQJHLVWKDWLQ
FDVHZKHUHWKHIDLUYDOXHRSWLRQLVWDNHQIRUILQDQFLDOOLDELOLWLHVWKHSDUW
RIDIDLUYDOXHFKDQJHGXHWRDQHQWLW\·VRZQFUHGLWULVNLVUHFRUGHGLQ
RWKHUFRPSUHKHQVLYHLQFRPHUDWKHUWKDQLQSURILWRUORVVXQOHVVWKLV
FUHDWHVDQDFFRXQWLQJPLVPDWFK
7RGDWHRWKHUFKDSWHUVRI3)56GHDOLQJZLWKLPSDLUPHQW
PHWKRGRORJ\DQGKHGJHDFFRXQWLQJDUHVWLOOEHLQJFRPSOHWHG
)XUWKHULQ1RYHPEHUWKH,$6%WHQWDWLYHO\GHFLGHGWRFRQVLGHU
PDNLQJOLPLWHGPRGLILFDWLRQVWR,)56·VILQDQFLDODVVHWFODVVLILFDWLRQ
PRGHOWRDGGUHVVFHUWDLQDSSOLFDWLRQLVVXHV
7KH*URXSGRHVQRWH[SHFWWRLPSOHPHQWDQGDGRSW3)56XQWLOLWV
HIIHFWLYHGDWHRUXQWLODOOFKDSWHUVRIWKLVQHZVWDQGDUGKDYHEHHQ
SXEOLVKHG,QDGGLWLRQPDQDJHPHQWLVFXUUHQWO\DVVHVVLQJWKHLPSDFWRI
3)56RQWKHILQDQFLDOVWDWHPHQWVRIWKH*URXSDQGLWSODQVWRFRQGXFW
DFRPSUHKHQVLYHVWXG\RIWKHSRWHQWLDOLPSDFWRIWKLVVWDQGDUGSULRUWR
LWVPDQGDWRU\DGRSWLRQGDWHWRDVVHVVWKHLPSDFWRIDOOFKDQJHV
YLLL $QQXDO,PSURYHPHQWVWR3)56$QQXDOLPSURYHPHQWVWR
3)56&\FOHPDGHPLQRUDPHQGPHQWVWRDQXPEHURI
3)56ZKLFKDUHHIIHFWLYHIRUDQQXDOSHULRGEHJLQQLQJRQRUDIWHU
-DQXDU\$PRQJWKRVHLPSURYHPHQWVWKHIROORZLQJ
DPHQGPHQWVDUHUHOHYDQWWRWKH*URXSEXWPDQDJHPHQWGRHVQRW
H[SHFWDPDWHULDOLPSDFWRQWKH*URXS·VILQDQFLDOVWDWHPHQWV
D 3$6$PHQGPHQW3URSHUW\3ODQWDQG(TXLSPHQW²&ODVVLILFDWLRQRI
6HUYLFLQJ(TXLSPHQW7KHDPHQGPHQWDGGUHVVHVDSHUFHLYHG
LQFRQVLVWHQF\LQWKHFODVVLILFDWLRQUHTXLUHPHQWVIRUVHUYLFLQJ
HTXLSPHQWZKLFKUHVXOWHGLQFODVVLI\LQJVHUYLFLQJHTXLSPHQWDVSDUW
RILQYHQWRU\ZKHQLWLVXVHGIRUPRUHWKDQRQHSHULRG,WFODULILHV
WKDWLWHPVVXFKDVVSDUHSDUWVVWDQGE\HTXLSPHQWDQGVHUYLFLQJ
HTXLSPHQWVKDOOEHUHFRJQL]HGDVSURSHUW\SODQWDQGHTXLSPHQW
ZKHQWKH\PHHWWKHGHILQLWLRQRISURSHUW\SODQWDQGHTXLSPHQW
RWKHUZLVHWKHVHDUHFODVVLILHGDVLQYHQWRU\
E 3$6$PHQGPHQW)LQDQFLDO,QVWUXPHQWV²3UHVHQWDWLRQ²7D[(IIHFW
RI'LVWULEXWLRQVWR+ROGHUVRI(TXLW\,QVWUXPHQWVZDVLGHQWLILHGWREH
UHOHYDQWWRWKH*URXS·VILQDQFLDOVWDWHPHQWVEXWPDQDJHPHQWGRHV
QRWH[SHFWDPDWHULDOLPSDFWRQWKH*URXS·VILQDQFLDOVWDWHPHQWV
7KHDPHQGPHQWFODULILHVWKDWWKHFRQVHTXHQFHVRILQFRPHWD[
UHODWLQJWRGLVWULEXWLRQVWRKROGHUVRIDQHTXLW\LQVWUXPHQWDQGWR
WUDQVDFWLRQFRVWVRIDQHTXLW\WUDQVDFWLRQVKDOOEHDFFRXQWHGIRULQ
DFFRUGDQFHZLWK3$6,QFRPH7D[HV$FFRUGLQJO\LQFRPHWD[
UHODWLQJWRGLVWULEXWLRQVWRKROGHUVRIDQHTXLW\LQVWUXPHQWLV
UHFRJQL]HGLQSURILWRUORVVZKLOHLQFRPHWD[UHODWHGWRWKH
WUDQVDFWLRQFRVWVRIDQHTXLW\WUDQVDFWLRQLVUHFRJQL]HGLQHTXLW\
%DVLVRI&RQVROLGDWHGDQG6HSDUDWH)LQDQFLDO6WDWHPHQWV
7KH*URXSREWDLQVDQGH[HUFLVHVFRQWUROWKURXJKYRWLQJULJKWV7KH*URXS·V
ILQDQFLDOVWDWHPHQWVFRPSULVHWKHDFFRXQWVRIWKH%DQNDQGLWVVXEVLGLDULHVDV
HQXPHUDWHGLQ1RWHDQGDVGLVFORVHGXQGHU1RWHDIWHUWKHHOLPLQDWLRQRI
PDWHULDOLQWHUFRPSDQ\WUDQVDFWLRQV$OOLQWHUFRPSDQ\EDODQFHVDQGWUDQVDFWLRQVZLWK
VXEVLGLDULHVLQFOXGLQJLQFRPHH[SHQVHVDQGGLYLGHQGVDUHHOLPLQDWHGLQIXOO
8QUHDOL]HGSURILWVDQGORVVHVIURPLQWHUFRPSDQ\WUDQVDFWLRQVWKDWDUHUHFRJQL]HGLQ
WKHVHSDUDWHILQDQFLDOVWDWHPHQWVDUHDOVRHOLPLQDWHGLQIXOO,QWHUFRPSDQ\ORVVHVWKDW
LQGLFDWHLPSDLUPHQWDUHUHFRJQL]HGLQWKH*URXS·VILQDQFLDOVWDWHPHQWV
7KHILQDQFLDOVWDWHPHQWVRIVXEVLGLDULHVDUHSUHSDUHGIRUWKHVDPHUHSRUWLQJSHULRGDV
WKH%DQNXVLQJFRQVLVWHQWDFFRXQWLQJSULQFLSOHV
7KH*URXS·VDQG3DUHQW&RPSDQ\·VLQYHVWPHQWVLQVSHFLDOSXUSRVHFRPSDQLHV
63&VDVGHVFULEHGLQ1RWHDUHUHFRJQL]HGLQWKHILQDQFLDOVWDWHPHQWVWKURXJK
WKH,QYHVWPHQW3URSHUWLHVDFFRXQWLQVWHDGRIHTXLW\LQYHVWPHQWV,QGLYLGXDOO\
LGHQWLILDEOHDVVHWVRIWKHVH63&VODQGDQGEXLOGLQJDFTXLUHGE\WKH*URXSDUH
FODVVLILHGDVLQYHVWPHQWSURSHUWLHVDQGQRWDVLQYHVWPHQWVLQWKHVKDUHVRIVWRFNVRI
WKH63&V7KHVHSURSHUWLHVWKHUHIRUHDUHPHDVXUHGDWIDLUYDOXHVHH1RWH
,QWKH%DQN·VVHSDUDWHILQDQFLDOVWDWHPHQWVWKHLQYHVWPHQWVLQVXEVLGLDULHV
VHH1RWHDUHFDUULHGDWFRVWOHVVDQ\LPSDLUPHQWLQYDOXH
6XEVLGLDULHVDUHDOOHQWLWLHVRYHUZKLFKWKH*URXSKDVWKHSRZHUWRJRYHUQWKH
ILQDQFLDODQGRSHUDWLQJSROLFLHVJHQHUDOO\DFFRPSDQ\LQJDVKDUHKROGLQJRIPRUHWKDQ
RQHKDOIRIWKHYRWLQJULJKWV7KHH[LVWHQFHDQGHIIHFWRISRWHQWLDOYRWLQJULJKWVWKDW
DUHFXUUHQWO\H[HUFLVDEOHRUFRQYHUWLEOHDUHFRQVLGHUHGZKHQDVVHVVLQJZKHWKHUWKH
*URXSFRQWUROVDQRWKHUHQWLW\6XEVLGLDULHVDUHFRQVROLGDWHGIURPWKHGDWHWKH%DQN
REWDLQVFRQWUROXQWLOVXFKWLPHWKDWVXFKFRQWUROFHDVHV
7KHDFTXLVLWLRQPHWKRGLVDSSOLHGWRDFFRXQWIRUDFTXLUHGVXEVLGLDULHV7KLVUHTXLUHV
UHFRJQL]LQJDQGPHDVXULQJWKHLGHQWLILDEOHDVVHWVDFTXLUHGWKHOLDELOLWLHVDVVXPHGDQG
DQ\QRQFRQWUROOLQJLQWHUHVWLQWKHDFTXLUHH7KHFRQVLGHUDWLRQWUDQVIHUUHGIRUWKH
DFTXLVLWLRQRIDVXEVLGLDU\LVWKHIDLUYDOXHRIWKHDVVHWVWUDQVIHUUHGWKHOLDELOLWLHV
LQFXUUHGDQGWKHHTXLW\LQWHUHVWVLVVXHGE\WKH*URXSLIDQ\7KHFRQVLGHUDWLRQ
WUDQVIHUUHGDOVRLQFOXGHVWKHIDLUYDOXHRIDQ\DVVHWRUOLDELOLW\UHVXOWLQJIURPD
FRQWLQJHQWFRQVLGHUDWLRQDUUDQJHPHQW$FTXLVLWLRQUHODWHGFRVWVDUHH[SHQVHGDV
LQFXUUHGDQGVXEVHTXHQWFKDQJHLQWKHIDLUYDOXHRIFRQWLQJHQWFRQVLGHUDWLRQLV
UHFRJQL]HGGLUHFWO\LQSURILWRUORVV
,GHQWLILDEOHDVVHWVDFTXLUHGDQGOLDELOLWLHVDQGFRQWLQJHQWOLDELOLWLHVDVVXPHGLQD
EXVLQHVVFRPELQDWLRQDUHPHDVXUHGLQLWLDOO\DWWKHLUIDLUYDOXHVDWWKHDFTXLVLWLRQ
GDWH2QDQDFTXLVLWLRQE\DFTXLVLWLRQEDVLVWKH*URXSUHFRJQL]HVDQ\
QRQFRQWUROOLQJLQWHUHVWLQWKHDFTXLUHHHLWKHUDWIDLUYDOXHRUDWWKH
QRQFRQWUROOLQJLQWHUHVW·VSURSRUWLRQDWHVKDUHRIWKHUHFRJQL]HGDPRXQWVRI
DFTXLUHH·VLGHQWLILDEOHQHWDVVHWV
7KHH[FHVVRIWKHFRQVLGHUDWLRQWUDQVIHUUHGWKHDPRXQWRIDQ\QRQFRQWUROOLQJ
LQWHUHVWLQWKHDFTXLUHHDQGWKHDFTXLVLWLRQGDWHIDLUYDOXHRIDQ\H[LVWLQJHTXLW\
LQWHUHVWLQWKHDFTXLUHHRYHUWKHDFTXLVLWLRQGDWHIDLUYDOXHRILGHQWLILDEOHQHWDVVHWV
DFTXLUHGLVUHFRJQL]HGDVJRRGZLOO,IWKHFRQVLGHUDWLRQWUDQVIHUUHGLVOHVVWKDQWKH
IDLUYDOXHRIWKHQHWDVVHWVRIWKHVXEVLGLDU\DFTXLUHGLQWKHFDVHRIDEDUJDLQSXUFKDVH
WKHGLIIHUHQFHLVUHFRJQL]HGGLUHFWO\DVJDLQLQSURILWRUORVVVHH1RWH
%XVLQHVV&RPELQDWLRQV
%XVLQHVVDFTXLVLWLRQVDUHDFFRXQWHGIRUXVLQJWKHDFTXLVLWLRQPHWKRGRIDFFRXQWLQJ
*RRGZLOOUHSUHVHQWVWKHH[FHVVRIWKHFRVWRIDQDFTXLVLWLRQRYHUWKHIDLUYDOXHRIWKH
*URXS·VVKDUHRIWKHQHWLGHQWLILDEOHDVVHWVRIWKHDFTXLUHGVXEVLGLDU\DWWKHGDWHRI
DFTXLVLWLRQ6XEVHTXHQWWRLQLWLDOUHFRJQLWLRQJRRGZLOOLVPHDVXUHGDWFRVWOHVVDQ\
DFFXPXODWHGLPSDLUPHQWORVVHV*RRGZLOOLVWHVWHGDQQXDOO\IRULPSDLUPHQWDQGLV
FDUULHGDWFRVWOHVVDFFXPXODWHGORVVHV
1HJDWLYHJRRGZLOOZKLFKLVWKHH[FHVVRIWKH*URXS·VLQWHUHVWLQWKHQHWIDLUYDOXHRI
QHWLGHQWLILDEOHDVVHWVDFTXLUHGRYHUDFTXLVLWLRQFRVWLVFKDUJHGGLUHFWO\WRSURILW
)RUWKHSXUSRVHRILPSDLUPHQWWHVWLQJJRRGZLOOLVDOORFDWHGWRFDVKJHQHUDWLQJXQLWV
RUJURXSVRIFDVKJHQHUDWLQJXQLWVWKDWDUHH[SHFWHGWREHQHILWIURPWKHEXVLQHVV
FRPELQDWLRQLQZKLFKWKHJRRGZLOODURVH7KHFDVKJHQHUDWLQJXQLWVRUJURXSVRI
FDVKJHQHUDWLQJXQLWVDUHLGHQWLILHGDFFRUGLQJWRRSHUDWLQJVHJPHQW
*DLQVDQGORVVHVRQWKHGLVSRVDORIDQLQWHUHVWLQDVXEVLGLDU\LQFOXGHWKHFDUU\LQJ
DPRXQWRIJRRGZLOOUHODWLQJWRLW
,IWKHEXVLQHVVFRPELQDWLRQLVDFKLHYHGLQVWDJHVWKHDFTXLUHULVUHTXLUHGWR
UHPHDVXUHLWVSUHYLRXVO\KHOGHTXLW\LQWHUHVWLQWKHDFTXLUHGDWLWVDFTXLVLWLRQGDWHIDLU
YDOXHDQGUHFRJQL]HWKHUHVXOWLQJJDLQRUORVVLIDQ\LQWKHSURILWRUORVVRURWKHU
FRPSUHKHQVLYHLQFRPHDVDSSURSULDWH
$Q\FRQWLQJHQWFRQVLGHUDWLRQWREHWUDQVIHUUHGE\WKH*URXSLVUHFRJQL]HGDWIDLU
YDOXHDWWKHDFTXLVLWLRQGDWH6XEVHTXHQWFKDQJHVWRWKHIDLUYDOXHRIWKHFRQWLQJHQW
WKDWLVGHHPHGWREHDQDVVHWRUOLDELOLW\LVUHFRJQL]HGLQDFFRUGDQFHZLWK3$6
3URYLVLRQV&RQWLQJHQW/LDELOLWLHVDQG&RQWLQJHQW$VVHWVHLWKHULQSURILWRUORVVRUDVD
FKDUJHWRRWKHUFRPSUHKHQVLYHLQFRPH&RQWLQJHQWFRQVLGHUDWLRQWKDWLVFODVVLILHGDV
HTXLW\LVQRWUHPHDVXUHGDQGLWVVXEVHTXHQWVHWWOHPHQWLVDFFRXQWHGIRUZLWKLQHTXLW\
)LQDQFLDO$VVHWV
)LQDQFLDODVVHWVDUHUHFRJQL]HGZKHQWKH*URXSEHFRPHVDSDUW\WRWKHFRQWUDFWXDO
WHUPVRIWKHILQDQFLDOLQVWUXPHQW)LQDQFLDODVVHWVRWKHUWKDQWKRVHGHVLJQDWHGDQG
HIIHFWLYHDVKHGJLQJLQVWUXPHQWVDUHFODVVLILHGLQWRWKHIROORZLQJFDWHJRULHVILQDQFLDO
DVVHWVDWIDLUYDOXHWKURXJKSURILWRUORVV)973/ORDQVDQGUHFHLYDEOHV+70
LQYHVWPHQWVDQG$)6ILQDQFLDODVVHWV)LQDQFLDODVVHWVDUHDVVLJQHGWRWKHGLIIHUHQW
FDWHJRULHVE\PDQDJHPHQWRQLQLWLDOUHFRJQLWLRQGHSHQGLQJRQWKHSXUSRVHIRUZKLFK
WKHLQYHVWPHQWVZHUHDFTXLUHG
5HJXODUSXUFKDVHVDQGVDOHVRIILQDQFLDODVVHWVDUHUHFRJQL]HGRQWKHLUVHWWOHPHQWGDWH
$OOILQDQFLDODVVHWVWKDWDUHQRWFODVVLILHGDVDW)973/DUHLQLWLDOO\UHFRJQL]HGDWIDLU
YDOXHSOXVDQ\GLUHFWO\DWWULEXWDEOHWUDQVDFWLRQFRVWV)LQDQFLDODVVHWVFDUULHGDW
)973/DUHLQLWLDOO\UHFRUGHGDWIDLUYDOXHDQGWUDQVDFWLRQFRVWVUHODWHGWRLWDUH
UHFRJQL]HGLQSURILWRUORVV
$PRUHGHWDLOHGGHVFULSWLRQRIWKHIRXUFDWHJRULHVRIILQDQFLDODVVHWVIROORZ
D
)LQDQFLDO$VVHWVDW)973/
7KLVFDWHJRU\LQFOXGHVILQDQFLDODVVHWVWKDWDUHHLWKHUFODVVLILHGDVKHOGIRU
WUDGLQJRUWKDWPHHWVFHUWDLQFRQGLWLRQVDQGDUHGHVLJQDWHGE\WKH*URXSWREH
FDUULHGDW)973/XSRQLQLWLDOUHFRJQLWLRQ$OOGHULYDWLYHVIDOOLQWRWKLVFDWHJRU\
H[FHSWIRUWKRVHGHVLJQDWHGDQGHIIHFWLYHDVKHGJLQJLQVWUXPHQWV
6XEVHTXHQWWRLQLWLDOUHFRJQLWLRQWKHILQDQFLDODVVHWVLQFOXGHGLQWKLVFDWHJRU\
DUHPHDVXUHGDWIDLUYDOXHZLWKFKDQJHVLQIDLUYDOXHUHFRJQL]HGLQSURILWRUORVV
)LQDQFLDODVVHWVH[FHSWGHULYDWLYHVDQGILQDQFLDODVVHWVRULJLQDOO\GHVLJQDWHGDV
ILQDQFLDODVVHWVDW)973/PD\EHVXEVHTXHQWO\UHFODVVLILHGRXWRI)973/
FDWHJRU\LIWKH\DUHQRORQJHUKHOGIRUWKHSXUSRVHRIEHLQJVROGRUUHSXUFKDVHG
LQWKHQHDUWHUPHIIHFWLYH-XO\
L RQO\LQUDUHFLUFXPVWDQFHVDQGLIWKHUHLVDFKDQJHLQLQWHQWLRQ
LHWKHILQDQFLDODVVHWLVQRORQJHUKHOGIRUWKHSXUSRVHRIVHOOLQJRU
UHSXUFKDVLQJLWLQWKHQHDUIXWXUHDQG
LL LIWKHILQDQFLDODVVHWZRXOGKDYHPHWWKHGHILQLWLRQRIORDQVUHFHLYDEOHV
DQGLIWKHILQDQFLDODVVHWKDGQRWEHHQUHTXLUHGWREHFODVVLILHGDV
KHOGIRUWUDGLQJDWLQLWLDOUHFRJQLWLRQDQGWKHHQWLW\KDVWKHLQWHQWLRQDQG
DELOLW\WRKROGWKHILQDQFLDODVVHWIRUWKHIRUHVHHDEOHIXWXUHRUXQWLOPDWXULW\
E
/RDQVDQG5HFHLYDEOHV
/RDQVDQGUHFHLYDEOHVDUHQRQGHULYDWLYHILQDQFLDODVVHWVZLWKIL[HGRU
GHWHUPLQDEOHSD\PHQWVWKDWDUHQRWTXRWHGLQDQDFWLYHPDUNHW7KH\DULVH
ZKHQWKH*URXSSURYLGHVPRQH\JRRGVRUVHUYLFHVGLUHFWO\WRWKHGHEWRUZLWK
QRLQWHQWLRQRIWUDGLQJWKHUHFHLYDEOHV,QFOXGHGLQWKLVFDWHJRU\DUHWKRVH
DULVLQJIURPGLUHFWORDQVWRFXVWRPHUVLQWHUEDQNORDQVVDOHVFRQWUDFW
UHFHLYDEOHVDQGDOOUHFHLYDEOHVIURPFXVWRPHUVDQGRWKHUEDQNV
6HFXULWLHV3XUFKDVHG8QGHU5HYHUVH5HSXUFKDVH$JUHHPHQWV63855$
ZKHUHLQWKH*URXSHQWHUVLQWRVKRUWWHUPSXUFKDVHVRIVHFXULWLHVXQGHUUHYHUVH
UHSXUFKDVHDJUHHPHQWVRIVXEVWDQWLDOO\LGHQWLFDOVHFXULWLHVZLWKWKH%63DUHDOVR
LQFOXGHGLQWKLVFDWHJRU\7KHGLIIHUHQFHEHWZHHQWKHVDOHDQGUHSXUFKDVHSULFH
LVUHFRJQL]HGDVLQWHUHVWDQGDFFUXHGRYHUWKHOLIHRIWKHDJUHHPHQWVXVLQJWKH
HIIHFWLYHLQWHUHVWPHWKRG
/RDQVDQGUHFHLYDEOHVDUHVXEVHTXHQWO\PHDVXUHGDWDPRUWL]HGFRVWXVLQJWKH
HIIHFWLYHLQWHUHVWPHWKRGOHVVLPSDLUPHQWORVVHVLIDQ\$Q\FKDQJHLQWKHLU
IDLUYDOXHLVUHFRJQL]HGLQSURILWRUORVVH[FHSWIRUUHFODVVLILHGILQDQFLDODVVHWV
XQGHU3$6DQG3)56$PHQGPHQWV,QFUHDVHVLQHVWLPDWHVRIIXWXUHFDVK
UHFHLSWVIURPILQDQFLDODVVHWVWKDWKDYHEHHQUHFODVVLILHGLQDFFRUGDQFHZLWK
3$6DQG3)56$PHQGPHQWVVKDOOEHUHFRJQL]HGDVDQDGMXVWPHQWWRWKH
HIIHFWLYHLQWHUHVWUDWHIURPWKHGDWHRIWKHFKDQJHLQHVWLPDWH
,PSDLUPHQWORVVHVLVWKHHVWLPDWHGDPRXQWRIORVVHVLQWKH*URXS·VORDQ
SRUWIROLREDVHGRQWKHHYDOXDWLRQRIWKHHVWLPDWHGIXWXUHFDVKIORZVGLVFRXQWHG
DWWKHORDQ·VRULJLQDOHIIHFWLYHLQWHUHVWUDWHVRUWKHODVWUHSULFLQJUDWHIRUORDQV
LVVXHGDWYDULDEOHUDWHVVHH1RWH,WLVHVWDEOLVKHGWKURXJKDQDOORZDQFH
DFFRXQWZKLFKLVFKDUJHGWRH[SHQVH/RDQVDQGUHFHLYDEOHVDUHZULWWHQRII
DJDLQVWWKHDOORZDQFHIRULPSDLUPHQWZKHQPDQDJHPHQWEHOLHYHVWKDWWKH
FROOHFWLELOLW\RIWKHSULQFLSDOLVXQOLNHO\VXEMHFWWR%63UHJXODWLRQV
F
+70,QYHVWPHQWV
7KLVFDWHJRU\LQFOXGHVQRQGHULYDWLYHILQDQFLDODVVHWVZLWKIL[HGRUGHWHUPLQDEOH
SD\PHQWVDQGDIL[HGGDWHRIPDWXULW\WKDWWKH*URXSKDVWKHSRVLWLYHLQWHQWLRQ
DQGDELOLW\WRKROGWRPDWXULW\,QYHVWPHQWVLQWHQGHGWREHKHOGIRUDQ
XQGHILQHGSHULRGDUHQRWLQFOXGHGLQWKLVFODVVLILFDWLRQ
+70LQYHVWPHQWVDUHVXEVHTXHQWO\PHDVXUHGDWDPRUWL]HGFRVWXVLQJWKH
HIIHFWLYHLQWHUHVWPHWKRG,QDGGLWLRQLIWKHUHLVREMHFWLYHHYLGHQFHWKDWWKH
LQYHVWPHQWKDVEHHQLPSDLUHGWKHILQDQFLDODVVHWLVPHDVXUHGDWWKHSUHVHQW
YDOXHRIHVWLPDWHGFDVKIORZVVHH1RWH$Q\FKDQJHVWRWKHFDUU\LQJ
DPRXQWRIWKHLQYHVWPHQWGXHWRLPSDLUPHQWDUHUHFRJQL]HGLQSURILWRUORVV
6KRXOGWKH*URXSVHOORWKHUWKDQDQLQVLJQLILFDQWDPRXQWRI+70LQYHVWPHQWV
WKHHQWLUHFDWHJRU\ZRXOGEHWDLQWHGDQGUHFODVVLILHGDV$)6ILQDQFLDODVVHWV
H[FHSWDVPD\EHDOORZHGE\WKH%63DQG6(&0RUHRYHUWKHWDLQWLQJ
SURYLVLRQZLOOQRWDSSO\LIWKHVDOHVRUUHFODVVLILFDWLRQVRI+70LQYHVWPHQWVDUH
LVRFORVHWRPDWXULW\RUWKHILQDQFLDOUHVRXUFHV·FDOOGDWHWKDWFKDQJHVLQWKH
PDUNHWUDWHRILQWHUHVWZRXOGQRWKDYHDVLJQLILFDQWHIIHFWRQLWVIDLUYDOXH
LLRFFXUDIWHUWKH*URXSKDVFROOHFWHGVXEVWDQWLDOO\DOORIWKHILQDQFLDODVVHWV·
RULJLQDOSULQFLSDOWKURXJKVFKHGXOHGSD\PHQWVRUSUHSD\PHQWVRU
LLLDUHDWWULEXWDEOHWRDQLVRODWHGHYHQWWKDWLVEH\RQGWKHFRQWURORIWKH*URXS
LVQRQUHFXUULQJDQGFRXOGKDYHQRWEHHQUHDVRQDEO\DQWLFLSDWHGE\WKH*URXS
,Q'HFHPEHUWKH*URXSSDUWLFLSDWHGLQDERQGH[FKDQJHSURJUDPE\WKH
%XUHDXRI7UHDVXU\ZKHUHLQFHUWDLQ+70LQYHVWPHQWVZHUHH[FKDQJHGIRU
+70LQYHVWPHQWVZLWKORQJHUWHUPVDQGKLJKHU\LHOGUDWHV7KHLQYHVWPHQWV
JLYHQXSLQWKHH[FKDQJHFRQVWLWXWHPRUHWKDQDQLQVLJQLILFDQWSRUWLRQRIWKH
WRWDO+70SRUWIROLREHIRUHWKHH[FKDQJH+HQFHIRU3)56UHSRUWLQJWKH
HQWLUH+70SRUWIROLRRIWKH%DQNZRXOGKDYHEHHQFRQVLGHUHGWDLQWHG
+RZHYHUWKH%63DQGWKH6(&JUDQWHGUHOLHIIURPWKHWDLQWLQJSURYLVLRQRI
3$6WRDOOSDUWLFLSDQWVLQWKHH[FKDQJHSURJUDPVHH1RWH
G
$)6)LQDQFLDO$VVHWV
7KLVFDWHJRU\LQFOXGHVQRQGHULYDWLYHILQDQFLDODVVHWVWKDWDUHHLWKHUGHVLJQDWHG
WRWKLVFDWHJRU\RUGRQRWTXDOLI\IRULQFOXVLRQLQDQ\RIWKHRWKHUFDWHJRULHVRI
ILQDQFLDODVVHWV
$OOILQDQFLDODVVHWVZLWKLQWKLVFDWHJRU\DUHVXEVHTXHQWO\PHDVXUHGDWIDLUYDOXH
XQOHVVRWKHUZLVHGLVFORVHG*DLQVDQGORVVHVIURPFKDQJHVLQIDLUYDOXHDUH
UHFRJQL]HGLQRWKHUFRPSUHKHQVLYHLQFRPHQHWRIDQ\LQFRPHWD[HIIHFWVDQG
DUHUHSRUWHGDVSDUWRIWKH1HW8QUHDOL]HG)DLU9DOXH*DLQV/RVVHVRQ$)6
)LQDQFLDO$VVHWVDFFRXQWLQHTXLW\:KHQWKHILQDQFLDODVVHWLVGLVSRVHGRIRULV
GHWHUPLQHGWREHLPSDLUHGWKHFXPXODWLYHIDLUYDOXHJDLQVRUORVVHVUHFRJQL]HG
LQRWKHUFRPSUHKHQVLYHLQFRPHLVUHFODVVLILHGIURPHTXLW\WRSURILWRUORVVDQG
LVSUHVHQWHGDVUHFODVVLILFDWLRQDGMXVWPHQWZLWKLQRWKHUFRPSUHKHQVLYHLQFRPH
5HYHUVDORILPSDLUPHQWORVVHVDUHUHFRJQL]HGLQRWKHUFRPSUHKHQVLYHLQFRPH
H[FHSWIRUILQDQFLDODVVHWVWKDWDUHGHEWVHFXULWLHVZKLFKDUHUHFRJQL]HGLQSURILW
RUORVVRQO\LIWKHUHYHUVDOFDQEHREMHFWLYHO\UHODWHGWRDQHYHQWRFFXUULQJDIWHU
WKHLPSDLUPHQWORVVZDVUHFRJQL]HG
)RULQYHVWPHQWVWKDWDUHDFWLYHO\WUDGHGLQRUJDQL]HGILQDQFLDOPDUNHWVIDLUYDOXHLV
GHWHUPLQHGE\UHIHUHQFHWRH[FKDQJHTXRWHGPDUNHWELGSULFHVDWWKHFORVHRI
EXVLQHVVRQWKHUHSRUWLQJSHULRG)RULQYHVWPHQWVZKHUHWKHUHLVQRTXRWHGPDUNHW
SULFHIDLUYDOXHLVGHWHUPLQHGE\UHIHUHQFHWRWKHFXUUHQWPDUNHWYDOXHRIDQRWKHU
LQVWUXPHQWZKLFKLVVXEVWDQWLDOO\WKHVDPHRULVFDOFXODWHGEDVHGRQWKHH[SHFWHGFDVK
IORZVRIWKHXQGHUO\LQJQHWDVVHWEDVHRIWKHLQYHVWPHQW
$ILQDQFLDODVVHWLVFRQVLGHUHGDVEHLQJWUDGHGLQDQDFWLYHPDUNHWLITXRWHGSULFHVRU
PDUNHWYDOXHVDUHUHDGLO\DQGSHULRGLFDOO\DYDLODEOHIURPVWRFNRUGHEWPDUNHWV
H[FKDQJHVGHDOHUVEURNHUVLQGXVWU\JURXSVSULFLQJVHUYLFHHQWLWLHVRUUHJXODWRU\
DJHQFLHV,QVXFKFDVHVWKRVHSULFHVRUYDOXHVUHSUHVHQWDFWXDODQGUHJXODUO\
RFFXUULQJPDUNHWWUDQVDFWLRQVRQDQDUP·VOHQJWKEDVLV2WKHUZLVHWKHPDUNHWLV
UHJDUGHGDVEHLQJLQDFWLYH,QGLFDWLRQVWKDWDPDUNHWLVLQDFWLYHDUHZKHQWKHUHDUH
IHZUHFHQWWUDQVDFWLRQVRUZKHQPDUNHWSDUWLFLSDQWVKDYHQRWHQJDJHGLQWUDQVDFWLRQV
IRUDWOHDVWRQH\HDU
1RQFRPSRXQGLQJLQWHUHVWGLYLGHQGLQFRPHDQGRWKHUFDVKIORZVUHVXOWLQJIURP
KROGLQJILQDQFLDODVVHWVDUHUHFRJQL]HGLQSURILWRUORVVZKHQHDUQHGUHJDUGOHVVRI
KRZWKHUHODWHGFDUU\LQJDPRXQWRIILQDQFLDODVVHWVLVPHDVXUHG
7KHILQDQFLDODVVHWVDUHGHUHFRJQL]HGZKHQWKHFRQWUDFWXDOULJKWVWRUHFHLYHFDVK
IORZVIURPWKHILQDQFLDOLQVWUXPHQWVH[SLUHRUZKHQDOOVXEVWDQWLDOULVNVDQGUHZDUGV
RIRZQHUVKLSKDYHEHHQWUDQVIHUUHG
'HULYDWLYH)LQDQFLDO,QVWUXPHQWV
7KH*URXSLVDFRXQWHUSDUW\WRGHULYDWLYHVFRQWUDFWVVXFKDVRSWLRQVFXUUHQF\
IRUZDUGVDQGVZDSVLQWHUHVWUDWHVZDSDQGIXWXUHVFRQWUDFWV7KHVHFRQWUDFWVDUH
HQWHUHGLQWRDVDPHDQVRIUHGXFLQJRUPDQDJLQJWKH*URXS·VIRUHLJQH[FKDQJHDQG
LQWHUHVWUDWHH[SRVXUHVDVZHOODVWKRVHRILWVFXVWRPHUV
'HULYDWLYHVDUHLQLWLDOO\UHFRJQL]HGDWIDLUYDOXHRQWKHGDWHRQZKLFKWKHGHULYDWLYH
FRQWUDFWLVHQWHUHGLQWRDQGDUHVXEVHTXHQWO\PHDVXUHGDWWKHLUIDLUYDOXHV)DLUYDOXHV
DUHREWDLQHGIURPTXRWHGPDUNHWSULFHVLQDFWLYHPDUNHWVLQFOXGLQJUHFHQWPDUNHW
WUDQVDFWLRQV$OOGHULYDWLYHVDUHFDUULHGDVDVVHWVZKHQIDLUYDOXHLVSRVLWLYHDQGDV
OLDELOLWLHVZKHQIDLUYDOXHLVQHJDWLYH
7KHEHVWHYLGHQFHRIWKHIDLUYDOXHRIDGHULYDWLYHDWLQLWLDOUHFRJQLWLRQLVWKH
WUDQVDFWLRQSULFHWKHIDLUYDOXHRIWKHFRQVLGHUDWLRQJLYHQRUUHFHLYHGXQOHVVWKHIDLU
YDOXHRIWKDWLQVWUXPHQWLVHYLGHQFHGE\FRPSDULVRQZLWKRWKHUREVHUYDEOHFXUUHQW
PDUNHWWUDQVDFWLRQVLQWKHVDPHLQVWUXPHQW:KHQVXFKHYLGHQFHH[LVWVWKH*URXS
UHFRJQL]HVDJDLQRUORVVDWLQLWLDOUHFRJQLWLRQ
)RUPRUHFRPSOH[LQVWUXPHQWVWKH*URXSXVHVSURSULHWDU\PRGHOVZKLFKXVXDOO\DUH
GHYHORSHGIURPUHFRJQL]HGYDOXDWLRQPRGHOV6RPHRUDOORIWKHLQSXWVLQWRWKHVH
PRGHOVPD\QRWEHPDUNHWREVHUYDEOHDQGDUHGHULYHGIURPPDUNHWSULFHVRUUDWHVRU
DUHHVWLPDWHGEDVHGRQDVVXPSWLRQV:KHQHQWHULQJLQWRDWUDQVDFWLRQWKHILQDQFLDO
LQVWUXPHQWLVUHFRJQL]HGLQLWLDOO\DWWKHWUDQVDFWLRQSULFHZKLFKLVWKHEHVWLQGLFDWRU
RIIDLUYDOXHDOWKRXJKWKHYDOXHREWDLQHGIURPWKHYDOXDWLRQPRGHOPD\GLIIHUIURP
WKHWUDQVDFWLRQSULFH7KLVLQLWLDOGLIIHUHQFHLQIDLUYDOXHLQGLFDWHGE\YDOXDWLRQ
WHFKQLTXHVLVUHFRJQL]HGLQLQFRPHGHSHQGLQJXSRQWKHLQGLYLGXDOIDFWVDQG
FLUFXPVWDQFHVRIHDFKWUDQVDFWLRQDQGQRWODWHUWKDQZKHQWKHPDUNHWGDWDEHFRPHV
REVHUYDEOH
7KHYDOXHSURGXFHGE\DPRGHORURWKHUYDOXDWLRQWHFKQLTXHLVDGMXVWHGWRDOORZIRUD
QXPEHURIIDFWRUVDVDSSURSULDWHEHFDXVHYDOXDWLRQWHFKQLTXHVFDQQRWDSSURSULDWHO\
UHIOHFWDOOIDFWRUVPDUNHWSDUWLFLSDQWVWDNHLQWRDFFRXQWZKHQHQWHULQJLQWRD
WUDQVDFWLRQ9DOXDWLRQDGMXVWPHQWVDUHUHFRUGHGWRDOORZIRUPRGHOULVNVELGDVN
VSUHDGVOLTXLGLW\ULVNVDVZHOODVRWKHUIDFWRUV0DQDJHPHQWEHOLHYHVWKDWWKHVH
YDOXDWLRQDGMXVWPHQWVDUHQHFHVVDU\DQGDSSURSULDWHWRIDLUO\VWDWHILQDQFLDO
LQVWUXPHQWVFDUULHGDWIDLUYDOXHRQWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQ
&HUWDLQGHULYDWLYHVHPEHGGHGLQRWKHUILQDQFLDOLQVWUXPHQWVVXFKDVWKHFDOORUSXW
RSWLRQLQDERQGDQGFUHGLWGHIDXOWVZDSLQDFUHGLWOLQNHGQRWHDUHFRQVLGHUHGDV
VHSDUDWHGHULYDWLYHVZKHQWKHLUHFRQRPLFFKDUDFWHULVWLFVDQGULVNVDUHQRWFORVHO\
UHODWHGWRWKRVHRIWKHKRVWFRQWUDFWDQGWKHKRVWFRQWUDFWLVQRWFDUULHGDWIDLUYDOXH
WKURXJKSURILWRUORVV7KHVHHPEHGGHGGHULYDWLYHVDUHELIXUFDWHGIURPWKHKRVW
FRQWUDFWVDQGDUHPHDVXUHGDWIDLUYDOXHZLWKFKDQJHVLQIDLUYDOXHUHFRJQL]HGLQSURILW
RUORVV
&KDQJHVLQWKHIDLUYDOXHRIGHULYDWLYHVDUHUHFRJQL]HGLQSURILWRUORVV
$VVHWV+HOGIRU6DOH
$VVHWVKHOGIRUVDOHLQFOXGHUHDODQGRWKHUSURSHUWLHVDFTXLUHG523$WKURXJK
UHSRVVHVVLRQRUIRUHFORVXUHWKDWWKH*URXSLQWHQGVWRVHOOZLWKLQRQH\HDUIURPWKH
GDWHRIFODVVLILFDWLRQDVKHOGIRUVDOH
$VVHWVFODVVLILHGDVKHOGIRUVDOHDUHPHDVXUHGDWWKHORZHURIWKHLUFDUU\LQJDPRXQWV
LPPHGLDWHO\SULRUWRWKHLUFODVVLILFDWLRQDVKHOGIRUVDOHDQGWKHLUIDLUYDOXHOHVVFRVWV
WRVHOO$VVHWVFODVVLILHGDVKHOGIRUVDOHDUHQRWVXEMHFWWRGHSUHFLDWLRQRU
DPRUWL]DWLRQ7KHSURILWRUORVVDULVLQJIURPWKHVDOHRIDVVHWVKHOGIRUVDOHLV
LQFOXGHGLQWKH2WKHU,QFRPHDFFRXQWLQWKHVWDWHPHQWRILQFRPH
%DQN3UHPLVHV)XUQLWXUH)L[WXUHVDQG(TXLSPHQW
%DQNSUHPLVHVIXUQLWXUHIL[WXUHVDQGHTXLSPHQWDUHFDUULHGDWDFTXLVLWLRQFRVWOHVV
DFFXPXODWHGGHSUHFLDWLRQDQGDPRUWL]DWLRQDQGDQ\LPSDLUPHQWLQYDOXH
7KHFRVWRIDQDVVHWFRPSULVHVLWVSXUFKDVHSULFHDQGGLUHFWO\DWWULEXWDEOHFRVWVRI
EULQJLQJWKHDVVHWWRZRUNLQJFRQGLWLRQIRULWVLQWHQGHGXVH([SHQGLWXUHVIRU
DGGLWLRQVPDMRULPSURYHPHQWVDQGUHQHZDOVDUHFDSLWDOL]HGH[SHQGLWXUHVIRUUHSDLUV
DQGPDLQWHQDQFHDUHFKDUJHGWRH[SHQVHDVLQFXUUHG
'HSUHFLDWLRQLVFRPSXWHGRQDVWUDLJKWOLQHEDVLVRYHUWKHHVWLPDWHGXVHIXOOLYHVRI
WKHGHSUHFLDEOHDVVHWVDVIROORZV
%XLOGLQJV
²\HDUV
)XUQLWXUHIL[WXUHVDQGHTXLSPHQW
²\HDUV
/HDVHKROGULJKWVDQGLPSURYHPHQWVDUHDPRUWL]HGRYHUWKHWHUPRIWKHOHDVHRUWKH
HVWLPDWHGXVHIXOOLYHVRIWKHLPSURYHPHQWVRIILYHWRWHQ\HDUVZKLFKHYHULVVKRUWHU
$QDVVHW·VFDUU\LQJDPRXQWLVZULWWHQGRZQLPPHGLDWHO\WRLWVUHFRYHUDEOHDPRXQWLI
WKHDVVHW·VFDUU\LQJDPRXQWLVJUHDWHUWKDQLWVHVWLPDWHGUHFRYHUDEOHDPRXQW
VHH1RWH
7KHUHVLGXDOYDOXHVDQGHVWLPDWHGXVHIXOOLYHVRIEDQNSUHPLVHVIXUQLWXUHIL[WXUHV
DQGHTXLSPHQWDUHUHYLHZHGDQGDGMXVWHGLIDSSURSULDWHDWWKHHQGRIHDFKUHSRUWLQJ
SHULRG
$QLWHPRIEDQNSUHPLVHVIXUQLWXUHIL[WXUHVDQGHTXLSPHQWLQFOXGLQJWKHUHODWHG
DFFXPXODWHGGHSUHFLDWLRQDPRUWL]DWLRQDQGLPSDLUPHQWORVVHVLVGHUHFRJQL]HGXSRQ
GLVSRVDORUZKHQQRIXWXUHHFRQRPLFEHQHILWVDUHH[SHFWHGWRDULVHIURPWKH
FRQWLQXHGXVHRIWKHDVVHW$Q\JDLQRUORVVDULVLQJRQGHUHFRJQLWLRQRIWKHDVVHW
FDOFXODWHGDVWKHGLIIHUHQFHEHWZHHQWKHQHWGLVSRVDOSURFHHGVDQGWKHFDUU\LQJ
DPRXQWRIWKHLWHPLVLQFOXGHGLQSURILWRUORVVLQWKHSHULRGWKHLWHPLV
GHUHFRJQL]HG
,QYHVWPHQW3URSHUWLHV
,QYHVWPHQWSURSHUWLHVDUHPHDVXUHGLQLWLDOO\DWDFTXLVLWLRQFRVWZKLFKFRPSULVHLWV
SXUFKDVHSULFHDQGGLUHFWO\DWWULEXWDEOHFRVWLQFXUUHG7KHVHLQFOXGHSDUFHOVRIODQG
DQGEXLOGLQJVDQGUHODWHGLPSURYHPHQWVDFTXLUHGE\WKH%DQNIURPGHIDXOWLQJ
ERUURZHUVQRWKHOGIRUVDOHLQWKHQH[WPRQWKV6XEVHTXHQWO\LQYHVWPHQW
SURSHUWLHVDUHVWDWHGDWIDLUYDOXHDVGHWHUPLQHGE\LQGHSHQGHQWDSSUDLVDOFRPSDQLHV
DFFUHGLWHGE\WKH%637KHFDUU\LQJDPRXQWVUHFRJQL]HGLQWKHVWDWHPHQWRIILQDQFLDO
SRVLWLRQUHIOHFWWKHSUHYDLOLQJPDUNHWFRQGLWLRQVDWWKHUHSRUWLQJGDWH
,QYHVWPHQWSURSHUWLHVRIWKH*URXSXQGHUFRQVWUXFWLRQRUGHYHORSPHQWLIWKHIDLU
YDOXHRIWKHVHSURSHUWLHVFDQQRWEHUHOLDEO\PHDVXUHGDUHPHDVXUHGDWFRVWXQWLO
FRQVWUXFWLRQRUGHYHORSPHQWLVFRPSOHWH$WFRPSOHWLRQWKHVHSURSHUWLHVDUH
PHDVXUHGDWIDLUYDOXH
$Q\JDLQRUORVVUHVXOWLQJIURPHLWKHUDFKDQJHLQWKHIDLUYDOXHRUWKHVDOHRIDQ
LQYHVWPHQWSURSHUW\LVLPPHGLDWHO\UHFRJQL]HGLQSURILWRUORVVDV)DLUYDOXHJDLQV
ORVVHVRQLQYHVWPHQWSURSHUWLHVXQGHU2WKHU,QFRPHDFFRXQWLQWKHVWDWHPHQWRI
LQFRPH
,QYHVWPHQWSURSHUWLHVDUHGHUHFRJQL]HGXSRQGLVSRVDORUZKHQSHUPDQHQWO\
ZLWKGUDZQIURPXVHDQGQRIXWXUHHFRQRPLFEHQHILWLVH[SHFWHGIURPLWVGLVSRVDO
$Q\JDLQRUORVVRQWKHUHWLUHPHQWRUGLVSRVDORIDQLQYHVWPHQWSURSHUW\LV
UHFRJQL]HGLQSURILWRUORVVLQWKH\HDURIUHWLUHPHQWRUGLVSRVDO
'LUHFWRSHUDWLQJH[SHQVHVUHODWHGWRLQYHVWPHQWSURSHUWLHVVXFKDVUHSDLUVDQG
PDLQWHQDQFHDQGUHDOHVWDWHWD[HVDUHQRUPDOO\FKDUJHGDJDLQVWFXUUHQWRSHUDWLRQVLQ
WKHSHULRGLQZKLFKWKHVHFRVWVDUHLQFXUUHG
,QWDQJLEOH$VVHWV
*RRGZLOOUHSUHVHQWVWKHH[FHVVRIWKHDFTXLVLWLRQFRVWRYHUWKHIDLUYDOXHRIWKH
IRUPHU,QWHUQDWLRQDO([FKDQJH%DQN·VL%DQNLGHQWLILDEOHQHWDVVHWVRQLWVPHUJHU
ZLWKWKH%DQNRQ$SULO*RRGZLOOLVFODVVLILHGDVLQWDQJLEOHDVVHWZLWK
LQGHILQLWHXVHIXOOLIHDQGWKXVQRWVXEMHFWWRDPRUWL]DWLRQEXWZRXOGUHTXLUHDQ
DQQXDOWHVWIRULPSDLUPHQW*RRGZLOOLVVXEVHTXHQWO\FDUULHGDWFRVWOHVVDFFXPXODWHG
LPSDLUPHQWORVVHV
*RRGZLOOLVDOORFDWHGWRFDVKJHQHUDWLQJXQLWVIRUWKHSXUSRVHRILPSDLUPHQWWHVWLQJ
*RRGZLOOVRPHWLPHVFDQQRWEHDOORFDWHGRQDQRQDUELWUDU\EDVLVWRLQGLYLGXDO
FDVKJHQHUDWLQJXQLWVEXWRQO\WRJURXSVRIFDVKJHQHUDWLQJXQLWV$VDUHVXOWWKH
ORZHVWOHYHOZLWKLQWKH3DUHQW&RPSDQ\DWZKLFKJRRGZLOOLVPRQLWRUHGIRULQWHUQDO
PDQDJHPHQWSXUSRVHVVRPHWLPHVFRPSULVHVDQXPEHURIFDVKJHQHUDWLQJXQLWV7KH
*URXS·VFDVKJHQHUDWLQJXQLWUHSUHVHQWVWKHEUDQFKHVDQGVHJPHQWVLGHQWLILHGDV
FRPLQJIURPWKHIRUPHUL%DQN
,QWDQJLEOHDVVHWVLQFOXGHDFTXLUHGFRPSXWHUVRIWZDUHXVHGLQDGPLQLVWUDWLRQZKLFKLV
DFFRXQWHGIRUXQGHUWKHFRVWPRGHO7KHFRVWRIWKHDVVHWLVWKHDPRXQWRIFDVKRU
FDVKHTXLYDOHQWVSDLGRUWKHIDLUYDOXHRIWKHRWKHUFRQVLGHUDWLRQVJLYHQXSWRDFTXLUH
DQDVVHWDWWKHWLPHRILWVDFTXLVLWLRQRUSURGXFWLRQ
$FTXLUHGFRPSXWHUVRIWZDUHOLFHQVHVDUHFDSLWDOL]HGRQWKHEDVLVRIWKHFRVWVLQFXUUHG
WRDFTXLUHDQGLQVWDOOWKHVSHFLILFVRIWZDUH7KHVHFRVWVDUHDPRUWL]HGRQD
VWUDLJKWOLQHEDVLVRYHUWKHH[SHFWHGXVHIXOOLYHVRIILYHWRWHQ\HDUV&RVWVDVVRFLDWHG
ZLWKPDLQWDLQLQJFRPSXWHUVRIWZDUHDUHH[SHQVHGDVLQFXUUHG,QWDQJLEOHDVVHWVDUH
VXEMHFWWRLPSDLUPHQWWHVWLQJDVGHVFULEHGLQ1RWH
3UHSD\PHQWVDQG2WKHU5HVRXUFHV
3UHSD\PHQWVDQGRWKHUUHVRXUFHVSHUWDLQWRRWKHUUHVRXUFHVFRQWUROOHGE\WKH*URXS
DVDUHVXOWRISDVWHYHQWV7KHVHDUHUHFRJQL]HGLQWKHILQDQFLDOVWDWHPHQWVZKHQLWLV
SUREDEOHWKDWWKHIXWXUHHFRQRPLFEHQHILWVZLOOIORZWRWKHHQWLW\DQGWKHDVVHWKDVD
FRVWRUYDOXHWKDWFDQEHPHDVXUHGUHOLDEO\
)LQDQFLDO/LDELOLWLHV
)LQDQFLDOOLDELOLWLHVLQFOXGHGHSRVLWOLDELOLWLHVELOOVSD\DEOHQRWHVSD\DEOHDQGRWKHU
OLDELOLWLHVH[FHSWWD[UHODWHGSD\DEOHVDQGSUHQHHGUHVHUYHV
)LQDQFLDOOLDELOLWLHVDUHUHFRJQL]HGZKHQWKH*URXSEHFRPHVDSDUW\WRWKHFRQWUDFWXDO
DJUHHPHQWVRIWKHLQVWUXPHQW$OOLQWHUHVWUHODWHGFKDUJHVLQFXUUHGRQDILQDQFLDO
OLDELOLW\DUHUHFRJQL]HGDVDQH[SHQVHLQSURILWRUORVV
'HSRVLWOLDELOLWLHVDUHUHFRUGHGRUVWDWHGDWDPRXQWVLQZKLFKWKH\DUHWREHSDLG
ZKLFKDSSUR[LPDWHIDLUYDOXH
%LOOVSD\DEOHDQGQRWHVSD\DEOHDUHUHFRJQL]HGLQLWLDOO\DWIDLUYDOXHZKLFKLVWKHLVVXH
SURFHHGVIDLUYDOXHRIFRQVLGHUDWLRQUHFHLYHGQHWRIGLUHFWLVVXHFRVWV%LOOVSD\DEOH
DQGQRWHVSD\DEOHDUHVXEVHTXHQWO\VWDWHGDWDPRUWL]HGFRVWDQ\GLIIHUHQFHEHWZHHQ
WKHSURFHHGVQHWRIWUDQVDFWLRQFRVWVDQGWKHUHGHPSWLRQYDOXHLVUHFRJQL]HGLQSURILW
RUORVVRYHUWKHSHULRGRIWKHERUURZLQJVXVLQJWKHHIIHFWLYHLQWHUHVWPHWKRG
'HULYDWLYHOLDELOLWLHVZKLFKDUHLQFOXGHGDVSDUWRI2WKHU/LDELOLWLHVDUHUHFRJQL]HG
LQLWLDOO\DQGVXEVHTXHQWO\PHDVXUHGDWIDLUYDOXHZLWKFKDQJHVLQIDLUYDOXHUHFRJQL]HG
LQSURILWRUORVV
2WKHUOLDELOLWLHVDUHUHFRJQL]HGLQLWLDOO\DWWKHLUIDLUYDOXHDQGVXEVHTXHQWO\PHDVXUHG
DWDPRUWL]HGFRVWXVLQJHIIHFWLYHLQWHUHVWPHWKRGIRUPDWXULWLHVEH\RQGRQH\HDUOHVV
VHWWOHPHQWSD\PHQWV
'LYLGHQGGLVWULEXWLRQVWRVKDUHKROGHUVDUHUHFRJQL]HGDVILQDQFLDOOLDELOLWLHVZKHQWKH
GLYLGHQGVDUHDSSURYHGE\WKH%63
)LQDQFLDOOLDELOLWLHVDUHGHUHFRJQL]HGLQWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQRQO\ZKHQ
WKHREOLJDWLRQVDUHH[WLQJXLVKHGHLWKHUWKURXJKGLVFKDUJHFDQFHOODWLRQRUH[SLUDWLRQ
2IIVHWWLQJ)LQDQFLDO,QVWUXPHQWV
)LQDQFLDODVVHWVDQGOLDELOLWLHVDUHRIIVHWDQGWKHUHVXOWLQJQHWDPRXQWLVUHSRUWHGLQ
WKHVWDWHPHQWRIILQDQFLDOSRVLWLRQZKHQWKHUHLVDOHJDOO\HQIRUFHDEOHULJKWWRRIIVHW
WKHUHFRJQL]HGDPRXQWVDQGWKHUHLVDQLQWHQWLRQWRVHWWOHRQDQHWEDVLVRUUHDOL]HWKH
DVVHWDQGVHWWOHWKHOLDELOLW\VLPXOWDQHRXVO\
3URYLVLRQVDQG&RQWLQJHQFLHV
3URYLVLRQVDUHUHFRJQL]HGZKHQSUHVHQWREOLJDWLRQVZLOOSUREDEO\OHDGWRDQRXWIORZ
RIHFRQRPLFUHVRXUFHVDQGWKH\FDQEHHVWLPDWHGUHOLDEO\HYHQLIWKHWLPLQJRU
DPRXQWRIWKHRXWIORZPD\VWLOOEHXQFHUWDLQ$SUHVHQWREOLJDWLRQDULVHVIURPWKH
SUHVHQFHRIDOHJDORUFRQVWUXFWLYHREOLJDWLRQWKDWKDVUHVXOWHGIURPSDVWHYHQWV
3URYLVLRQVDUHPHDVXUHGDWWKHHVWLPDWHGH[SHQGLWXUHUHTXLUHGWRVHWWOHWKHSUHVHQW
REOLJDWLRQEDVHGRQWKHPRVWUHOLDEOHHYLGHQFHDYDLODEOHDWWKHHQGRIWKHUHSRUWLQJ
SHULRGLQFOXGLQJWKHULVNVDQGXQFHUWDLQWLHVDVVRFLDWHGZLWKWKHSUHVHQWREOLJDWLRQ
$Q\UHLPEXUVHPHQWH[SHFWHGWREHUHFHLYHGLQWKHFRXUVHRIVHWWOHPHQWRIWKHSUHVHQW
REOLJDWLRQLVUHFRJQL]HGLIYLUWXDOO\FHUWDLQDVDVHSDUDWHDVVHWDWDQDPRXQWQRW
H[FHHGLQJWKHEDODQFHRIWKHUHODWHGSURYLVLRQ:KHUHWKHUHDUHDQXPEHURIVLPLODU
REOLJDWLRQVWKHOLNHOLKRRGWKDWDQRXWIORZZLOOEHUHTXLUHGLQVHWWOHPHQWLVGHWHUPLQHG
E\FRQVLGHULQJWKHFODVVRIREOLJDWLRQVDVDZKROH,QDGGLWLRQORQJWHUPSURYLVLRQV
DUHGLVFRXQWHGWRWKHLUSUHVHQWYDOXHVXVLQJDSUHWD[UDWHWKDWUHIOHFWVPDUNHW
DVVHVVPHQWDQGWKHULVNVVSHFLILFWRWKHREOLJDWLRQZKHUHWLPHYDOXHRIPRQH\LV
PDWHULDO7KHLQFUHDVHLQWKHSURYLVLRQGXHWRSDVVDJHRIWLPHLVUHFRJQL]HGDV
LQWHUHVWH[SHQVH3URYLVLRQVDUHUHYLHZHGDWWKHHQGRIHDFKUHSRUWLQJSHULRGDQG
DGMXVWHGWRUHIOHFWWKHFXUUHQWEHVWHVWLPDWH
,QWKRVHFDVHVZKHUHWKHSRVVLEOHRXWIORZRIHFRQRPLFUHVRXUFHDVDUHVXOWRISUHVHQW
REOLJDWLRQVLVFRQVLGHUHGLPSUREDEOHRUUHPRWHRUWKHDPRXQWWREHSURYLGHGIRU
FDQQRWEHPHDVXUHGUHOLDEO\QROLDELOLW\LVUHFRJQL]HGLQWKHILQDQFLDOVWDWHPHQWV
6LPLODUO\SRVVLEOHLQIORZVRIHFRQRPLFEHQHILWVWKDWGRQRW\HWPHHWWKHUHFRJQLWLRQ
FULWHULDRIDQDVVHWDUHFRQVLGHUHGFRQWLQJHQWDVVHWVKHQFHDUHQRWUHFRJQL]HGLQWKH
ILQDQFLDOVWDWHPHQWV2QWKHRWKHUKDQGDQ\UHLPEXUVHPHQWWKDWWKH*URXSFDQEH
YLUWXDOO\FHUWDLQWRFROOHFWIURPDWKLUGSDUW\ZLWKUHVSHFWWRWKHREOLJDWLRQLV
UHFRJQL]HGDVDVHSDUDWHDVVHWQRWH[FHHGLQJWKHDPRXQWRIWKHUHODWHGSURYLVLRQ
3UH1HHG5HVHUYHVDQG,QVXUDQFH3UHPLXP5HVHUYHV
D
3UHQHHG5HVHUYHV
,QWKH*URXSFRQVROLGDWHGILQDQFLDOVWDWHPHQWVSUHQHHGUHVHUYHV315
SUHVHQWHGDVSDUWRI2WKHU/LDELOLWLHVLQWKHVWDWHPHQWVRIILQDQFLDOSRVLWLRQDUH
UHFRJQL]HGIRUDOOSUHQHHGEHQHILWVJXDUDQWHHGDQGSD\DEOHE\)83,DVGHILQHG
LQWKHSUHQHHGSHQVLRQSODQFRQWUDFWV
315IRUSHQVLRQSODQVDUHGHWHUPLQHGXVLQJWKHUHTXLUHPHQWVRQSURYLVLRQLQJ
RI3$6DQGWKHVSHFLILFPHWKRGRIFRPSXWDWLRQUHTXLUHGE\WKH,QVXUDQFH
&RPPLVVLRQ,&DVGHVFULEHGEHORZ
7KHDPRXQWUHFRJQL]HGDVDSURYLVLRQWRFRYHUWKH315LVWKHEHVWHVWLPDWHRI
WKHH[SHQGLWXUHUHTXLUHGWRVHWWOHWKHSUHVHQWREOLJDWLRQDWWKHHQGRIWKH
UHSRUWLQJSHULRG7KHULVNVDQGXQFHUWDLQWLHVWKDWLQHYLWDEO\VXUURXQGPDQ\
HYHQWVDQGFLUFXPVWDQFHVZHUHWDNHQLQWRDFFRXQWLQUHDFKLQJWKHEHVWHVWLPDWH
RIDSURYLVLRQ
315LVFRPSXWHGEDVHGRQWKHIROORZLQJFRQVLGHUDWLRQV
L
2Q&XUUHQWO\%HLQJ3DLG3ODQV
x 3URYLVLRQIRUWHUPLQDWLRQYDOXHVDUHFRPSXWHGEDVHGRQWKHVXUUHQGHU
UDWHH[SHULHQFH
x 3URYLVLRQIRUWKHSRUWLRQRIFXUUHQWO\EHLQJSDLGSODQVWKDWZLOOUHDFK
IXOOSD\PHQWDUHFRPSXWHGEDVHGRQIXOOSD\PHQWH[SHULHQFH,WLV
HTXLYDOHQWWRWKHSUHVHQWYDOXHRIIXWXUHPDWXULW\EHQHILWVUHGXFHGE\
WKHSUHVHQWYDOXHRIIXWXUHWUXVWIXQGFRQWULEXWLRQVUHTXLUHGSHU
SURGXFWPRGHOGLVFRXQWHGDWWKHDSSURYHGKXUGOHUDWHSHUSURGXFW
PRGHORI)83,
LL 2Q/DSVHG3ODQVZLWKLQWKH$OORZDEOH5HLQVWDWHPHQW3HULRG
x 3URYLVLRQIRUWHUPLQDWLRQYDOXHVDUHFRPSXWHGEDVHGRQUHLQVWDWHPHQW
H[SHULHQFH
LLL 2Q)XOO\3DLG3ODQV
x )RUSODQVGXHIRUSD\PHQWZLWKLQWKHQH[WILYH\HDUVWKHUHVHUYHLV
FRPSXWHGEDVHGRQWKHSUHVHQWYDOXHRIIXWXUHPDWXULW\EHQHILWV
GLVFRXQWHGDWWKHDWWDLQDEOHUDWHDVGHWHUPLQHGDQGFHUWLILHGE\
)83,·VWUXVWHHXVLQJLQGXVWU\EHVWSUDFWLFHVDQGSULQFLSOHV
x )RUSODQVQRW\HWGXHIRUSD\PHQWZLWKLQWKHQH[WILYH\HDUVWKH
UHVHUYHLVEDVHGRQWKHSUHVHQWYDOXHRIIXWXUHPDWXULW\EHQHILWV
GLVFRXQWHGDWWKHDSSURYHGKXUGOHUDWHSHUSURGXFWPRGHO
LY )XWXUHHYHQWVWKDWPD\DIIHFWWKHIRUHJRLQJDPRXQWVDUHUHIOHFWHGLQWKH
DPRXQWRIWKHSURYLVLRQIRU315ZKHUHWKHUHLVVXIILFLHQWREMHFWLYH
HYLGHQFHWKDWWKH\ZLOORFFXU
Y 7KHUDWHVRIVXUUHQGHUFDQFHOODWLRQUHLQVWDWHPHQWXWLOL]DWLRQDQG
LQIODWLRQZKHQDSSOLHGUHSUHVHQWWKHDFWXDOH[SHULHQFHRI)83,LQWKHODVW
WKUHH\HDUVRUWKHLQGXVWU\LQWKHDEVHQFHRIDUHOLDEOHH[SHULHQFH
YL 7KHSUREDELOLW\RISUHWHUPLQDWLRQRQVXUUHQGHURIIXOO\SDLGSODQVDUH
FRQVLGHUHGLQGHWHUPLQLQJWKH315RIIXOO\SDLGSODQV$SUHWHUPLQDWLRQ
H[SHULHQFHRQIXOO\SDLGSODQVRIDQGEHORZDUHFRQVLGHUHG
LQVLJQLILFDQW,QVXFKFDVHVGHUHFRJQLWLRQRIOLDELOLW\VKDOOEHUHFRUGHGDW
SUHWHUPLQDWLRQGDWH
7KHFRPSXWDWLRQRIWKHIRUHJRLQJDVVXPSWLRQVLVYDOLGDWHGE\WKH,&DFFUHGLWHG
DFWXDU\RI)83,
$Q\H[FHVVLQWKHDPRXQWRIWKHWUXVWIXQGDVDUHVXOWRIWKHUHYLVHGUHVHUYLQJ
UHTXLUHPHQWVKDOOQHLWKHUEHUHOHDVHGIURPWKHIXQGQRUEHFUHGLWHGVHWRIIWR
IXWXUHUHTXLUHGFRQWULEXWLRQV
E
,QVXUDQFH3UHPLXP5HVHUYHV
,QVXUDQFHSUHPLXPUHVHUYHVIRUOLIHSHQVLRQDQGHGXFDWLRQDOSODQVUHSUHVHQWV
)83,·VDFWXDULDOO\GHWHUPLQHGOLDELOLW\LQDFFRUGDQFHZLWK3$6WRJXDUDQWHH
WKHEHQHILWVSURYLGHGLQWKHSODQLQFRQVLGHUDWLRQRIWKHLQVXUDQFHSUHPLXP
IXQGVDVVLJQHGIRUWKLVSXUSRVHDVGHWHUPLQHGDQGFHUWLILHGE\WKH,&DFFUHGLWHG
DFWXDU\
&DSLWDO)XQGV
&RPPRQVWRFNUHSUHVHQWVWKHQRPLQDOYDOXHRIVKDUHVWKDWKDYHEHHQLVVXHG
$GGLWLRQDOSDLGLQFDSLWDOLQFOXGHVDQ\SUHPLXPVUHFHLYHGRQWKHLVVXDQFHRI
FRPPRQVWRFN$Q\WUDQVDFWLRQFRVWVDVVRFLDWHGZLWKWKHLVVXDQFHRIVKDUHVDUH
GHGXFWHGIURPDGGLWLRQDOSDLGLQFDSLWDOQHWRIDQ\UHODWHGLQFRPHWD[EHQHILWV
6XUSOXVIUHHLQFOXGHVDOOFXUUHQWDQGSULRUSHULRGUHVXOWVDVUHSRUWHGLQWKHVWDWHPHQW
RILQFRPHDQGZKLFKDUHDYDLODEOHDQGQRWUHVWULFWHGIRUXVHE\WKH*URXS
6XUSOXVUHVHUYHVSHUWDLQVWRDSRUWLRQRIWKH*URXS·VLQFRPHIURPWUXVWRSHUDWLRQV
VHWXSRQD\HDUO\EDVLVLQFRPSOLDQFHZLWK%63UHJXODWLRQV7KHVXUSOXVVHWXSLV
HTXDOWRRIWKHQHWSURILWDFFUXLQJIURPWKHWUXVWEXVLQHVVXQWLOWKHVXUSOXVVKDOO
DPRXQWWRRIDXWKRUL]HGFDSLWDOVWRFN7KHUHVHUYHVKDOOQRWEHSDLGRXWDV
GLYLGHQGVEXWORVVHVDFFUXLQJLQWKHFRXUVHRIWKHWUXVWEXVLQHVVPD\EHFKDUJHG
DJDLQVWWKLVDFFRXQW
1HWXQUHDOL]HGIDLUYDOXHJDLQVORVVHVRQ$)6ILQDQFLDODVVHWVSHUWDLQWRFXPXODWLYH
PDUNWRPDUNHWYDOXDWLRQRI$)6ILQDQFLDODVVHWV
5HYHQXHDQG&RVW5HFRJQLWLRQ
5HYHQXHLVUHFRJQL]HGWRWKHH[WHQWWKDWLWLVSUREDEOHWKDWWKHHFRQRPLFEHQHILWVZLOO
IORZWRWKH*URXSDQGWKHUHYHQXHFDQEHUHOLDEO\PHDVXUHG([SHQVHVDUH
UHFRJQL]HGLQSURILWRUORVVXSRQXWLOL]DWLRQRIWKHDVVHWVRUVHUYLFHVRUDWWKHGDWH
WKHVHDUHLQFXUUHG$OOILQDQFHFRVWVDUHUHSRUWHGRQDQDFFUXDOEDVLV6SHFLILF
UHFRJQLWLRQFULWHULDRILQFRPHDQGH[SHQVHVGHVFULEHGEHORZPXVWDOVREHPHWEHIRUH
LQFRPHRUH[SHQVHLVUHFRJQL]HG
D ,QWHUHVW²,QWHUHVWLQFRPHDQGH[SHQVHVDUHUHFRJQL]HGLQSURILWRUORVVIRUDOO
LQVWUXPHQWVPHDVXUHGDWDPRUWL]HGFRVWXVLQJWKHHIIHFWLYHLQWHUHVWPHWKRG
7KHHIIHFWLYHLQWHUHVWPHWKRGLVDPHWKRGRIFDOFXODWLQJWKHDPRUWL]HGFRVWRID
ILQDQFLDODVVHWRUDILQDQFLDOOLDELOLW\DQGRIDOORFDWLQJWKHLQWHUHVWLQFRPHRU
LQWHUHVWH[SHQVHRYHUWKHUHOHYDQWSHULRG7KHHIIHFWLYHLQWHUHVWUDWHLVWKHUDWH
WKDWH[DFWO\GLVFRXQWVHVWLPDWHGIXWXUHFDVKSD\PHQWVRUUHFHLSWVWKURXJKWKH
H[SHFWHGOLIHRIWKHILQDQFLDOLQVWUXPHQWRUZKHQDSSURSULDWHDVKRUWHUSHULRG
WRWKHQHWFDUU\LQJDPRXQWRIWKHILQDQFLDODVVHWRUILQDQFLDOOLDELOLW\:KHQ
FDOFXODWLQJWKHHIIHFWLYHLQWHUHVWUDWHWKH*URXSHVWLPDWHVFDVKIORZV
FRQVLGHULQJDOOFRQWUDFWXDOWHUPVRIWKHILQDQFLDOLQVWUXPHQWEXWGRHVQRW
FRQVLGHUIXWXUHFUHGLWORVVHV7KHFDOFXODWLRQLQFOXGHVDOOIHHVDQGSRLQWVSDLG
RUUHFHLYHGEHWZHHQSDUWLHVWRWKHFRQWUDFWWKDWDUHDQLQWHJUDOSDUWRIWKH
HIIHFWLYHLQWHUHVWUDWHWUDQVDFWLRQFRVWVDQGDOORWKHUSUHPLXPVRUGLVFRXQWV
2QFHDILQDQFLDODVVHWRUDJURXSRIVLPLODUILQDQFLDODVVHWVKDVEHHQZULWWHQ
GRZQDVDUHVXOWRILPSDLUPHQWLQWHUHVWLQFRPHLVUHFRJQL]HGXVLQJWKHUDWHRI
LQWHUHVWXVHGWRGLVFRXQWWKHIXWXUHFDVKIORZVIRUWKHSXUSRVHRIPHDVXULQJWKH
LPSDLUPHQWORVV
E 7UDGLQJJDLQORVV²7UDGLQJJDLQORVVLVUHFRJQL]HGZKHQWKHRZQHUVKLSRIWKH
VHFXULWLHVLVWUDQVIHUUHGWRWKHEX\HUDWDQDPRXQWHTXDOWRWKHH[FHVVRIWKH
VHOOLQJSULFHRYHUWKHFDUU\LQJDPRXQWRIVHFXULWLHVDQGDVDUHVXOWRIWKH
PDUNWRPDUNHWYDOXDWLRQRIRXWVWDQGLQJVHFXULWLHVFODVVLILHGDV)973/DW
\HDUHQG
F 3UHPLXPUHYHQXHV²3UHPLXPVIURPVDOHRISUHQHHGSODQVDUHUHFRJQL]HGDV
HDUQHGZKHQFROOHFWHGLQFOXVLYHRIDGYDQFHSUHPLXPSD\PHQWV:KHQ
SUHPLXPVDUHUHFRJQL]HGDVLQFRPHWKHUHODWHGFRVWRIFRQWUDFWVLVFRPSXWHG
DQGUHFRJQL]HGZLWKWKHUHVXOWWKDWWKHEHQHILWVDQGH[SHQVHVDUHPDWFKHGZLWK
VXFKUHYHQXH
G 6HUYLFHFKDUJHVIHHVDQGFRPPLVVLRQV²6HUYLFHFKDUJHVIHHVDQGFRPPLVVLRQVDUH
JHQHUDOO\UHFRJQL]HGZKHQWKHVHUYLFHKDVEHHQSURYLGHG/RDQFRPPLWPHQW
IHHVIRUORDQVWKDWDUHOLNHO\WREHGUDZQGRZQDUHGHIHUUHGWRJHWKHUZLWK
UHODWHGGLUHFWFRVWVDQGUHFRJQL]HGDVDQDGMXVWPHQWWRWKHHIIHFWLYHLQWHUHVW
UDWHRQWKHORDQ,IWKHFRPPLWPHQWH[SLUHVZLWKRXWGUDZGRZQE\WKH%DQN
WKHFRPPLWPHQWIHHVDUHUHFRJQL]HGDVRWKHULQFRPH/RDQFRPPLWPHQWIHHV
HDUQHGDVVHUYLFHVDUHSURYLGHGDUHUHFRJQL]HGDVRWKHULQFRPHRQDWLPH
SURSRUWLRQEDVLVRYHUWKHFRPPLWPHQWSHULRG
H 0LVFHOODQHRXVLQFRPHLQFOXGHVWKHIROORZLQJDFFRXQWV
L *DLQORVVIURPVDOHRIDVVHWV²3URILWRUORVVIURPDVVHWVVROGRUH[FKDQJHGLV
UHFRJQL]HGZKHQWKHULVNDQGUHZDUGVWRWKHDVVHWVLVWUDQVIHUUHGWRWKH
EX\HURUZKHQWKHFROOHFWLELOLW\RIWKHHQWLUHVDOHVSULFHLVUHDVRQDEO\
DVVXUHG
LL 'LYLGHQG²'LYLGHQGLQFRPHLVUHFRJQL]HGZKHQWKH*URXS·VULJKWWR
UHFHLYHSD\PHQWLVHVWDEOLVKHG
LLL 5HQWDO²5HQWDOLQFRPHDULVLQJIURPOHDVHGSURSHUWLHVLVDFFRXQWHGIRURQ
DVWUDLJKWOLQHEDVLVRYHUWKHOHDVHWHUPVRQRQJRLQJOHDVHV
LY &RPPLVVLRQVHDUQHGRQFUHGLWFDUGV²&RPPLVVLRQVHDUQHGRQFUHGLWFDUGVDUH
WDNHQXSDVLQFRPHXSRQUHFHLSWIURPPHPEHUHVWDEOLVKPHQWVRIFKDUJHV
DULVLQJIURPFUHGLWDYDLOPHQWVE\FUHGLWFDUGKROGHUV7KHVHFRPPLVVLRQV
DUHFRPSXWHGEDVHGRQFHUWDLQDJUHHGUDWHVDQGDUHGHGXFWHGIURP
DPRXQWVUHPLWWDEOHWRPHPEHUHVWDEOLVKPHQWV3XUFKDVHVE\WKHFUHGLW
FDUGKROGHUVFROOHFWLEOHRQLQVWDOOPHQWEDVLVDUHUHFRUGHGDWWKHFRVWRI
WKHLWHPVSXUFKDVHGSOXVFHUWDLQSHUFHQWDJHRIFRVW,QFRPHLVUHFRJQL]HG
RQHYHU\WHUPRILQVWDOOPHQWELOOHGWRWKHFDUGKROGHUVDQGFRPSXWHGXVLQJ
WKHHIIHFWLYHLQWHUHVWPHWKRG
/HDVHV
7KH*URXSDFFRXQWVIRULWVOHDVHVDVIROORZV
D *URXSDV/HVVHH
/HDVHVZKLFKGRQRWWUDQVIHUWRWKH*URXSVXEVWDQWLDOO\DOOWKHULVNVDQG
EHQHILWVRIRZQHUVKLSRIWKHDVVHWDUHFODVVLILHGDVRSHUDWLQJOHDVHV2SHUDWLQJ
OHDVHSD\PHQWVDUHUHFRJQL]HGDVH[SHQVHLQSURILWRUORVVRQDVWUDLJKWOLQH
EDVLVRYHUWKHOHDVHWHUP$VVRFLDWHGFRVWVVXFKDVUHSDLUVPDLQWHQDQFHDQG
LQVXUDQFHDUHH[SHQVHGDVLQFXUUHG
E *URXSDV/HVVRU
/HDVHVZKLFKGRQRWWUDQVIHUWRWKHOHVVHHVXEVWDQWLDOO\DOOWKHULVNVDQGEHQHILWV
RIRZQHUVKLSRIWKHDVVHWDUHFODVVLILHGDVRSHUDWLQJOHDVHV/HDVHLQFRPHIURP
RSHUDWLQJOHDVHVLVUHFRJQL]HGDVLQFRPHLQSURILWRUORVVRQDVWUDLJKWOLQHEDVLV
RYHUWKHOHDVHWHUP
7KH*URXSGHWHUPLQHVZKHWKHUDQDUUDQJHPHQWLVRUFRQWDLQVDOHDVHEDVHGRQWKH
VXEVWDQFHRIWKHDUUDQJHPHQW,WPDNHVDQDVVHVVPHQWRIZKHWKHUWKHIXOILOOPHQWRI
WKHDUUDQJHPHQWLVGHSHQGHQWRQWKHXVHRIDVSHFLILFDVVHWRUDVVHWVDQGWKH
DUUDQJHPHQWFRQYH\VDULJKWWRXVHWKHDVVHW
)RUHLJQ&XUUHQF\7UDQVDFWLRQVDQG7UDQVODWLRQV
7KHDFFRXQWLQJUHFRUGVRIWKH*URXSDUHPDLQWDLQHGLQ3KLOLSSLQHSHVRVH[FHSWIRU
WKH)RUHLJQ&XUUHQF\'HSRVLW8QLW)&'8ZKLFKDUHPDLQWDLQHGLQ8QLWHG6WDWHV
86GROODUV)RUHLJQFXUUHQF\WUDQVDFWLRQVGXULQJWKHSHULRGDUHWUDQVODWHGLQWRWKH
IXQFWLRQDOFXUUHQF\DWH[FKDQJHUDWHVZKLFKDSSUR[LPDWHWKRVHSUHYDLOLQJRQ
WUDQVDFWLRQGDWHV
)RUILQDQFLDOUHSRUWLQJSXUSRVHVWKHDFFRXQWVRIWKH)&'8DUHWUDQVODWHGLQWRWKHLU
HTXLYDOHQWVLQ3KLOLSSLQHSHVRVEDVHGRQWKH3KLOLSSLQH'HDOLQJ6\VWHPFORVLQJUDWHV
3'6&5SUHYDLOLQJDWWKHHQGRIWKHSHULRGIRUUHVRXUFHVDQGOLDELOLWLHVDQGDWWKH
DYHUDJH3'6&5IRUWKHSHULRGIRULQFRPHDQGH[SHQVHV
)RUHLJQH[FKDQJHJDLQVDQGORVVHVUHVXOWLQJIURPWKHVHWWOHPHQWRIVXFKWUDQVDFWLRQV
DQGIURPWKHWUDQVODWLRQDWSHULRGHQGH[FKDQJHUDWHVRIPRQHWDU\DVVHWVDQG
OLDELOLWLHVGHQRPLQDWHGLQIRUHLJQFXUUHQFLHVDUHUHFRJQL]HGLQSURILWRUORVV
,PSDLUPHQWRI)LQDQFLDO$VVHWV
7KH*URXSDVVHVVHVDWWKHHQGRIHDFKUHSRUWLQJSHULRGZKHWKHUWKHUHLVREMHFWLYH
HYLGHQFHWKDWDILQDQFLDODVVHWRUJURXSRIILQDQFLDODVVHWVLVLPSDLUHG$ILQDQFLDO
DVVHWRUDJURXSRIILQDQFLDODVVHWVLVLPSDLUHGDQGLPSDLUPHQWORVVHVDUHLQFXUUHGLI
DQGRQO\LIWKHUHLVREMHFWLYHHYLGHQFHRILPSDLUPHQWDVDUHVXOWRIRQHRUPRUH
HYHQWVWKDWRFFXUUHGDIWHUWKHLQLWLDOUHFRJQLWLRQRIWKHDVVHWDORVVHYHQWDQGWKDW
ORVVHYHQWKDVDQLPSDFWRQWKHHVWLPDWHGIXWXUHFDVKIORZVRIWKHILQDQFLDODVVHWRU
JURXSRIILQDQFLDODVVHWVWKDWFDQEHUHOLDEO\HVWLPDWHG
2EMHFWLYHHYLGHQFHWKDWDILQDQFLDODVVHWRUJURXSRIDVVHWVLVLPSDLUHGLQFOXGHV
REVHUYDEOHGDWDWKDWFRPHVWRWKHDWWHQWLRQRIWKH*URXSDERXWFHUWDLQORVVHYHQWV
LQFOXGLQJDPRQJRWKHUVLVLJQLILFDQWILQDQFLDOGLIILFXOW\RIWKHLVVXHURUGHEWRULLD
EUHDFKRIFRQWUDFWVXFKDVDGHIDXOWRUGHOLQTXHQF\LQLQWHUHVWRUSULQFLSDOSD\PHQWV
LLLLWLVSUREDEOHWKDWWKHERUURZHUZLOOHQWHUEDQNUXSWF\RURWKHUILQDQFLDO
UHRUJDQL]DWLRQLYWKHGLVDSSHDUDQFHRIDQDFWLYHPDUNHWIRUWKDWILQDQFLDODVVHW
EHFDXVHRIILQDQFLDOGLIILFXOWLHVRUYREVHUYDEOHGDWDLQGLFDWLQJWKDWWKHUHLVD
PHDVXUDEOHGHFUHDVHLQWKHHVWLPDWHGIXWXUHFDVKIORZVIURPDJURXSRIILQDQFLDO
DVVHWVVLQFHWKHLQLWLDOUHFRJQLWLRQRIWKRVHDVVHWVDOWKRXJKWKHGHFUHDVHFDQQRW\HWEH
LGHQWLILHGZLWKWKHLQGLYLGXDOILQDQFLDODVVHWVLQWKHJURXS
D $VVHWV&DUULHGDW$PRUWL]HG&RVW
7KH*URXSILUVWDVVHVVHVZKHWKHUREMHFWLYHHYLGHQFHRILPSDLUPHQWH[LVWV
LQGLYLGXDOO\IRUILQDQFLDODVVHWVWKDWDUHLQGLYLGXDOO\VLJQLILFDQWDQGLQGLYLGXDOO\
RUFROOHFWLYHO\IRUILQDQFLDODVVHWVWKDWDUHQRWLQGLYLGXDOO\VLJQLILFDQW,IWKH
*URXSGHWHUPLQHVWKDWQRREMHFWLYHHYLGHQFHRILPSDLUPHQWH[LVWVIRUDQ
LQGLYLGXDOO\DVVHVVHGILQDQFLDODVVHWZKHWKHUVLJQLILFDQWRUQRWLWLQFOXGHVWKH
DVVHWLQDJURXSRIILQDQFLDODVVHWVZLWKVLPLODUFUHGLWULVNFKDUDFWHULVWLFVDQG
FROOHFWLYHO\DVVHVVHVWKHPIRULPSDLUPHQW
)LQDQFLDODVVHWVWKDWDUHLQGLYLGXDOO\DVVHVVHGIRULPSDLUPHQWDQGIRUZKLFKDQ
LPSDLUPHQWORVVLVRUFRQWLQXHVWREHUHFRJQL]HGDUHQRWLQFOXGHGLQDFROOHFWLYH
DVVHVVPHQWRILPSDLUPHQW
,IWKHUHLVREMHFWLYHHYLGHQFHWKDWDQLPSDLUPHQWORVVRQORDQVDQGUHFHLYDEOHV
RU+70LQYHVWPHQWVFDUULHGDWDPRUWL]HGFRVWKDVEHHQLQFXUUHGWKHDPRXQW
RIWKHORVVLVPHDVXUHGDVWKHGLIIHUHQFHEHWZHHQWKHDVVHW·VFDUU\LQJDPRXQW
DQGWKHSUHVHQWYDOXHRIHVWLPDWHGIXWXUHFDVKIORZVH[FOXGLQJIXWXUHFUHGLW
ORVVHVWKDWKDYHQRWEHHQLQFXUUHGGLVFRXQWHGDWWKHILQDQFLDODVVHW·VRULJLQDO
HIIHFWLYHLQWHUHVWUDWH7KHFDUU\LQJDPRXQWRIWKHDVVHWLVUHGXFHGWKURXJKWKH
XVHRIDQDOORZDQFHDFFRXQWDQGWKHDPRXQWRIWKHORVVLVUHFRJQL]HGLQSURILW
RUORVV
,IDORDQRU+70LQYHVWPHQWKDVDYDULDEOHLQWHUHVWUDWHWKHGLVFRXQWUDWHIRU
PHDVXULQJDQ\LPSDLUPHQWORVVLVWKHFXUUHQWHIIHFWLYHLQWHUHVWUDWHGHWHUPLQHG
XQGHUWKHFRQWUDFW:KHQSUDFWLFDEOHWKH*URXSPD\PHDVXUHLPSDLUPHQWRQ
WKHEDVLVRIDQLQVWUXPHQW·VIDLUYDOXHXVLQJDQREVHUYDEOHPDUNHWSULFH
7KHFDOFXODWLRQRIWKHSUHVHQWYDOXHRIWKHHVWLPDWHGIXWXUHFDVKIORZVRID
FROODWHUDOL]HGILQDQFLDODVVHWUHIOHFWVWKHFDVKIORZVWKDWPD\UHVXOWIURP
IRUHFORVXUHOHVVFRVWVIRUREWDLQLQJDQGVHOOLQJWKHFROODWHUDOZKHWKHURUQRW
IRUHFORVXUHLVSUREDEOH
)RUWKHSXUSRVHRIDFROOHFWLYHHYDOXDWLRQRILPSDLUPHQWILQDQFLDODVVHWVDUH
JURXSHGRQWKHEDVLVRIVLPLODUFUHGLWULVNFKDUDFWHULVWLFVLHRQWKHEDVLVRIWKH
*URXS·VRU%63·VJUDGLQJSURFHVVWKDWFRQVLGHUVDVVHWW\SHLQGXVWU\
JHRJUDSKLFDOORFDWLRQFROODWHUDOW\SHSDVWGXHVWDWXVDQGRWKHUUHOHYDQWIDFWRUV
7KRVHFKDUDFWHULVWLFVDUHUHOHYDQWWRWKHHVWLPDWLRQRIIXWXUHFDVKIORZVIRU
JURXSVRIVXFKDVVHWVE\EHLQJLQGLFDWLYHRIWKHGHEWRUV·DELOLW\WRSD\DOO
DPRXQWVGXHDFFRUGLQJWRWKHFRQWUDFWXDOWHUPVRIWKHDVVHWVEHLQJHYDOXDWHG
)XWXUHFDVKIORZVLQDJURXSRIILQDQFLDODVVHWVWKDWDUHFROOHFWLYHO\HYDOXDWHG
IRULPSDLUPHQWDUHHVWLPDWHGRQWKHEDVLVRIWKHFRQWUDFWXDOFDVKIORZVRIWKH
DVVHWVDQGKLVWRULFDOORVVH[SHULHQFHIRUDVVHWVZLWKFUHGLWULVNFKDUDFWHULVWLFV
VLPLODUWRWKRVHLQWKHJURXS+LVWRULFDOORVVH[SHULHQFHLVDGMXVWHGRQWKHEDVLV
RIFXUUHQWREVHUYDEOHGDWDWRUHIOHFWWKHHIIHFWVRIFXUUHQWFRQGLWLRQVWKDWGLG
QRWDIIHFWWKHSHULRGRQZKLFKWKHKLVWRULFDOORVVH[SHULHQFHLVEDVHGDQGWR
UHPRYHWKHHIIHFWVRIFRQGLWLRQVLQWKHKLVWRULFDOSHULRGWKDWGRQRWH[LVW
FXUUHQWO\
(VWLPDWHVRIFKDQJHVLQIXWXUHFDVKIORZVIRUJURXSVRIDVVHWVVKRXOGUHIOHFW
DQGEHFRQVLVWHQWZLWKFKDQJHVLQUHODWHGREVHUYDEOHGDWDIURPSHULRGWR
SHULRG7KHPHWKRGRORJ\DQGDVVXPSWLRQVXVHGIRUHVWLPDWLQJIXWXUHFDVK
IORZVDUHUHYLHZHGUHJXODUO\E\WKH*URXSWRUHGXFHDQ\GLIIHUHQFHVEHWZHHQ
ORVVHVWLPDWHVDQGDFWXDOORVVH[SHULHQFH
:KHQDORDQLVXQFROOHFWLEOHLWPD\EHZULWWHQRIIVXEMHFWWR%63JXLGHOLQHV
DJDLQVWWKHUHODWHGDOORZDQFHIRUORDQLPSDLUPHQW6XFKORDQVDUHZULWWHQRII
DIWHUDOOWKHQHFHVVDU\SURFHGXUHVLQFOXGLQJDSSURYDOIURPWKH%2'DQGWKH
%63LIQHFHVVDU\XQGHUH[LVWLQJUHJXODWLRQVKDYHEHHQFRPSOHWHGDQGWKH
DPRXQWRIWKHORVVKDVEHHQGHWHUPLQHG6XEVHTXHQWUHFRYHULHVRIDPRXQWV
SUHYLRXVO\ZULWWHQRIIGHFUHDVHWKHDPRXQWRIWKHLPSDLUPHQWORVVLQSURILWRU
ORVV
,ILQDVXEVHTXHQWSHULRGWKHDPRXQWRIWKHLPSDLUPHQWORVVGHFUHDVHDQGWKH
GHFUHDVHFDQEHUHODWHGREMHFWLYHO\WRDQHYHQWRFFXUULQJDIWHUWKHLPSDLUPHQW
ZDVUHFRJQL]HGVXFKDVDQLPSURYHPHQWLQWKHGHEWRU·VFUHGLWUDWLQJWKH
SUHYLRXVO\UHFRJQL]HGLPSDLUPHQWORVVLVUHYHUVHGE\DGMXVWLQJWKHDOORZDQFH
DFFRXQW7KHDPRXQWRIWKHUHYHUVDOLVUHFRJQL]HGLQSURILWRUORVV
E $VVHWV&DUULHGDW)DLU9DOXHZLWK&KDQJHV5HFRJQL]HGLQ2WKHU&RPSUHKHQVLYH,QFRPH
,QWKHFDVHRILQYHVWPHQWVFODVVLILHGDV$)6ILQDQFLDODVVHWVDVLJQLILFDQWRU
SURORQJHGGHFOLQHLQWKHIDLUYDOXHRIWKHVHFXULW\EHORZLWVFRVWLVFRQVLGHUHGLQ
GHWHUPLQLQJZKHWKHUWKHDVVHWVDUHLPSDLUHG,IDQ\VXFKHYLGHQFHH[LVWVIRU
$)6ILQDQFLDODVVHWVWKHFXPXODWLYHORVV²PHDVXUHGDVWKHGLIIHUHQFHEHWZHHQ
WKHDFTXLVLWLRQFRVWDQGWKHFXUUHQWIDLUYDOXHOHVVDQ\LPSDLUPHQWORVVRQWKDW
ILQDQFLDODVVHWSUHYLRXVO\UHFRJQL]HGLQSURILWRUORVV²LVUHPRYHGIURPRWKHU
FRPSUHKHQVLYHLQFRPHDQGUHFRJQL]HGLQSURILWRUORVV,PSDLUPHQWORVVHV
UHFRJQL]HGLQSURILWRUORVVRQHTXLW\LQVWUXPHQWVDUHQRWUHYHUVHGWKURXJK
SURILWRUORVV
,ILQDVXEVHTXHQWSHULRGWKHIDLUYDOXHRIDGHEWLQVWUXPHQWFODVVLILHGDV$)6
LQFUHDVHVDQGWKHLQFUHDVHFDQEHREMHFWLYHO\UHODWHGWRDQHYHQWRFFXUULQJDIWHU
WKHLPSDLUPHQWORVVZDVUHFRJQL]HGLQSURILWRUORVVWKHLPSDLUPHQWORVVLV
UHYHUVHGWKURXJKSURILWRUORVV
F
$VVHWV&DUULHGDW&RVW
7KH*URXSDVVHVVHVDWWKHHQGRIHDFKUHSRUWLQJSHULRGZKHWKHUWKHUHLV
REMHFWLYHHYLGHQFHWKDWDQ\RIWKHXQTXRWHGHTXLW\VHFXULWLHVDQGGHULYDWLYH
DVVHWVOLQNHGWRDQGUHTXLUHGWREHVHWWOHGLQVXFKXQTXRWHGHTXLW\LQVWUXPHQWV
ZKLFKDUHFDUULHGDWFRVWPD\EHLPSDLUHG7KHDPRXQWRILPSDLUPHQWORVVLV
WKHGLIIHUHQFHEHWZHHQWKHFDUU\LQJDPRXQWRIWKHHTXLW\VHFXULW\DQGWKH
SUHVHQWYDOXHRIWKHHVWLPDWHGIXWXUHFDVKIORZVGLVFRXQWHGDWWKHFXUUHQW
PDUNHWUDWHRIUHWXUQRIDVLPLODUDVVHW,PSDLUPHQWORVVHVRQDVVHWVFDUULHGDW
FRVWFDQQRWEHUHYHUVHG:KHUHSRVVLEOHWKH*URXSVHHNVWRUHVWUXFWXUHORDQV
UDWKHUWKDQWRWDNHSRVVHVVLRQRIFROODWHUDO7KLVPD\LQYROYHH[WHQGLQJWKH
SD\PHQWDUUDQJHPHQWVDQGWKHDJUHHPHQWRIQHZORDQFRQGLWLRQV2QFHWKH
WHUPVKDYHEHHQUHQHJRWLDWHGWKHORDQLVQRORQJHUFRQVLGHUHGSDVWGXH
0DQDJHPHQWFRQWLQXRXVO\UHYLHZVUHVWUXFWXUHGORDQVWRHQVXUHWKDWDOOFULWHULD
DUHPHWDQGWKDWIXWXUHSD\PHQWVDUHOLNHO\WRRFFXU7KHORDQVFRQWLQXHWREH
VXEMHFWWRDQLQGLYLGXDORUFROOHFWLYHLPSDLUPHQWDVVHVVPHQWFDOFXODWHGXVLQJ
WKHORDQV·RULJLQDOHIIHFWLYHLQWHUHVWUDWH7KHGLIIHUHQFHEHWZHHQWKHUHFRUGHG
VDOHRIWKHRULJLQDOORDQDQGWKHSUHVHQWYDOXHRIWKHUHVWUXFWXUHGFDVKIORZV
GLVFRXQWHGDWWKHRULJLQDOHIIHFWLYHLQWHUHVWUDWHLVUHFRJQL]HGDVSDUWRI
,PSDLUPHQW/RVVHVLQWKHVWDWHPHQWRILQFRPH
,PSDLUPHQWRI1RQILQDQFLDO$VVHWV
7KH*URXS·VLQWDQJLEOHDVVHWVFRQVLVWLQJRIJRRGZLOODQGFRPSXWHUVRIWZDUH
UHFRUGHGDVSDUWRI2WKHU5HVRXUFHVEDQNSUHPLVHVIXUQLWXUHIL[WXUHVDQG
HTXLSPHQWDVVHWVKHOGIRUVDOHDQGWKH%DQN·VLQYHVWPHQWVLQVXEVLGLDULHVDUHVXEMHFW
WRLPSDLUPHQWWHVWLQJ,QWDQJLEOHDVVHWVZLWKDQLQGHILQLWHXVHIXOOLIHVXFKDV
JRRGZLOODUHWHVWHGIRULPSDLUPHQWDWOHDVWDQQXDOO\$OORWKHULQGLYLGXDODVVHWVRU
FDVKJHQHUDWLQJXQLWVDUHWHVWHGIRULPSDLUPHQWZKHQHYHUHYHQWVRUFKDQJHVLQ
FLUFXPVWDQFHVLQGLFDWHWKDWWKHFDUU\LQJDPRXQWPD\QRWEHUHFRYHUDEOH
)RUSXUSRVHVRIDVVHVVLQJLPSDLUPHQWDVVHWVDUHJURXSHGDWWKHORZHVWOHYHOVIRU
ZKLFKWKHUHDUHVHSDUDWHO\LGHQWLILDEOHFDVKIORZVFDVKJHQHUDWLQJXQLWV$VDUHVXOW
VRPHDVVHWVDUHWHVWHGLQGLYLGXDOO\IRULPSDLUPHQWDQGVRPHDUHWHVWHGDW
FDVKJHQHUDWLQJXQLWOHYHO
$QLPSDLUPHQWORVVLVUHFRJQL]HGIRUWKHDPRXQWE\ZKLFKWKHDVVHWRU
FDVKJHQHUDWLQJXQLW·VFDUU\LQJDPRXQWH[FHHGVLWVUHFRYHUDEOHDPRXQWZKLFKLVWKH
KLJKHURIIDLUYDOXHUHIOHFWLQJPDUNHWFRQGLWLRQVOHVVFRVWVWRVHOODQGYDOXHLQXVH,Q
GHWHUPLQLQJYDOXHLQXVHPDQDJHPHQWHVWLPDWHVWKHH[SHFWHGIXWXUHFDVKIORZVIURP
HDFKFDVKJHQHUDWLQJXQLWDQGGHWHUPLQHVWKHVXLWDEOHLQWHUHVWUDWHLQRUGHUWR
FDOFXODWHWKHSUHVHQWYDOXHRIWKRVHFDVKIORZV'LVFRXQWIDFWRUVDUHGHWHUPLQHG
LQGLYLGXDOO\IRUHDFKFDVKJHQHUDWLQJXQLWDQGUHIOHFWPDQDJHPHQW·VDVVHVVPHQWRI
UHVSHFWLYHULVNSURILOHVVXFKDVPDUNHWDQGDVVHWVSHFLILFULVNIDFWRUV
$OODVVHWVDUHVXEVHTXHQWO\UHDVVHVVHGIRULQGLFDWLRQVWKDWDQLPSDLUPHQWORVV
SUHYLRXVO\UHFRJQL]HGPD\QRORQJHUH[LVWDQGWKHFDUU\LQJDPRXQWRIWKHDVVHWLV
DGMXVWHGWRWKHUHFRYHUDEOHDPRXQWUHVXOWLQJLQWKHUHYHUVDORIWKHLPSDLUPHQWORVV
(PSOR\HH%HQHILWV
5HWLUHPHQWEHQHILWVDUHSURYLGHGWRHPSOR\HHVWKURXJKDGHILQHGEHQHILWSODQDVZHOO
DVDGHILQHGFRQWULEXWLRQSODQ
D 3RVWHPSOR\PHQW'HILQHG%HQHILW3ODQ
$GHILQHGEHQHILWSODQLVDSRVWHPSOR\PHQWSODQWKDWGHILQHVDQDPRXQWRI
SRVWHPSOR\PHQWEHQHILWWKDWDQHPSOR\HHZLOOUHFHLYHRQUHWLUHPHQWDQGLV
GHSHQGHQWRQIDFWRUVVXFKDVDJH\HDUVRIVHUYLFHDQGVDODU\7KHOHJDO
REOLJDWLRQIRUDQ\EHQHILWVIURPWKLVNLQGRISRVWHPSOR\PHQWSODQUHPDLQV
ZLWKWKH*URXSHYHQLISODQDVVHWVIRUIXQGLQJWKHGHILQHGEHQHILWSODQKDYH
EHHQDFTXLUHG3ODQDVVHWVPD\LQFOXGHDVVHWVVSHFLILFDOO\GHVLJQDWHGWRD
ORQJWHUPEHQHILWIXQG7KH*URXS·VSRVWHPSOR\PHQWGHILQHGEHQHILWSODQ
FRYHUVDOOUHJXODUIXOOWLPHHPSOR\HHV7KHSHQVLRQSODQLVWD[TXDOLILHG
QRQFRQWULEXWRU\DQGDGPLQLVWHUHGE\DWUXVWHH
7KHOLDELOLW\UHFRJQL]HGLQWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQIRU
SRVWHPSOR\PHQWGHILQHGEHQHILWSODQVLVWKHSUHVHQWYDOXHRIWKHGHILQHG
EHQHILWREOLJDWLRQ'%2DWWKHHQGRIWKHUHSRUWLQJSHULRGOHVVWKHIDLUYDOXHRI
SODQDVVHWVWRJHWKHUZLWKDGMXVWPHQWVIRUXQUHFRJQL]HGDFWXDULDOJDLQVRUORVVHV
DQGSDVWVHUYLFHFRVWV7KH'%2LVFDOFXODWHGDQQXDOO\E\LQGHSHQGHQW
DFWXDULHVXVLQJWKHSURMHFWHGXQLWFUHGLWPHWKRG7KHSUHVHQWYDOXHRIWKH'%2
LVGHWHUPLQHGE\GLVFRXQWLQJWKHHVWLPDWHGIXWXUHFDVKRXWIORZVXVLQJLQWHUHVW
UDWHVRI]HURFRXSRQJRYHUQPHQWERQGVDVSXEOLVKHGE\3KLOLSSLQH'HDOLQJDQG
([FKDQJH&RUSRUDWLRQWKDWDUHGHQRPLQDWHGLQWKHFXUUHQF\LQZKLFKWKH
EHQHILWVZLOOEHSDLGDQGWKDWKDYHWHUPVWRPDWXULW\DSSUR[LPDWLQJWRWKHWHUPV
RIWKHUHODWHGSRVWHPSOR\PHQWOLDELOLW\
$FWXDULDOJDLQVDQGORVVHVDUHQRWUHFRJQL]HGDVDQH[SHQVHXQOHVVWKHWRWDO
XQUHFRJQL]HGJDLQRUORVVH[FHHGVRIWKHJUHDWHURIWKHREOLJDWLRQDQG
UHODWHGSODQDVVHWV7KHDPRXQWH[FHHGLQJWKLVFRUULGRULVFKDUJHGRU
FUHGLWHGWRSURILWRUORVVRYHUWKHHPSOR\HHV·H[SHFWHGDYHUDJHUHPDLQLQJ
ZRUNLQJOLYHV$FWXDULDOJDLQVDQGORVVHVZLWKLQWKHFRUULGRUDUHGLVFORVHG
VHSDUDWHO\3DVWVHUYLFHFRVWVDUHUHFRJQL]HGLPPHGLDWHO\LQSURILWRUORVV
XQOHVVWKHFKDQJHVWRWKHUHWLUHPHQWSODQDUHFRQGLWLRQDORQWKHHPSOR\HHV
UHPDLQLQJLQVHUYLFHIRUDVSHFLILHGSHULRGRIWLPHWKHYHVWLQJSHULRG,QWKLV
FDVHWKHSDVWVHUYLFHFRVWVDUHDPRUWL]HGRQDVWUDLJKWOLQHEDVLVRYHUWKHYHVWLQJ
SHULRG
E
'HILQHG%HQHILW&RQWULEXWLRQ3ODQ
7KH*URXSSD\VIL[HGPDQGDWRU\FRQWULEXWLRQVWRWKH6RFLDO6HFXULW\6\VWHP
7KH*URXSKDVQROHJDORUFRQVWUXFWLYHREOLJDWLRQVWRSD\IXUWKHUFRQWULEXWLRQV
DIWHUSD\PHQWRIWKHIL[HGFRQWULEXWLRQ7KHFRQWULEXWLRQVUHFRJQL]HGLQ
UHVSHFWRIGHILQHGFRQWULEXWLRQSODQVDUHH[SHQVHGDVWKH\IDOOGXH/LDELOLWLHV
DQGDVVHWVPD\EHUHFRJQL]HGLIXQGHUSD\PHQWRUSUHSD\PHQWKDVRFFXUUHG
F
6HSDUDWLRQ%HQHILWV
6HSDUDWLRQEHQHILWVDUHSD\DEOHZKHQHPSOR\PHQWLVWHUPLQDWHGGXHWR
UHVLJQDWLRQRUUHGXQGDQF\E\WKH*URXSEHIRUHWKHQRUPDOUHWLUHPHQWGDWH
7KH*URXSUHFRJQL]HVWHUPLQDWLRQEHQHILWVZKHQLWLVGHPRQVWUDEO\FRPPLWWHG
WRHLWKHULWHUPLQDWLQJWKHHPSOR\PHQWRIFXUUHQWHPSOR\HHVGXHWR
UHVLJQDWLRQRULLSURYLGLQJWHUPLQDWLRQEHQHILWVDVDUHVXOWRIDUHGXQGDQF\
$Q\EHQHILWVIDOOLQJGXHPRUHWKDQPRQWKVDIWHUWKHHQGRIWKHUHSRUWLQJ
SHULRGDUHGLVFRXQWHGWRSUHVHQWYDOXH
G
3URILW6KDULQJDQG%RQXV3ODQV
7KH*URXSUHFRJQL]HVDOLDELOLW\DQGDQH[SHQVHIRUERQXVHVDQGSURILWVKDULQJ
EDVHGRQDIRUPXODWKDWWDNHVLQWRFRQVLGHUDWLRQWKHSURILWDWWULEXWDEOHWRWKH
*URXS·VVKDUHKROGHUVDIWHUFHUWDLQDGMXVWPHQWV7KH*URXSUHFRJQL]HVD
SURYLVLRQZKHUHLWLVFRQWUDFWXDOO\REOLJHGWRSD\WKHERQXVSODQV7KH*URXS
DOVRUHFRJQL]HVDSURYLVLRQIRUSURILWVKDULQJDQGERQXVSODQVZKHUHWKHUHLVD
SDVWSUDFWLFHWKDWKDVFUHDWHGDFRQVWUXFWLYHREOLJDWLRQ
H
&RPSHQVDWHG$EVHQFHV
&RPSHQVDWHGDEVHQFHVDUHUHFRJQL]HGIRUWKHQXPEHURISDLGOHDYHGD\V
LQFOXGLQJKROLGD\HQWLWOHPHQWUHPDLQLQJDWWKHHQGRIWKHUHSRUWLQJGDWH7KH\
DUHLQFOXGHGLQWKH$FFUXHGWD[HVDQGRWKHUH[SHQVHVXQGHUWKH2WKHU/LDELOLWLHV
DFFRXQWLQWKHVWDWHPHQWVRIILQDQFLDOSRVLWLRQDWWKHXQGLVFRXQWHGDPRXQWWKDW
WKH*URXSH[SHFWVWRSD\DVDUHVXOWRIWKHXQXVHGHQWLWOHPHQW
,QFRPH7D[HV
7D[H[SHQVHUHFRJQL]HGLQSURILWRUORVVFRPSULVHVWKHVXPRIGHIHUUHGWD[DQG
FXUUHQWWD[QRWUHFRJQL]HGLQRWKHUFRPSUHKHQVLYHLQFRPHRUGLUHFWO\LQFDSLWDO
IXQGVLIDQ\
&XUUHQWWD[DVVHWVRUOLDELOLWLHVFRPSULVHWKRVHFODLPVIURPRUREOLJDWLRQVWRILVFDO
DXWKRULWLHVUHODWLQJWRWKHFXUUHQWRUSULRUUHSRUWLQJSHULRGWKDWDUHXQFROOHFWHGRU
XQSDLGDWWKHUHSRUWLQJSHULRG7KH\DUHFDOFXODWHGXVLQJWKHWD[UDWHVDQGWD[ODZV
DSSOLFDEOHWRWKHILVFDOSHULRGVWRZKLFKWKH\UHODWHEDVHGRQWKHWD[DEOHSURILWIRUWKH
\HDU$OOFKDQJHVWRFXUUHQWWD[DVVHWVRUOLDELOLWLHVDUHUHFRJQL]HGDVDFRPSRQHQWRI
WD[H[SHQVHLQSURILWRUORVV
'HIHUUHGWD[LVDFFRXQWHGIRUXVLQJWKHOLDELOLW\PHWKRGRQDOOWHPSRUDU\GLIIHUHQFHV
DWWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQGDWHEHWZHHQWKHWD[EDVHVRIDVVHWVDQG
OLDELOLWLHVDQGWKHLUFDUU\LQJDPRXQWVIRUILQDQFLDOUHSRUWLQJSXUSRVHV8QGHUWKH
OLDELOLW\PHWKRGZLWKFHUWDLQH[FHSWLRQVGHIHUUHGWD[OLDELOLWLHVDUHUHFRJQL]HGIRUDOO
WD[DEOHWHPSRUDU\GLIIHUHQFHVDQGGHIHUUHGWD[DVVHWVDUHUHFRJQL]HGIRUDOOGHGXFWLEOH
WHPSRUDU\GLIIHUHQFHVDQGWKHFDUU\IRUZDUGRIXQXVHGWD[ORVVHVDQGXQXVHGWD[
FUHGLWVWRWKHH[WHQWWKDWLWLVSUREDEOHWKDWWD[DEOHSURILWZLOOEHDYDLODEOHDJDLQVW
ZKLFKWKHGHIHUUHGWD[DVVHWVFDQEHXWLOL]HG8QUHFRJQL]HGGHIHUUHGWD[DVVHWVDUH
UHDVVHVVHGDWWKHHQGRIHDFKUHSRUWLQJSHULRGDQGDUHUHFRJQL]HGWRWKHH[WHQWWKDWLW
KDVEHFRPHSUREDEOHWKDWIXWXUHWD[DEOHSURILWZLOOEHDYDLODEOHWRDOORZVXFKGHIHUUHG
WD[DVVHWVWREHUHFRYHUHG
7KHFDUU\LQJDPRXQWRIGHIHUUHGWD[DVVHWVLVUHYLHZHGDWWKHHQGRIHDFKUHSRUWLQJ
SHULRGDQGUHGXFHGWRWKHH[WHQWWKDWLWLVSUREDEOHWKDWVXIILFLHQWWD[DEOHSURILWZLOO
EHDYDLODEOHWRDOORZDOORUSDUWRIWKHGHIHUUHGWD[DVVHWVWREHXWLOL]HG
'HIHUUHGWD[DVVHWVDQGOLDELOLWLHVDUHPHDVXUHGDWWKHWD[UDWHVWKDWDUHH[SHFWHGWR
DSSO\WRWKHSHULRGZKHQWKHDVVHWLVUHDOL]HGRUWKHOLDELOLW\LVVHWWOHGEDVHGRQWD[
UDWHVDQGWD[ODZVWKDWKDYHEHHQHQDFWHGRUVXEVWDQWLYHO\HQDFWHGDWWKHHQGRIWKH
UHSRUWLQJSHULRG
0RVWFKDQJHVLQGHIHUUHGWD[DVVHWVRUOLDELOLWLHVDUHUHFRJQL]HGDVDFRPSRQHQWRIWD[
H[SHQVHLQSURILWRUORVV2QO\FKDQJHVLQGHIHUUHGWD[DVVHWVRUOLDELOLWLHVWKDWUHODWH
WRLWHPVUHFRJQL]HGLQRWKHUFRPSUHKHQVLYHLQFRPHRUGLUHFWO\LQFDSLWDOIXQGVDUH
UHFRJQL]HGLQRWKHUFRPSUHKHQVLYHLQFRPHRUGLUHFWO\LQFDSLWDOIXQGV
5HODWHG3DUW\5HODWLRQVKLSVDQG7UDQVDFWLRQV
5HODWHGSDUW\WUDQVDFWLRQVDUHWUDQVIHUVRIUHVRXUFHVVHUYLFHVRUREOLJDWLRQVEHWZHHQ
WKH*URXSDQGWKHLUUHODWHGSDUWLHVUHJDUGOHVVZKHWKHUDSULFHLVFKDUJHG
3DUWLHVDUHFRQVLGHUHGWREHUHODWHGLIRQHSDUW\KDVWKHDELOLW\WRFRQWUROWKHRWKHU
SDUW\RUH[HUFLVHVLJQLILFDQWLQIOXHQFHRYHUWKHRWKHUSDUW\LQPDNLQJILQDQFLDODQG
RSHUDWLQJGHFLVLRQV7KHVHSDUWLHVLQFOXGHDLQGLYLGXDOVRZQLQJGLUHFWO\RU
LQGLUHFWO\WKURXJKRQHRUPRUHLQWHUPHGLDULHVFRQWURORUDUHFRQWUROOHGE\RUXQGHU
FRPPRQFRQWUROZLWKWKH%DQNEDVVRFLDWHVFLQGLYLGXDOVRZQLQJGLUHFWO\RU
LQGLUHFWO\DQLQWHUHVWLQWKHYRWLQJSRZHURIWKH%DQNWKDWJLYHVWKHPVLJQLILFDQW
LQIOXHQFHRYHUWKH%DQNDQGFORVHPHPEHUVRIWKHIDPLO\RIDQ\VXFKLQGLYLGXDODQG
GWKH*URXS·VUHWLUHPHQWSODQ
,QFRQVLGHULQJHDFKSRVVLEOHUHODWHGSDUW\UHODWLRQVKLSDWWHQWLRQLVGLUHFWHGWRWKH
VXEVWDQFHRIWKHUHODWLRQVKLSDQGQRWPHUHO\RQWKHOHJDOIRUP
(DUQLQJV3HU6KDUH
%DVLFHDUQLQJVSHUVKDUHDUHGHWHUPLQHGE\GLYLGLQJWKHQHWLQFRPHIRUWKH\HDU
DWWULEXWDEOHWRFRPPRQVKDUHKROGHUVE\WKHZHLJKWHGDYHUDJHQXPEHURIFRPPRQ
VKDUHVRXWVWDQGLQJGXULQJWKH\HDUDIWHUUHWURDFWLYHHIIHFWWRDQ\VWRFNGLYLGHQGV
GHFODUHGLQWKHFXUUHQW\HDU
'LOXWHGHDUQLQJVSHUFRPPRQVKDUHDUHDOVRFRPSXWHGE\GLYLGLQJQHWLQFRPHE\WKH
ZHLJKWHGDYHUDJHQXPEHURIFRPPRQVKDUHVVXEVFULEHGDQGRXWVWDQGLQJDWWKHHQG
RIWKHUHSRUWLQJSHULRG+RZHYHUQHWLQFRPHDWWULEXWDEOHWRFRPPRQVKDUHVDQGWKH
ZHLJKWHGDYHUDJHQXPEHURIFRPPRQVKDUHVVXEVFULEHGDQGRXWVWDQGLQJDUHDGMXVWHG
WRUHIOHFWWKHHIIHFWVRIDQ\SRWHQWLDOO\GLOXWLYHSUHIHUUHGVKDUHVVWRFNRSWLRQVDQG
ZDUUDQWV$VRI'HFHPEHUDQGWKH*URXSKDVQRRXWVWDQGLQJ
SRWHQWLDOO\GLOXWLYHVHFXULWLHVKHQFHWKHEDVLFHDUQLQJVSHUVKDUHLVHTXDOWRGLOXWHG
HDUQLQJVSHUVKDUH
7UXVW$FWLYLWLHV
7KH*URXSFRPPRQO\DFWVDVWUXVWHHDQGLQRWKHUILGXFLDU\FDSDFLWLHVWKDWUHVXOWLQ
WKHKROGLQJRUSODFLQJRIDVVHWVRQEHKDOIRILQGLYLGXDOVWUXVWVUHWLUHPHQWEHQHILW
SODQVDQGRWKHULQVWLWXWLRQV7KHVHDVVHWVDQGWKHUHODWHGLQFRPHDULVLQJWKHUHRQDUH
H[FOXGHGIURPWKHVHILQDQFLDOVWDWHPHQWVDVWKH\DUHQRWUHVRXUFHVRIWKH*URXS
6HJPHQW5HSRUWLQJ
2SHUDWLQJVHJPHQWVDUHUHSRUWHGLQDPDQQHUFRQVLVWHQWZLWKWKHLQWHUQDOUHSRUWLQJ
SURYLGHGWRWKH*URXS·VFKLHIRSHUDWLQJGHFLVLRQPDNHU7KHFKLHIRSHUDWLQJ
GHFLVLRQPDNHULVUHVSRQVLEOHIRUDOORFDWLQJUHVRXUFHVDQGDVVHVVLQJSHUIRUPDQFHRI
WKHRSHUDWLQJVHJPHQWV
,QLGHQWLI\LQJLWVRSHUDWLQJVHJPHQWVPDQDJHPHQWJHQHUDOO\IROORZVWKH*URXS·V
SURGXFWVDQGVHUYLFHVDVGLVFORVHGLQ1RWHZKLFKUHSUHVHQWWKHPDLQSURGXFWVDQG
VHUYLFHVSURYLGHGE\WKH*URXS
(DFKRIWKHVHRSHUDWLQJVHJPHQWVLVPDQDJHGVHSDUDWHO\DVHDFKRIWKHVHVHUYLFHV
UHTXLUHGLIIHUHQWWHFKQRORJLHVDQGRWKHUUHVRXUFHVDVZHOODVPDUNHWLQJDSSURDFKHV
$OOLQWHUVHJPHQWWUDQVIHUVDUHFDUULHGRXWDWDUP·VOHQJWKSULFHV
7KHPHDVXUHPHQWSROLFLHVWKH*URXSXVHVIRUVHJPHQWUHSRUWLQJXQGHU3)56
2SHUDWLQJ6HJPHQWVDUHWKHVDPHDVWKRVHXVHGLQLWVILQDQFLDOVWDWHPHQWVH[FHSWWKDW
WKHIROORZLQJDUHQRWLQFOXGHGLQDUULYLQJDWWKHRSHUDWLQJSURILWRIWKHRSHUDWLQJ
VHJPHQWVLIDQ\
H[SHQVHVUHODWLQJWRVKDUHEDVHGSD\PHQWV
UHVHDUFKFRVWVUHODWLQJWRQHZEXVLQHVVDFWLYLWLHVDQG
UHYHQXHFRVWVDQGIDLUYDOXHJDLQVIURPLQYHVWPHQWSURSHUWLHV
,QDGGLWLRQFRUSRUDWHDVVHWVZKLFKDUHQRWGLUHFWO\DWWULEXWDEOHWRWKHEXVLQHVV
DFWLYLWLHVRIDQ\RSHUDWLQJVHJPHQWDUHQRWDOORFDWHGWRDSDUWLFXODUVHJPHQW
7KHUHKDYHEHHQQRFKDQJHVIURPSULRUSHULRGVLQWKHPHDVXUHPHQWPHWKRGVXVHGWR
GHWHUPLQHUHSRUWHGVHJPHQWSURILWRUORVV
7KH*URXS·VRSHUDWLRQVDUHRUJDQL]HGDFFRUGLQJWRWKHQDWXUHRIWKHSURGXFWVDQG
VHUYLFHVSURYLGHG)LQDQFLDOLQIRUPDWLRQRQEXVLQHVVVHJPHQWVLVSUHVHQWHGLQ
1RWH
(YHQWV$IWHUWKH(QGRIWKH5HSRUWLQJ3HULRG
$Q\SRVW\HDUHQGHYHQWWKDWSURYLGHVDGGLWLRQDOLQIRUPDWLRQDERXWWKH*URXS·V
SRVLWLRQDWWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQGDWHDGMXVWLQJHYHQWLVUHIOHFWHGLQWKH
ILQDQFLDOVWDWHPHQWV3RVW\HDUHQGHYHQWVWKDWDUHQRWDGMXVWLQJHYHQWVLIDQ\DUH
GLVFORVHGZKHQPDWHULDOWRWKHILQDQFLDOVWDWHPHQWV
6XPPDU\RI$FFRXQWLQJ-XGJPHQWVDQG(VWLPDWHV
6800$5<2)$&&2817,1*-8'*0(176$1'(67,0$7(6
7KH*URXS·VILQDQFLDOVWDWHPHQWVSUHSDUHGLQDFFRUGDQFHZLWK)563IRUEDQNV
UHTXLUHPDQDJHPHQWWRPDNHMXGJPHQWVDQGHVWLPDWHVWKDWDIIHFWWKHDPRXQWV
UHSRUWHGLQWKHILQDQFLDOVWDWHPHQWVDQGUHODWHGQRWHV-XGJPHQWVDQGHVWLPDWHVDUH
FRQWLQXDOO\HYDOXDWHGDQGDUHEDVHGRQKLVWRULFDOH[SHULHQFHDQGRWKHUIDFWRUV
LQFOXGLQJH[SHFWDWLRQVRIIXWXUHHYHQWVWKDWDUHEHOLHYHGWREHUHDVRQDEOHXQGHUWKH
FLUFXPVWDQFHV$FWXDOUHVXOWVPD\XOWLPDWHO\GLIIHUIURPWKHVHHVWLPDWHV
&ULWLFDO0DQDJHPHQW-XGJPHQWVLQ$SSO\LQJ$FFRXQWLQJ3ROLFLHV
,QWKHSURFHVVRIDSSO\LQJWKH*URXS·VDFFRXQWLQJSROLFLHVPDQDJHPHQWKDVPDGH
WKHIROORZLQJMXGJPHQWVDSDUWIURPWKRVHLQYROYLQJHVWLPDWLRQZKLFKKDYHWKHPRVW
VLJQLILFDQWHIIHFWRQWKHDPRXQWVUHFRJQL]HGLQWKHILQDQFLDOVWDWHPHQWV
D
'HWHUPLQLQJ)XQFWLRQDODQG3UHVHQWDWLRQ&XUUHQF\
7KH*URXSKDVGHWHUPLQHGWKDWLWVIXQFWLRQDODQGSUHVHQWDWLRQFXUUHQF\LVWKH
3KLOLSSLQHSHVRZKLFKLVWKHFXUUHQF\RIWKHSULPDU\HQYLURQPHQWLQZKLFKWKH
*URXSRSHUDWHV
E
7DLQWLQJRI+70,QYHVWPHQWV
([FHSWIRUWKHH[HPSWLRQIURPWKHWDLQWLQJSURYLVLRQRI3$6DVDOORZHGE\
WKH%63DQGWKH6(&LQDVGLVFORVHGLQ1RWHWKH*URXSIROORZVWKH
JXLGDQFHRI3$6LQFODVVLI\LQJQRQGHULYDWLYHILQDQFLDODVVHWVZLWKIL[HGRU
GHWHUPLQDEOHSD\PHQWVDQGIL[HGPDWXULW\DV+70LQYHVWPHQWV7KLV
FODVVLILFDWLRQUHTXLUHVVLJQLILFDQWMXGJPHQW,QPDNLQJWKLVMXGJPHQWWKH
*URXSHYDOXDWHVLWVLQWHQWLRQDQGDELOLW\WRKROGVXFKLQYHVWPHQWVXSWR
PDWXULW\,IWKH*URXSIDLOVWRNHHSWKHVHLQYHVWPHQWVWRPDWXULW\RWKHUWKDQ
IRUVSHFLILFFLUFXPVWDQFHVDVDOORZHGXQGHUWKHVWDQGDUGVLWZLOOEHUHTXLUHGWR
UHFODVVLI\WKHZKROHFODVVDV$)6ILQDQFLDODVVHWV,QVXFKDFDVHWKH
LQYHVWPHQWVZRXOGWKHUHIRUHEHPHDVXUHGDWIDLUYDOXHQRWDWDPRUWL]HGFRVW
,QWKH%DQNGLVSRVHGRIPRUHWKDQDQLQVLJQLILFDQWDPRXQWRILWV+70
LQYHVWPHQWV$FFRUGLQJO\WKHUHVWRIWKH+70SRUWIROLRZDVUHFODVVLILHGWR
$)6ILQDQFLDODVVHWVLQDFFRUGDQFHZLWK3$6VHH1RWHVDQG
F
(YDOXDWLQJ,PSDLUPHQWRI$)6)LQDQFLDO$VVHWV
7KHGHWHUPLQDWLRQZKHQDQLQYHVWPHQWLVRWKHUWKDQWHPSRUDULO\LPSDLUHG
UHTXLUHVVLJQLILFDQWMXGJPHQW,QPDNLQJWKLVMXGJPHQWWKH*URXSHYDOXDWHV
DPRQJRWKHUIDFWRUVWKHGXUDWLRQDQGH[WHQWWRZKLFKWKHIDLUYDOXHRIDQ
LQYHVWPHQWLVOHVVWKDQLWVFRVWDQGWKHILQDQFLDOKHDOWKRIDQGQHDUWHUP
EXVLQHVVRXWORRNIRUWKHLQYHVWHHLQFOXGLQJIDFWRUVVXFKDVLQGXVWU\DQGVHFWRU
SHUIRUPDQFHFKDQJHVLQWHFKQRORJ\DQGRSHUDWLRQDODQGILQDQFLQJFDVKIORZV
7KH*URXSDQG3DUHQW&RPSDQ\UHFRJQL]HGLPSDLUPHQWORVVHVRQ
$)6ILQDQFLDODVVHWVLQSURILWRUORVVDPRXQWLQJWR3LQDQGQLOLQ
DQG)XWXUHFKDQJHVLQWKRVHLQIRUPDWLRQDQGFLUFXPVWDQFHPLJKW
VLJQLILFDQWO\DIIHFWWKHFDUU\LQJDPRXQWRIWKHDVVHWV
6LJQLILFDQW$FFRXQWLQJ-XGJPHQWVDQG(VWLPDWHV
G
'LVWLQFWLRQ%HWZHHQ,QYHVWPHQW3URSHUWLHVDQG2ZQHURFFXSLHG3URSHUWLHV
7KH*URXSGHWHUPLQHVZKHWKHUDSURSHUW\TXDOLILHVDVDQLQYHVWPHQWSURSHUW\
,QPDNLQJLWVMXGJPHQWWKH*URXSFRQVLGHUVZKHWKHUWKHSURSHUW\JHQHUDWHG
FDVKIORZVODUJHO\LQGHSHQGHQWRIWKHRWKHUDVVHWVKHOGE\DQHQWLW\
2ZQHURFFXSLHGSURSHUWLHVJHQHUDWHFDVKIORZVWKDWDUHDWWULEXWDEOHQRWRQO\WR
SURSHUW\EXWDOVRWRRWKHUDVVHWVXVHGLQWKHSURGXFWLRQRUVXSSO\SURFHVV
6RPHSURSHUWLHVFRPSULVHDSRUWLRQWKDWLVKHOGWRHDUQUHQWDORUIRUFDSLWDO
DSSUHFLDWLRQDQGDQRWKHUSRUWLRQWKDWLVKHOGIRUXVHLQWKHSURGXFWLRQDQG
VXSSO\RIJRRGVDQGVHUYLFHVRUIRUDGPLQLVWUDWLYHSXUSRVHV,IWKHVHSRUWLRQV
FDQEHVROGVHSDUDWHO\RUOHDVHGRXWVHSDUDWHO\XQGHUILQDQFHOHDVHWKH*URXS
DFFRXQWVIRUWKHSRUWLRQVVHSDUDWHO\,IWKHSRUWLRQVFDQQRWEHVROGVHSDUDWHO\
WKHSURSHUW\LVDFFRXQWHGIRUDVLQYHVWPHQWSURSHUW\RQO\LIDQLQVLJQLILFDQW
SRUWLRQLVKHOGIRUXVHLQWKHSURGXFWLRQRUVXSSO\RIJRRGVRUVHUYLFHVRUIRU
DGPLQLVWUDWLYHSXUSRVHV
-XGJPHQWLVDSSOLHGLQGHWHUPLQLQJZKHWKHUDQFLOODU\VHUYLFHVDUHVRVLJQLILFDQW
WKDWDSURSHUW\GRHVQRWTXDOLI\DVLQYHVWPHQWSURSHUW\7KH*URXSFRQVLGHUV
HDFKSURSHUW\VHSDUDWHO\LQPDNLQJLWVMXGJPHQW
H
'LVWLQFWLRQ%HWZHHQ2SHUDWLQJDQG)LQDQFH/HDVHV
7KH*URXSKDVHQWHUHGLQWRYDULRXVOHDVHDJUHHPHQWVDVHLWKHUDOHVVRURUOHVVHH
&ULWLFDOMXGJPHQWZDVH[HUFLVHGE\PDQDJHPHQWWRGLVWLQJXLVKHDFKOHDVH
DJUHHPHQWDVHLWKHUDQRSHUDWLQJRUILQDQFHOHDVHE\ORRNLQJDWWKHWUDQVIHURU
UHWHQWLRQRIVLJQLILFDQWULVNDQGUHZDUGVRIRZQHUVKLSRIWKHSURSHUWLHVFRYHUHG
E\WKHDJUHHPHQWV)DLOXUHWRPDNHWKHULJKWMXGJPHQWZLOOUHVXOWLQHLWKHU
RYHUVWDWHPHQWRUXQGHUVWDWHPHQWRIUHVRXUFHVDQGOLDELOLWLHV
I
&ODVVLILFDWLRQRI$FTXLUHG3URSHUWLHVDQG)DLU9DOXH'HWHUPLQDWLRQRI$VVHWV+HOGIRU
6DOHDQG,QYHVWPHQW3URSHUWLHV
7KH*URXSFODVVLILHVLWVDFTXLUHGSURSHUWLHVDV%DQN3UHPLVHV)XUQLWXUH
)L[WXUHVDQG(TXLSPHQWLIXVHGLQRSHUDWLRQVDV$VVHWV+HOGIRUVDOHLIWKH
*URXSH[SHFWVWKDWWKHSURSHUWLHVZLOOEHUHFRYHUHGWKURXJKVDOHZLWKLQRQH
\HDUIURPWKHGDWHRIFODVVLILFDWLRQUDWKHUWKDQXVHDV,QYHVWPHQW3URSHUWLHVLI
WKH*URXSLQWHQGVWRKROGWKHSURSHUWLHVIRUFDSLWDODSSUHFLDWLRQRUDV)LQDQFLDO
$VVHWVLQDFFRUGDQFHZLWK3$6$WLQLWLDOUHFRJQLWLRQWKH*URXSGHWHUPLQHV
WKHIDLUYDOXHRIDFTXLUHGSURSHUWLHVEDVHGRQYDOXDWLRQVSHUIRUPHGE\
LQGHSHQGHQWDSSUDLVDOFRPSDQLHVDFFUHGLWHGE\WKH%637KHDSSUDLVHGYDOXHLV
GHWHUPLQHGEDVHGRQWKHFXUUHQWHFRQRPLFDQGPDUNHWFRQGLWLRQVDVZHOODVWKH
SK\VLFDOFRQGLWLRQRIWKHSURSHUW\
J
5HFRJQLWLRQRI3URYLVLRQVDQG&RQWLQJHQFLHV
-XGJPHQWLVH[HUFLVHGE\PDQDJHPHQWWRGLVWLQJXLVKEHWZHHQSURYLVLRQVDQG
FRQWLQJHQFLHV3ROLFLHVRQUHFRJQLWLRQDQGGLVFORVXUHVRISURYLVLRQVDQGRI
FRQWLQJHQFLHVDUHGLVFXVVHGLQ1RWHVDQGDQGUHOHYDQWGLVFORVXUHVDUH
SUHVHQWHGLQ1RWH
.H\6RXUFHVRI(VWLPDWLRQ8QFHUWDLQW\
7KHIROORZLQJDUHWKHNH\DVVXPSWLRQVFRQFHUQLQJWKHIXWXUHDQGRWKHUNH\VRXUFHV
RIHVWLPDWLRQXQFHUWDLQW\DWWKHHQGRIWKHUHSRUWLQJSHULRGWKDWKDYHDVLJQLILFDQW
ULVNRIFDXVLQJDPDWHULDODGMXVWPHQWWRWKHFDUU\LQJDPRXQWVRIDVVHWVDQGOLDELOLWLHV
ZLWKLQWKHQH[WILQDQFLDO\HDU
D (VWLPDWLQJ,PSDLUPHQW/RVVHVRQ2WKHU)LQDQFLDO$VVHWV/RDQVDQG2WKHU5HFHLYDEOHV
DQG+70,QYHVWPHQWV
7KH*URXSUHYLHZVLWVORDQDQGRWKHUUHFHLYDEOHVDQG+70LQYHVWPHQWV
SRUWIROLRVWRDVVHVVLPSDLUPHQWDWOHDVWRQDQDQQXDOEDVLV,QGHWHUPLQLQJ
ZKHWKHUDQLPSDLUPHQWORVVVKRXOGEHUHFRUGHGLQSURILWRUORVVWKH*URXS
PDNHVMXGJPHQWVDVWRZKHWKHUWKHUHLVDQ\REVHUYDEOHGDWDLQGLFDWLQJWKDW
WKHUHLVDPHDVXUDEOHGHFUHDVHLQWKHHVWLPDWHGIXWXUHFDVKIORZVIURPWKH
SRUWIROLREHIRUHWKHGHFUHDVHFDQEHLGHQWLILHGZLWKDQLQGLYLGXDOLWHPLQWKDW
SRUWIROLR7KLVHYLGHQFHPD\LQFOXGHREVHUYDEOHGDWDLQGLFDWLQJWKDWWKHUHKDV
EHHQDQDGYHUVHFKDQJHLQWKHSD\PHQWVWDWXVRIERUURZHUVRULVVXHUVLQD
JURXSRUQDWLRQDORUORFDOHFRQRPLFFRQGLWLRQVWKDWFRUUHODWHZLWKGHIDXOWVRQ
DVVHWVLQWKHJURXS0DQDJHPHQWXVHVHVWLPDWHVEDVHGRQKLVWRULFDOORVV
H[SHULHQFHIRUDVVHWVZLWKFUHGLWULVNFKDUDFWHULVWLFVDQGREMHFWLYHHYLGHQFHRI
LPSDLUPHQWVLPLODUWRWKRVHLQWKHSRUWIROLRZKHQVFKHGXOLQJLWVIXWXUHFDVK
IORZV7KHPHWKRGRORJ\DQGDVVXPSWLRQVXVHGIRUHVWLPDWLQJERWKWKHDPRXQW
DQGWLPLQJRIIXWXUHFDVKIORZVDUHUHYLHZHGUHJXODUO\WRUHGXFHDQ\GLIIHUHQFHV
EHWZHHQORVVHVWLPDWHVDQGDFWXDOORVVH[SHULHQFH
,PSDLUPHQWORVVHVUHFRJQL]HGE\WKH*URXSDQG3DUHQW&RPSDQ\RQLWVORDQV
DQGRWKHUUHFHLYDEOHVDUHGLVFXVVHGLQ1RWHVDQG
E )DLU9DOXH0HDVXUHPHQWRI)LQDQFLDO$VVHWVDQG/LDELOLWLHV
0DQDJHPHQWDSSOLHVYDOXDWLRQWHFKQLTXHVWRGHWHUPLQHWKHIDLUYDOXHRI
ILQDQFLDOLQVWUXPHQWVZKHUHDFWLYHPDUNHWTXRWHVDUHQRWDYDLODEOH7KLV
UHTXLUHVPDQDJHPHQWWRGHYHORSHVWLPDWHVDQGDVVXPSWLRQVEDVHGRQPDUNHW
LQSXWVXVLQJREVHUYDEOHGDWDWKDWPDUNHWSDUWLFLSDQWVZRXOGXVHLQSULFLQJWKH
LQVWUXPHQW
:KHUHVXFKGDWDLVQRWREVHUYDEOHPDQDJHPHQWXVHVLWVEHVWHVWLPDWH
(VWLPDWHGIDLUYDOXHVRIILQDQFLDOLQVWUXPHQWVPD\YDU\IURPWKHDFWXDOSULFHV
WKDWZRXOGEHDFKLHYHGLQDQDUP·VOHQJWKWUDQVDFWLRQDWWKHUHSRUWLQJGDWH
,QDFFRUGDQFHZLWKWKLV3)56)LQDQFLDO,QVWUXPHQWV'LVFORVXUHVILQDQFLDODVVHWV
DQGOLDELOLWLHVPHDVXUHGDWIDLUYDOXHLQWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQDUH
FDWHJRUL]HGLQDFFRUGDQFHZLWKWKHIDLUYDOXHKLHUDUFK\7KLVKLHUDUFK\JURXSV
ILQDQFLDODVVHWVDQGOLDELOLWLHVLQWRWKUHHOHYHOVEDVHGRQWKHVLJQLILFDQFHRILQSXWV
XVHGLQPHDVXULQJWKHIDLUYDOXHRIWKHILQDQFLDODVVHWVDQGOLDELOLWLHV7KHIDLU
YDOXHKLHUDUFK\KDVWKHIROORZLQJOHYHOV
x /HYHOTXRWHGSULFHVXQDGMXVWHGLQDFWLYHPDUNHWVIRULGHQWLFDODVVHWVRU
OLDELOLWLHV
x /HYHOLQSXWVRWKHUWKDQTXRWHGSULFHVLQFOXGHGZLWKLQ/HYHOWKDWDUH
REVHUYDEOHIRUWKHUHVRXUFHRUOLDELOLW\HLWKHUGLUHFWO\LHDVSULFHVRU
LQGLUHFWO\LHGHULYHGIURPSULFHVDQG
x /HYHOLQSXWVIRUWKHDVVHWRUOLDELOLW\WKDWDUHQRWEDVHGRQREVHUYDEOH
PDUNHWGDWDXQREVHUYDEOHLQSXWV
7KHOHYHOZLWKLQZKLFKWKHILQDQFLDODVVHWRUOLDELOLW\LVFODVVLILHGLVGHWHUPLQHG
EDVHGRQWKHORZHVWOHYHORIVLJQLILFDQWLQSXWWRWKHIDLUYDOXHPHDVXUHPHQW
7KHILQDQFLDODVVHWVDQGOLDELOLWLHVPHDVXUHGDWIDLUYDOXHLQWKHVWDWHPHQWVRI
ILQDQFLDOSRVLWLRQDVRI'HFHPEHUDQGDUHJURXSHGLQWRWKHIDLU
YDOXHKLHUDUFK\DVSUHVHQWHGLQWKHIROORZLQJWDEOHDPRXQWVLQPLOOLRQVRI
3KLOLSSLQHSHVRV
*URXS
5HVRXUFHV
)LQDQFLDODVVHWVDW)973/ 'HULYDWLYHDVVHWV
'HEWVHFXULWLHV
$)6ILQDQFLDODVVHWV
*RYHUQPHQWERQGV
2WKHUGHEWVHFXULWLHV
)L[HGUDWHWUHDVXU\QRWHV 3ULYDWHERQGVDQG
FRPPHUFLDOSDSHUV (TXLW\VHFXULWLHV
/LDELOLWLHV
'HULYDWLYHVZLWKQHJDWLYH IDLUYDOXHV
1RWHV
1RWHV
5HVRXUFHV
'HEWVHFXULWLHV
(TXLW\VHFXULWLHV
$)6ILQDQFLDODVVHWV
*RYHUQPHQWERQGV
2WKHUGHEWVHFXULWLHV
/LDELOLWLHV
/HYHO 'HFHPEHU
/HYHO /HYHO 3
3
7RWDO
3
3
3
3
3
3
3
3
3
3
/HYHO 'HFHPEHU
/HYHO /HYHO 3
3
7RWDO
3
3
3
3
3
3
3
3
3
3
3DUHQW
1RWHV
5HVRXUFHV
'HEWVHFXULWLHV
$)6ILQDQFLDODVVHWV
*RYHUQPHQWERQGV
2WKHUGHEWVHFXULWLHV
/LDELOLWLHV
1RWHV
5HVRXUFHV
'HEWVHFXULWLHV
$)6ILQDQFLDODVVHWV
*RYHUQPHQWERQGV
2WKHUGHEWVHFXULWLHV
/LDELOLWLHV
/HYHO 'HFHPEHU
/HYHO /HYHO 3
3
7RWDO
3
3
3
3
3
3
3
3
3
3
'HFHPEHU
/HYHO /HYHO 3
3
3
3
3
3
3
3
3
3
3
3
7RWDO
/HYHO 7KHUHZHUHQRWUDQVIHUVEHWZHHQRWKHUOHYHOVRIKLHUDUFK\H[FHSWLQZKHQ
FHUWDLQXQTXRWHGHTXLW\VHFXULWLHVFODVVLILHGDV$)6ILQDQFLDODVVHWVZLWKFRVW
DPRXQWLQJWR3DVRI'HFHPEHUDQGSUHYLRXVO\QRWUHIOHFWHGLQ
WKHIDLUYDOXHKLHUDUFK\PHDVXUHPHQWZHUHDOUHDG\LQFOXGHGLQWKH
KLHUDUFK\XVLQJ/HYHOPHDVXUHPHQW7KHIDLUYDOXHRIVXFKLQYHVWPHQWV
DPRXQWHGWR3DVRIWKHGDWHRIPHDVXUHPHQW$OVRLQ6DQ
0LJXHO&RUSRUDWLRQ6HULHV,3UHIHUUHG6KDUHVEHFDPHOLVWHG&RQVHTXHQWO\
WUDQVIHUEHWZHHQOHYHOVRIKLHUDUFK\IURP/HYHOWR/HYHODPRXQWLQJWR
3ZDVPDGHLQ7KHUHZHUHQRJDLQVRUORVVHVUHFRJQL]HGLQSURILWRU
ORVVIRU/HYHOLQVWUXPHQWV
8QTXRWHGHTXLW\VHFXULWLHVFRQVLVWRISUHIHUUHGVKDUHVDQGFRPPRQVKDUHVRI
YDULRXVXQOLVWHGORFDOFRPSDQLHV
7KHIROORZLQJWDEOHVXPPDUL]HVWKHFDUU\LQJDPRXQWVDQGIDLUYDOXHVRIWKRVH
ILQDQFLDOUHVRXUFHVDQGOLDELOLWLHVQRWSUHVHQWHGLQWKHVWDWHPHQWRIILQDQFLDO
SRVLWLRQDWWKHLUIDLUYDOXHV
*URXS
3DUHQW
&DUU\LQJ )DLU &DUU\LQJ )DLU
$PRXQW 9DOXH $PRXQW 9DOXH
)LQDQFLDO$VVHWV
&DVKDQGRWKHUFDVKLWHPV 3 3 3 3 'XHIURP%63
'XHIURPRWKHUEDQNV ,QWHUEDQNORDQVUHFHLYDEOH /RDQVDQGRWKHUUHFHLYDEOHV )LQDQFLDO/LDELOLWLHV
'HSRVLWOLDELOLWLHV
%LOOVSD\DEOH
1RWHVSD\DEOH
0DQDJHU·VFKHFNV
$FFUXHGLQWHUHVWSD\DEOH 'RPHVWLFELOOVSXUFKDVHG²
FRQWUD
'XHWR7UHDVXUHURIWKH
3KLOLSSLQHV
$FFRXQWVSD\DEOH
3D\PHQWRUGHUVSD\DEOH *URXS
3DUHQW
&DUU\LQJ )DLU &DUU\LQJ )DLU
$PRXQW 9DOXH $PRXQW 9DOXH
)LQDQFLDO$VVHWV
&DVKDQGRWKHUFDVKLWHPV 3 3 3 3 'XHIURP%63
'XHIURPRWKHUEDQNV ,QWHUEDQNORDQVUHFHLYDEOH /RDQVDQGRWKHUUHFHLYDEOHV )LQDQFLDO/LDELOLWLHV
'HSRVLWOLDELOLWLHV
%LOOVSD\DEOH
1RWHVSD\DEOH
0DQDJHU·VFKHFNV
$FFUXHGLQWHUHVWSD\DEOH 'RPHVWLFELOOVSXUFKDVHG²
FRQWUD
'XHWR7UHDVXUHURIWKH
3KLOLSSLQHV
$FFRXQWVSD\DEOH
3D\PHQWRUGHUVSD\DEOH 6LJQLILFDQW$FFRXQWLQJ-XGJPHQWVDQG(VWLPDWHV
L 'XHIURP%63DQG2WKHU%DQNV
'XHIURP%63SHUWDLQVWRGHSRVLWVPDGHE\WKH*URXSWR%63IRU
FOHDULQJDQGUHVHUYHUHTXLUHPHQWV'XHIURPRWKHUEDQNVLQFOXGH
LQWHUEDQNSODFHPHQWVDQGLWHPVLQWKHFRXUVHRIFROOHFWLRQ7KHIDLUYDOXH
RIIORDWLQJUDWHSODFHPHQWVDQGRYHUQLJKWGHSRVLWVLVWKHLUFDUU\LQJ
DPRXQW7KHHVWLPDWHGIDLUYDOXHRIIL[HGLQWHUHVWEHDULQJGHSRVLWVLV
EDVHGRQGLVFRXQWHGFDVKIORZVXVLQJSUHYDLOLQJPRQH\PDUNHWLQWHUHVW
UDWHVIRUGHEWVZLWKVLPLODUFUHGLWULVNDQGUHPDLQLQJPDWXULW\ZKLFKIRU
VKRUWWHUPGHSRVLWVDSSUR[LPDWHVWKHQRPLQDOYDOXH
LL $)6)LQDQFLDO$VVHWV
7KHIDLUYDOXHRI$)6ILQDQFLDODVVHWVLVGHWHUPLQHGE\GLUHFWUHIHUHQFHWR
SXEOLVKHGSULFHTXRWHGLQDQDFWLYHPDUNHWIRUWUDGHGVHFXULWLHV2QWKH
RWKHUKDQGXQTXRWHG$)6ILQDQFLDODVVHWVDUHFDUULHGDWFRVWEHFDXVHWKH
IDLUYDOXHFDQQRWEHUHOLDEO\GHWHUPLQHGHLWKHUE\UHIHUHQFHWRVLPLODU
ILQDQFLDOLQVWUXPHQWVRUWKURXJKYDOXDWLRQWHFKQLTXH
LLL+70,QYHVWPHQWV
)DLUYDOXHIRU+70LQYHVWPHQWVLVEDVHGRQPDUNHWSULFHV:KHUHWKLV
LQIRUPDWLRQLVQRWDYDLODEOHIDLUYDOXHKDVEHHQHVWLPDWHGXVLQJTXRWHG
PDUNHWSULFHVIRUVHFXULWLHVZLWKVLPLODUFUHGLWPDWXULW\DQG\LHOG
FKDUDFWHULVWLFVRUWKURXJKYDOXDWLRQWHFKQLTXHVXVLQJGLVFRXQWHGFDVKIORZ
DQDO\VLV
LY /RDQVDQG2WKHU5HFHLYDEOHV
/RDQVDQGRWKHUUHFHLYDEOHVDUHQHWRISURYLVLRQVIRULPSDLUPHQW7KH
HVWLPDWHGIDLUYDOXHRIORDQVDQGUHFHLYDEOHVUHSUHVHQWVWKHGLVFRXQWHG
DPRXQWRIHVWLPDWHGIXWXUHFDVKIORZVH[SHFWHGWREHUHFHLYHG([SHFWHG
FDVKIORZVDUHGLVFRXQWHGDWFXUUHQWPDUNHWUDWHVWRGHWHUPLQHIDLUYDOXH
Y 'HSRVLWVDQG%RUURZLQJV
7KHHVWLPDWHGIDLUYDOXHRIGHPDQGGHSRVLWVZLWKQRVWDWHGPDWXULW\
ZKLFKLQFOXGHVQRQLQWHUHVWEHDULQJGHSRVLWVLVWKHDPRXQWUHSD\DEOHRQ
GHPDQG7KHHVWLPDWHGIDLUYDOXHRIORQJWHUPIL[HGLQWHUHVWEHDULQJ
GHSRVLWVDQGRWKHUERUURZLQJVZLWKRXWTXRWHGPDUNHWSULFHLVEDVHGRQ
GLVFRXQWHGFDVKIORZVXVLQJLQWHUHVWUDWHVIRUQHZGHEWVZLWKVLPLODU
UHPDLQLQJPDWXULW\
F
'HWHUPLQLQJ)DLU9DOXHRI'HULYDWLYHV
7KHIDLUYDOXHVRIGHULYDWLYHILQDQFLDOLQVWUXPHQWVWKDWDUHQRWTXRWHGLQDQ
DFWLYHPDUNHWDUHGHWHUPLQHGWKURXJKYDOXDWLRQWHFKQLTXHVXVLQJWKHQHWSUHVHQW
YDOXHFRPSXWDWLRQ
G
9DOXDWLRQWHFKQLTXHVDUHXVHGWRGHWHUPLQHIDLUYDOXHVZKLFKDUHYDOLGDWHGDQG
SHULRGLFDOO\UHYLHZHG7RWKHH[WHQWSUDFWLFDEOHPRGHOVXVHREVHUYDEOHGDWD
KRZHYHUDUHDVVXFKDVFUHGLWULVNERWKRZQDQGFRXQWHUSDUW\YRODWLOLWLHVDQG
FRUUHODWLRQVUHTXLUHPDQDJHPHQWWRPDNHHVWLPDWHV&KDQJHVLQDVVXPSWLRQV
FRXOGDIIHFWUHSRUWHGIDLUYDOXHRIILQDQFLDOLQVWUXPHQWV7KH*URXSXVHV
MXGJPHQWWRVHOHFWDYDULHW\RIPHWKRGVDQGPDNHDVVXPSWLRQVWKDWDUHPDLQO\
EDVHGRQPDUNHWFRQGLWLRQVH[LVWLQJDWWKHHQGRIHDFKUHSRUWLQJSHULRG
(VWLPDWLQJ8VHIXO/LYHVRI%DQN3UHPLVHV)XUQLWXUH)L[WXUHVDQG(TXLSPHQWDQG
&RPSXWHU6RIWZDUH
H
7KH*URXSHVWLPDWHVWKHXVHIXOOLYHVRIEDQNSUHPLVHVIXUQLWXUHIL[WXUHVDQG
HTXLSPHQWDQGFRPSXWHUVRIWZDUHEDVHGRQWKHSHULRGRYHUZKLFKWKHDVVHWV
DUHH[SHFWHGWREHDYDLODEOHIRUXVH7KHHVWLPDWHGXVHIXOOLYHVRIEDQN
SUHPLVHVIXUQLWXUHIL[WXUHVDQGHTXLSPHQWDQGFRPSXWHUVRIWZDUHDUHUHYLHZHG
SHULRGLFDOO\DQGDUHXSGDWHGLIH[SHFWDWLRQVGLIIHUIURPSUHYLRXVHVWLPDWHVGXH
WRSK\VLFDOZHDUDQGWHDUWHFKQLFDORUFRPPHUFLDOREVROHVFHQFHDQGOHJDORU
RWKHUOLPLWVRQWKHXVHRIWKHDVVHWV,QDGGLWLRQHVWLPDWLRQRIWKHXVHIXOOLYHV
RIEDQNSUHPLVHVIXUQLWXUHIL[WXUHVDQGHTXLSPHQWDQGFRPSXWHUVRIWZDUHLV
EDVHGRQFROOHFWLYHDVVHVVPHQWRILQGXVWU\SUDFWLFHLQWHUQDOWHFKQLFDOHYDOXDWLRQ
DQGH[SHULHQFHZLWKVLPLODUDVVHWV7KHFDUU\LQJDPRXQWVRIEDQNSUHPLVHV
IXUQLWXUHIL[WXUHVDQGHTXLSPHQWDQGFRPSXWHUVRIWZDUHDUHSUHVHQWHGLQ
1RWHVDQGUHVSHFWLYHO\%DVHGRQPDQDJHPHQW·VDVVHVVPHQWDVDW
'HFHPEHUDQGWKHUHLVQRFKDQJHLQHVWLPDWHGXVHIXOOLYHVRI
WKRVHDVVHWVGXULQJWKRVH\HDUV$FWXDOUHVXOWVKRZHYHUPD\YDU\GXHWR
FKDQJHVLQHVWLPDWHVEURXJKWDERXWE\FKDQJHVLQIDFWRUVPHQWLRQHGDERYH
'HWHUPLQLQJ)DLU9DOXHRI,QYHVWPHQW3URSHUWLHV
7KHIDLUYDOXHRILQYHVWPHQWSURSHUWLHVLVGHWHUPLQHGEDVHGRQYDOXDWLRQV
SHUIRUPHGE\LQGHSHQGHQWDSSUDLVDOFRPSDQLHVDFFUHGLWHGE\WKH%63DWWKH
HQGRIHDFKUHSRUWLQJSHULRG7KHIDLUYDOXHLVGHWHUPLQHGE\UHIHUHQFHWR
PDUNHWEDVHGHYLGHQFHZKLFKLVWKHDPRXQWIRUZKLFKWKHDVVHWVFRXOGEH
H[FKDQJHGEHWZHHQDNQRZOHGJHDEOHZLOOLQJEX\HUDQGVHOOHULQDQDUP·VOHQJWK
WUDQVDFWLRQDVDWWKHYDOXDWLRQGDWH6XFKDPRXQWLVLQIOXHQFHGE\GLIIHUHQW
IDFWRUVLQFOXGLQJWKHORFDWLRQDQGVSHFLILFFKDUDFWHULVWLFVRIWKHSURSHUW\
HJVL]HIHDWXUHVDQGFDSDFLW\TXDQWLW\RIFRPSDUDEOHSURSHUWLHVDYDLODEOHLQ
WKHPDUNHWDQGHFRQRPLFFRQGLWLRQDQGEHKDYLRURIWKHEX\LQJSDUWLHV7KH
DPRXQWVRIUHYDOXDWLRQDQGIDLUYDOXHJDLQVUHFRJQL]HGRQFHUWDLQODQG
EXLOGLQJVDQGODQGLPSURYHPHQWVDUHGLVFORVHGLQ1RWH
I
(YDOXDWLQJ5HDOL]DEOH$PRXQWRI'HIHUUHG7D[$VVHWV
7KH*URXSUHYLHZVLWVGHIHUUHGWD[DVVHWVDWWKHHQGRIHDFKUHSRUWLQJSHULRGDQG
UHGXFHVWKHFDUU\LQJDPRXQWWRWKHH[WHQWWKDWLWLVQRORQJHUSUREDEOHWKDW
VXIILFLHQWWD[DEOHSURILWZLOOEHDYDLODEOHWRDOORZDOORUSDUWRIWKHGHIHUUHGWD[
DVVHWWREHXWLOL]HG7KHFDUU\LQJYDOXHRIGHIHUUHGWD[DVVHWVDVRIWKRVHGDWHVLV
GLVFORVHGLQ1RWH7KH*URXSGRHVQRWUHFRJQL]HDQ\GHIHUUHGWD[DVVHWVRQ
QHWRSHUDWLQJORVVFDUU\RYHU12/&2DQGPLQLPXPFRUSRUDWHLQFRPHWD[
0&,7VLQFHPDQDJHPHQWEHOLHYHVWKDWWKHGHIHUUHGWD[DVVHWVRQWKHVH
GLIIHUHQFHVPD\QRWEHIXOO\XWLOL]HGLQWKHIXWXUH
J
(VWLPDWLQJ,PSDLUPHQWRI1RQILQDQFLDO$VVHWV
3)56UHTXLUHVWKDWDQLPSDLUPHQWUHYLHZEHSHUIRUPHGZKHQFHUWDLQ
LPSDLUPHQWLQGLFDWRUVDUHSUHVHQW7KH*URXS·VSROLF\RQHVWLPDWLQJWKH
LPSDLUPHQWRIQRQILQDQFLDODVVHWVLVGLVFXVVHGLQGHWDLOLQ1RWH7KRXJK
PDQDJHPHQWEHOLHYHVWKDWWKHDVVXPSWLRQVXVHGLQWKHHVWLPDWLRQRIIDLUYDOXHV
UHIOHFWHGLQWKHILQDQFLDOVWDWHPHQWVDUHDSSURSULDWHDQGUHDVRQDEOHVLJQLILFDQW
FKDQJHVLQWKHVHDVVXPSWLRQVPD\PDWHULDOO\DIIHFWWKHDVVHVVPHQWRI
UHFRYHUDEOHYDOXHVDQGDQ\UHVXOWLQJLPSDLUPHQWORVVFRXOGKDYHDPDWHULDO
DGYHUVHHIIHFWRQWKHUHVXOWVRIRSHUDWLRQV
1RLPSDLUPHQWORVVHVRQQRQILQDQFLDODVVHWVZHUHUHFRJQL]HGE\WKH*URXSLQ
DQG
K
9DOXDWLRQRI3RVWHPSOR\PHQWDQG2WKHU%HQHILWV
7KHGHWHUPLQDWLRQRIWKH*URXS·VREOLJDWLRQDQGFRVWRISHQVLRQDQGRWKHU
SRVWHPSOR\PHQWEHQHILWVLVGHSHQGHQWRQWKHVHOHFWLRQRIFHUWDLQDVVXPSWLRQV
XVHGE\DFWXDULHVLQFDOFXODWLQJVXFKDPRXQWV7KRVHDVVXPSWLRQVLQFOXGH
DPRQJRWKHUVGLVFRXQWUDWHVH[SHFWHGUHWXUQRQSODQDVVHWVDQGH[SHFWHGUDWHV
RIVDODU\LQFUHDVH,QDFFRUGDQFHZLWK3)56DFWXDOUHVXOWVWKDWGLIIHUIURPWKH
DVVXPSWLRQVVXEMHFWWRWKHFRUULGRUWHVWDUHDFFXPXODWHGDQGDPRUWL]HG
RYHUIXWXUHSHULRGVDQGWKHUHIRUHJHQHUDOO\DIIHFWWKHUHFRJQL]HGH[SHQVHDQG
UHFRUGHGREOLJDWLRQLQVXFKIXWXUHSHULRGV:KLOHWKH*URXSEHOLHYHVWKDWWKH
DVVXPSWLRQVZHUHUHDVRQDEOHDQGDSSURSULDWHVLJQLILFDQWGLIIHUHQFHVEHWZHHQ
DFWXDOH[SHULHQFHVDQGDVVXPSWLRQVPD\PDWHULDOO\DIIHFWWKHFRVWRIHPSOR\HH
EHQHILWVDQGUHODWHGREOLJDWLRQV
7KHKLVWRULFDOUDWHRIUHWXUQRQSODQDVVHWVZDVEDVHGRQWKHDYHUDJHKLVWRULFDO
SUHPLXPRIIXQGDVVHWV7KHDVVXPHGGLVFRXQWUDWHVZHUHGHWHUPLQHGXVLQJ
WKHPDUNHW\LHOGVRQ3KLOLSSLQHJRYHUQPHQWERQGVZLWKWHUPVFRQVLVWHQWZLWK
WKHH[SHFWHGEHQHILWSD\RXWDVRIWKHHQGRIHDFKUHSRUWLQJSHULRG
7KHDPRXQWVRIUHWLUHPHQWEHQHILWREOLJDWLRQDQGH[SHQVHDQGDQDQDO\VLVRI
WKHPRYHPHQWVLQWKHHVWLPDWHGSUHVHQWYDOXHRIUHWLUHPHQWEHQHILWREOLJDWLRQ
DUHSUHVHQWHGLQ1RWH
7KH*URXSDOVRHVWLPDWHVRWKHUHPSOR\HHEHQHILWREOLJDWLRQVDQGH[SHQVHV
LQFOXGLQJWKHFRVWRISDLGOHDYHVEDVHGRQKLVWRULFDOOHDYHDYDLOPHQWVRI
HPSOR\HHVVXEMHFWWR3DUHQW&RPSDQ\SROLFLHV7KHVHHVWLPDWHVPD\YDU\
GHSHQGLQJRQIXWXUHFKDQJHVLQVDODULHVDQGDFWXDOH[SHULHQFHVGXULQJWKH\HDU
5LVN0DQDJHPHQW2EMHFWLYHVDQG3ROLFLHV
5,6.0$1$*(0(172%-(&7,9(6$1'32/,&,(6
7KH*URXSLVH[SRVHGWRDUDQJHRISRWHQWLDOULVNVDULVLQJIURPLWVEXVLQHVVDFWLYLWLHV
,WHQWHUVLQWRILQDQFLDOLQVWUXPHQWVFRQWUDFWVZKLFKFRQVLVWRIILQDQFLDODVVHWVDW
)973/$)6ILQDQFLDODVVHWV+70LQYHVWPHQWVORDQVDQGUHFHLYDEOHVLQWHUEDQN
ORDQVUHFHLYDEOHDQGILQDQFLDOOLDELOLWLHVVXFKDVGHSRVLWVELOOVDQGDFFHSWDQFHVSD\DEOH
DQGQRWHVSD\DEOHWRILQDQFHWKH*URXS·VRSHUDWLRQV7KH*URXSDOVRHQWHUVLQWR
GHULYDWLYHWUDQVDFWLRQVVXFKDVLQWHUHVWUDWHVZDSVDQGIRUZDUGFXUUHQF\FRQWUDFWVWR
PDQDJHWKHLQWHUHVWUDWHDQGFXUUHQF\ULVNVDULVLQJIURPLWVRSHUDWLRQV
7KH*URXS·VJRDOLQULVNPDQDJHPHQWLVWRHQVXUHWKDWLWLGHQWLILHVXQGHUVWDQGV
PHDVXUHVDQGPRQLWRUVWKHYDULRXVULVNVWKDWDULVHIURPLWVEXVLQHVVDFWLYLWLHVVXFKDV
FUHGLWULVNOLTXLGLW\ULVNPDUNHWULVNLQWHUHVWUDWHULVNIRUHLJQH[FKDQJHULVN
RSHUDWLRQDOULVNSUHSD\PHQWULVNDQGOHJDODQGUHJXODWRU\ULVN
5LVN0DQDJHPHQW6WUXFWXUH
7KH%2'LVSULPDULO\UHVSRQVLEOHIRUDSSURYLQJWKHULVNSDUDPHWHUVFUHGLWSROLFLHV
DQGWKHRYHUDOOULVNFDSDFLW\RIWKH3DUHQW&RPSDQ\%RDUGFRPPLWWHHVKDYHEHHQ
HVWDEOLVKHGE\WKH%2'WRRYHUVHHWKHLQFUHDVLQJO\YDULHGULVNPDQDJHPHQWDFWLYLWLHV
RIWKH3DUHQW&RPSDQ\ZLWKWKHDFWLYHSDUWLFLSDWLRQRIVHQLRUPDQDJHPHQW
7KH([HFXWLYH&RPPLWWHH(;&20FRPSRVHGRIVHYHQPHPEHUVRIWKH
%2'H[HUFLVHVFHUWDLQIXQFWLRQVDVGHOHJDWHGE\WKH%2'LQFOXGLQJDPRQJ
RWKHUVWKHDSSURYDORIFUHGLWSURSRVDOVDVVHWUHFRYHU\DQG523$VDOHVZLWKLQ
LWVGHOHJDWHGOLPLWV
D
7KH5LVN0DQDJHPHQW&RPPLWWHH50&FRPSRVHGRIVHYHQPHPEHUVRIWKH
%2'LVUHVSRQVLEOHIRUWKHGHYHORSPHQWDQGRYHUVLJKWRIWKH3DUHQW
&RPSDQ\·VULVNPDQDJHPHQWSURJUDP,WDVVLVWVWKH%2'LQRYHUVHHLQJDOO
PDWWHUVUHODWLQJWRULVNPDQDJHPHQWLQFOXGLQJSURYLGLQJDFRPSUHKHQVLYHDQG
EDQNZLGHRYHUVLJKWRIDOOULVNVDQGWKHPDQDJHPHQWRIVXFKULVNVIRUPXODWLQJ
DQGUHYLHZLQJDOORIWKH3DUHQW&RPSDQ\·VPDWHULDOULVNSROLFLHVVWUDWHJLHVDQG
SURFHGXUHV$PRQJLWVVSHFLILFGXWLHVDUHWRLGHQWLI\DQGHYDOXDWHH[SRVXUHV
GHYHORSULVNPDQDJHPHQWVWUDWHJLHVLPSOHPHQWULVNPDQDJHPHQWSODQVDQG
UHYLHZVXFKSODQVDVQHFHVVDU\,WDOVRSURYLGHVRYHUVLJKWGLUHFWLRQDQG
JXLGDQFHWRWKHRWKHUFRPPLWWHHVLQFOXGLQJWKH0DUNHW5LVN&RPPLWWHH05&
DQGWKH2SHUDWLRQV5LVN0DQDJHPHQW&RPPLWWHH250&
E
F
7KH05&FRPSRVHGRIILYHPHPEHUVRIWKH%2'VHWVSROLFLHVDQGVWDQGDUGV
IRUPDUNHWULVNLGHQWLILFDWLRQDQDO\VLVDQGPDQDJHPHQW7KH05&DOVR
PRQLWRUVWKHVHQVLWLYLW\RIWKH*URXS·VILQDQFLDOFRQGLWLRQWRWKHHIIHFWVRI
PDUNHWYRODWLOLW\DQGDGYHUVHSULFHFKDQJHVRQWKH*URXS·VSRUWIROLRRIILQDQFLDO
LQVWUXPHQWDQGRYHUVHHVWKH*URXS·VOLTXLGLW\SRVLWLRQWKURXJKWKH$VVHWDQG
/LDELOLW\&RPPLWWHH$/&2
7KH250&FRPSRVHGRIWKUHHPHPEHUVRIWKH%2'DQGWZRPHPEHUVIURP
6HQLRU0DQDJHPHQWUHYLHZVYDULRXVRSHUDWLRQVULVNSROLFLHVDQGSUDFWLFHV
G
7KH$XGLW&RPPLWWHHLVDFRPPLWWHHRIWKH%2'WKDWLVFRPSRVHGRIILYH
PHPEHUVPRVWZLWKDFFRXQWLQJDXGLWLQJRUUHODWHGILQDQFLDOPDQDJHPHQW
H[SHUWLVHRUH[SHULHQFH7KHVNLOOVTXDOLILFDWLRQVDQGH[SHULHQFHRIWKH
FRPPLWWHHPHPEHUVDUHDSSURSULDWHIRUWKHPWRSHUIRUPWKHLUGXWLHVDVODLG
GRZQE\WKH%RDUG7ZRRIWKHVHILYHPHPEHUVDUHLQGHSHQGHQWGLUHFWRUV
LQFOXGLQJWKH&KDLUPDQ
H
7KH$XGLW&RPPLWWHHVHUYHVDVSULQFLSDODJHQWRIWKH%2'LQHQVXULQJ
LQGHSHQGHQFHRIWKH%DQN·VH[WHUQDODXGLWRUVDQGWKHLQWHUQDODXGLWIXQFWLRQ
WKHLQWHJULW\RIPDQDJHPHQWDQGWKHDGHTXDF\RIGLVFORVXUHVDQGUHSRUWLQJWR
VWRFNKROGHUV,WDOVRRYHUVHHVWKH%DQN·VILQDQFLDOUHSRUWLQJSURFHVVRQEHKDOI
RIWKH%2',WDVVLVWVWKH%2'LQIXOILOOLQJLWVILGXFLDU\UHVSRQVLELOLWLHVDVWR
DFFRXQWLQJSROLFLHVUHSRUWLQJSUDFWLFHVDQGWKHVXIILFLHQF\RIDXGLWLQJUHODWLYH
WKHUHWRDQGUHJXODWRU\FRPSOLDQFH
7RHIIHFWLYHO\SHUIRUPWKHVHIXQFWLRQVWKH$XGLW&RPPLWWHHKDVDJRRG
XQGHUVWDQGLQJRIWKH3DUHQW&RPSDQ\·VEXVLQHVVLQFOXGLQJWKHIROORZLQJ
3DUHQW&RPSDQ\·VVWUXFWXUHEXVLQHVVFRQWUROVDQGWKHW\SHVRIWUDQVDFWLRQVRU
RWKHUILQDQFLDOUHSRUWLQJPDWWHUVDSSOLFDEOHWRWKH3DUHQW&RPSDQ\7KH$XGLW
&RPPLWWHHDOVRKDVDJRRGXQGHUVWDQGLQJRIWKH3DUHQW&RPSDQ\·VLQWHUQDO
FRQWUROVWRGHWHUPLQHZKHWKHUWKHVHFRQWUROVDUHDGHTXDWHIXQFWLRQLQJDV
GHVLJQHGDQGRSHUDWLQJHIIHFWLYHO\,WDOVRFRQVLGHUVWKHSRWHQWLDOHIIHFWVRI
HPHUJLQJEXVLQHVVULVNVDQGWKHLULPSDFWRQWKH3DUHQW&RPSDQ\·VILQDQFLDO
SRVLWLRQDQGUHVXOWVRIRSHUDWLRQV
$PRQJWKHUHVSRQVLELOLWLHVRIWKH$XGLW&RPPLWWHHDUH
L 2YHUVLJKWRIWKHILQDQFLDOUHSRUWLQJSURFHVV7KH$XGLW&RPPLWWHHHQVXUHVWKDWWKH
3DUHQW&RPSDQ\KDVDKLJKTXDOLW\UHSRUWLQJSURFHVVWKDWSURYLGHV
WUDQVSDUHQWFRQVLVWHQWDQGFRPSDUDEOHILQDQFLDOVWDWHPHQWV,QWKLVUHJDUG
WKH$XGLW&RPPLWWHHZRUNVFORVHO\ZLWKPDQDJHPHQWHVSHFLDOO\WKH2IILFH
RIWKH&RQWUROOHUWKH,QWHUQDO$XGLW'LYLVLRQ,$'DVZHOODVWKHH[WHUQDO
DXGLWRUVWRHIIHFWLYHO\PRQLWRUWKHILQDQFLDOUHSRUWLQJSURFHVVDQGWKH
H[LVWHQFHRIVLJQLILFDQWILQDQFLDOUHSRUWLQJLVVXHVDQGFRQFHUQV
LL 2YHUVLJKWRIWKHDXGLWSURFHVV7KH$XGLW&RPPLWWHHLVNQRZOHGJHDEOHRQWKH
DXGLWIXQFWLRQDQGWKHDXGLWSURFHVV7KH$XGLW&RPPLWWHHPDLQWDLQV
VXSSRUWLYHWUXVWLQJDQGLQTXLVLWLYHUHODWLRQVKLSVZLWKERWKLQWHUQDODQG
H[WHUQDODXGLWRUVWRHQKDQFHLWVHIIHFWLYHQHVV
,QWKHSHUIRUPDQFHRIWKHVHIXQFWLRQVWKH$XGLW&RPPLWWHHLVVXSSRUWHGE\
WKH,$'7KH,$'+HDGGHULYHVDXWKRULW\IURPDQGLVGLUHFWO\DFFRXQWDEOHWR
WKH$XGLW&RPPLWWHH+RZHYHUDGPLQLVWUDWLYHO\WKH,$'+HDGUHSRUWVWRWKH
3UHVLGHQWRIWKH%DQN
7KH,$'LVHQWLUHO\LQGHSHQGHQWIURPDOOWKHRWKHURUJDQL]DWLRQDOXQLWVRI
WKH%DQNDVZHOODVIURPWKHSHUVRQQHODQGZRUNWKDWDUHWREHDXGLWHG,W
RSHUDWHVXQGHUWKHGLUHFWFRQWURORIWKH$XGLW&RPPLWWHHDQGLVJLYHQDQ
DSSURSULDWHVWDQGLQJZLWKLQWKH%DQNWREHIUHHIURPELDVDQGLQWHUIHUHQFH
7KH,$'LVIUHHWRUHSRUWLWVILQGLQJVDQGDSSUDLVDOVLQWHUQDOO\DWLWVRZQ
LQLWLDWLYHWRWKH$XGLW&RPPLWWHH
7KH,$'LVDXWKRUL]HGE\WKH$XGLW&RPPLWWHHWRKDYHXQUHVWULFWHGDFFHVVWR
DOOIXQFWLRQVUHFRUGVSURSHUW\DQGSHUVRQQHORIWKH%DQNVXEMHFWWRH[LVWLQJ
PDQGDWHDQGDSSOLFDEOHODZV7KLVLQFOXGHVWKHDXWKRULW\WRDOORFDWHUHVRXUFHV
VHWDXGLWIUHTXHQFLHVVHOHFWVXEMHFWVGHWHUPLQHVFRSHRIZRUNDQGDSSO\WKH
WHFKQLTXHVUHTXLUHGWRDFFRPSOLVKWKHDXGLWHQJDJHPHQWREMHFWLYHV
7KH,$'LVDOVRDXWKRUL]HGWRREWDLQWKHQHFHVVDU\DVVLVWDQFHIURPSHUVRQQHO
ZLWKLQWKH%DQNXQLWVZKHUHWKH\SHUIRUPDXGLWVDVZHOODVRWKHUVSHFLDOL]HG
VHUYLFHVZLWKLQRURXWVLGHWKH%DQN
$WOHDVWRQFHDPRQWKWKH$XGLW&RPPLWWHHPHHWVWRGLVFXVVWKHUHVXOWVRIWKH
DVVXUDQFHDQGFRQVXOWLQJHQJDJHPHQWVDQGFDVHLQYHVWLJDWLRQVE\,$'7KH
UHVXOWVRIWKHVHPHHWLQJVDUHUHJXODUO\UHSRUWHGE\WKH$XGLW&RPPLWWHH
&KDLUPDQWRWKH%2'LQLWVPRQWKO\PHHWLQJV
,QUHVSRQVHWRWKHLQFUHDVLQJUROHRILQWHUQDODXGLWXQGHU%DVHO,,WKH,$'
XQGHUWRRNDVSHFLDOSURMHFWWRDFTXLUHWKHULJKWVNLOOVHWDQGDSSURDFKWRIXOILOO
LWVUROHWRFRQGXFWDQLQGHSHQGHQWUHYLHZRIWKH%DQN·V,QWHUQDO&DSLWDO
$GHTXDF\$VVHVVPHQW3URFHVV,&$$3GRFXPHQWDQGLWVXQGHUO\LQJSURFHVVHV
DQGSURFHGXUHV
7KH&RUSRUDWH*RYHUQDQFH&RPPLWWHH&*&LVSULPDULO\UHVSRQVLEOHIRU
KHOSLQJWKH%2'IXOILOOLWVFRUSRUDWHJRYHUQDQFHUHVSRQVLELOLWLHV,WDGYRFDWHV
DQGDVVLVWVWKH%2'LQDGRSWLQJDQGLPSOHPHQWLQJVRXQGSULQFLSOHVDQG
SUDFWLFHVRIJRRGFRUSRUDWHJRYHUQDQFH
I
7KH&*&UHFRPPHQGVFRUSRUDWHJRYHUQDQFHSROLFLHVWRWKH%2'EDVHGRQWKH
UHJXODWLRQVRIWKH%636(&WKH36(DQGRWKHUUHJXODWRU\ERGLHVDVZHOODV
LQWHUQDWLRQDOO\UHFRJQL]HGLQGXVWU\EHVWSUDFWLFHV,WVHUYHVDVWKHSULPDU\
UHVRXUFHIRUWKH%2'WRVWXG\DQGHYDOXDWHWKH%2'·VDQGLWV&RPPLWWHHV·
VWUXFWXUHSROLFLHVDQGSUDFWLFHVZLWKWKHREMHFWLYHRIUDLVLQJWKHEDUIRUWKH
%DQN·VFRUSRUDWHJRYHUQDQFH
&*&·VVSHFLILFGXWLHVLQFOXGHDPRQJRWKHUVPDNLQJUHFRPPHQGDWLRQVWRWKH
%2'UHJDUGLQJFRQWLQXLQJHGXFDWLRQRIGLUHFWRUVDQGRYHUVHHLQJWKHSHULRGLF
SHUIRUPDQFHHYDOXDWLRQRIWKH%2'LWV&RPPLWWHHVDQGVHQLRUPDQDJHPHQW
7KH&*&FRQVLVWVRIVHYHQPHPEHUVRIWKH%RDUGWZRRIZKRPDUH
LQGHSHQGHQWGLUHFWRUVLQFOXGLQJLWVFKDLUPDQDQGRQHEHORQJLQJWRWKH%DQN·V
VHQLRUPDQDJHPHQW,WKDVWZRVXEFRPPLWWHHVQDPHO\WKH1RPLQDWLRQV
6XE&RPPLWWHHDQGWKH&RPSHQVDWLRQDQG5HPXQHUDWLRQ6XE&RPPLWWHH
7KH1RPLQDWLRQV6XE&RPPLWWHHLVFRPSULVHGRIVL[YRWLQJPHPEHUVRIWKH
%2'RQHRIZKRPLVDQLQGHSHQGHQWGLUHFWRUDQGRQHQRQYRWLQJPHPEHULQ
WKHSHUVRQRIWKH+XPDQ5HVRXUFHV'LUHFWRU7KH1RPLQDWLRQV
6XE&RPPLWWHHLVUHVSRQVLEOHIRUUHYLHZLQJWKHTXDOLILFDWLRQVRIDQGVFUHHQLQJ
FDQGLGDWHVIRUWKH%2'NH\RIILFHUVRIWKH%DQNDQGQRPLQHHVIRU
LQGHSHQGHQWGLUHFWRUV,WRYHUVHHVWKHLPSOHPHQWDWLRQRISURJUDPVIRU
LGHQWLI\LQJUHWDLQLQJDQGGHYHORSLQJFULWLFDORIILFHUVDQGWKHVXFFHVVLRQSODQIRU
YDULRXVXQLWVLQWKHRUJDQL]DWLRQ
7KH&RPSHQVDWLRQDQG5HPXQHUDWLRQ6XE&RPPLWWHHLVFRPSRVHGRIILYH
PHPEHUVRIWKH%2'RQHRIZKRPLVDQLQGHSHQGHQWGLUHFWRU,WLV
UHVSRQVLEOHIRURYHUVHHLQJLPSOHPHQWDWLRQRIWKHSURJUDPVIRUVDODULHVDQG
EHQHILWVRIGLUHFWRUVDQGVHQLRUPDQDJHPHQW,WPRQLWRUVDGHTXDF\
HIIHFWLYHQHVVDQGFRQVLVWHQF\RIFRPSHQVDWLRQSURJUDPYLVjYLVFRUSRUDWH
SKLORVRSK\DQGVWUDWHJ\
7KH%DQN·V&RPSOLDQFHDQG&RUSRUDWH*RYHUQDQFH2IILFH&&*2DVVLVWVWKH
&*&LQIXOILOOLQJLWVIXQFWLRQVE\DSSULVLQJWKHVDPHRISHUWLQHQWUHJXODWLRQV
DQGRWKHULVVXDQFHVUHODWLQJWRFRUSRUDWHJRYHUQDQFHDQGFRQWLQXRXVO\JLYLQJ
XSGDWHVWKHUHRQ,QDGGLWLRQWKH&&*2NHHSVWKH&*&DEUHDVWRIJRYHUQDQFH
LVVXHVEHLQJEURXJKWDERXWDPRQJSULYDWHRUJDQL]DWLRQVDQGLQGLYLGXDOV
DGYRFDWLQJJRRGJRYHUQDQFHSUDFWLFHV,WWKHQPDNHVUHFRPPHQGDWLRQVWRWKH
&*&EDVHGRQVXFKJRYHUQDQFHLVVXHVDQGSUDFWLFHVDSSOLFDEOHDQGUHOHYDQWWR
WKH%DQN
7KH3DUHQW&RPSDQ\·V5LVN0DQDJHPHQW8QLWV508VDUHUHVSRQVLEOHIRU
LGHQWLI\LQJDVVHVVLQJPRQLWRULQJDQGPDQDJLQJWKHFUHGLWULVNPDUNHWULVNOLTXLGLW\
ULVNDQGRSHUDWLRQDOULVNRIWKH*URXSLQDFFRUGDQFHZLWKZHOOGHILQHGSROLFLHVDQG
SURFHGXUHV,QFRRUGLQDWLRQZLWKWKHUHVSHFWLYHEXVLQHVVXQLWVWKH\DUHDOVR
UHVSRQVLEOHIRUULVNSROLF\GHYHORSPHQWULVNDQDO\VLVLPSOHPHQWDWLRQRIULVN
PHWKRGRORJLHVDQGULVNUHSRUWLQJWRVHQLRUPDQDJHPHQWDQGWKHYDULRXVFRPPLWWHHV
RIWKH3DUHQW&RPSDQ\
7KH508·VSRUWIROLRPDQDJHPHQWIXQFWLRQLQYROYHVWKHUHYLHZRIWKH3DUHQW
&RPSDQ\·VORDQSRUWIROLRLQFOXGLQJWKHSRUWIROLRULVNVDVVRFLDWHGZLWKSDUWLFXODU
LQGXVWU\VHFWRUVUHJLRQVORDQVL]HDQGPDWXULW\DQGWKHGHYHORSPHQWRIDVWUDWHJ\
IRUWKH3DUHQW&RPSDQ\WRDFKLHYHLWVGHVLUHGSRUWIROLRPL[DQGULVNSURILOH
&UHGLW5LVN
&UHGLWULVNLVWKHULVNRIORVVUHVXOWLQJIURPWKHIDLOXUHRIDERUURZHURUFRXQWHUSDUW\
WRKRQRULWVILQDQFLDORUFRQWUDFWXDOREOLJDWLRQWRWKH3DUHQW&RPSDQ\7KHULVNPD\
DULVHIURPOHQGLQJWUDGHILQDQFHWUHDVXU\LQYHVWPHQWVGHULYDWLYHVDQGRWKHUDFWLYLWLHV
XQGHUWDNHQE\WKH3DUHQW&RPSDQ\&UHGLWULVNLVPDQDJHGWKURXJKVWUDWHJLHV
SROLFLHVDQGOLPLWVWKDWDUHDSSURYHGE\WKH%2')XUWKHUWKH3DUHQW&RPSDQ\KDV
DZHOOVWUXFWXUHGDQGVWDQGDUGL]HGFUHGLWDSSURYDOSURFHVVDQGFUHGLWVFRULQJV\VWHP
IRUHDFKRILWVEXVLQHVVDQGRUSURGXFWVHJPHQWV
7KH508XQGHUWDNHVVHYHUDOIXQFWLRQVZLWKUHVSHFWWRFUHGLWULVNPDQDJHPHQW7KH
508LQGHSHQGHQWO\SHUIRUPVFUHGLWULVNDVVHVVPHQWHYDOXDWLRQDQGUHYLHZIRULWV
UHWDLOFRPPHUFLDODQGFRUSRUDWHILQDQFLDOSURGXFWVWRHQVXUHFRQVLVWHQF\LQWKH
3DUHQW&RPSDQ\·VULVNDVVHVVPHQWSURFHVV,WDOVRHQVXUHVWKDWWKH3DUHQW&RPSDQ\·V
FUHGLWSROLFLHVDQGSURFHGXUHVDUHDGHTXDWHDQGDUHFRQVWDQWO\XSGDWHGWRPHHWWKH
FKDQJLQJGHPDQGVRIWKHEXVLQHVV7KH508LVDOVRUHVSRQVLEOHIRUGHYHORSLQJ
SURFHGXUHVWRVWUHDPOLQHDQGH[SHGLWHWKHSURFHVVLQJRIFUHGLWDSSOLFDWLRQV
7KH508UHYLHZVWKH3DUHQW&RPSDQ\·VORDQSRUWIROLRTXDOLW\LQOLQHZLWKWKH3DUHQW
&RPSDQ\·VSROLF\RIDYRLGLQJVLJQLILFDQWFRQFHQWUDWLRQVRIH[SRVXUHWRVSHFLILF
LQGXVWULHVRUJURXSVRIERUURZHUV&RQFHQWUDWLRQVDULVHZKHQDQXPEHURI
FRXQWHUSDUWLHVDUHHQJDJHGLQVLPLODUEXVLQHVVDFWLYLWLHVRUDFWLYLWLHVLQWKHVDPH
JHRJUDSKLFUHJLRQRUKDYHVLPLODUHFRQRPLFIHDWXUHV&RQFHQWUDWLRQVLQGLFDWHWKH
UHODWLYHVHQVLWLYLW\RIWKH3DUHQW&RPSDQ\·VSHUIRUPDQFHWRGHYHORSPHQWVDIIHFWLQJD
SDUWLFXODULQGXVWU\RUJHRJUDSKLFDOORFDWLRQ
,QRUGHUWRDYRLGH[FHVVLYHFRQFHQWUDWLRQVRIULVNWKH3DUHQW&RPSDQ\·V
SROLFLHVDQGSURFHGXUHVLQFOXGHJXLGHOLQHVIRUPDLQWDLQLQJDGLYHUVLILHGSRUWIROLR
HJFRQFHQWUDWLRQOLPLWV,GHQWLILHGFRQFHQWUDWLRQVRIFUHGLWULVNVDUHFRQWUROOHGDQG
PDQDJHGDFFRUGLQJO\7KH508DOVRPRQLWRUVFRPSOLDQFHWRWKH%63·VOLPLWRQ
H[SRVXUHWRDQ\VLQJOHSHUVRQRUJURXSRIFRQQHFWHGSHUVRQVWRDQDPRXQWQRW
H[FHHGLQJRIWKH3DUHQW&RPSDQ\·VDGMXVWHGFDSLWDODFFRXQWV
&RUSRUDWH/RDQV
&RUSRUDWHOHQGLQJDFWLYLWLHVDUHXQGHUWDNHQE\WKH%DQN·V&RUSRUDWH%DQNLQJ&HQWHU
7KHFXVWRPHUDFFRXQWVXQGHUWKLVJURXSEHORQJWRWKHWRSWLHUFRUSRUDWLRQV
FRQJORPHUDWHVDQGODUJHPXOWLQDWLRQDOFRPSDQLHV7KH%DQNXQGHUWDNHVD
FRPSUHKHQVLYHSURFHGXUHIRUWKHFUHGLWHYDOXDWLRQDQGULVNDVVHVVPHQWRIODUJH
FRUSRUDWHERUURZHUVEDVHGRQLWV,QWHUQDO&UHGLW5LVN5DWLQJ6\VWHP7KHUDWLQJ
V\VWHPDVVHVVHVULVNVRQDWKUHHGLPHQVLRQDOOHYHO%RUURZHU5LVN)DFLOLW\5LVNDQG
6HFXULW\5LVN,WDOVRKDVHVWDEOLVKHGFRQFHQWUDWLRQOLPLWVGHSHQGLQJRQWKH%RUURZHU
5LVN5DWLQJDQGRYHUDOOFUHGLWTXDOLW\
%RUURZHUULVNLVHYDOXDWHGE\FRQVLGHULQJLTXDQWLWDWLYHIDFWRUVVXFKDVSURILWDELOLW\
OLTXLGLW\FDSLWDODGHTXDF\DQGVDOHVJURZWKLLTXDOLWDWLYHIDFWRUVVXFKDV
PDQDJHPHQWVNLOOVDQGPDQDJHPHQWLQWHJULW\DQGLLLLQGXVWU\ULVN,QGXVWU\ULVNLV
DVVHVVHGE\FRQVLGHULQJFHUWDLQLQGXVWU\FKDUDFWHULVWLFVVXFKDVLWVLPSRUWDQFHWRWKH
HFRQRP\JURZWKRXWORRNF\FOLFDOLW\LQGXVWU\VWUXFWXUHDQGUHOHYDQWJRYHUQPHQW
SROLFLHV
%DVHGRQIRUHJRLQJIDFWRUVHDFKERUURZHULVDVVLJQHGD%RUURZHU5LVN5DWLQJ%55
DJUDGHVFRULQJV\VWHPWKDWUDQJHVIURP$$$WR'ZLWK$$$WR$DV+LJK
*UDGH%%%WR%DV6WDQGDUG*UDGHDQG&&&DQGORZHUDV6XEVWDQGDUGJUDGH
%RUURZHUVZLWKKLJKJUDGH%55VDUHFRQVLGHUHGWRKDYHYHU\VWURQJFUHGLWVZKHUHWKH
3DUHQW&RPSDQ\PD\EHFRPIRUWDEOHLQJUDQWLQJFOHDQVKRUWWHUPIDFLOLWLHV
%RUURZHUVZLWKVWDQGDUG%55VDUHVLPLODUO\DFFHSWDEOHFUHGLWVEXWPD\UHTXLUH
FROODWHUDOWRPLWLJDWHWKHFUHGLWULVN2QWKHRWKHUKDQGERUURZHUVZLWKVXEVWDQGDUG
%55VDUHGHHPHGWREHKLJKULVNDQGWKXVPD\EHUHTXLUHGE\WKH%DQNWRSOHGJH
KLJKJUDGHFROODWHUDORURWKHUIRUPVRIFUHGLWHQKDQFHPHQWV
%HORZLVDVXPPDU\DVRI'HFHPEHUDQGRIWKH%DQN·VFRUSRUDWHORDQV
JURVVRIWKHUHODWHGDOORZDQFHIRULPSDLUPHQWZLWKWKHLUUHVSHFWLYHFUHGLWVFRUHV
&UHGLW6FRUH 'HVFULSWLRQ $PRXQW
+LJKJUDGH
6WDQGDUGJUDGH
6XEVWDQGDUGJUDGH
%%%
%%
%
&&&
DQGEHORZ
$YHUDJH
)DLU
/RZ
1RQUDWHG
$$$
$$
$
+LJKHVW
TXDOLW\
3
3
+LJKTXDOLW\ 6DWLVIDFWRU\
TXDOLW\
6XEVWDQGDUG 3 3 7KHGHVFULSWLRQRIHDFKFUHGLWVFRUHLVH[SODLQHGIXUWKHUDVIROORZV
+LJKHVW4XDOLW\7KHVHERUURZHUVKDYHDKLJKGHJUHHRIVWDELOLW\VXEVWDQFHDQG
GLYHUVLW\7KH\DUHH[SHFWHGWRUHPDLQRIKLJKTXDOLW\LQYLUWXDOO\DOOHFRQRPLF
FRQGLWLRQVDQGKDYHDFFHVVWRVXEVWDQWLDODPRXQWRIIXQGVWKURXJKWKHSXEOLF
PDUNHWVDWDQ\WLPH
+LJK4XDOLW\7KHVHERUURZHUVKDYHDFRPIRUWDEOHGHJUHHRIVWDELOLW\VXEVWDQFHDQG
GLYHUVLW\7KH\KDYHDFFHVVWRVXEVWDQWLDODPRXQWRIIXQGVWKURXJKWKHSXEOLFPDUNHW
XQGHUQRUPDOFRQGLWLRQV7KHVHDUHQRUPDOO\WKHTXDOLW\PXOWLQDWLRQDOVRUORFDO
FRUSRUDWLRQVZKLFKDUHZHOOFDSLWDOL]HG
6DWLVIDFWRU\4XDOLW\7KHVHERUURZHUVKDYHVWURQJFDVKIORZVDQGDFFHSWDEOHGHJUHHRI
VWDELOLW\DQGVXEVWDQFHXQGHUQRUPDOPDUNHWFRQGLWLRQV+RZHYHUWKH\PD\EH
VXVFHSWLEOHWRF\FOLFDOFKDQJHVRUFRQFHQWUDWLRQVRIEXVLQHVVULVNPD\EHSUHVHQW
$YHUDJH7KHVHERUURZHUVKDYHDGHTXDWHFDVKIORZVWRPHHWLWVFRPPLWPHQWVDQGFDQ
ZLWKVWDQGQRUPDOEXVLQHVVF\FOHV+RZHYHUDQ\SURORQJHGXQIDYRUDEOHHFRQRPLF
SHULRGZRXOGFUHDWHGHWHULRUDWLRQEH\RQGDFFHSWDEOHOHYHOVDVFOHDUULVNHOHPHQWVH[LVW
UHIOHFWLQJYRODWLOLW\RIHDUQLQJVDQGSHUIRUPDQFH
)DLU7KHVHERUURZHUVKDYHDGHTXDWHFDVKIORZVWRPHHWLWVFRPPLWPHQWVEXWIDFHV
RQJRLQJXQFHUWDLQWLHVDQGH[SRVXUHWRDGYHUVHEXVLQHVVILQDQFLDORUHFRQRPLF
FRQGLWLRQV
/RZ$OWKRXJKWKHVHERUURZHUVFXUUHQWO\KDYHDGHTXDWHFDVKIORZVWRPHHWWKHLU
FRPPLWPHQWVWKHLUSHUIRUPDQFHKDYHDOUHDG\EHHQZHDNHQHGDQGDQ\FRQWLQXDWLRQ
RIDGYHUVHEXVLQHVVILQDQFLDORUHFRQRPLFFRQGLWLRQVRUIXUWKHUGRZQWXUQVDUH
DOUHDG\H[SHFWHGWRLPSDLUWKHLUFDSDFLW\RUZLOOLQJQHVVWRPHHWWKHLUILQDQFLDO
FRPPLWPHQWV
6XEVWDQGDUG7KHVHERUURZHUVKDYHLQDGHTXDWHFDVKIORZVDQGDUHH[SRVHGWRDUHDO
ULVNRIQRQSD\PHQWRISULQFLSDO7KHSUREDELOLW\RIGHIDXOWLQFUHDVHVDVWKHFUHGLW
VFRUHJRHVGRZQWR&&&DQGORZHU
,QDGGLWLRQWRWKH%55WKH%DQNDVVLJQVDORDQH[SRVXUHUDWLQJ/(5DSRLQW
V\VWHPZKLFKLVFRPSULVHGRID)DFLOLW\7HQRU5DWLQJ)75DQGD6HFXULW\5LVN
5DWLQJ6557KH)75PHDVXUHVWKHPDWXULW\ULVNEDVHGRQWKHOHQJWKRIORDQ
H[SRVXUHZKLOHWKH655PHDVXUHVWKHTXDOLW\RIWKHFROODWHUDODQGULVNRILWVSRWHQWLDO
GHWHULRUDWLRQRYHUWKHWHUPRIWKHORDQ7KH)75DQGWKH655HDFKDSRLQW
VFRULQJV\VWHPDUHJLYHQHTXDOZHLJKWLQGHWHUPLQLQJWKH/(5
2QFHWKH%55DQGWKH/(5KDYHEHHQGHWHUPLQHGWKHFUHGLWOLPLWWRDERUURZHULV
GHWHUPLQHGXQGHUWKH5LVN$VVHW$FFHSWDQFH&ULWHULD5$$&ZKLFKLVDUDQJHRI
DFFHSWDEOHFRPELQDWLRQVRIWKH%55DQGWKH/(5)RUH[DPSOHXQGHUWKH5$$&D
ERUURZHUZLWKDKLJK%55ZLOOKDYHDEURDGHUUDQJHRIDFFHSWDEOH/(5V
7KHFUHGLWUDWLQJIRUHDFKERUURZHULVUHYLHZHGDQQXDOO\RUHDUOLHULIWKHERUURZHUKDV
DKLJKHUULVNSURILOHRUZKHQWKHUHDUHH[WUDRUGLQDU\RUDGYHUVHGHYHORSPHQWV
DIIHFWLQJWKHERUURZHUWKHLQGXVWU\DQGRUWKH3KLOLSSLQHHFRQRP\$Q\PDMRU
FKDQJHLQWKHFUHGLWVFRULQJV\VWHPWKH5$$&UDQJHDQGRUWKHULVNDGMXVWHGSULFLQJ
V\VWHPLVSUHVHQWHGWRDQGDSSURYHGE\WKH50&
&RPPHUFLDO/RDQV
7KH3DUHQW&RPSDQ\·VFRPPHUFLDOEDQNLQJDFWLYLWLHVDUHXQGHUWDNHQE\LWV
&RPPHUFLDO%DQNLQJ&HQWHU&RP%DQN7KHVHFRQVLVWRIEDQNLQJSURGXFWVDQG
VHUYLFHVUHQGHUHGWRFXVWRPHUVZKLFKDUHHQWLWLHVWKDWDUHSUHGRPLQDQWO\VPDOODQG
PHGLXPVFDOHHQWHUSULVHV60(V7KHVHSURGXFWVDQGVHUYLFHVDUHVLPLODUWRWKRVH
SURYLGHGWRODUJHFRUSRUDWHFXVWRPHUVZLWKWKHSUHGRPLQDQFHRIWUDGH
ILQDQFHUHODWHGSURGXFWVDQGVHUYLFHV
&RP%DQNXVHVDVHSDUDWHJUDGHFUHGLWVFRULQJV\VWHPIRUFRPPHUFLDODFFRXQWV
FRPSULVHGRIDQ2EOLJRU5LVN5DWLQJ255D)DFLOLW\5LVN$GMXVWPHQW)5$DQGD
)LQDO5LVN5DWLQJ)55$Q(VWLPDWHG&DVK5LVN3RVLWLRQLVLQGLFDWHGWRGHWHUPLQH
WKHVHFXUHGDQGXQVHFXUHGSRUWLRQRIWKHREOLJDWLRQUHODWLYHWRFROODWHUDO
7KH255LVDQDVVHVVPHQWRIWKHFUHGLWZRUWKLQHVVRIWKHERUURZHURUJXDUDQWRU
ZLWKRXWFRQVLGHULQJWKHW\SHRUDPRXQWRIWKHIDFLOLW\RULWVVHFXULW\DUUDQJHPHQWV,W
LVDQLQGLFDWRURIWKHSUREDELOLW\WKDWDERUURZHUFDQQRWPHHWLWVFUHGLWREOLJDWLRQVLQ
WKHIRUHVHHQPDQQHU,QGHWHUPLQLQJWKH255WKHIRFXVOLHVRQWKHRXWORRNRIWKH
ERUURZHU$OWKRXJKWKHERUURZHU·VILQDQFLDOFRQGLWLRQLVHYDOXDWHGRQWKHEDVLVRI
WKHKLVWRULFDOILQDQFLDOVWDWHPHQWVWKLVLVSULPDULO\WRGHWHUPLQHDQ\WUHQGLQWKH
FRPSDQ\·VILQDQFLDOSRVLWLRQJRLQJIRUZDUGDQGKRZLWZLOOLPSDFWWKHFRPSDQ\·V
IXWXUHVROYHQF\RUGHEWVHUYLFHFDSDELOLWLHV
%DVHGRQDERYHIDFWRUVHDFKERUURZHULVDVVLJQHGDQ255WKDWUDQJHVIURPWR
ZLWKWRDV+LJK*UDGHWRDV6WDQGDUG*UDGHDQGDQGORZHUDV6XEVWDQGDUG
*UDGH%RUURZHUVZLWKKLJKJUDGH255VDUHXVXDOO\JUDQWHGFOHDQVKRUWWHUPORDQ
IDFLOLWLHV%RUURZHUVZLWKVWDQGDUG255VPD\EHUHTXLUHGE\WKH%DQNWRJLYH
FROODWHUDOWRHQKDQFHWKHLUFUHGLWUDWLQJ2QWKHRWKHUKDQGERUURZHUVZLWK
VXEVWDQGDUG255VDUHGHHPHGWREHKLJKULVNWKXVPD\EHUHTXLUHGE\WKH%DQNWR
SOHGJHKLJKJUDGHFROODWHUDO
%HORZLVDVXPPDU\DVRI'HFHPEHUDQGRIWKH%DQN·VFRPPHUFLDO
ORDQVJURVVRIUHODWHGDOORZDQFHIRULPSDLUPHQWZLWKWKHLUUHVSHFWLYHFUHGLWVFRUHV
&UHGLW6FRUH 'HVFULSWLRQ $PRXQW
+LJKJUDGH
6WDQGDUGJUDGH
6XEVWDQGDUGJUDGH
%HORZ
6XEVWDQWLDOO\
ULVNIUHH 3
3
0LQLPDOULVN 0RGHUDWHULVN $YHUDJHULVN $ERYHDYHUDJH
ULVN
+LJKULVN
1RQUDWHG 3DVWGXHDQG
&UDWHG 3 3 6XEVWDQWLDOO\5LVNIUHH7KHVHERUURZHUVKDYHKLJKGHJUHHRIVWDELOLW\VXEVWDQFHDQG
GLYHUVLW\7KH\DUHH[SHFWHGWRUHPDLQRIKLJKTXDOLW\LQYLUWXDOO\DOOHFRQRPLF
FRQGLWLRQVDQGKDYHDFFHVVWRVXEVWDQWLDODPRXQWRIIXQGVWKURXJKWKHSXEOLF
PDUNHWVDWDQ\WLPH
0LQLPDO5LVN7KHVHERUURZHUVKDYHVWURQJPDUNHWDQGILQDQFLDOSRVLWLRQZLWK
KLVWRU\RIVXFFHVVIXOSHUIRUPDQFH7KHRYHUDOOGHEWVHUYLFHFDSDFLW\DVPHDVXUHGE\
FDVKIORZWRWRWDOGHEWVHUYLFHDVZHOODVWKHLUDELOLW\WRPHHWWKHLUILQDQFLDO
FRPPLWPHQWVLVYHU\VWURQJ
0RGHVW5LVN7KHVHERUURZHUVKDYHVWURQJFDVKIORZVDQGDFFHSWDEOHGHJUHHRI
VWDELOLW\DQGVXEVWDQFHXQGHUQRUPDOPDUNHWFRQGLWLRQV+RZHYHUWKH\PD\EH
VXVFHSWLEOHWRF\FOLFDOFKDQJHVRUFRQFHQWUDWLRQVRIEXVLQHVVULVNPD\EHSUHVHQW
$YHUDJH5LVN7KHVHERUURZHUVKDYHDGHTXDWHFDVKIORZVWRPHHWLWVFRPPLWPHQWV
DQGFDQZLWKVWDQGQRUPDOEXVLQHVVF\FOHV+RZHYHUDQ\SURORQJHGXQIDYRUDEOH
HFRQRPLFSHULRGZRXOGFUHDWHGHWHULRUDWLRQEH\RQGDFFHSWDEOHOHYHOVDVFOHDUULVN
HOHPHQWVH[LVWVUHIOHFWLQJYRODWLOLW\RIHDUQLQJVDQGSHUIRUPDQFH
$ERYH$YHUDJH5LVN7KHVHERUURZHUVKDYHDGHTXDWHFDVKIORZVWRPHHWLWV
FRPPLWPHQWVEXWIDFHVRQJRLQJXQFHUWDLQWLHVDQGH[SRVXUHWRDGYHUVHEXVLQHVV
ILQDQFLDORUHFRQRPLFFRQGLWLRQV
+LJK5LVN$OWKRXJKWKHVHERUURZHUVFXUUHQWO\KDYHDGHTXDWHFDVKIORZVWRPHHW
WKHLUFRPPLWPHQWVWKHLUSHUIRUPDQFHKDYHDOUHDG\EHHQZHDNHQHGDQGDQ\
FRQWLQXDWLRQRIDGYHUVHEXVLQHVVILQDQFLDORUHFRQRPLFFRQGLWLRQVRUIXUWKHU
GRZQWXUQVDUHDOUHDG\H[SHFWHGWRLPSDLUWKHLUFDSDFLW\RUZLOOLQJQHVVWRPHHWWKHLU
ILQDQFLDOFRPPLWPHQWV
6XEVWDQGDUG7KHVHERUURZHUVUHSUHVHQWLQDGHTXDF\RIFDVKIORZVDQGUHDOULVNRI
QRQSD\PHQWRISULQFLSDO7KHSUREDELOLW\RIGHIDXOWLQFUHDVHVDVFUHGLWUDWLQJJRHV
GRZQIURP
%DVLFDOO\LQGHSHQGHQWIURPLQIOXHQFHRIDQ\WUDQVDFWLRQDOIDFWRUVWKH255LV
FRPELQHGZLWKWKH)5$WRDOORZDPRUHSUHFLVHGHSLFWLRQRIULVN7KH)5$WDNHV
LQWRDFFRXQWWKHFRQGXFWRUKDQGOLQJRIWKHERUURZHU·VORDQDQGGHSRVLWRU\DFFRXQWV
7KHFRPELQDWLRQRIWKH255DQGWKH)5$UHVXOWVLQDERUURZHUULVNUDWLQJZKLFK
PD\EHFRPELQHGZLWKRWKHUUHOHYDQWIDFWRUVQRWFRQVLGHUHGLQLWLDOO\LQWKHFUHGLW
VFRULQJV\VWHPWRGHWHUPLQHWKH)55
5HWDLO)LQDQFLDO3URGXFWV
7KHFRQVXPHUORDQSRUWIROLRRIWKH%DQNLVFRPSRVHGRIWKUHHPDLQSURGXFWJURXSV
QDPHO\FUHGLWFDUGVDXWRDQGUHVLGHQWLDOPRUWJDJHORDQV(DFKRIWKHVHSURGXFW
JURXSVKDVWKHLURZQFUHGLWULVNJXLGHOLQHVDQGULVNDVVHVVPHQWV\VWHP$OWKRXJK
HDFKORDQDSSOLFDWLRQLVH[DPLQHGWKURXJKDQLQGLYLGXDOFUHGLWHYDOXDWLRQSURFHVV
FRPELQHGPDQXDODQGDXWRPDWHGSURFHVVWKHFRQVXPHUORDQVDUHPDQDJHGRQD
SRUWIROLREDVLVZLWKUHVSHFWWRGHIDXOWVDVZHOODVDFFHSWUHMHFWDQGUHYLHZVWDQGDUGV
)RUWKH%DQN·VFUHGLWFDUGEXVLQHVVWKHPDLQULVNDVVHVVPHQWWRROLVWKHDSSOLFDWLRQV
VFRULQJPRGHOZKLFKKDVEHHQUHYLVHGDQGILQHWXQHGWKURXJKWKH\HDUVXVLQJWKH
%DQN·VRZQFUHGLWH[SHULHQFHLQWKHFUHGLWFDUGEXVLQHVV7KHFXUUHQWDSSOLFDWLRQV
VFRULQJPRGHOXVHVQLQHYDULDEOHVZKLFKKDYHEHHQLGHQWLILHGDVOLNHO\SUHGLFWRUVRI
FUHGLWEHKDYLRURIFUHGLWFDUGDSSOLFDQWV
7KH%DQNKDVFDWHJRUL]HGWKHVFRUHFDUGLQWRWKUHHOHYHOV2XWULJKWDFFHSW5HYLHZ
EDQGDQG2XWULJKWUHMHFW7KH2XWULJKW$FFHSWFDWHJRU\UHIHUVWRDSSOLFDQWVWKDWDUH
ZLWKLQWKHULVNSURILOHDFFHSWDEOHWRWKH%DQNDQGWKHLUDSSOLFDWLRQVDUHDXWRPDWLFDOO\
DSSURYHGSURYLGHGWKDWDOOLQIRUPDWLRQLQWKHDSSOLFDWLRQDUHYHULILHGWREHDFFXUDWH
EDVHGRQDYDOLGDWLRQV\VWHPSUHVHQWO\LQSODFH7KH2XWULJKW5HMHFWFDWHJRU\UHIHUV
WRDSSOLFDQWVWKDWDUHEHORZWKHPLQLPXPULVNSURILOHDFFHSWDEOHWRWKH3DUHQW
&RPSDQ\DQGWKHLUDSSOLFDWLRQVDUHDXWRPDWLFDOO\UHMHFWHG$SSOLFDWLRQVWKDWIDOO
ZLWKLQWKH5HYLHZ%DQGDUHERUGHUOLQHFDVHVZKLFKDUHURXWHGIRUDSSURYDOE\DULVN
RIILFHUZKRKDVWKHDXWKRULW\WRLQGLYLGXDOO\DFFHSWRUUHMHFWVXFKDSSOLFDWLRQVEDVHG
RQWKHSUHGHWHUPLQHGUHYLHZSDUDPHWHUV7KH3DUHQW&RPSDQ\XWLOL]HVVWDWLVWLFDO
PRGHOLQJLQXSGDWLQJLWVDSSOLFDWLRQVFRUHFDUGV
([SRVXUHWR&UHGLW5LVN
0D[LPXPH[SRVXUHWRFUHGLWULVNZLWKRXWWDNLQJLQWRDFFRXQWDQ\FROODWHUDOKHOGRU
RWKHUFUHGLWHQKDQFHPHQWVIRURQERRNVILQDQFLDODVVHWVDQGRIIERRNVLWHPVDUH
VKRZQEHORZ
*URXS
3DUHQW
&UHGLWULVNH[SRVXUHVUHODWLQJWRRQERRNVLWHPV
'XHIURP%63
3 3 3 3
'XHIURPRWKHUEDQNV
)LQDQFLDODVVHWVDW)973/
'HULYDWLYHDVVHWV
'HEWVHFXULWLHV
$)6ILQDQFLDODVVHWV
*RYHUQPHQWERQGV
)L[HGUDWHWUHDVXU\QRWHV
3ULYDWHERQGVDQG
FRPPHUFLDOSDSHUV
/RDQVDQGUHFHLYDEOHV
5HFHLYDEOHVIURPFXVWRPHUV
&RPPHUFLDO
&RUSRUDWH
&RQVXPHU
%LOOVSXUFKDVHG
$FFUXHGLQWHUHVW
UHFHLYDEOH$,5
2WKHUV
63855$
8QTXRWHGGHEWVHFXULWLHV
FODVVLILHGDVORDQV8'6&/
$,5²RWKHUUHFHLYDEOHV
6DOHVFRQWUDFWUHFHLYDEOHV $FFRXQWVUHFHLYDEOH
,QVWDOOPHQWFRQWUDFWV
UHFHLYDEOH
6XEWRWDOFDUULHGIRUZDUG3 3 3 3
*URXS
3DUHQW
6XEWRWDOEURXJKWIRUZDUG
3 3 3 3
&UHGLWULVNH[SRVXUHVUHODWLQJWRRIIERRNVLWHPV
)LQDQFLDOJXDUDQWHHV
VHH1RWH
/RDQFRPPLWPHQWVDQGRWKHU
FUHGLWUHODWHGOLDELOLWLHV
3 3 3 3
&RQFHQWUDWLRQVRI&UHGLW5LVN
$QDQDO\VLVRIFRQFHQWUDWLRQVRIFUHGLWULVNIRUORDQVDQGRWKHUUHFHLYDEOHVDQG
LQYHVWPHQWVHFXULWLHVJURVVHGXSIRUDQ\DOORZDQFHIRULPSDLUPHQWORVVHVDQG
XQHDUQHGGLVFRXQWVRIWKH*URXSDQGWKH3DUHQW&RPSDQ\E\LQGXVWU\DQGE\
JHRJUDSKLFORFDWLRQDVRI'HFHPEHUDQGLVVKRZQEHORZ
*URXS
/RDQVDQG2WKHU
5HFHLYDEOHV
$PRXQW ,QYHVWPHQW
6HFXULWLHV 7RWDO
&RQFHQWUDWLRQE\LQGXVWU\
0DQXIDFWXULQJ
3 3
3 5HDOHVWDWHUHQWLQJDQGRWKHU
UHODWHGDFWLYLWLHV
)LQDQFLDOLQWHUPHGLDWLRQ
&RPPXQLW\VRFLDODQG
SHUVRQDODFWLYLWLHV
:KROHVDOHDQGUHWDLOWUDGH
7UDQVSRUWDWLRQVWRUDJH
DQGFRPPXQLFDWLRQ
(OHFWULFLW\JDVDQGZDWHU
3ULYDWHKRXVHKROGV
+RWHODQGUHVWDXUDQWV
2WKHUV
3 3 3 &XUUHQW%63UHJXODWLRQVOLPLWWKHFRQFHQWUDWLRQWRDQLQGXVWU\WR&RQFHQWUDWLRQWRILQDQFLDO
LQWHUPHGLDWLRQLQGXVWU\DVRI'HFHPEHURI3LQFOXGHVUHYHUVHUHSXUFKDVH
DJUHHPHQWVZLWKWKH%63RI3SHUWDLQLQJWRRYHUQLJKWOHQGLQJZKLFKPDWXUHG
LPPHGLDWHO\DIWHU'HFHPEHU+HQFHH[FOXGLQJWKHUHYHUVHUHSXUFKDVHDJUHHPHQW
DFFRXQWWKHFRQFHQWUDWLRQUDWLRWRILQDQFLDOLQWHUPHGLDWLRQLVUHGXFHGWR
&RQFHQWUDWLRQE\ORFDWLRQ
3KLOLSSLQHV
2WKHU$VLD
(XURSH
8QLWHG6WDWHV
/RDQVDQG2WKHU
5HFHLYDEOHV
$PRXQW ,QYHVWPHQW
6HFXULWLHV 7RWDO
3 3 3 3 3 3 /RDQVDQG2WKHU
5HFHLYDEOHV
$PRXQW ,QYHVWPHQW
6HFXULWLHV 7RWDO
0DQXIDFWXULQJ
3 3
3 5HDOHVWDWHUHQWLQJDQGRWKHU
UHODWHGDFWLYLWLHV
&RPPXQLW\VRFLDODQG
SHUVRQDODFWLYLWLHV
DQGFRPPXQLFDWLRQ
3ULYDWHKRXVHKROGV
+RWHODQGUHVWDXUDQWV
2WKHUV
DJUHHPHQWVZLWKWKH%63RI3SHUWDLQLQJWRRYHUQLJKWOHQGLQJZKLFKPDWXUHGLPPHGLDWHO\
DIWHU'HFHPEHU+HQFHH[FOXGLQJWKHUHYHUVHUHSXUFKDVHDJUHHPHQWDFFRXQWWKH
FRQFHQWUDWLRQUDWLRWRILQDQFLDOLQWHUPHGLDWLRQLVUHGXFHGWR
/RDQVDQG2WKHU
5HFHLYDEOHV
,QYHVWPHQW
$PRXQW 6HFXULWLHV 7RWDO
3KLOLSSLQHV
3 3 3
2WKHU$VLD
(XURSH
8QLWHG6WDWHV
3 3 3
3DUHQW
/RDQVDQG2WKHU
5HFHLYDEOHV
$PRXQW ,QYHVWPHQW
6HFXULWLHV 7RWDO
0DQXIDFWXULQJ
3 3
3 5HDOHVWDWHUHQWLQJDQGRWKHU UHODWHGDFWLYLWLHV
&RPPXQLW\VRFLDODQG
SHUVRQDODFWLYLWLHV
DQGFRPPXQLFDWLRQ
3ULYDWHKRXVHKROGV
+RWHODQGUHVWDXUDQWV
2WKHUV
/RDQVDQG2WKHU
5HFHLYDEOHV
,QYHVWPHQW
3KLOLSSLQHV
2WKHU$VLD
(XURSH
8QLWHG6WDWHV
3 3 3 3 3 3 5LVN0DQDJHPHQW2EMHFWLYHVDQG3ROLFLHV
/RDQVDQG2WKHU
5HFHLYDEOHV
$PRXQW ,QYHVWPHQW
6HFXULWLHV 7RWDO
0DQXIDFWXULQJ
3 3
3 5HDOHVWDWHUHQWLQJDQGRWKHU UHODWHGDFWLYLWLHV
&RPPXQLW\VRFLDODQG
SHUVRQDODFWLYLWLHV
DQGFRPPXQLFDWLRQ
3ULYDWHKRXVHKROGV
+RWHODQGUHVWDXUDQWV
2WKHUV
3 3 3
&XUUHQW%63UHJXODWLRQVOLPLWWKHFRQFHQWUDWLRQWRDQLQGXVWU\WR&RQFHQWUDWLRQWRILQDQFLDO
/RDQVDQG2WKHU
5HFHLYDEOHV
,QYHVWPHQW
3KLOLSSLQHV
2WKHU$VLD
(XURSH
8QLWHG6WDWHV
&UHGLW4XDOLW\RI)LQDQFLDO$VVHWV
7KHFUHGLWTXDOLW\RIORDQVDQGRWKHUUHFHLYDEOHVDVZHOODVLQYHVWPHQWVHFXULWLHVDUH
VXPPDUL]HGEHORZ
*URXS
/RDQV
DQG2WKHU ,QYHVWPHQW
5HFHLYDEOHV 6HFXULWLHV 7RWDO
1HLWKHUSDVWGXHQRULPSDLUHG 3DVWGXHEXWQRWLPSDLUHG
,PSDLUHG
$OORZDQFHIRULPSDLUPHQW
3 3 3 3 3 3
/RDQV
DQG2WKHU ,QYHVWPHQW
,PSDLUHG
3DUHQW
3 3 3
3 3 3 /RDQV
DQG2WKHU ,QYHVWPHQW
,PSDLUHG
/RDQV
DQG2WKHU ,QYHVWPHQW
,PSDLUHG
3 3 3
3 3 3
7KHWDEOHEHORZVKRZVWKHFUHGLWTXDOLW\SHUFODVVRIILQDQFLDODVVHWVWKDWDUHQHLWKHU
SDVWGXHQRULPSDLUHGEDVHGRQWKH%DQN·VUDWLQJV\VWHP
*URXS
6WDQGDUG 6XEVWDQGDUG
+LJK*UDGH *UDGH *UDGH 7RWDO
'XHIURP%63
3 3
'XHIURPRWKHUEDQNV
*RYHUQPHQWGHEWVHFXULWLHV 3ULYDWHGHEWVHFXULWLHV
3
3 $)6ILQDQFLDODVVHWV
*RYHUQPHQWGHEWVHFXULWLHV LQFOXGLQJIL[HGUDWH
WUHDVXU\QRWHV
3ULYDWHGHEWVHFXULWLHV
5HFHLYDEOHVIURPFXVWRPHUV &RUSRUDWH
&RPPHUFLDO
&RQVXPHU
%LOOVSXUFKDVHG
$FFUXHGLQWHUHVWUHFHLYDEOH 2WKHUV
63855$
8'6&/
$FFRXQWVUHFHLYDEOH
6DOHVFRQWUDFWUHFHLYDEOH
3 3 3
3
'XHIURP%63
'XHIURPRWKHUEDQNV
3 3
3
3
$)6ILQDQFLDODVVHWV
*RYHUQPHQWGHEWVHFXULWLHV LQFOXGLQJIL[HGUDWH
WUHDVXU\QRWHV
&RPPHUFLDO
&RQVXPHU
%LOOVSXUFKDVHG
63855$
8'6&/
$FFRXQWVUHFHLYDEOH
3 3DUHQW
3 3 3
'XHIURP%63
'XHIURPRWKHUEDQNV
6XEWRWDOFDUULHGIRUZDUG
3 3
3
3 3 3
3
3 5LVN0DQDJHPHQW2EMHFWLYHVDQG3ROLFLHV
+LJK*UDGH *UDGH *UDGH 6XEWRWDOEURXJKWIRUZDUG
3 3
7RWDO
3
3
$)6ILQDQFLDODVVHWV
*RYHUQPHQWGHEWVHFXULWLHV
LQFOXGLQJIL[HGUDWH
WUHDVXU\QRWHV
&RPPHUFLDO
&RQVXPHU
%LOOVSXUFKDVHG
63855$
8'6&/
$FFRXQWVUHFHLYDEOH
3 3 3
3
'XHIURP%63
'XHIURPRWKHUEDQNV
3 3
3
3
3 3 3
3
$)6ILQDQFLDODVVHWV
LQFOXGLQJIL[HGUDWH
WUHDVXU\QRWHV
6XEWRWDOFDUULHGIRUZDUG
3 3 3
6XEWRWDOEURXJKWIRUZDUG
3 3 3
3 /RDQVDQGRWKHUUHFHLYDEOHV
&RUSRUDWH
&RPPHUFLDO
&RQVXPHU
%LOOVSXUFKDVHG
$FFUXHGLQWHUHVWUHFHLYDEOH
2WKHUV
63855$
8'6&/
$FFRXQWVUHFHLYDEOH
3 3 3
3 7KHWDEOHEHORZVKRZVWKHDJLQJDQDO\VLVRISDVWGXHEXWQRWLPSDLUHGILQDQFLDODVVHWV
SHUFODVVRIWKH*URXS
/RDQV
&RPPHUFLDO
&RQVXPHU
&RUSRUDWH
$FFUXHGLQWHUHVW
UHFHLYDEOH
2WKHUV
6DOHVFRQWUDFWV
UHFHLYDEOH
/HVVWKDQ WR WR 0RUHWKDQ
GD\V GD\V GD\V GD\V 7RWDO
3
3 3
3
3
3
3 3
3
3 2WKHUUHFHLYDEOHV²
$FFRXQWVUHFHLYDEOH
WR WR GD\V
GD\V
GD\V DQGRYHU 3
3
3
3
7RWDO
/RDQV
&RPPHUFLDO
&RQVXPHU
&RUSRUDWH
$FFUXHGLQWHUHVW
UHFHLYDEOH
6DOHVFRQWUDFWV
UHFHLYDEOH
/HVVWKDQ WR WR 0RUHWKDQ
GD\V GD\V GD\V GD\V 7RWDO
3 3 3
3
3 3
3 3
2WKHUUHFHLYDEOHV
$FFRXQWVUHFHLYDEOH
UHFHLYDEOH
3 3
WR WR GD\V
GD\V
GD\V
DQGRYHU 3
3
3
3
7RWDO
3
3
3 3
1RVHSDUDWHSDUHQWFRPSDQ\DJLQJDQDO\VLVRISDVWGXHEXWQRWLPSDLUHGILQDQFLDO
DVVHWVZDVSUHVHQWHGGXHWRLQVLJQLILFDQWGLIIHUHQFHEHWZHHQWKHFRQVROLGDWHGDQG
SDUHQWFRPSDQ\DFFRXQWV
&ROODWHUDO+HOG$V6HFXULW\DQG2WKHU&UHGLW(QKDQFHPHQWV
7KH*URXSKROGVFROODWHUDODJDLQVWORDQVDQGRWKHUUHFHLYDEOHVIURPFXVWRPHUVLQ
RUGHUWRPLWLJDWHULVN7KHFROODWHUDOPD\EHLQWKHIRUPRIPRUWJDJHRYHUUHDOHVWDWH
SURSHUW\FKDWWHOVLQYHQWRU\FDVKVHFXULWLHVDQGRUJXDUDQWHHV7KH%DQNUHJXODUO\
PRQLWRUVDQGXSGDWHVWKHIDLUYDOXHRIWKHFROODWHUDOGHSHQGLQJRQWKHW\SHRIFUHGLW
H[SRVXUH(VWLPDWHVRIWKHIDLUYDOXHRIFROODWHUDODUHFRQVLGHUHGLQWKHUHYLHZDQG
DVVHVVPHQWRIWKHDGHTXDF\RIDOORZDQFHIRUFUHGLWORVVHV,QJHQHUDOWKH%DQNGRHV
QRWUHTXLUHFROODWHUDOIRUORDQVDQGDGYDQFHVWRRWKHUEDQNVH[FHSWZKHQVHFXULWLHV
DUHKHOGDVSDUWRIUHYHUVHUHSXUFKDVHDJUHHPHQWV
$QHVWLPDWHRIWKHIDLUYDOXHRIFROODWHUDODQGRWKHUVHFXULW\HQKDQFHPHQWVKHOGE\
WKH*URXSDJDLQVWORDQVDQGRWKHUUHFHLYDEOHVDVRI'HFHPEHUDQGLV
VKRZQEHORZ
$JDLQVWLQGLYLGXDOO\LPSDLUHG
3URSHUW\
3
3
2WKHUV
$JDLQVWFROOHFWLYHO\LPSDLUHG
3URSHUW\
'HSRVLWV
2WKHUV
$JDLQVWSDVWGXHEXWQRWLPSDLUHG
3URSHUW\
'HSRVLWV
2WKHUV
$JDLQVWQHLWKHUSDVWGXHQRULPSDLUHG
3URSHUW\
'HSRVLWV
2WKHUV
/LTXLGLW\5LVN
3
3
/LTXLGLW\ULVNLVWKHULVNWKDWWKHUHDUHLQVXIILFLHQWIXQGVDYDLODEOHWRDGHTXDWHO\PHHW
WKHFUHGLWGHPDQGVRIWKH*URXS·VFXVWRPHUVDQGUHSD\GHSRVLWVRQPDWXULW\7KH
$/&2DQGWKH7UHDVXUHURIWKH*URXSHQVXUHWKDWVXIILFLHQWOLTXLGDVVHWVDUH
DYDLODEOHWRPHHWVKRUWWHUPIXQGLQJDQGUHJXODWRU\UHTXLUHPHQWV/LTXLGLW\LV
PRQLWRUHGE\WKH*URXSRQDGDLO\EDVLVDQGXQGHUVWUHVVHGVLWXDWLRQV$
FRQWLQJHQF\SODQLVIRUPXODWHGWRVHWRXWWKHDPRXQWDQGWKHVRXUFHVRIIXQGV
VXFKDVXQXVHGFUHGLWIDFLOLWLHVWKDWDUHDYDLODEOHWRWKH*URXSDQGWKHFLUFXPVWDQFHV
XQGHUZKLFKWKH*URXSPD\XVHVXFKIXQGV
7KH*URXSDOVRPDQDJHVLWVOLTXLGLW\ULVNVWKURXJKWKHXVHRID0D[LPXP&XPXODWLYH
2XWIORZ0&2OLPLWZKLFKUHJXODWHVWKHRXWIORZRIFDVKRQDFXPXODWLYHEDVLVDQG
RQDWHQRUEDVLV7RPDLQWDLQVXIILFLHQWOLTXLGLW\LQIRUHLJQFXUUHQFLHVWKH*URXSKDV
DOVRVHWDQ0&2OLPLWIRUFHUWDLQGHVLJQDWHGIRUHLJQFXUUHQFLHV7KH0&2OLPLWVDUH
HQGRUVHGE\WKH05&DQGDSSURYHGE\WKH%2'
7KHWDEOHEHORZVKRZVWKHPDWXULW\SURILOHRIWKHILQDQFLDOOLDELOLWLHVEDVHGRQ
FRQWUDFWXDOXQGLVFRXQWHGFDVKIORZVDPRXQWVLQPLOOLRQVRI3KLOLSSLQHSHVRV
*URXS
2Q 8SWR WR WR WR %H\RQG
GHPDQG PRQWK PRQWKV PRQWKV PRQWKV \HDU 7RWDO 1RQGHULYDWLYHOLDELOLWLHV
'HSRVLWOLDELOLWLHV
'HPDQG
6DYLQJV
7LPH
%LOOVSD\DEOH
1RWHVSD\DEOH
0DQDJHU·VFKHFNV
$FFUXHGLQWHUHVW
SD\DEOH
$FFUXHGRWKHU
SD\DEOHV
2WKHUOLDELOLWLHV
'HULYDWLYHOLDELOLWLHV
2XWIORZ
,QIORZ
7RWDOOLDELOLWLHV
3 3 3 3
1RQGHULYDWLYHOLDELOLWLHV
'HSRVLWOLDELOLWLHV
'HPDQG
6DYLQJV
DVUHVWDWHG
7LPH
%LOOVSD\DEOH
1RWHVSD\DEOH
0DQDJHU·VFKHFNV
$FFUXHGLQWHUHVW
SD\DEOH
$FFUXHGRWKHU
SD\DEOHV
2WKHUOLDELOLWLHV
2XWIORZ
,QIORZ
7RWDOOLDELOLWLHV
3 3 3 3
3 3
3 3
3
3
3 3
3 3
GHPDQG PRQWK PRQWKV PRQWKV PRQWKV \HDU 7RWDO 3 3
3
3
3
3
3 3
3
3DUHQW
'HSRVLWOLDELOLWLHV
'HPDQG
6DYLQJV
7LPH
%LOOVSD\DEOH
1RWHVSD\DEOH
0DQDJHU·VFKHFNV
$FFUXHGLQWHUHVW
SD\DEOH
$FFUXHGRWKHU
SD\DEOHV
2WKHUOLDELOLWLHV
2XWIORZ
,QIORZ
7RWDOOLDELOLWLHV
3 3 3 3
'HSRVLWOLDELOLWLHV
'HPDQG
6DYLQJV
7LPH
%LOOVSD\DEOH
1RWHVSD\DEOH
0DQDJHU·VFKHFNV
$FFUXHGLQWHUHVW
SD\DEOH
$FFUXHGRWKHU
SD\DEOHV
2WKHUOLDELOLWLHV
GHPDQG PRQWK PRQWKV PRQWKV PRQWKV \HDU 7RWDO 3 3 3 3
3
3
3 3
3 3 2Q 8SWR WR WR WR %H\RQG
GHPDQG PRQWK PRQWKV PRQWKV PRQWKV \HDU 7RWDO 3 3 3 3
3
3
3 'HULYDWLYHOLDELOLWLHV
2XWIORZ
,QIORZ
7RWDOOLDELOLWLHV
3 3 3 3
3
3
)ROORZLQJLVWKHFRQWUDFWXDOPDWXULW\SHUW\SHRIGHULYDWLYHOLDELOLWLHVIRUERWKWKH
*URXSDQG3DUHQW&RPSDQ\LQDQG
GHPDQG PRQWK PRQWKV PRQWKV PRQWKV \HDU 7RWDO )RUHLJQFXUUHQF\
IRUZDUGV
3
3
3
3
3
3
3
GHPDQG PRQWK PRQWKV PRQWKV PRQWKV \HDU 7RWDO )RUHLJQFXUUHQF\
IRUZDUGV
3
3
3
3
3
3
3
0DUNHW5LVN
0DUNHWULVNLVWKHULVNWKDWWKHIDLUYDOXHRUIXWXUHFDVKIORZVRIILQDQFLDOLQVWUXPHQWV
ZLOOIOXFWXDWHGXHWRFKDQJHVLQPDUNHWYDULDEOHVVXFKDVLQWHUHVWUDWHIRUHLJQ
H[FKDQJHUDWHVDQGHTXLW\SULFHV7KH*URXSFODVVLILHVH[SRVXUHVWRPDUNHWULVNLQWR
HLWKHUWUDGLQJERRNRUEDQNLQJERRN7KHPDUNHWULVNIRUWKHWUDGLQJSRUWIROLRLV
PDQDJHGDQGPRQLWRUHGEDVHGRQD9DOXHDW5LVN9D5PHWKRGRORJ\0HDQZKLOH
WKHPDUNHWULVNIRUWKHQRQWUDGLQJSRVLWLRQVDUHPDQDJHGDQGPRQLWRUHGXVLQJRWKHU
VHQVLWLYLW\DQDO\VHV
7KH*URXSDSSOLHVD9D5PHWKRGRORJ\WRDVVHVVWKHPDUNHWULVNRISRVLWLRQVKHOG
DQGWRHVWLPDWHWKHSRWHQWLDOHFRQRPLFORVVEDVHGXSRQDQXPEHURISDUDPHWHUVDQG
DVVXPSWLRQVIRUYDULRXVFKDQJHVLQPDUNHWFRQGLWLRQV9D5LVDPHWKRGXVHGLQ
PHDVXULQJILQDQFLDOULVNE\HVWLPDWLQJWKHSRWHQWLDOQHJDWLYHFKDQJHLQWKHPDUNHW
YDOXHRIDSRUWIROLRDWDJLYHQFRQILGHQFHOHYHODQGRYHUDVSHFLILHGWLPHKRUL]RQ
7KH*URXSXVHVWKHSDUDPHWULF9D5DSSURDFKLQDVVHVVLQJWKHSRVVLEOHFKDQJHVLQWKH
PDUNHWYDOXHRIKHOGIRUWUDGLQJDQG$)6ILQDQFLDODVVHWVEDVHGRQKLVWRULFDOGDWDIRU
DUROOLQJRQH\HDUSHULRG7KH9D5PRGHOVDUHGHVLJQHGWRPHDVXUHPDUNHWULVNLQD
QRUPDOPDUNHWHQYLURQPHQW7KHPRGHOVDVVXPHWKDWDQ\FKDQJHVRFFXUULQJLQWKH
ULVNIDFWRUVDIIHFWLQJWKHQRUPDOPDUNHWHQYLURQPHQWZLOOIROORZDQRUPDO
GLVWULEXWLRQ7KHXVHRI9D5KDVOLPLWDWLRQVEHFDXVHLWLVEDVHGRQKLVWRULFDO
FRUUHODWLRQVDQGYRODWLOLWLHVLQPDUNHWSULFHVDQGDVVXPHVWKDWIXWXUHSULFHPRYHPHQWV
ZLOOIROORZDVWDWLVWLFDOGLVWULEXWLRQ'XHWRWKHIDFWWKDW9D5UHOLHVKHDYLO\RQ
KLVWRULFDOGDWDWRSURYLGHLQIRUPDWLRQDQGPD\QRWFOHDUO\SUHGLFWWKHIXWXUHFKDQJHV
DQGPRGLILFDWLRQVRIWKHULVNIDFWRUVWKHSUREDELOLW\RIODUJHPDUNHWPRYHVPD\EH
XQGHUHVWLPDWHGLIFKDQJHVLQULVNIDFWRUVIDLOWRDOLJQZLWKWKHQRUPDOGLVWULEXWLRQ
DVVXPSWLRQ
9D5PD\DOVREHXQGHUHVWLPDWHGRURYHUHVWLPDWHGGXHWRWKHDVVXPSWLRQVSODFHGRQ
ULVNIDFWRUVDQGWKHUHODWLRQVKLSEHWZHHQVXFKIDFWRUVIRUVSHFLILFLQVWUXPHQWV(YHQ
WKRXJKSRVLWLRQVPD\FKDQJHWKURXJKRXWWKHGD\WKH9D5RQO\UHSUHVHQWVWKHULVNRI
WKHSRUWIROLRVDWWKHFORVHRIHDFKEXVLQHVVGD\DQGLWGRHVQRWDFFRXQWIRUDQ\ORVVHV
WKDWPD\RFFXUEH\RQGWKHFRQILGHQFHOHYHO
7KH9D5ILJXUHVDUHEDFNWHVWHGGDLO\DJDLQVWDFWXDODQGK\SRWKHWLFDOSURILWDQGORVVRI
WKHWUDGLQJERRNWRYDOLGDWHWKHUREXVWQHVVRIWKH9D5PRGHO7RVXSSOHPHQWWKH
9D5WKH*URXSSHUIRUPVVWUHVVWHVWVZKHUHLQWKHWUDGLQJSRUWIROLRVDUHYDOXHGXQGHU
H[WUHPHPDUNHWVFHQDULRVQRWFRYHUHGE\WKHFRQILGHQFHLQWHUYDORIWKH*URXS·V9D5
PRGHO
6LQFH9D5LVDQLQWHJUDOSDUWRIWKH*URXS·VPDUNHWULVNPDQDJHPHQW9D5OLPLWVKDYH
EHHQHVWDEOLVKHGDQQXDOO\IRUDOOILQDQFLDOWUDGLQJDFWLYLWLHVDQGH[SRVXUHVDJDLQVWWKH
9D5OLPLWVDQGDUHPRQLWRUHGRQDGDLO\EDVLV/LPLWVDUHEDVHGRQWKHWROHUDEOHULVN
DSSHWLWHRIWKH*URXS
$VXPPDU\RIWKH*URXS·V9D5SRVLWLRQDW'HFHPEHUDQGIROORZV
DPRXQWVLQPLOOLRQVRI3KLOLSSLQHSHVRV
)RUHLJQ ([FKDQJH ,QWHUHVW 5DWH (TXLW\
7RWDO9D5 'HFHPEHU
$YHUDJHGDLO\
+LJKHVW
/RZHVW
3
3
QLO 3
3
)RUHLJQ ([FKDQJH ,QWHUHVW 5DWH (TXLW\
7RWDO9D5 'HFHPEHU
$YHUDJHGDLO\
+LJKHVW
/RZHVW
3
3
QLO 3
3
7KHKLJKDQGORZRIWKHWRWDOSRUWIROLRPD\QRWHTXDOWRWKHVXPRIWKHLQGLYLGXDO
FRPSRQHQWVDVWKHKLJKDQGORZVRIWKHLQGLYLGXDOSRUWIROLRVPD\KDYHRFFXUUHGRQ
GLIIHUHQWWUDGLQJGD\V7KH9D5IRUIRUHLJQH[FKDQJHLVWKHIRUHLJQH[FKDQJHULVN
WKURXJKRXWWKH3DUHQW&RPSDQ\
,QWHUHVW5DWH5LVN
$FULWLFDOHOHPHQWRIWKH*URXS·VULVNPDQDJHPHQWSURJUDPFRQVLVWVRIPHDVXULQJ
DQGPRQLWRULQJWKHULVNVDVVRFLDWHGZLWKIOXFWXDWLRQVLQPDUNHWLQWHUHVWUDWHVRQWKH
*URXS·VQHWLQWHUHVWLQFRPHDQGHQVXULQJWKDWWKHH[SRVXUHLQLQWHUHVWUDWHVLVNHSW
ZLWKLQDFFHSWDEOHOLPLWV
7KH*URXSHPSOR\V´JDSDQDO\VLVµWRPHDVXUHWKHLQWHUHVWUDWHVHQVLWLYLW\RILWV
UHVRXUFHVDQGOLDELOLWLHV7KHJDSDQDO\VLVPHDVXUHVIRUDQ\JLYHQSHULRGDQ\
PLVPDWFKEHWZHHQWKHDPRXQWVRILQWHUHVWHDUQLQJUHVRXUFHVDQGLQWHUHVWEHDULQJ
OLDELOLWLHVZKLFKZRXOGPDWXUHRUUHSULFHGXULQJWKHSHULRG$SRVLWLYHJDSRFFXUV
ZKHQWKHDPRXQWRILQWHUHVWUDWHVHQVLWLYHDVVHWVH[FHHGVWKHDPRXQWRILQWHUHVWUDWH
VHQVLWLYHOLDELOLWLHVZKLOHDQHJDWLYHJDSRFFXUVZKHQWKHDPRXQWRILQWHUHVWUDWH
VHQVLWLYHOLDELOLWLHVH[FHHGVWKHDPRXQWRILQWHUHVWUDWHVHQVLWLYHDVVHWV$FFRUGLQJO\
GXULQJDSHULRGRIULVLQJLQWHUHVWUDWHVDFRPSDQ\ZLWKDSRVLWLYHJDSZLOOKDYHPRUH
LQWHUHVWUDWHVHQVLWLYHDVVHWVUHSULFLQJDWDKLJKHULQWHUHVWUDWHWKDQLQWHUHVWUDWH
VHQVLWLYHOLDELOLWLHVZKLFKZLOOEHIDYRUDEOHWRLW'XULQJDSHULRGRIIDOOLQJLQWHUHVW
UDWHVDFRPSDQ\ZLWKDSRVLWLYHJDSZLOOKDYHPRUHLQWHUHVWUDWHVHQVLWLYHDVVHWV
UHSULFLQJDWDORZHULQWHUHVWUDWHWKDQLQWHUHVWUDWHVHQVLWLYHOLDELOLWLHVZKLFKZLOOEH
XQIDYRUDEOHWRLW
7KHDVVHWOLDELOLW\JDSSRVLWLRQRIWKH3DUHQW&RPSDQ\DWFDUU\LQJDPRXQWVIROORZV
DPRXQWVLQPLOOLRQVRI3KLOLSSLQHSHVRV
%H\RQG 8SWR 6L[0RQWKV %H\RQG
6L[0RQWKV WR2QH<HDU 2QH<HDU 7RWDO
5HVRXUFHV
3ODFHPHQWV
/RDQV
,QYHVWPHQWV
/LDELOLWLHV
'HSRVLWOLDELOLWLHV
%LOOVSD\DEOH
1RWHVSD\DEOH
$VVHW/LDELOLW\*DS
3
3
3
3
3
3
3
3
%H\RQG 8SWR 6L[0RQWKV %H\RQG
6L[0RQWKV WR2QH<HDU 2QH<HDU 7RWDO
5HVRXUFHV
3ODFHPHQWV
/RDQV
,QYHVWPHQWV
/LDELOLWLHV
'HSRVLWOLDELOLWLHV
%LOOVSD\DEOH
1RWHVSD\DEOH
$VVHW/LDELOLW\*DS
3
3
3
3
3
3
3
3
7KH3DUHQW&RPSDQ\·VPDWXULQJILQDQFLDOOLDELOLWLHVZLWKLQWKHRQHWRVL[PRQWK
SHULRGSHUWDLQWRWLPHGHSRVLWVDVZHOODVELOOVSD\DEOHGXHWREDQNVDQGRWKHU
ILQDQFLDOLQVWLWXWLRQV0DWXULQJELOOVSD\DEOHDUHXVXDOO\VHWWOHGWKURXJKUHSD\PHQWV
:KHQPDWXULQJILQDQFLDODVVHWVDUHQRWVXIILFLHQWWRFRYHUWKHUHODWHGPDWXULQJ
ILQDQFLDOOLDELOLWLHVELOOVSD\DEOHDQGRWKHUFXUUHQWO\PDWXULQJILQDQFLDOOLDELOLWLHVDUH
UROOHGRYHUUHILQDQFHGRUDUHVHWWOHGE\HQWHULQJLQWRQHZERUURZLQJDUUDQJHPHQWV
ZLWKRWKHUFRXQWHUSDUWLHV
)RUHLJQ([FKDQJH5LVN
)RUHLJQH[FKDQJHULVNLVWKHULVNWRHDUQLQJVRUFDSLWDODULVLQJIURPFKDQJHVLQIRUHLJQ
H[FKDQJHUDWHV
7KH*URXS·VQHWIRUHLJQH[FKDQJHH[SRVXUHWDNLQJLQWRDFFRXQWDQ\VSRWRU
IRUZDUGH[FKDQJHFRQWUDFWVLVFRPSXWHGDVIRUHLJQFXUUHQF\DVVHWVOHVVIRUHLJQ
FXUUHQF\OLDELOLWLHV7KHIRUHLJQH[FKDQJHH[SRVXUHLVOLPLWHGWRWKHGD\WRGD\
RYHUWKHFRXQWHUEX\LQJDQGVHOOLQJRIIRUHLJQH[FKDQJHLQWKH*URXS·VEUDQFKHVDV
ZHOODVIRUHLJQH[FKDQJHWUDGLQJZLWKFRUSRUDWHDFFRXQWVDQGRWKHUILQDQFLDO
LQVWLWXWLRQV7KH*URXSLVSHUPLWWHGWRHQJDJHLQSURSULHWDU\WUDGLQJWRWDNH
DGYDQWDJHRIIRUHLJQH[FKDQJHIOXFWXDWLRQV
7KHEUHDNGRZQRIWKHILQDQFLDOUHVRXUFHVDQGOLDELOLWLHVRIWKH*URXSDQG3DUHQW
&RPSDQ\DVWRIRUHLJQFXUUHQF\GHQRPLQDWHGEDODQFHVWUDQVODWHGWR3KLOLSSLQHSHVRV
DVRI'HFHPEHUDQGIROORZV
2WKHU
)RUHLJQ
86'ROODU &XUUHQFLHV 7RWDO
3
5HVRXUFHV
'XHIURPRWKHUEDQNV ,QWHUEDQNORDQVUHFHLYDEOHV
$)6ILQDQFLDODVVHWV
3
3
/LDELOLWLHV
'HSRVLWOLDELOLWLHV
%LOOVSD\DEOH
$FFUXHGLQWHUHVWDQG
RWKHUH[SHQVHV
2WKHUOLDELOLWLHV
&XUUHQF\VZDSVDQGIRUZDUGV
1HWH[SRVXUH
3
3
3
2WKHU
)RUHLJQ
86'ROODU &XUUHQFLHV 7RWDO
5HVRXUFHV
'XHIURPRWKHUEDQNV ,QWHUEDQNORDQVUHFHLYDEOHV
$)6ILQDQFLDODVVHWV
/LDELOLWLHV
'HSRVLWOLDELOLWLHV
%LOOVSD\DEOH
$FFUXHGLQWHUHVWDQG
RWKHUH[SHQVHV
2WKHUOLDELOLWLHV
3 3
3
&XUUHQF\VZDSVDQGIRUZDUGV
1HWH[SRVXUH
3
3
3
7KH%DQN·VIRUHLJQFXUUHQF\SRVLWLRQIRU%63UHSRUWLQJSXUSRVHVLVGHWHUPLQHGE\
DOVRFRQVLGHULQJWKHIRUHLJQFXUUHQF\SRVLWLRQRIQRQILQDQFLDODVVHWVDQGOLDELOLWLHV
WKDWDUHGHQRPLQDWHGLQIRUHLJQFXUUHQFLHVVXFKDVVXQGU\GHELWVGXHIURP+HDG
2IILFHDQGEUDQFKHVVXQGU\FUHGLWVDQGRWKHUGRUPDQWFUHGLWV7KH%DQN·VQHW
IRUHLJQFXUUHQF\H[SRVXUHIRU%63UHSRUWLQJZKLFKLVUHTXLUHGWREHSUHVHQWHGLQ
DJJUHJDWHQHW86GROODUDPRXQWVDQGWUDQVODWHGWR3KLOLSSLQHSHVRVDVRI
'HFHPEHUDQGIROORZV
,Q86GROODUV
,Q3KLOLSSLQHSHVRV
3
3
7KH3DUHQW&RPSDQ\·VSROLF\LVWRPDLQWDLQIRUHLJQFXUUHQF\H[SRVXUHZLWKLQ
DFFHSWDEOHOLPLWVDQGZLWKLQH[LVWLQJUHJXODWRU\JXLGHOLQHV7KH3DUHQW&RPSDQ\
EHOLHYHVWKDWLWVSURILOHRIIRUHLJQFXUUHQF\H[SRVXUHRQLWVDVVHWVDQGOLDELOLWLHVLV
ZLWKLQFRQVHUYDWLYHOLPLWVIRUDILQDQFLDOLQVWLWXWLRQHQJDJHGLQWKHW\SHRIEXVLQHVVLQ
ZKLFKWKH3DUHQW&RPSDQ\LVLQYROYHG
7KHIROORZLQJWDEOHVLOOXVWUDWHWKHVHQVLWLYLW\RIWKHQHWUHVXOWVDQGFDSLWDOIXQGVWRWKH
FKDQJHVLQIRUHLJQH[FKDQJHUDWHVRQWKH*URXS·VILQDQFLDODVVHWVDQGILQDQFLDO
OLDELOLWLHV7KHSHUFHQWDJHVFKDQJHLQFUHDVHDQGGHFUHDVHKDYHEHHQGHWHUPLQHG
EDVHGRQWKHDYHUDJHPDUNHWYRODWLOLW\LQH[FKDQJHUDWHVLQWKHSUHYLRXVPRQWKV
XVLQJDFRQILGHQFHOHYHORI7KHVHQVLWLYLW\DQDO\VLVLVEDVHGRQWKH*URXS·V
IRUHLJQFXUUHQF\GHQRPLQDWHGILQDQFLDOLQVWUXPHQWVKHOGDWHDFKUHSRUWLQJGDWH
LQFOXGLQJFXUUHQF\VZDSVDQGIRUZDUGV
(IIHFWRQ (IIHFWRQ
,QFUHDVHLQ QHWSURILW ,QFUHDVHLQ QHWSURILW FKDQJH IRUWKH\HDU FKDQJH IRUWKH\HDU 86GROODUV
-DSDQHVH\HQ
(XUR
2WKHUV
3
3
2SHUDWLRQDO5LVN
7RVWDQGDUGL]HWKHSUDFWLFHDQGWRFRQIRUPWRLQWHUQDWLRQDOVWDQGDUGVWKH3DUHQW
&RPSDQ\KDVDGRSWHGWKH%DVHO&RPPLWWHH·VGHILQLWLRQRIRSHUDWLRQDOULVN7KLVLV
IRUPDOL]HGLQWKH3DUHQW&RPSDQ\·VDSSURYHG2SHUDWLRQDO5LVN0DQDJHPHQW
)UDPHZRUN2SHUDWLRQDOULVNLVWKHULVNRIORVVDULVLQJIURPLQDGHTXDWHRUIDLOHG
LQWHUQDOSURFHVVHVSHRSOHDQGV\VWHPVRUH[WHUQDOHYHQWV7KLVGHILQLWLRQLQFOXGHV
OHJDOULVNEXWH[FOXGHVVWUDWHJLFDQGUHSXWDWLRQDOULVN7KLVDOVRFRYHUVSRWHQWLDO
ORVVHVWKDWFRXOGRFFXUDVDUHVXOWRIWKH3DUHQW&RPSDQ\·VH[SRVXUHLQWKHXVHRI
WHFKQRORJ\UHODWHGSURGXFWVVHUYLFHVGHOLYHU\FKDQQHOVDQGSURFHVVHV
(DFKVSHFLILFXQLWRIWKH3DUHQW&RPSDQ\KDVLWVUROHVDQGUHVSRQVLELOLWLHVLQWKH
PDQDJHPHQWRIRSHUDWLRQDOULVNDQGWKHVHDUHFOHDUO\VWDWHGLQWKHRSHUDWLRQDOULVN
PDQDJHPHQWIUDPHZRUN$WWKH%2'OHYHODQ250&ZDVIRUPHGWRSURYLGH
RYHUDOOGLUHFWLRQLQWKHPDQDJHPHQWRIRSHUDWLRQDOULVN
7KH250&FRPSRVHGRIWKUHHPHPEHUVRIWKH%2'DQGWZRVHQLRUPDQDJHPHQW
RIILFHUVRIWKH3DUHQW&RPSDQ\FRYHUVWKHIROORZLQJDUHDVRIFRQFHUQ
D
7KHDGHTXDF\RIWKH3DUHQW&RPSDQ\·VSROLFLHVSURFHGXUHVRUJDQL]DWLRQDQG
UHVRXUFHVIRUSUHYHQWLQJRUOLPLWLQJWKHGDPDJHIURPXQH[SHFWHGORVVGXHWR
GHILFLHQFLHVLQLQIRUPDWLRQV\VWHPVEXVLQHVVRSHUDWLRQDODQGPDQDJHPHQW
SURFHVVHVHPSOR\HHVVNLOOVDQGVXSHUYLVLRQHTXLSPHQWDQGLQWHUQDOFRQWUROV
E 5HVXOWVRISHULRGLFRUVSHFLDOULVNDVVHVVPHQWVFRQGXFWHGLQYDULRXVEXVLQHVVHV
DQGRSHUDWLQJXQLWVRIWKH3DUHQW&RPSDQ\WRSURDFWLYHO\XQFRYHURSHUDWLRQDO
ULVNVWKDWPD\UHVXOWWRDFWXDOORVVRUGDPDJHWRWKH3DUHQW&RPSDQ\
F
5HVXOWVRILQWHUQDODXGLWV%63H[DPLQDWLRQVDQGLQYHVWLJDWLRQRIDGPLQLVWUDWLYH
FDVHVWKDWKLJKOLJKWWUHQGVLQGLFDWLYHRISUHVHQWRUHPHUJLQJH[SRVXUHVWR
VSHFLILFRSHUDWLRQDOULVNV
G 5LVNDVVHVVPHQWRIPDMRULQIRUPDWLRQV\VWHPVWREHLPSOHPHQWHGLQWKH3DUHQW
&RPSDQ\
H
5HJXODWRU\FRPSOLDQFHLVVXHVZKHWKHUFXUUHQWO\H[LVWLQJRUDQWLFLSDWHGWRDULVH
DVDUHVXOWRIQHZODZVRUUHJXODWLRQV
I
%XVLQHVVFRQWLQXLW\VWUDWHJLHVSODQVDQGUHVRXUFHV
$Q2SHUDWLRQDO5LVN0DQDJHPHQW2508QLWKDVEHHQIRUPHGDQGZDVJLYHQWKH
PDQGDWHWREXLOGDQGOHDGWKHURDGPDSLQGHYHORSLQJWKHIRXQGDWLRQVDQGV\VWHPV
QHFHVVDU\IRUWKHHIIHFWLYHLPSOHPHQWDWLRQRIDQ2SHUDWLRQDO5LVN0DQDJHPHQW
)UDPHZRUN7KHURDGPDSLVSULPDULO\EDVHGRQWKHEHVWSUDFWLFHVPRGHODVDSSOLHG
E\RWKHUIRUHLJQDQGORFDOILQDQFLDOLQVWLWXWLRQV,QOLQHZLWKWKHDGRSWLRQRIDQ
(QWHUSULVH5LVN0DQDJHPHQWIUDPHZRUNIRUWKH3DUHQW&RPSDQ\WKH2508QLW
WRJHWKHUZLWKDOOWKHRWKHU5LVN8QLWVLVQRZUHSRUWLQJGLUHFWO\WRWKH&KLHI5LVN
2IILFHU
7KH3DUHQW&RPSDQ\DVDPDWWHURISUDFWLFHKDVHPEHGGHGLQLWVSURFHVVHVWKHEDVLF
VWUDWHJLHVQHFHVVDU\WRPDQDJHH[SRVXUHWRRSHUDWLRQDOULVN)RUHPRVWLVWKHSURSHU
VHJUHJDWLRQRIGXWLHVDQGUHVSRQVLELOLWLHV,WHQVXUHVWKDWQRSHUVRQZLOOEHDEOHWR
DSSURYHKLVRZQWUDQVDFWLRQDQGSURYLGHVWKHQHFHVVDU\FRQWUROOD\HUVWRSURYLGH
FKHFNDQGEDODQFH
,QPDQDJLQJSURGXFWVDQGVHUYLFHVQRQHZSURGXFWVRUVHUYLFHVDUHLPSOHPHQWHG
ZLWKRXWDQRSHUDWLRQDOULVNDVVHVVPHQW$VSDUWRIWKHSURGXFWDSSURYDOSURFHVV
SURGXFWPDQDJHUVHQVXUHWKDWULVNVDUHFOHDUO\LGHQWLILHGDQGDGHTXDWHO\FRQWUROOHG
DQGPLWLJDWHG)RUH[LVWLQJSURGXFWVDQGVHUYLFHVUHJXODUUHYLHZVDUHFRQGXFWHGDQG
FRQWUROVDUHDVVHVVHGWRGHWHUPLQHWKHLUFRQWLQXHGHIIHFWLYHQHVV7KH3DUHQW
&RPSDQ\DVSDUWRILWVFRQWLQXLQJHIIRUWWRPDQDJHRSHUDWLRQDOULVNKDVHQVXUHGWKDW
WKHEDVLFVWUDWHJLHVWRPDQDJHH[SRVXUHWRRSHUDWLRQDOULVNKDYHEHHQHPEHGGHGLQLWV
FRQWUROSURFHVVHV
)RUDOOWHFKQRORJ\UHODWHGDFWLYLWLHVDQGLQLWLDWLYHVWKH3DUHQW&RPSDQ\KDVD
7HFKQRORJ\6WHHULQJ&RPPLWWHH76&WRSURYLGHRYHUVLJKWIXQFWLRQ,WVPHPEHUV
DUHFRPSRVHGRI6HQLRU0DQDJHPHQWRIILFHUVIURPERWKWKHEXVLQHVVDQGWKH
RSHUDWLRQDOXQLWVWKHUHE\DOORZLQJDFRPSUHKHQVLYHDQGKLJKOHYHOJXLGDQFHRQ
WHFKQRORJ\UHODWHGLVVXHVWKDWPD\LPSDFWWKH3DUHQW&RPSDQ\7KH3DUHQW
&RPSDQ\KDVGHYHORSHGDQGLPSOHPHQWHGD%XVLQHVV&RQWLQXLW\3ODQWRJLYH
DVVXUDQFHWKDWEDQNVHUYLFHVZLOOFRQWLQXHLQWKHHYHQWRIGLVDVWHUVRUXQIRUHVHHQ
FLUFXPVWDQFHV
3UHSD\PHQW5LVN
3UHSD\PHQWULVNLVWKHULVNWKDWWKH3DUHQW&RPSDQ\ZLOOLQFXUDILQDQFLDOORVVEHFDXVH
LWVFXVWRPHUVDQGFRXQWHUSDUWLHVUHSD\RUUHTXHVWUHSD\PHQWHDUOLHUWKDQH[SHFWHG
VXFKDVIL[HGUDWHPRUWJDJHVZKHQLQWHUHVWUDWHVIDOO7KH3DUHQW&RPSDQ\KDV
H[SRVXUHVLQFRQVXPHUORDQVHJKRXVLQJDQGPRWRUYHKLFOHV7KHVHDFWLYLWLHV
JHQHUDWHPDUNHWULVNVLQFHWKHVHORDQSURGXFWVDUHLQKHUHQWO\VHQVLWLYHWRFKDQJHVLQ
WKHOHYHORIPDUNHWLQWHUHVWUDWHV%DVHGRQKLVWRULFDOGDWDIURPWRWZHOYH
PRQWKVHQGHG'HFHPEHUDQGIURPWRWZHOYHPRQWKVHQGHG
'HFHPEHUSUHSD\PHQWUHFHLYHGE\WKH3DUHQW&RPSDQ\LVOHVVWKDQRI
WKHWRWDOFRQVXPHUORDQSRUWIROLR
5LVN0DQDJHPHQW2EMHFWLYHVDQG3ROLFLHVDQG&DSLWDO0DQDJHPHQW
/HJDO5LVNDQG5HJXODWRU\5LVN0DQDJHPHQW
/HJDOULVNSHUWDLQVWRWKH%DQN·VH[SRVXUHWRORVVHVDULVLQJIURPFDVHVGHFLGHGQRWLQ
IDYRURIWKH%DQNZKHUHVLJQLILFDQWOHJDOFRVWVKDYHDOUHDG\EHHQLQFXUUHGRULQVRPH
LQVWDQFHVZKHUHWKH%DQNPD\EHUHTXLUHGWRSD\GDPDJHV7KH%DQNLVRIWHQ
LQYROYHGLQOLWLJDWLRQLQHQIRUFLQJLWVFROOHFWLRQULJKWVXQGHUORDQDJUHHPHQWVLQFDVH
RIERUURZHUGHIDXOW7KH%DQNPD\LQFXUVLJQLILFDQWOHJDOH[SHQVHVDVDUHVXOWRI
WKHVHHYHQWVEXWWKH%DQNPD\VWLOOHQGXSZLWKQRQFROOHFWLRQRUQRQHQIRUFHPHQW
RIFODLPV7KH%DQNKDVHVWDEOLVKHGPHDVXUHVWRDYRLGRUPLWLJDWHWKHHIIHFWVRIWKHVH
DGYHUVHGHFLVLRQVDQGHQJDJHVVHYHUDOTXDOLILHGOHJDODGYLVRUVZKRZHUHHQGRUVHGWR
DQGFDUHIXOO\DSSURYHGE\VHQLRUPDQDJHPHQW$W\HDUHQGWKH%DQNDOVRHQVXUHV
WKDWPDWHULDODGMXVWPHQWVRUGLVFORVXUHVDUHPDGHLQWKHILQDQFLDOVWDWHPHQWVIRUDQ\
VLJQLILFDQWFRPPLWPHQWVRUFRQWLQJHQFLHVZKLFKPD\KDYHDULVHQIURPOHJDO
SURFHHGLQJVLQYROYLQJWKH%DQN
5HJXODWRU\ULVNUHIHUVWRWKHSRWHQWLDOULVNIRUWKH%DQNWRVXIIHUILQDQFLDOORVVGXHWR
FKDQJHVLQWKHODZVRUPRQHWDU\WD[RURWKHUJRYHUQPHQWDOUHJXODWLRQVRIDFRXQWU\
7KHPRQLWRULQJRIWKH%DQN·VFRPSOLDQFHZLWKWKHVHUHJXODWLRQVDVZHOODVWKHVWXG\
RIWKHSRWHQWLDOLPSDFWRIQHZODZVDQGUHJXODWLRQVLVWKHSULPDU\UHVSRQVLELOLW\RI
WKH%DQN·V&KLHI&RPSOLDQFH2IILFHU7KH&KLHI&RPSOLDQFH2IILFHLVUHVSRQVLEOH
IRUFRPPXQLFDWLQJDQGGLVVHPLQDWLQJQHZUXOHVDQGUHJXODWLRQVWRDOOXQLWVDQDO\]LQJ
DQGDGGUHVVLQJFRPSOLDQFHLVVXHVSHUIRUPLQJSHULRGLFFRPSOLDQFHWHVWLQJRQ
EUDQFKHVDQG+HDG2IILFHXQLWVDQGUHSRUWLQJFRPSOLDQFHILQGLQJVWRWKH$XGLW
&RPPLWWHHDQGWKH%2'
&$3,7$/0$1$*(0(17
5HJXODWRU\&DSLWDO
7KH%DQN·VOHDGUHJXODWRUWKH%63VHWVDQGPRQLWRUVFDSLWDOUHTXLUHPHQWVRIWKH
%DQN
,QLPSOHPHQWLQJFXUUHQWFDSLWDOUHTXLUHPHQWVWKH%63UHTXLUHVWKH%DQNWRPDLQWDLQ
DPLQLPXPFDSLWDODPRXQWDQGDSUHVFULEHGUDWLRRITXDOLI\LQJFDSLWDOWR
ULVNZHLJKWHGDVVHWVNQRZQDVWKH´FDSLWDODGHTXDF\UDWLRµ&$55LVNZHLJKWHG
DVVHWVLVWKHDJJUHJDWHYDOXHRIDVVHWVZHLJKWHGE\FUHGLWULVNPDUNHWULVNDQG
RSHUDWLRQDOULVNEDVHGRQ%63SUHVFULEHGIRUPXODSURYLGHGXQGHULWVFLUFXODUV
&DSLWDO0DQDJHPHQW
8QGHU%63&LUFXODU1RHIIHFWLYH-XO\WKHFDSLWDOWRULVNDVVHWVUDWLRLVWR
EHLQFOXVLYHRIDPDUNHWULVNFKDUJH,Q$XJXVWWKH%63LVVXHG&LUFXODU
1RZKLFKFRQWDLQVWKHLPSOHPHQWLQJJXLGHOLQHVIRUWKHUHYLVHGULVNEDVHGFDSLWDO
DGHTXDF\IUDPHZRUNWRFRQIRUPWR%DVHO,,UHFRPPHQGDWLRQV8QGHUWKHUHYLVHG
IUDPHZRUNFDSLWDOUHTXLUHPHQWVIRURSHUDWLRQDOULVNFUHGLWGHULYDWLYHVDQG
VHFXULWL]DWLRQH[SRVXUHVDUHWREHLQFOXGHGLQWKHFDOFXODWLRQRIWKH%DQN·VFDSLWDO
DGHTXDF\7KHUHYLVHGIUDPHZRUNDOVRSUHVFULEHVDPRUHJUDQXODUPDSSLQJRI
H[WHUQDOFUHGLWUDWLQJVWRWKHFDSLWDOUHTXLUHPHQWVDQGUHFRJQL]HVPRUHW\SHRI
ILQDQFLDOFROODWHUDODQGJXDUDQWHHVDVFUHGLWULVNPLWLJDQWV&KDQJHVLQWKHFUHGLWULVN
ZHLJKWVRIYDULRXVDVVHWVVXFKDVIRUHLJQFXUUHQF\GHQRPLQDWHGH[SRVXUHVWRWKH
3KLOLSSLQHQDWLRQDOJRYHUQPHQWQRQSHUIRUPLQJH[SRVXUHVDQG523$ZHUHDOVR
PDGH([SRVXUHVDUHUHTXLUHGWREHULVNZHLJKWHGEDVHGRQWKLUGSDUW\FUHGLW
DVVHVVPHQWRIWKHLQGLYLGXDOH[SRVXUHJLYHQE\HOLJLEOHH[WHUQDOFUHGLWDVVHVVPHQW
LQVWLWXWLRQV&UHGLWULVNZHLJKWVUDQJHIURPWRGHSHQGLQJRQWKHW\SHRI
H[SRVXUHDQGRUFUHGLWDVVHVVPHQWRIWKHREOLJRU7KHQHZJXLGHOLQHVWRRNHIIHFWRQ
-XO\
,QFRPSXWLQJWKH&$5WKHUHJXODWRU\TXDOLI\LQJFDSLWDOLVDQDO\]HGLQWRWZRWLHUV
ZKLFKDUHL7LHU&DSLWDODQGLL7LHU&DSLWDOOHVVGHGXFWLRQVIURPWKH7RWDO
7LHUDQG7LHUIRUWKHIROORZLQJ
D LQYHVWPHQWVLQHTXLW\RIXQFRQVROLGDWHGVXEVLGLDU\EDQNVDQGRWKHUILQDQFLDO
DOOLHGXQGHUWDNLQJVEXWH[FOXGLQJLQVXUDQFHFRPSDQLHV
E LQYHVWPHQWVLQGHEWFDSLWDOLQVWUXPHQWVRIXQFRQVROLGDWHGVXEVLGLDU\EDQNV
F LQYHVWPHQWVLQHTXLW\RIVXEVLGLDU\LQVXUDQFHFRPSDQLHVDQGQRQILQDQFLDODOOLHG
XQGHUWDNLQJV
G UHFLSURFDOLQYHVWPHQWVLQHTXLW\RIRWKHUEDQNVHQWHUSULVHVDQG
H UHFLSURFDOLQYHVWPHQWVLQRWKHUUHJXODWRU\FDSLWDOLQVWUXPHQWVRIRWKHUEDQNV
DQGTXDVLEDQNV
3URYLGHGWKDWDQ\DVVHWGHGXFWHGIURPWKHTXDOLI\LQJFDSLWDOLQFRPSXWLQJWKH
QXPHUDWRURIWKHULVNEDVHGFDSLWDOUDWLRVKDOOQRWEHLQFOXGHGLQWKHULVNZHLJKWHG
DVVHWVLQFRPSXWLQJWKHGHQRPLQDWRURIWKHUDWLR
7LHU&DSLWDODQG7LHU&DSLWDODUHGHILQHGDVIROORZV
7LHU&DSLWDOLQFOXGHVWKHIROORZLQJ
D
L SDLGXSFRPPRQVWRFN
LL SDLGXSSHUSHWXDODQGQRQFXPXODWLYHSUHIHUUHGVWRFN
LLL FRPPRQDQGSHUSHWXDOQRQFXPXODWLYHSUHIHUUHGVWRFNGLYLGHQGV
GLVWULEXWDEOH
LY VXUSOXV
Y VXUSOXVUHVHUYHV
YL XQGLYLGHGSURILWVIRUGRPHVWLFEDQNVRQO\
YLLXQVHFXUHGVXERUGLQDWHGGHEWZLWKSULRU%63DSSURYDODQG
YLLLPLQRULW\LQWHUHVWLQWKHHTXLW\RIVXEVLGLDU\ILQDQFLDODOOLHGXQGHUWDNLQJV
&DSLWDO0DQDJHPHQW
6XEMHFWWRGHGXFWLRQVIRU
L WUHDVXU\VKDUHV
LL XQUHDOL]HGORVVHVRQXQGHUZULWWHQOLVWHGHTXLW\VHFXULWLHVSXUFKDVHG
LLL XQERRNHGYDOXDWLRQUHVHUYHVDQGRWKHUFDSLWDODGMXVWPHQWVEDVHGRQWKH
ODWHVWUHSRUWRIH[DPLQDWLRQ
LY RXWVWDQGLQJXQVHFXUHGFUHGLWDFFRPPRGDWLRQVERWKGLUHFWDQGLQGLUHFWWR
GLUHFWRUVRIILFHUVVWRFNKROGHUVDQGWKHLUUHODWHGLQWHUHVWV'265,
Y JRRGZLOODQG
YL GHIHUUHGLQFRPHWD[
E 7LHU&DSLWDOLQFOXGHV
L SHUSHWXDODQGFXPXODWLYHSUHIHUUHGVWRFN
LL OLPLWHGOLIHUHGHHPDEOHSUHIHUUHGVWRFNZLWKRUZLWKRXWWKHUHSODFHPHQW
UHTXLUHPHQWVXEMHFWWR%63FRQGLWLRQV
LLL GLYLGHQGVGLVWULEXWDEOHRILDQGLLDERYH
LY DSSUDLVDOLQFUHPHQWUHVHUYH²EDQNSUHPLVHVDVDXWKRUL]HGE\WKH0RQHWDU\
%RDUG0%
Y QHWXQUHDOL]HGJDLQVRQXQGHUZULWWHQOLVWHGHTXLW\VHFXULWLHVSXUFKDVHG
YL JHQHUDOORDQORVVSURYLVLRQ
YLLXQVHFXUHGVXERUGLQDWHGGHEWZLWKDPLQLPXPRULJLQDOPDWXULW\RIDWOHDVW
WHQ\HDUVZLWKSULRU%63DSSURYDO
YLLLXQVHFXUHGVXERUGLQDWHGGHEWZLWKDPLQLPXPRULJLQDOPDWXULW\RIDWOHDVW
ILYH\HDUVZLWKSULRU%63DSSURYDODQG
L[ GHSRVLWIRUVWRFNVXEVFULSWLRQRQ
x FRPPRQVWRFN
x SHUSHWXDODQGQRQFXPXODWLYHSUHIHUUHGVWRFN
x SHUSHWXDODQGFXPXODWLYHSUHIHUUHGVWRFNVXEVFULSWLRQDQG
x OLPLWHGOLIHUHGHHPDEOHSUHIHUUHGVWRFNVXEVFULSWLRQZLWKWKH
UHSODFHPHQWUHTXLUHPHQWXSRQUHGHPSWLRQ
6XEMHFWWRGHGXFWLRQVIRU
L 3HUSHWXDODQGFXPXODWLYHSUHIHUUHGVWRFNWUHDVXU\VKDUHV
LL /LPLWHGOLIHUHGHHPDEOHSUHIHUUHGVWRFNWUHDVXU\VKDUHVZLWKWKH
UHSODFHPHQWUHTXLUHPHQWXSRQUHGHPSWLRQ
LLL 6LQNLQJIXQGIRUUHGHPSWLRQRIOLPLWHGOLIHUHGHHPDEOHSUHIHUUHGVWRFNZLWK
WKHUHSODFHPHQWUHTXLUHPHQWXSRQUHGHPSWLRQ
LY /LPLWHGOLIHUHGHHPDEOHSUHIHUUHGVWRFNWUHDVXU\VKDUHVZLWKRXWWKH
UHSODFHPHQWUHTXLUHPHQWXSRQUHGHPSWLRQDQG
Y 6LQNLQJIXQGIRUUHGHPSWLRQRIOLPLWHGOLIHUHGHHPDEOHSUHIHUUHGVWRFN
ZLWKRXWWKHUHSODFHPHQWUHTXLUHPHQWXSRQUHGHPSWLRQ
&DSLWDO0DQDJHPHQW
7KH*URXS·VDQGWKH%DQN·VUHJXODWRU\FDSLWDOSRVLWLRQDVRI'HFHPEHUDQG
IROORZDPRXQWVLQPLOOLRQV
7LHU&DSLWDO
7LHU&DSLWDO
7RWDO5HJXODWRU\&DSLWDO
'HGXFWLRQV
7RWDO4XDOLI\LQJ&DSLWDODIWHU
GHGXFWLRQV
&UHGLWULVNZHLJKWHGDVVHWV
0DUNHWULVNZHLJKWHGDVVHWV
2SHUDWLRQDOULVNZHLJKWHG
DVVHWV
7RWDOULVNZHLJKWHGDVVHWV
*URXS
3DUHQW
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
7KHFDSLWDOUDWLRVFRPSO\ZLWKWKH%63SUHVFULEHGUDWLRRIDWOHDVW
7KHEUHDNGRZQRIFUHGLWULVNZHLJKWHGDVVHWVDQGPDUNHWULVNZHLJKWHGDVVHWVIROORZ
&DSLWDOUDWLRV
7RWDOUHJXODWRU\FDSLWDO
H[SUHVVHGDVSHUFHQWDJH
RIWRWDOULVNZHLJKWHG
DVVHWV
7RWDO7LHUH[SUHVVHG
DVSHUFHQWDJHRIWRWDO
ULVNZHLJKWHGDVVHWV
2QERRNVDVVHWV
2IIERRNVDVVHWV
&RXQWHUSDUW\ULVNZHLJKWHG
DVVHWVLQWKHWUDGLQJERRNV
7RWDO&UHGLW5LVN:HLJKWHG
$VVHWV
,QWHUHVWUDWHH[SRVXUHV
)RUHLJQH[FKDQJHH[SRVXUHV
7RWDO0DUNHW5LVN:HLJKWHG
$VVHWV
3
*URXS
3
3
3DUHQW
3
3
3
3
3
3
3
3
3
3
3
3
3
0LQLPXP&DSLWDO5HTXLUHPHQW
8QGHUWKHUHOHYDQWSURYLVLRQVRIFXUUHQW%63UHJXODWLRQVWKHUHTXLUHGPLQLPXP
FDSLWDOL]DWLRQRIDXQLYHUVDOEDQNLV3ELOOLRQ$VRI'HFHPEHUDQG
WKH%DQNLVLQFRPSOLDQFHZLWKWKLVUHJXODWLRQ
&DSLWDO0DQDJHPHQW
(QVXULQJ6XIILFLHQW&DSLWDO
2Q-DQXDU\WKH%63LVVXHG&LUFXODU1RDUWLFXODWLQJWKHQHHGIRUEDQNV
WRDGRSWDQGGRFXPHQWDQLQWHUQDOFDSLWDODGHTXDF\DVVHVVPHQWSURFHVV´,&$$3µ
$OOXQLYHUVDODQGFRPPHUFLDOEDQNVDUHH[SHFWHGWRSHUIRUPDWKRURXJKDVVHVVPHQW
RIDOOWKHLUPDWHULDOULVNVDVZHOODVPDLQWDLQFDSLWDODGHTXDWHWRVXSSRUWWKHVHULVNV
7KLVLVLQWHQGHGWRFRPSOHPHQWWKHFXUUHQWUHJXODWRU\FDSLWDOUHTXLUHPHQWRIDWOHDVW
RIULVNDVVHWVZKLFKFRYHUHGRQO\FUHGLWPDUNHWDQGRSHUDWLRQDOULVNV2Q
'HFHPEHU%63LVVXHG&LUFXODU1RHIIHFWLYHO\H[WHQGLQJWKH
LPSOHPHQWDWLRQRIWKH,&$$3IURP-DQXDU\WR-DQXDU\
&RJQL]DQWRIWKHLPSRUWDQFHRIDVWURQJFDSLWDOEDVHWRPHHWVWUDWHJLFDQGUHJXODWRU\
UHTXLUHPHQWVWKH%DQNKDVDGRSWHGDUREXVW,&$$3RQDJURXSZLGHOHYHOWKDW
LVFRQVLVWHQWZLWKLWVULVNSKLORVRSK\DQGULVNDSSHWLWH7KH,&$$3'RFXPHQW
HPERGLHVWKH%DQN·VULVNSKLORVRSK\ULVNDSSHWLWHDQGULVNJRYHUQDQFHIUDPHZRUN
DQGVWUXFWXUHDQGLQWHJUDWHVWKHVHZLWKDWKH%DQN·VVWUDWHJLFREMHFWLYHVDQG
ORQJWHUPVWUDWHJLHVFDOOHG)2&86EWKHILYH\HDUILQDQFLDODQGEXVLQHVV
SODQVDQGFWKHFDSLWDOSODQDQGGLYLGHQGSROLF\
7KH,&$$3·VREMHFWLYHLVWRHQVXUHWKDWWKH%2'DQG6HQLRU0DQDJHPHQWDFWLYHO\
DQGSURPSWO\LGHQWLI\DQGPDQDJHWKHPDWHULDOULVNVDULVLQJIURPWKHJHQHUDOEXVLQHVV
HQYLURQPHQWDQGWKDWDQDSSURSULDWHOHYHORIFDSLWDOLVPDLQWDLQHGWRFRYHUWKHVH
ULVNV7RWHVWWKHDGHTXDF\RILWVFDSLWDOHYHQXQGHUGLIILFXOWFRQGLWLRQVWKH%DQN
FRQGXFWVUHJXODUVWUHVVWHVWLQJWRDVVHVVWKHHIIHFWVRIH[WUHPHEXWSODXVLEOHHYHQWVRQ
LWVFDSLWDO7KHUHVXOWVDUHWKRURXJKO\GLVFXVVHGGXULQJ50&PHHWLQJVDQGUHSRUWHG
WRWKH%RDUG,QWKHFRXUVHRILWVGLVFXVVLRQVWKH%2'DQG6HQLRU0DQDJHPHQWPD\
UHTXHVWIRUDGGLWLRQDOVWUHVVWHVWLQJVFHQDULRVRUUHYLVLRQVWRWKHWHVWDVVXPSWLRQVLQ
RUGHUWREHWWHUDOLJQWKHVHWRFXUUHQWWUHQGVDQGIRUHFDVWV
7KH%DQNKDVDFURVVIXQFWLRQDO,&$$3WHFKQLFDOWHDPFRPSULVHGRIUHSUHVHQWDWLYHV
IURPWKHFRUHULVNPDQDJHPHQWXQLWV²FUHGLWPDUNHWDQGRSHUDWLRQDOULVNVILQDQFLDO
FRQWUROOHUVKLSWUHDVXU\FRUSRUDWHSODQQLQJLQWHUQDODXGLWDQGFRPSOLDQFH
7KLVHQVXUHVDZHOOFRRUGLQDWHGDSSURDFKWRWKHGHYHORSPHQWGRFXPHQWDWLRQ
LPSOHPHQWDWLRQUHYLHZLPSURYHPHQWDQGPDLQWHQDQFHRIWKHYDULRXVVXESURFHVVHV
LQFOXGHGLQWKH,&$$37KHPHPEHUVRIWKH%DQN·V,$'ZHUHJLYHQIXUWKHUWUDLQLQJ
WRHQKDQFHWKHLUH[SHUWLVHSDUWLFXODUO\RQWKHVXEMHFWVRI%DVHO,,DQG,&$$3
,Q6HSWHPEHUWKH%DQNHQJDJHGDQLQGHSHQGHQWFRQVXOWDQWWRDVVLVWLQWKH
GHYHORSPHQWDQGEDQNZLGHLPSOHPHQWDWLRQRIDQ(QWHUSULVH5LVN0DQDJHPHQW
(50GLVFLSOLQHHQYLVLRQHGWRVWUHQJWKHQWKH%DQN·VFDSLWDODQGULVNPDQDJHPHQW
IUDPHZRUN7KHFRQVXOWDQWFRQGXFWHGDQ(50DZDUHQHVVWUDLQLQJIRUWKH%DQN·V
%2'PHPEHUVRIWKH6HQLRU0DQDJHPHQWDQGWKH,&$$3WHFKQLFDOWHDP7KH\DOVR
KHOG(50$ZDUHQHVV:RUNVKRSVWKDWZDVDWWHQGHGE\LGHQWLILHGULVNFKDPSLRQV
IURPYDULRXVOHYHOVRIWKHRUJDQL]DWLRQZKRZHUHGHHPHGWRSRVVHVVH[WHQVLYH
H[SRVXUHWRDQGNQRZOHGJHRIRSHUDWLRQVDQGULVNLVVXHV7KHHQJDJHPHQWDOVR
LQFOXGHVWKHUHYLHZDQGHQKDQFHPHQWRIWKH%DQN·VULVNXQLYHUVHULVNGLFWLRQDU\ULVN
DSSHWLWHDQGULVNDVVHVVPHQWDQGGHYHORSPHQWRIULVNWUHDWPHQWDQGDFWLRQSODQVULVN
LQGLFDWRUVDQGDQ(50PDQXDO
&DSLWDO0DQDJHPHQWDQG6HJPHQW5HSRUWLQJ
2Q0DUFKWKH%63UHOHDVHGWKURXJKWKH%DQNHUV$VVRFLDWLRQRIWKH
3KLOLSSLQHVWKH'LVFXVVLRQ3DSHURQ%DVHO,,,,PSOHPHQWDWLRQLQWKH3KLOLSSLQHV
7KHGLVFXVVLRQSDSHURXWOLQHVWKHNH\SURSRVDOVUHJDUGLQJWKHQHZUHJXODWRU\FDSLWDO
IUDPHZRUNVHWIRUWKE\WKH%DVHO&RPPLWWHHRQ%DQNLQJ6XSHUYLVLRQDVIROORZV
DQHZFDWHJRUL]DWLRQRIWKHFDSLWDOEDVHEUHYLVHGHOLJLELOLW\FULWHULDIRUWKH
GLIIHUHQWFDWHJRULHVRIUHJXODWRU\FDSLWDOFUHJXODWRU\DGMXVWPHQWVGKLJKHU
PLQLPXPFDSLWDOUHTXLUHPHQWVHORVVDEVRUEHQF\RIUHJXODWRU\FDSLWDODWWKHSRLQW
RIQRQYLDELOLW\HLQWURGXFWLRQRIDIUDPHZRUNWRSURPRWHWKHFRQVHUYDWLRQRI
FDSLWDODQGWKHEXLOGXSRIDGHTXDWHEXIIHUVDERYHWKHPLQLPXPDQGIDGGLWLRQDO
GLVFORVXUHUHTXLUHPHQWV6XEVHTXHQWO\RQ-DQXDU\WKH%63LVVXHG&LUFXODU
1RZKLFKVSHFLILHVWKHLPSOHPHQWLQJJXLGHOLQHVRQWKHUHYLVHGULVNEDVHGFDSLWDO
DGHTXDF\IUDPHZRUNLQDFFRUGDQFHZLWKWKH%DVHO,,,VWDQGDUGVDSSOLFDEOHWR
XQLYHUVDODQGFRPPHUFLDOEDQNVDVZHOODVWKHLUVXEVLGLDU\EDQNVDQGTXDVLEDQNV
HIIHFWLYH-DQXDU\,QWKLVFRQQHFWLRQWKH%DQNLQLWV,&$$3'RFXPHQW
FRQVLGHUHGWKHSRVVLEOHLPSDFWRI%DVHO,,,LPSOHPHQWDWLRQRQWKHHOLJLELOLW\RI
XQVXERUGLQDWHGQRWHVDVTXDOLI\LQJFDSLWDODQGWKHFKDQJHVLQFRPSRVLWLRQRI
TXDOLI\LQJFDSLWDO
7KH%DQN·V,&$$3GRFXPHQWZDVVXEMHFWHGWRLQGHSHQGHQWUHYLHZRI,$'WR
SURYLGHUHDVRQDEOHDVVXUDQFHWKDWWKH%DQNPHWUHJXODWRU\UHTXLUHPHQWV7KHUHVXOWV
RIWKHDXGLWDVVHVVPHQWZHUHSUHVHQWHGWRWKH$XGLW&RPPLWWHHDQGWKH%2'LQ
-DQXDU\%DVHGRQ,$'·VDVVHVVPHQWRIWKH%DQN·V,&$$3GRFXPHQWLWV
UHODWHGVXSSRUWLQJGRFXPHQWVH[LVWLQJSURFHVVHVDQGVWUXFWXUHV,$'UHSRUWHGWKDW
WKH%DQNKDVVDWLVIDFWRULO\FRPSOLHGZLWKWKHPLQLPXPUHTXLUHPHQWVSUHVFULEHGLQ
%63&LUFXODU1R,$'DOVRQRWHGWKDWWKH%DQNKDVXQGHUWDNHQLPSURYHPHQWV
LQLWVFDSLWDODQGULVNPDQDJHPHQWSURFHVVHVFRQVLGHULQJWKHFRPPHQWVUHFHLYHG
IURPWKH%63DQGUHVXOWVRIWKHLQWHUQDODXGLWUHYLHZ
7KH%DQN·V,&$$3'RFXPHQWZDVSUHVHQWHGWRDQGDSSURYHGE\WKH%2'RQ
-DQXDU\DQGVXEPLWWHGWRWKH%63RQ-DQXDU\
6(*0(175(3257,1*
%XVLQHVV6HJPHQWV
7KH*URXS·VPDLQRSHUDWLQJEXVLQHVVHVDUHRUJDQL]HGDQGPDQDJHGVHSDUDWHO\
DFFRUGLQJWRWKHQDWXUHRISURGXFWVDQGVHUYLFHVSURYLGHGDQGWKHGLIIHUHQWPDUNHWV
VHUYHGZLWKHDFKVHJPHQWUHSUHVHQWLQJDVWUDWHJLFEXVLQHVVXQLW7KHVHDUHDOVRWKH
EDVLVRIWKH*URXSLQUHSRUWLQJWRLWVFKLHIRSHUDWLQJGHFLVLRQPDNHUIRULWVVWUDWHJLF
GHFLVLRQPDNLQJDFWLYLWLHV7KH*URXS·VPDLQEXVLQHVVVHJPHQWVDUHDVIROORZV
D &RQVXPHU%DQNLQJ
7KLVVHJPHQWSULQFLSDOO\KDQGOHVLQGLYLGXDOFXVWRPHUV·GHSRVLWVDQGSURYLGHV
FRQVXPHUW\SHORDQVVXFKDVDXWRPRELOHVDQGPRUWJDJHILQDQFLQJFUHGLWFDUG
IDFLOLWLHVDQGIXQGVWUDQVIHUIDFLOLWLHV
E
&RUSRUDWHDQG&RPPHUFLDO%DQNLQJ
7KLVVHJPHQWSULQFLSDOO\KDQGOHVORDQVDQGRWKHUFUHGLWIDFLOLWLHVDQGGHSRVLW
DQGFXUUHQWDFFRXQWVIRUFRUSRUDWHLQVWLWXWLRQDOVPDOODQGPHGLXPHQWHUSULVHV
DQGPLGGOHPDUNHWFXVWRPHUV
6HJPHQW5HSRUWLQJ
F
7UHDVXU\
7KLVVHJPHQWLVSULQFLSDOO\UHVSRQVLEOHIRUPDQDJLQJWKH%DQN·VOLTXLGLW\DQG
IXQGLQJUHTXLUHPHQWVDQGKDQGOLQJWUDQVDFWLRQVLQWKHILQDQFLDOPDUNHWV
FRYHULQJIRUHLJQH[FKDQJHDQGIL[HGLQFRPHWUDGLQJDQGLQYHVWPHQWVDQG
GHULYDWLYHVDQG
G
+HDGTXDUWHUV
7KLVVHJPHQWLQFOXGHVFRUSRUDWHPDQDJHPHQWVXSSRUWDQGDGPLQLVWUDWLYHXQLWV
QRWVSHFLILFDOO\LGHQWLILHGZLWK&RQVXPHU%DQNLQJ&RUSRUDWH%DQNLQJRU
7UHDVXU\
7KHVHVHJPHQWVDUHWKHEDVLVRQZKLFKWKH*URXSUHSRUWVLWVSULPDU\VHJPHQW
LQIRUPDWLRQ7UDQVDFWLRQVEHWZHHQVHJPHQWVDUHFRQGXFWHGDWHVWLPDWHGPDUNHWUDWHV
RQDQDUP·VOHQJWKEDVLV
6HJPHQWUHVRXUFHVDQGOLDELOLWLHVFRPSULVHRSHUDWLQJUHVRXUFHVDQGOLDELOLWLHVLQFOXGLQJ
LWHPVVXFKDVWD[DWLRQDQGERUURZLQJV5HYHQXHVDQGH[SHQVHVWKDWDUHGLUHFWO\
DWWULEXWDEOHWREXVLQHVVVHJPHQWDQGWKHUHOHYDQWSRUWLRQVRIWKH*URXS·VUHYHQXHV
DQGH[SHQVHVWKDWFDQEHDOORFDWHGWRWKDWEXVLQHVVVHJPHQWDUHDFFRUGLQJO\UHIOHFWHG
DVUHYHQXHVDQGH[SHQVHVRIWKDWEXVLQHVVVHJPHQW
,QWHUVHJPHQW7UDQVDFWLRQV
7KHUHZHUHQRLQWHUVHJPHQWWUDQVDFWLRQVIRUDQG
6HJPHQW5HSRUWLQJ
$QDO\VLVRI6HJPHQW,QIRUPDWLRQ
6HJPHQWLQIRUPDWLRQRIWKH*URXSDVRIDQGIRUWKH\HDUVHQGHG'HFHPEHU
DQGLVSUHVHQWHGDVIROORZVDPRXQWVLQPLOOLRQVRI3KLOLSSLQHSHVRV
&RUSRUDWH
DQG
&RQVXPHU &RPPHUFLDO
%DQNLQJ %DQNLQJ 7UHDVXU\ +HDGTXDUWHUV 7RWDO
'HFHPEHU
5HVXOWVRIRSHUDWLRQV
1HWLQWHUHVW
LQFRPHDQG
RWKHULQFRPH 3
3
3
3
3
2WKHUH[SHQVHV ,QFRPHEHIRUH
LPSDLUPHQW
ORVVHVDQG
LQFRPHWD[
3
3
3
3
3
,PSDLUPHQWORVVHV 7D[H[SHQVH
1HWLQFRPH
3
6HJPHQW
UHVRXUFHV
3
3
3
3
3
6HJPHQWOLDELOLWLHV 3
2WKHULQIRUPDWLRQ
'HSUHFLDWLRQDQG
DPRUWL]DWLRQ 3
&DSLWDO
H[SHQGLWXUHV 'HFHPEHU
5HVXOWVRIRSHUDWLRQV
1HWLQWHUHVW
LQFRPHDQG
RWKHULQFRPH 3
LPSDLUPHQW
ORVVHVDQG
LQFRPHWD[
3
1HWLQFRPH
6HJPHQW
UHVRXUFHV
DVUHVWDWHG
3
6HJPHQWOLDELOLWLHV DVUHVWDWHG
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
2WKHULQIRUPDWLRQ
'HSUHFLDWLRQDQG
DPRUWL]DWLRQ 3
&DSLWDO
H[SHQGLWXUHV 3
3
3
3
6HJPHQW5HSRUWLQJDQG&DVKDQG%DODQFHVZLWKWKH%63
&RUSRUDWH
DQG
&RQVXPHU &RPPHUFLDO
%DQNLQJ %DQNLQJ 7UHDVXU\ +HDGTXDUWHUV 'HFHPEHU
5HVXOWVRIRSHUDWLRQV
1HWLQWHUHVW
LQFRPHDQG
RWKHULQFRPH 3
3
3
3
3
LPSDLUPHQW
ORVVHVDQG
LQFRPHWD[
3
3
3
3
1HWLQFRPH
3
6HJPHQW
UHVRXUFHV
DVUHVWDWHG
3
3
3
3
3
6HJPHQWOLDELOLWLHV DVUHVWDWHG
3
2WKHULQIRUPDWLRQ
'HSUHFLDWLRQDQG
DPRUWL]DWLRQ 3
&DSLWDO
H[SHQGLWXUHV 3
3
3
3
3
3
7RWDO
3
3
&$6+$1'%$/$1&(6:,7+7+(%63
7KHVHDFFRXQWVDUHFRPSRVHGRIWKHIROORZLQJDVRI'HFHPEHU
*URXS
3DUHQW
3 3 3 3
'XHIURP%63
0DQGDWRU\UHVHUYHV
2WKHUWKDQPDQGDWRU\
3 3 3 3 &DVKFRQVLVWVSULPDULO\RIIXQGVLQWKHIRUPRI3KLOLSSLQHFXUUHQF\QRWHVDQGFRLQVLQ
WKH%DQN·VYDXOWDQGWKRVHLQWKHSRVVHVVLRQRIWHOOHUVLQFOXGLQJ$70V2WKHUFDVK
LWHPVLQFOXGHFDVKLWHPVRWKHUWKDQFXUUHQF\DQGFRLQVRQKDQGVXFKDVFKHFNVGUDZQ
RQRWKHUEDQNVRURWKHUEUDQFKHVWKDWZHUHUHFHLYHGDIWHUWKH%DQN·VFOHDULQJFXWRII
WLPHXQWLOWKHFORVHRIWKHUHJXODUEDQNLQJKRXUV
&DVKDQG%DODQFHVZLWKWKH%63DQG'XHIURP2WKHU%DQNV
0DQGDWRU\UHVHUYHVUHSUHVHQWWKHEDODQFHRIWKHGHSRVLWDFFRXQWPDLQWDLQHGZLWKWKH
%63WRPHHWUHVHUYHUHTXLUHPHQWVDQGWRVHUYHDVFOHDULQJDFFRXQWIRULQWHUEDQN
FODLPV'XHIURP%63EHDUVDQQXDOLQWHUHVWUDWHVUDQJLQJIURPWRLQ
WRLQDQGWRLQH[FHSWIRUWKHDPRXQWVZLWKLQ
WKHUHTXLUHGUHVHUYHDVGHWHUPLQHGE\%637RWDOLQWHUHVWLQFRPHHDUQHGDPRXQWHG
WR33DQG3LQDQGUHVSHFWLYHO\DQGLV
SUHVHQWHGDVSDUWRI,QWHUHVW,QFRPHRQ'XHIURP2WKHU%DQNVDFFRXQWLQWKH
VWDWHPHQWVRILQFRPH
&DVKDQGGXHIURP%63DUHLQFOXGHGLQFDVKDQGFDVKHTXLYDOHQWVIRUFDVKIORZ
VWDWHPHQWUHSRUWLQJSXUSRVHV
8QGHU6HFWLRQRIWKH0DQXDORI5HJXODWLRQVIRU%DQNV025%DEDQNLV
UHTXLUHGWRPDLQWDLQDWOHDVWSHUFHQWRILWVUHVHUYHUHTXLUHPHQWLQWKHIRUPRI
GHSRVLWVZLWKWKH%63DVDPRQJWKHDOORZDEOHLQVWUXPHQWVIRUUHVHUYHFRYHU
6HFWLRQRIWKH025%IXUWKHUSURYLGHVWKDWVXFKGHSRVLWDFFRXQWZLWKWKH%63
LVQRWFRQVLGHUHGDVDUHJXODUFXUUHQWDFFRXQWDVGUDZLQJVDJDLQVWVXFKGHSRVLWVVKDOO
EHOLPLWHGWRDVHWWOHPHQWRIREOLJDWLRQZLWKWKH%63DQGEZLWKGUDZDOVWRPHHW
FDVKUHTXLUHPHQWV
'8()52027+(5%$1.6
7KHEDODQFHRIWKLVDFFRXQWFRQVLVWVRIUHJXODUGHSRVLWVZLWKWKHIROORZLQJ
*URXS
3DUHQW
)RUHLJQEDQNV
/RFDOEDQNV
3 3 3 3
3 3 3 3
7KHEUHDNGRZQRIWKLVDFFRXQWDVWRFXUUHQF\IROORZV
*URXS
3DUHQW
86GROODU
3KLOLSSLQHSHVR
2WKHUFXUUHQFLHV
3 3 3 3
3 3 3 3
$QQXDOLQWHUHVWUDWHVRQWKHVHGHSRVLWVUDQJHIURPWRLQDQG
7RWDOLQWHUHVWLQFRPHRQ'XHIURP2WKHU%DQNVDPRXQWHGWR3LQ3
LQDQG3LQDQGLVSUHVHQWHGDVSDUWRI,QWHUHVW,QFRPHRQ'XHIURP
2WKHU%DQNVDFFRXQWLQWKHVWDWHPHQWVRILQFRPH
'XHIURPRWKHUEDQNVDUHLQFOXGHGLQFDVKDQGFDVKHTXLYDOHQWVIRUFDVKIORZ
VWDWHPHQWUHSRUWLQJSXUSRVHV ,QWHUEDQN/RDQV5HFHLYDEOHDQG)LQDQFLDO$VVHWVDW)DLU9DOXH7KURXJK
3URILWRU/RVV
,17(5%$1./2$165(&(,9$%/(
,QWHUEDQNORDQVUHFHLYDEOHFRQVLVWVRIORDQVJUDQWHGWRRWKHUEDQNV7KHVHORDQVKDYH
WHUPVUDQJLQJIURPRQHWRVHYHQGD\V
6LJQLILFDQWLQWHUEDQNORDQVUHFHLYDEOHDVRI'HFHPEHUDQGDOOLQWHUEDQNORDQV
UHFHLYDEOHDVRI'HFHPEHUDUHGHQRPLQDWHGLQIRUHLJQFXUUHQFLHV7KH
EUHDNGRZQRIWKLVDFFRXQWDVWRFXUUHQF\WUDQVODWHGWR3KLOLSSLQHSHVRDW\HDUHQG
IRUIRUHLJQFXUUHQF\GHQRPLQDWHGLQWHUEDQNORDQVIROORZV
*URXSDQG3DUHQW
86GROODU
$XVWUDOLDQGROODU
3KLOLSSLQHSHVR
%ULWLVKSRXQG
(XUR
3
3
3 3 ,QWHUHVWLQFRPHHDUQHGRQLQWHUEDQNORDQVDPRXQWHGWR3LQ3LQ
DQG3LQDQGLVSUHVHQWHGDV,QWHUHVW,QFRPHRQ,QWHUEDQN/RDQV
5HFHLYDEOHLQWKHVWDWHPHQWVRILQFRPH$QQXDOLQWHUHVWUDWHVRQLQWHUEDQNORDQV
UHFHLYDEOHUDQJHIURPWRLQWRLQDQGWR
LQ
),1$1&,$/$66(76$7)$,59$/8(7+528*+352),725/266
7KLVDFFRXQWLVFRPSRVHGRIWKHIROORZLQJDVDW'HFHPEHU
*URXS
3DUHQW
'HULYDWLYHDVVHWV
'HEWVHFXULWLHV
(TXLW\VHFXULWLHV
3
3
3
3
3
3
3
3 7KHEUHDNGRZQRIWKLVDFFRXQWDVWRFXUUHQF\IROORZV
*URXS
3DUHQW
3KLOLSSLQHSHVR
86GROODUV
3
3
3
3
3
3
3
3 $OOILQDQFLDODVVHWVDW)973/DUHKHOGIRUWUDGLQJ)DLUYDOXHVRIGHULYDWLYHDVVHWV
ZHUHGHWHUPLQHGWKURXJKYDOXDWLRQWHFKQLTXHXVLQJWKHQHWSUHVHQWYDOXH
FRPSXWDWLRQ7KHIDLUYDOXHVRIGHEWDQGHTXLW\VHFXULWLHVKDYHEHHQGHWHUPLQHG
GLUHFWO\E\UHIHUHQFHWRSXEOLVKHGSULFHVTXRWHGLQDFWLYHPDUNHWV
)LQDQFLDO$VVHWVDW)DLU9DOXH7KURXJK3URILWRU/RVV
7KH*URXSUHFRJQL]HGIDLUYDOXHJDLQRQ)973/DPRXQWLQJWR33
DQG3LQDQGUHVSHFWLYHO\LQWKH*URXSDQG3DUHQW
&RPSDQ\ILQDQFLDOVWDWHPHQWVDQGLVLQFOXGHGDVSDUWRI7UDGLQJ*DLQ²QHWDFFRXQW
LQWKHVWDWHPHQWVRILQFRPH
'HULYDWLYHLQVWUXPHQWVLQFOXGHIRUHLJQFXUUHQF\IRUZDUGVDQGZDUUDQWV)RUHLJQ
FXUUHQF\IRUZDUGVUHSUHVHQWFRPPLWPHQWVWRSXUFKDVHVHOOIRUHLJQFXUUHQF\RQD
IXWXUHGDWHDWDQDJUHHGH[FKDQJHUDWH
7KHDJJUHJDWHFRQWUDFWXDORUQRWLRQDODPRXQWRIGHULYDWLYHILQDQFLDOLQVWUXPHQWVDQG
WKHWRWDOIDLUYDOXHVRIGHULYDWLYHILQDQFLDODVVHWVDQGOLDELOLWLHVDUHVHWRXWEHORZ
VHH1RWH
1RWLRQDO
$PRXQW
'HFHPEHU
)DLU9DOXHV
$VVHWV
/LDELOLWLHV &XUUHQF\IRUZDUGV
%RXJKW
6ROG
:DUUDQWV
3
3
3
3
3
3
1RWLRQDO
$PRXQW
'HFHPEHU
)DLU9DOXHV
$VVHWV
/LDELOLWLHV
&XUUHQF\IRUZDUGV
%RXJKW
6ROG
:DUUDQWV
3 3
3
3 3
3
2Q'HFHPEHUWKH%DQNSDUWLFLSDWHGLQDERQGH[FKDQJHSURJUDPZKLFKZDV
RIIHUHGE\WKH3KLOLSSLQH*RYHUQPHQWZKHUHLQRZQHUVRIFHUWDLQHOLJLEOHERQGVZHUH
DOORZHGWRH[FKDQJHWKHVHROGERQGVIRUQHZERQGV,QWKHH[FKDQJHSURJUDPWKH
%DQNH[FKDQJHGLQYHVWPHQWVGHVLJQDWHGDVILQDQFLDODVVHWVDW)973/ZLWKIDLUYDOXH
RI3IRULQYHVWPHQWVZLWKIDLUYDOXHRI3ZKLFKZHUHGHVLJQDWHGDV
$)67KHGLIIHUHQFHEHWZHHQWKHFDUU\LQJDPRXQWRIWKHERQGVJLYHQXSDQGWKHIDLU
YDOXHRIWKHQHZERQGVRI3ZDVUHFRJQL]HGLQSURILWRUORVVXQGHUWKH7UDGLQJ
*DLQ²QHWDFFRXQWLQWKHVWDWHPHQWRILQFRPH
$YDLODEOHIRUVDOH)LQDQFLDO$VVHWV
$9$,/$%/()256$/(),1$1&,$/$66(76
$YDLODEOHIRUVDOHILQDQFLDODVVHWVFRQVLVWRIWKHIROORZLQJ
*URXS
3DUHQW
*RYHUQPHQWERQGV
2WKHUGHEWVHFXULWLHV
)L[HGUDWHWUHDVXU\QRWHV
3ULYDWHERQGVDQG
FRPPHUFLDOSDSHUV
(TXLW\VHFXULWLHV
3 3 3 3 3 3 3 3
7KHEUHDNGRZQRIWKLVDFFRXQWDVWRFXUUHQF\IROORZV
*URXS
3DUHQW
3KLOLSSLQHSHVR
86GROODU
2WKHUV
3 3 3 3
3 3 3 3
*RYHUQPHQWERQGVDQGRWKHUGHEWVHFXULWLHVLVVXHGE\UHVLGHQWDQGQRQUHVLGHQW
FRUSRUDWLRQVHDUQHGLQWHUHVWDWWRSHUDQQXPLQWRSHU
DQQXPLQDQGWRLQ
*RYHUQPHQWERQGVZLWKIDFHYDOXHRI3DVRI'HFHPEHUDQG
DUHGHSRVLWHGZLWK%63DVVHFXULW\IRUWKH%DQN·VIDLWKIXOFRPSOLDQFHZLWKLWV
ILGXFLDU\REOLJDWLRQVVHH1RWH
(TXLW\VHFXULWLHVLQFOXGHXQTXRWHGHTXLW\VHFXULWLHVFRQVLVWLQJRIFOXEVKDUHV
SUHIHUUHGVKDUHVDQGFRPPRQVKDUHVRIYDULRXVXQOLVWHGORFDOFRPSDQLHV
&KDQJHVLQ$)6ILQDQFLDODVVHWVDUHDVIROORZV
1RWHV *URXS
3DUHQW
%DODQFHDWEHJLQQLQJRI\HDU
$GGLWLRQV
'LVSRVDOV
)RUHLJQFXUUHQF\UHYDOXDWLRQ
)DLUYDOXHJDLQVORVVHV
,PSDLUPHQWUHYHUVDOORVV
5HFODVVLILFDWLRQWRORDQV
DQGUHFHLYDEOHV
5HFODVVLILFDWLRQIURP
+70LQYHVWPHQWV
%DODQFHDWHQGRI\HDU
3
3
3
3
3
3
3
3
$YDLODEOHIRUVDOH)LQDQFLDO$VVHWV
7KHIDLUYDOXHVRIJRYHUQPHQWERQGVDQGTXRWHG$)6VHFXULWLHVRWKHUGHEWDQG
HTXLW\VHFXULWLHVKDYHEHHQGHWHUPLQHGGLUHFWO\E\UHIHUHQFHWRTXRWHGSULFHV
JHQHUDWHGLQDFWLYHPDUNHWV)RUXQTXRWHG$)6HTXLW\VHFXULWLHVLQFOXGHGXQGHU
HTXLW\VHFXULWLHVWKHIDLUYDOXHLVQRWUHOLDEO\GHWHUPLQDEOHHLWKHUE\UHIHUHQFHWR
VLPLODUILQDQFLDOLQVWUXPHQWVRUWKURXJKYDOXDWLRQWHFKQLTXHXVLQJWKHQHWSUHVHQW
YDOXHRIWKHIXWXUHFDVKIORZV$FFRUGLQJO\XQTXRWHG$)6HTXLW\VHFXULWLHVDUH
FDUULHGDWFRVW
7KHWUDGLQJJDLQRQ$)6ILQDQFLDODVVHWVVKRZQDVSDUWRI7UDGLQJ*DLQ²QHWLQWKH
VWDWHPHQWVRILQFRPHDPRXQWHGWR33DQG3LQ
DQGUHVSHFWLYHO\
7KHQHWIDLUYDOXHJDLQVORVVHVRQ$)6ILQDQFLDODVVHWVGLUHFWO\UHFRJQL]HGLQRWKHU
FRPSUHKHQVLYHLQFRPHDPRXQWHGWR33DQG3LQ
DQGUHVSHFWLYHO\LQWKH*URXSILQDQFLDOVWDWHPHQWVDQG3
3DQG3LQDQGUHVSHFWLYHO\LQWKH3DUHQW
&RPSDQ\ILQDQFLDOVWDWHPHQWV
7KH*URXSUHFRJQL]HGLPSDLUPHQWORVVHVDPRXQWLQJWR3LQRQLWV
LQYHVWPHQWVLQHTXLW\VHFXULWLHVZKRVHPDUNHWYDOXHKDGVLJQLILFDQWO\GHFOLQHGRYHUD
ORQJSHULRGRIWLPH,QFHUWDLQLQYHVWPHQWVLQHTXLW\VHFXULWLHVDPRXQWLQJWR
3ZHUHVROGDQGWKHUHODWHGDOORZDQFHIRULPSDLUPHQWDPRXQWLQJWR3ZDV
DFFRUGLQJO\UHYHUVHG
7KH*URXSUHFRJQL]HGWKHGHWHULRUDWLRQRIWKHZRUOG·VILQDQFLDOPDUNHWVWKDW
RFFXUUHGLQWKHWKLUGTXDUWHURI7KHHQRUPLW\DQGH[WHQWRIWKHJOREDOFUHGLW
FULVLVZDVFU\VWDOOL]HGE\WKHVXEVWDQWLDOJRYHUQPHQWSURJUDPVLQVWLWXWHGE\PDMRU
HFRQRPLHVLQUHVSRQVHWRWKHFULVLVLQFOXGLQJWHPSRUDU\OLTXLGLW\IDFLOLWLHVRXWULJKW
SXUFKDVHRIFRPPHUFLDOSDSHUVDQGPRUWJDJHGEDFNHGVHFXULWLHVJXDUDQWHHRIQHZ
XQVHFXUHGGHEWLVVXHGE\EDQNVDQGSXUFKDVHRIHTXLW\VWDNHVLQILQDQFLDOLQVWLWXWLRQV
5HODWHGWRWKLVLQWKH*URXSUHFODVVLILHGFHUWDLQILQDQFLDODVVHWVDVDOORZHG
XQGHUWKHDPHQGHG3$6DQG3)567KH*URXSUHFODVVLILHG5HSXEOLFRIWKH
3KLOLSSLQHV523ERQGLQYHVWPHQWVZLWKWRWDOFDUU\LQJYDOXHRI3RXWRI
WKH$)6FDWHJRU\WR+70HIIHFWLYH6HSWHPEHU7KHIDLUYDOXHRIWKH
LQYHVWPHQWVDVRIWKHGDWHRIUHFODVVLILFDWLRQLVHTXDOWRWKHFDUU\LQJDPRXQWRIWKH
LQYHVWPHQWV7RWDOIDLUYDOXHORVVLQUHFRJQL]HGLQFDSLWDOIXQGVEHIRUH
UHFODVVLILFDWLRQDPRXQWHGWR37KHWRWDOIDLUYDOXHORVVRI3DVDWGDWH
RIUHFODVVLILFDWLRQVKDOOUHPDLQLQHTXLW\DQGZLOOEHDPRUWL]HGRYHUWKHUHPDLQLQJ
PDWXULW\RIWKH523ERQGLQYHVWPHQWVXVLQJWKHHIIHFWLYHLQWHUHVWPHWKRG
$PRUWL]DWLRQRIXQUHDOL]HGORVVHVIRUWKH\HDUVHQGHG'HFHPEHUDQG
DPRXQWHGWR3DQG3QLOLQUHVSHFWLYHO\,QVXEVWDQWLDOO\DOO
RIWKHVHUHFODVVLILHGLQYHVWPHQWVZHUHGLVSRVHGRI$W'HFHPEHUDQG
WKHFDUU\LQJYDOXHRIWKHUHFODVVLILHGLQYHVWPHQWVDPRXQWHGWR3DQG3
UHVSHFWLYHO\ZKLOHWKHIDLUYDOXHRIWKHLQYHVWPHQWVWRWDOHG3DQG3UHVSHFWLYHO\
$YDLODEOHIRUVDOH)LQDQFLDO$VVHWVDQG+HOGWR0DWXULW\,QYHVWPHQWV
DOORZHGWRH[FKDQJHWKHVHROGERQGVIRUQHZERQGV,QWKHH[FKDQJHSURJUDPWKH
%DQNH[FKDQJHGLQYHVWPHQWVGHVLJQDWHGDW$)6ZLWKIDLUYDOXHRI3DWWKH
GDWHRIWKHH[FKDQJHIRULQYHVWPHQWVZLWKIDLUYDOXHRI3ZKLFKZHUHDOVR
GHVLJQDWHGDV$)67KHGLIIHUHQFHEHWZHHQWKHIDLUYDOXHRIWKHERQGVJLYHQXSDQG
WKHIDLUYDOXHRIWKHQHZERQGVRI3ZDVUHFRJQL]HGLQSURILWRUORVVXQGHUWKH
7UDGLQJ*DLQ²QHWDFFRXQWLQWKHVWDWHPHQWRILQFRPH
+(/'720$785,7<,19(670(176
DOORZHGWRH[FKDQJHWKHVHROGERQGVIRUQHZERQGVPDWXULQJLQDQG,Q
WKHH[FKDQJHSURJUDPWKH%DQNH[FKDQJHG+70LQYHVWPHQWVZLWKFDUU\LQJYDOXHRI
3DWWKHGDWHRIWKHH[FKDQJHIRULQYHVWPHQWVZLWKIDLUYDOXHRI3
ZKLFKZHUHGHVLJQDWHGDOVRDV+707KHGLIIHUHQFHEHWZHHQWKHFDUU\LQJYDOXHRI
WKHERQGVJLYHQXSDQGWKHIDLUYDOXHRIWKHQHZERQGVRI3ZLOOEHDPRUWL]HG
RYHUWKHUHPDLQLQJOLIHRIWKHQHZERQGVDVDGMXVWPHQWRQLQWHUHVWLQFRPHWREH
HDUQHGRQWKHVHLQYHVWPHQWV(IIHFWLYHLQWHUHVWUDWHVRQWKHQHZLQYHVWPHQWVUDQJH
IURPWR7KHH[FKDQJHSURJUDPZDVFRYHUHGE\DUHOLHIIURPWKH
WDLQWLQJSURYLVLRQRI3$6DVDOORZHGE\%63DQG6(&VHHDOVR1RWH7KH
+70LQYHVWPHQWVXQGHUWKLVERQGH[FKDQJHSURJUDPZHUHIXOO\GLVSRVHGRILQ
,QWKH%DQNGLVSRVHGRIPRUHWKDQDQLQVLJQLILFDQWDPRXQWRILWV+70
LQYHVWPHQWVDPRXQWLQJWR37KHUHODWHGWUDGLQJJDLQUHFRJQL]HGDPRXQWHG
WR3DQGLVSUHVHQWHGDVSDUWRI7UDGLQJ*DLQ²QHWLQWKHVWDWHPHQWRI
LQFRPH&RQVHTXHQWO\LQDFFRUGDQFHZLWK3$6WKHUHPDLQLQJ+70LQYHVWPHQWV
SRUWIROLRDPRXQWLQJWR3ZDVUHFODVVLILHGWR$)6ILQDQFLDODVVHWV
VHH1RWH,QVXEVWDQWLDOO\DOORIWKHVHUHFODVVLILHGLQYHVWPHQWVZHUH
GLVSRVHGRI$W'HFHPEHUDQGWKHFDUU\LQJYDOXHRIWKHUHFODVVLILHG
LQYHVWPHQWVDPRXQWHGWR3DQG3UHVSHFWLYHO\ZKLOHWKHIDLUYDOXH
RIWKHLQYHVWPHQWVWRWDOHG3DQG3
/RDQVDQG2WKHU5HFHLYDEOHV
/2$16$1'27+(55(&(,9$%/(6
7KLVDFFRXQWFRQVLVWVRIWKHIROORZLQJDVRI'HFHPEHU
*URXS
3DUHQW
/RDQVDQGGLVFRXQWV
3
%LOOVSXUFKDVHG
&XVWRPHUV·OLDELOLWLHVXQGHU
DFFHSWDQFHVDQGWUXVW
UHFHLSWV
$FFUXHGLQWHUHVWUHFHLYDEOH 8QHDUQHGGLVFRXQWV
2WKHUUHFHLYDEOHV
63855$
6DOHVFRQWUDFWVUHFHLYDEOH
$FFRXQWVUHFHLYDEOH
$FFUXHGLQWHUHVWUHFHLYDEOH
UHFHLYDEOH
8'6&/
3 3 3
3 3 3 3
,QWKH*URXSGLVSRVHGRIXQTXRWHGGHEWVHFXULWLHVZLWKFDUU\LQJDPRXQWRI
37RWDOJDLQUHFRJQL]HGRQWKHGLVSRVDODPRXQWHGWR3ZKLFKLV
LQFOXGHGXQGHU7UDGLQJ*DLQ²QHWDFFRXQWLQWKHVWDWHPHQWRILQFRPH
&XUUHQWEDQNLQJUHJXODWLRQVDOORZEDQNVWKDWKDYHQRXQERRNHGYDOXDWLRQUHVHUYHV
DQGFDSLWDODGMXVWPHQWVUHTXLUHGE\%63WRH[FOXGHIURPQRQSHUIRUPLQJ
FODVVLILFDWLRQWKRVHORDQVFODVVLILHGDVORVVLQWKHODWHVWH[DPLQDWLRQRIWKH%63WKDW
DUHIXOO\FRYHUHGE\DOORZDQFHIRUFUHGLWORVVHVSURYLGHGWKDWLQWHUHVWRQVDLG
UHFHLYDEOHVVKDOOQRWEHDFFUXHG$VRI'HFHPEHUDQGWKH%DQNKDV
QRXQERRNHGYDOXDWLRQUHVHUYHV
$VRI'HFHPEHUDQGQRQSHUIRUPLQJORDQV13/VRIWKH%DQNDV
UHSRUWHGWRWKH%63QHWRIDFFRXQWVFODVVLILHGDV´/RVVµWKDWDUHFRYHUHGE\
ORDQORVVUHVHUYHVDUHDVIROORZV
*URXSDQG3DUHQW
*URVV13/V
/HVVORDQVFODVVLILHGDV´ORVVµ
ZLWKUHVHUYHV
1HW13/V
3
3
3
3
$VRI'HFHPEHUDQGWRWDOORDQORVVUHVHUYHVRIWKH*URXSDPRXQWHG
WR3DQG3UHVSHFWLYHO\7KHVHUHSUHVHQWWKHEDODQFHRIWKH
DOORZDQFHIRULPSDLUPHQWRQUHFHLYDEOHVIURPFXVWRPHUVDVRI'HFHPEHU
DQGOHVVWKHDOORZDQFHIRULPSDLUPHQWRQDFFUXHGLQWHUHVWUHFHLYDEOHRI3
DQG3UHVSHFWLYHO\
5HVWUXFWXUHGORDQVRIWKH*URXSDPRXQWHGWR3DVRI'HFHPEHU
DQG3DVRI'HFHPEHU,QWHUHVWLQFRPHRQWKHVHUHVWUXFWXUHG
ORDQVDPRXQWHGWR33DQG3LQDQG
UHVSHFWLYHO\
7KHEUHDNGRZQRIWRWDOORDQVDQGRWKHUUHFHLYDEOHVQHWRIXQHDUQHGGLVFRXQWVDVWR
VHFXUHGZLWKFRUUHVSRQGLQJFROODWHUDOW\SHVDQGXQVHFXUHGORDQVIROORZV
6HFXUHG
*RYHUQPHQWVHFXULWLHV
5HDOHVWDWH
&KDWWHOPRUWJDJH
'HSRVLWKROGRXW
$VVLJQPHQWRIUHFHLYDEOHV
2WKHUV
8QVHFXUHG
3
*URXS
3DUHQW
3 3 3 3 3 3 3
7KHEUHDNGRZQDVWRVHFXUHGDQGXQVHFXUHGRIQRQDFFUXLQJORDQVRIWKH*URXSDQG
WKH%DQNUHSRUWHGWRWKH%63DVRI'HFHPEHUIROORZV
*URXSDQG3DUHQW
6HFXUHG
8QVHFXUHG
3
3
3
7KHPDWXULW\SURILOHRIORDQVDQGRWKHUUHFHLYDEOHVIROORZV
3
*URXS
3DUHQW
/HVVWKDQRQH\HDU
3 3 3 3 2QH\HDUWROHVVWKDQILYH\HDUV %H\RQGILYH\HDUV
3 3 3 3
/RDQVDQGRWKHUUHFHLYDEOHVEHDUDQQXDOLQWHUHVWDWWKHUDQJHRIWRLQ
WRLQDQGWRLQ
7KHEUHDNGRZQRIORDQVUHFHLYDEOHIURPFXVWRPHUVH[FOXGLQJDFFUXHGLQWHUHVW
UHFHLYDEOHDVWRW\SHRILQWHUHVWUDWHIROORZV
*URXSDQG3DUHQW
9DULDEOHLQWHUHVWUDWHV
)L[HGLQWHUHVWUDWH
3
3
3
3
7KHDPRXQWVRILQWHUHVWLQFRPHSHUW\SHRIORDQVDQGUHFHLYDEOHVIRUHDFKUHSRUWLQJ
SHULRGDUHDVIROORZV
*URXS 5HFHLYDEOHVIURPFXVWRPHUV 2WKHUUHFHLYDEOHV
63855$
6DOHVFRQWUDFWVUHFHLYDEOH 8'6&/
,QVWDOOPHQWFRQWUDFWVUHFHLYDEOH
2WKHUV
3 3 3
3 3 3
3DUHQW
5HFHLYDEOHVIURPFXVWRPHUV 2WKHUUHFHLYDEOHV
63855$
6DOHVFRQWUDFWVUHFHLYDEOH 8'6&/
2WKHUV
3 3 3
3 3 3
$VRI'HFHPEHUDQGORDQVDQGGLVFRXQWVDPRXQWLQJWR3DQG
3UHVSHFWLYHO\KDYHEHHQDVVLJQHGWR%63WRVHFXUHWKH%DQN·VERUURZLQJV
XQGHU%63UHGLVFRXQWLQJSULYLOHJHVVHH1RWH
7KHPRYHPHQWVLQWKHDOORZDQFHIRULPSDLUPHQWRIORDQVDQGRWKHUUHFHLYDEOHVDUH
VXPPDUL]HGEHORZVHH1RWH
,PSDLUPHQWORVVHVGXULQJ
WKH\HDU
2WKHUDGMXVWPHQWVWUDQVIHUV
%DODQFHDWHQGRI\HDU
*URXS
3DUHQW
3 3 3 3 3 3 3 3 ,QYHVWPHQWLQ6XEVLGLDULHV
,19(670(176,168%6,',$5,(6
7KLVDFFRXQWLQWKH3DUHQW&RPSDQ\ILQDQFLDOVWDWHPHQWVSHUWDLQVWRWKH%DQN·V
LQYHVWPHQWVLQWKHIROORZLQJVXEVLGLDULHVZKLFKDUHFDUULHGDWFRVW
,QWHUHVW 3DUHQW
+HOG 83,
8%36,
8'&
8%3,%,
8&%&
3
3
3
3
7KH%DQNLVWKHXOWLPDWHSDUHQWFRPSDQ\RI83,·VZKROO\RZQHGVXEVLGLDULHV)83,
DQG)8'&1RHTXLW\LQYHVWPHQWDFFRXQWLVUHIOHFWHGLQWKH%DQN·VDQG
VHSDUDWHILQDQFLDOVWDWHPHQWVIRU)83,DQG)8'&VLQFH83,·VLQYHVWPHQWVLQWKHVH
VXEVLGLDULHVZHUHDOUHDG\HOLPLQDWHGDWFRQVROLGDWLRQOHYHOIRU83,2WKHUVXEVLGLDULHV
RIWKH%DQNDUHGRUPDQW,9&&ZDVQRWLQFOXGHGLQWKHFRQVROLGDWLRQGXHWR
LPPDWHULDOLW\RILWVDFFRXQWEDODQFHV
7KHIROORZLQJWDEOHSUHVHQWVILQDQFLDOLQIRUPDWLRQIRU83,)83,DQG)8'&DVRI
DQGIRUWKH\HDUVHQGHG'HFHPEHUDQG
$VVHWV
1HW3URILW /LDELOLWLHV 5HYHQXHV /RVV 83,
)83,
)8'&
83,
)83,
)8'&
3
3
3
3
3 3
3
3
7KH%DQNDOVRKDVLQYHVWPHQWVLQFHUWDLQ63&V7KHVH63&VZHUHHVWDEOLVKHG
SULPDULO\WRPDQDJHFHUWDLQLQYHVWPHQWSURSHUWLHVRIWKH%DQN,QWKH*URXSDQG
3DUHQW&RPSDQ\ILQDQFLDOVWDWHPHQWVWKHVH63&VDUHFRQVROLGDWHGWKURXJKWKH
,QYHVWPHQW3URSHUWLHVDFFRXQWLQVWHDGRIHTXLW\LQYHVWPHQWVHYHQLIWKH%DQN
DFTXLUHGWKHVKDUHVRIVWRFNRIWKH63&VDQGQRWWKHLQYHVWPHQWSURSHUWLHV
WKHPVHOYHV
%$1.35(0,6(6)851,785(),;785(6$1'(48,30(17
7KHJURVVFDUU\LQJDPRXQWVDQGDFFXPXODWHGGHSUHFLDWLRQDQGDPRUWL]DWLRQRIEDQN
SUHPLVHVIXUQLWXUHIL[WXUHVDQGHTXLSPHQWDWWKHEHJLQQLQJDQGHQGRIDQG
DUHVKRZQEHORZ
*URXS
'HFHPEHU
&RVW $FFXPXODWHG
GHSUHFLDWLRQDQG
DPRUWL]DWLRQ
1HWFDUU\LQJDPRXQW
'HFHPEHU
&RVW $FFXPXODWHG
GHSUHFLDWLRQDQG
DPRUWL]DWLRQ
1HWFDUU\LQJDPRXQW
-DQXDU\
&RVW $FFXPXODWHG
GHSUHFLDWLRQDQG
DPRUWL]DWLRQ
1HWFDUU\LQJDPRXQW
3DUHQW
/DQG
3
3
%XLOGLQJV
)XUQLWXUH /HDVHKROG
)L[WXUHV
5LJKWVDQG
DQG(TXLSPHQW ,PSURYHPHQWV 7RWDO
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
/DQG
3
3
'HFHPEHU
&RVW $FFXPXODWHG
GHSUHFLDWLRQDQG
DPRUWL]DWLRQ
1HWFDUU\LQJDPRXQW
'HFHPEHU
&RVW $FFXPXODWHG
GHSUHFLDWLRQDQG
DPRUWL]DWLRQ
1HWFDUU\LQJDPRXQW
-DQXDU\
&RVW $FFXPXODWHG
GHSUHFLDWLRQDQG
DPRUWL]DWLRQ
1HWFDUU\LQJDPRXQW
3
3
%XLOGLQJV
)XUQLWXUH /HDVHKROG
)L[WXUHV
5LJKWVDQG
DQG(TXLSPHQW ,PSURYHPHQWV 7RWDO
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
$UHFRQFLOLDWLRQRIWKHFDUU\LQJDPRXQWVDWWKHEHJLQQLQJDQGHQGRIDQG
RIEDQNSUHPLVHVIXUQLWXUHIL[WXUHVDQGHTXLSPHQWLVVKRZQEHORZ
*URXS
/DQG
%XLOGLQJV
%DODQFHDW-DQXDU\
QHWRIDFFXPXODWHG
GHSUHFLDWLRQDQG
DPRUWL]DWLRQ
3
$GGLWLRQV
'LVSRVDOV
5HFODVVLILFDWLRQV
DGMXVWPHQWV
'HSUHFLDWLRQDQG
DPRUWL]DWLRQFKDUJHV
IRUWKH\HDU
%DODQFHDW
'HFHPEHU
QHWRIDFFXPXODWHG
GHSUHFLDWLRQDQG
DPRUWL]DWLRQ
3
%DODQFHDW-DQXDU\
QHWRIDFFXPXODWHG
GHSUHFLDWLRQDQG
DPRUWL]DWLRQ
3
$GGLWLRQV
'LVSRVDOV
5HFODVVLILFDWLRQV
DGMXVWPHQWV
'HSUHFLDWLRQDQG
DPRUWL]DWLRQFKDUJHV
IRUWKH\HDU
%DODQFHDW
'HFHPEHU
QHWRIDFFXPXODWHG
GHSUHFLDWLRQDQG
DPRUWL]DWLRQ
3
)XUQLWXUH )L[WXUHV
DQG(TXLSPHQW
/HDVHKROG
5LJKWVDQG
,PSURYHPHQWV 7RWDO
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
%DQN3UHPLVHV)XUQLWXUH)L[WXUHVDQG(TXLSPHQWDQG
,QYHVWPHQW3URSHUWLHV
3DUHQW
/DQG
%DODQFHDW-DQXDU\
QHWRIDFFXPXODWHG
GHSUHFLDWLRQDQG
DPRUWL]DWLRQ
3
$GGLWLRQV
'LVSRVDOV
5HFODVVLILFDWLRQV
DGMXVWPHQWV
'HSUHFLDWLRQDQG
DPRUWL]DWLRQFKDUJHV
IRUWKH\HDU
%DODQFHDW
'HFHPEHU
QHWRIDFFXPXODWHG
GHSUHFLDWLRQDQG
DPRUWL]DWLRQ
3
%DODQFHDW-DQXDU\
QHWRIDFFXPXODWHG
GHSUHFLDWLRQDQG
DPRUWL]DWLRQ
3
$GGLWLRQV
'LVSRVDOV
5HFODVVLILFDWLRQV
DGMXVWPHQWV
'HSUHFLDWLRQDQG
DPRUWL]DWLRQFKDUJHV
IRUWKH\HDU
%DODQFHDW
'HFHPEHU
QHWRIDFFXPXODWHG
GHSUHFLDWLRQDQG
DPRUWL]DWLRQ
3
%XLOGLQJV
3
)XUQLWXUH /HDVHKROG
)L[WXUHV
5LJKWVDQG
DQG(TXLSPHQW ,PSURYHPHQWV 3
3
3
7RWDO
3
3
3
3
3
3
3
3
3
3
3
3
8QGHU%63UXOHVLQYHVWPHQWVLQEDQNSUHPLVHVIXUQLWXUHIL[WXUHVDQGHTXLSPHQW
VKRXOGQRWH[FHHGRIWKH%DQN·VXQLPSDLUHGFDSLWDO$VRI'HFHPEHU
DQGWKH%DQNKDVVDWLVIDFWRULO\FRPSOLHGZLWKWKLVUHTXLUHPHQW
,19(670(173523(57,(6
7KH*URXS·VLQYHVWPHQWSURSHUWLHVLQFOXGHVHYHUDOSDUFHOVRIODQGDQGEXLOGLQJVKHOG
IRUFDSLWDODSSUHFLDWLRQDQGDUHVWDWHGDWIDLUYDOXH,QYHVWPHQWSURSHUWLHVDUH
UHYDOXHGDWHYHU\\HDUHQGDVGHWHUPLQHGE\LQGHSHQGHQWDSSUDLVDOFRPSDQLHV
DFFUHGLWHGE\WKH%637KHEUHDNGRZQRIWKLVDFFRXQWDVWRW\SHIROORZV
*URXS
3DUHQW
/DQG
%XLOGLQJ
/DQGLPSURYHPHQWV
3 3 3 3 3 3 3 3
,QYHVWPHQW3URSHUWLHVDQG$VVHWV+HOG)RU6DOH
7KHQHWIDLUYDOXHJDLQVDQGORVVHVIURPLQYHVWPHQWSURSHUWLHVDFFRXQWLVSUHVHQWHG
XQGHU0LVFHOODQHRXV,QFRPHDFFRXQWLQWKHVWDWHPHQWVRILQFRPHVHH1RWH
5HDOSURSHUW\WD[HVUHODWHGWRWKHVHLQYHVWPHQWSURSHUWLHVSDLGE\WKH*URXSDQG
UHFRJQL]HGDVH[SHQVHIRUWKH\HDUVHQGHG'HFHPEHUDQGWRWDOHG
33DQG3UHVSHFWLYHO\DQGDUHLQFOXGHGDVSDUWRI7D[HVDQG
/LFHQVHVDFFRXQWLQWKHVWDWHPHQWVRILQFRPH>VHH1RWHG@
7KHFKDQJHVLQWKLVDFFRXQWFDQEHVXPPDUL]HGDVIROORZV
$GGLWLRQV
)DLUYDOXHJDLQV
5HFODVVLILFDWLRQWR
EDQNSUHPLVHVIXUQLWXUH
IL[WXUHVDQGHTXLSPHQW
VHH1RWH
'LVSRVDOV
7UDQVIHUVWRVDOHVFRQWUDFWV
UHFHLYDEOH
5HVFLQGHGVDOHV
%DODQFHDWHQGRI\HDU
*URXS
3DUHQW
3 3 3 3
3 3 3 3 5HQWLQFRPHHDUQHGE\WKH*URXSRQLWVLQYHVWPHQWSURSHUWLHVXQGHURSHUDWLQJOHDVHV
DPRXQWHGWR33DQG3LQDQGUHVSHFWLYHO\
ZKLOHUHQWLQFRPHHDUQHGE\WKH3DUHQW&RPSDQ\RQWKHVHLQYHVWPHQWSURSHUWLHV
DPRXQWHGWR33DQG3LQDQGUHVSHFWLYHO\
DQGLVLQFOXGHGDVSDUWRI5HQWDODFFRXQWXQGHU0LVFHOODQHRXV,QFRPHLQWKH
VWDWHPHQWVRILQFRPHVHH1RWH
$66(76+(/')256$/(
7KHEDODQFHRIWKLVDFFRXQWDVRI'HFHPEHUDQGSHUWDLQVPDLQO\WR
FKDWWHODQGRWKHUSHUVRQDOSURSHUWLHVWKDWDUHH[SHFWHGWREHVROGZLWKLQRQH\HDU
IURPWKHHQGRIWKHUHSRUWLQJSHULRGV
2WKHU5HVRXUFHV
27+(55(6285&(6
7KHFRPSRVLWLRQRI2WKHU5HVRXUFHVDFFRXQWDVRI'HFHPEHUIROORZV
*URXS
$V5HVWDWHG
VHH1RWH 3DUHQW
7UXVWIXQGDVVHWV
3 3 3
3
'HIHUUHGWD[DVVHWV²QHW
VHH1RWH
5HWXUQHGFKHFNVDQGRWKHU
FDVKLWHPV
&RPSXWHUVRIWZDUH²QHW
6XQGU\GHELWV
3UHSDLGH[SHQVHV
5HWLUHPHQWEHQHILW
DVVHWVHH1RWH
'RFXPHQWDU\VWDPSVDQGRWKHU
VXSSOLHVRQKDQG
0LVFHOODQHRXV²QHW
$OORZDQFHIRULPSDLUPHQW 3
3 3 3
,QWKH*URXSUHVWDWHGLWVDQGFRQVROLGDWHGILQDQFLDOVWDWHPHQWVWR
DSSURSULDWHO\UHFRJQL]HWKHWUXVWIXQGDVVHWVRI)83,WKDWZHUHLQDGYHUWHQWO\RIIVHW
DJDLQVWGHSRVLWOLDELOLWLHVLQWKHFRQVROLGDWLRQIRUWKRVH\HDUV7KHUHVWDWHPHQW
UHVXOWHGWRWKHLQFUHDVHLQWKHSUHYLRXVO\UHSRUWHGEDODQFHVRIWKH2WKHU5HVRXUFHV
DQGWKH'HSRVLW/LDELOLWLHV²6DYLQJVDFFRXQWVRIWKH*URXSE\3DQG
3DVRI'HFHPEHUDQGUHVSHFWLYHO\7KHUHVWDWHPHQWKDVQR
HIIHFWRQWKHSUHYLRXVO\UHSRUWHGFDSLWDOIXQGVRIWKH*URXSDVRI'HFHPEHU
DQGDQGRQWKH*URXS·VUHSRUWHGQHWLQFRPHDQGEDVLFDQGGLOXWHGHDUQLQJV
SHUVKDUHIRUWKH\HDUVWKHQHQGHG7KHUHVWDWHPHQWKDVDOVRQRHIIHFWRQWKH
SUHYLRXVO\UHSRUWHGILQDQFLDOVWDWHPHQWVRIWKH3DUHQW&RPSDQ\DVRI
'HFHPEHUDQGDQGIRUWKH\HDUVWKHQHQGHG
7KHWUXVWIXQGDVVHWVRI)83,FRQVLVWHGRIWKHIROORZLQJDVRI'HFHPEHU
DQG
*URXS
$VVHWV
,QYHVWPHQWVLQ
'HEWVHFXULWLHV
(TXLW\VHFXULWLHV
8QLWLQYHVWPHQWWUXVWIXQG
$FFUXHGLQWHUHVWDQGRWKHUDVVHWV
/LDELOLWLHV
3
3
3
3
2WKHU5HVRXUFHVDQG$OORZDQFHIRU,PSDLUPHQW
0LVFHOODQHRXVRWKHUUHVRXUFHVLQFOXGHIRUHFORVHGPDFKLQHULHVZLWKFDUU\LQJDPRXQW
RI3DQG3DVRI'HFHPEHUDQGUHVSHFWLYHO\
'HSUHFLDWLRQH[SHQVHUHFRJQL]HGE\WKH*URXSDQGWKH3DUHQWIRUWKHVHPDFKLQHULHV
DPRXQWHGWR3LQ3LQERWKDQGDQGLVLQFOXGHGDVSDUW
RI'HSUHFLDWLRQDQG$PRUWL]DWLRQDFFRXQWLQWKHVWDWHPHQWVRILQFRPH
7KHPRYHPHQWVLQWKH&RPSXWHU6RIWZDUHDFFRXQWIROORZ
*URXSDQG3DUHQW
$GGLWLRQV
5HFODVVLILFDWLRQV
$PRUWL]DWLRQFKDUJHVIRUWKH\HDU
%DODQFHDWHQGRI\HDU
3
3
3
3
$//2:$1&()25,03$,50(17
0RYHPHQWVLQWKHDOORZDQFHIRULPSDLUPHQWDUHVKRZQEHORZ
1RWHV %DODQFHDWEHJLQQLQJ
RI\HDU
$)6ILQDQFLDO
DVVHWV
+70LQYHVWPHQWV
/RDQVDQGRWKHU
UHFHLYDEOHV
2WKHUUHVRXUFHV
*URXS
3
0RYHPHQWVGXULQJ
WKH\HDU
3URYLVLRQIRU
LPSDLUPHQW
:ULWHRIIVDOH
$GMXVWPHQWV
UHFODVVLILFDWLRQV
%DODQFHDWHQGRI\HDU
$)6ILQDQFLDO
DVVHWV
/RDQVDQGRWKHU
UHFHLYDEOHV
2WKHUUHVRXUFHV
3DUHQW
3
3
3
3 3 3 3
:LWKWKHIRUHJRLQJOHYHORIDOORZDQFHIRULPSDLUPHQWDQGFUHGLWORVVHVPDQDJHPHQW
EHOLHYHVWKDWWKH*URXSKDVVXIILFLHQWDOORZDQFHIRUDQ\ORVVHVWKDWWKH*URXSPD\
LQFXUIURPWKHQRQFROOHFWLRQRUQRQUHDOL]DWLRQRILWVUHFHLYDEOHVDQGRWKHUULVNDVVHWV
$OORZDQFHIRU,PSDLUPHQW
5HFRQFLOLDWLRQRIWKHDOORZDQFHIRULPSDLUPHQWE\FODVVIROORZV
*URXS
/RDQVDQG5HFHLYDEOHV
6DOHVDQG 2WKHU $FFUXHG ,QVWDOOPHQW 2WKHU $)6
5HVRXUFHV
$FFRXQWV ,QWHUHVW &RQWUDFW /RDQ
)LQDQFLDO +70 DQG$VVHWV &RUSRUDWH &RPPHUFLDO &RQVXPHU 5HFHLYDEOH 5HFHLYDEOH 5HFHLYDEOH $FFRXQWV 7RWDO
$VVHWV ,QYHVWPHQWV +HOGIRU6DOH %DODQFHDWEHJLQQLQJRI\HDU
3 3
3 3
3
3
3
3 3
3
3
3
3URYLVLRQGXULQJWKH\HDU
2WKHUDGMXVWPHQWV
%DODQFHDWHQGRI\HDU
3 3 3 3
3
3
3
3 3
3
3
3
&RUSRUDWHLQFOXGHVDFFRXQWVXQGHU$VVHW5HFRYHU\*URXS2WKHUORDQDFFRXQWVLQFOXGHV%LOOV3XUFKDVH%UDQFK/RDQV+5/RDQVDQG6DODU\/RDQV
,PSDLUPHQWDWHQGRI\HDUEURNHQGRZQDVWRLQGLYLGXDODQGFROOHFWLYHDVVHVVPHQW
,QGLYLGXDOLPSDLUPHQW
3 3
3 3
3
3
3
3 3
3
3
3
&ROOHFWLYHLPSDLUPHQW
3 3 3 3
3
3
3
3 3
3
3
3
3DUHQW
/RDQVDQG5HFHLYDEOHV
6DOHVDQG 2WKHU $FFUXHG ,QVWDOOPHQW 2WKHU $)6
5HVRXUFHV
$VVHWV ,QYHVWPHQWV +HOGIRU6DOH %DODQFHDWEHJLQQLQJRI\HDU
3 3
3 3
3
3
3
3 3
3
3
3
3URYLVLRQGXULQJWKH\HDU
2WKHUDGMXVWPHQWV
%DODQFHDWHQGRI\HDU
3 3 3 3
3
3
3
3 3
3
3
3
&RUSRUDWHLQFOXGHVDFFRXQWVXQGHU$VVHW5HFRYHU\*URXS2WKHUORDQDFFRXQWVLQFOXGHV%LOOV3XUFKDVH%UDQFK/RDQV+5/RDQVDQG6DODU\/RDQV
3 3
3 3
3
3
3
3 3
3
3
3
&ROOHFWLYHLPSDLUPHQW
3 3 3 3
3
3
3
3 3
3
3
3
7RWDO
7RWDO
$OORZDQFHIRU,PSDLUPHQW
*URXS
/RDQVDQG5HFHLYDEOHV 6DOHVDQG 2WKHU $FFUXHG ,QVWDOOPHQW 2WKHU $)6
5HVRXUFHV
$VVHWV ,QYHVWPHQWV +HOGIRU6DOH 7RWDO %DODQFHDWEHJLQQLQJRI\HDU
3 3 3 3 3
3
3
3 3
3 3
3 3URYLVLRQGXULQJWKH\HDU
2WKHUDGMXVWPHQWV
%DODQFHDWHQGRI\HDU
3 3 3 3 3 3
3
3 3 3
3 3 &RUSRUDWHLQFOXGHVDFFRXQWVXQGHU$VVHW5HFRYHU\*URXS2WKHUORDQDFFRXQWVLQFOXGHV%LOOV3XUFKDVHG%UDQFK/RDQV+5/RDQVDQG6DODU\/RDQV
3 3 3 3 3 3
3
3 3 3
3 3 &ROOHFWLYHLPSDLUPHQW
3 3 3 3
3
3
3
3 3
3
3 3 3DUHQW
/RDQVDQG5HFHLYDEOHV 6DOHVDQG 2WKHU $FFUXHG ,QVWDOOPHQW 2WKHU $)6
5HVRXUFHV
$VVHWV ,QYHVWPHQWV +HOGIRU6DOH 7RWDO %DODQFHDWEHJLQQLQJRI\HDU
3 3 3 3 3
3
3
3 3
3 3
3 3URYLVLRQGXULQJWKH\HDU
2WKHUDGMXVWPHQWV
%DODQFHDWHQGRI\HDU
3 3 3 3
3 3
3
3 3 3
3 3 &RUSRUDWHLQFOXGHVDFFRXQWVXQGHU$VVHW5HFRYHU\*URXS2WKHUORDQDFFRXQWVLQFOXGHV%LOOV3XUFKDVHG%UDQFK/RDQV+5/RDQVDQG6DODU\/RDQV
3 3 3 3 3 3
3
3 3 3
3 3 &ROOHFWLYHLPSDLUPHQW
3 3 3 3
3
3
3
3 3
3
3
3 'HSRVLW/LDELOLWLHV
'(326,7/,$%,/,7,(6
7KHEUHDNGRZQRIGHSRVLWOLDELOLWLHVDFFRXQWIROORZV
'XHWREDQNV
'HPDQG
6DYLQJV
7LPH
*URXS
$V5HVWDWHG
VHH1RWH 3DUHQW
3
3 3
3 'XHWRFXVWRPHUV
'HPDQG
6DYLQJV
7LPH
3 3 3 3 7KHEUHDNGRZQRIGHSRVLWOLDELOLWLHVDFFRXQWDVWRFXUUHQF\IROORZV
3KLOLSSLQHSHVR
)RUHLJQFXUUHQF\
*URXS
3DUHQW
$V5HVWDWHG
VHH1RWH 3 3 3 3 3 3 3 3 7KHPDWXULW\SURILOHRIWKLVDFFRXQWLVSUHVHQWHGEHORZ
/HVVWKDQRQH\HDU
2QHWRILYH\HDUV
%H\RQGILYH\HDUV
*URXS
3DUHQW
$V5HVWDWHG
VHH1RWH 3 3 3 3 3 3 3 3 'HSRVLWOLDELOLWLHVEHDUDQQXDOLQWHUHVWDWUDWHVUDQJLQJIURPWRLQ
WRLQDQGWRLQ'HPDQGDQGVDYLQJVGHSRVLWVXVXDOO\KDYH
HLWKHUIL[HGRUYDULDEOHLQWHUHVWUDWHVZKLOHWLPHGHSRVLWVKDYHIL[HGLQWHUHVWUDWHV
'HSRVLW/LDELOLWLHVDQG%LOOV3D\DEOH
8QGHUH[LVWLQJ%63UHJXODWLRQVQRQ)&'8GHSRVLWOLDELOLWLHVRIWKH%DQNDUHVXEMHFWWR
OLTXLGLW\UHVHUYHHTXLYDOHQWWRDQGVWDWXWRU\UHVHUYHHTXLYDOHQWWRIURP
1RYHPEHUWR-XQHXQGHU%63&LUFXODUDQGOLTXLGLW\UHVHUYH
HTXLYDOHQWWRDQGVWDWXWRU\UHVHUYHHTXLYDOHQWWRIURP-XQHWR
$XJXVWXQGHU%63&LUFXODUDQGOLTXLGLW\UHVHUYHHTXLYDOHQWWRDQG
VWDWXWRU\UHVHUYHHTXLYDOHQWWRIURP$XJXVWWR$SULO
XQGHU%63&LUFXODUDQGXQLILHGUHVHUYHUHTXLUHPHQWHTXLYDOHQWWRIURP
$SULODQGWKHUHDIWHUXQGHU%63&LUFXODU$VRI'HFHPEHUDQG
WKH*URXSLVLQFRPSOLDQFHZLWKVXFKUHJXODWLRQV
/LTXLGLW\DQGVWDWXWRU\UHVHUYHVDVRI'HFHPEHUDQGDUHDVIROORZV
*URXSDQG3DUHQW
'XHIURP%63
3
3
3
3
%,//63$<$%/(
%LOOVSD\DEOHFRQVLVWRIERUURZLQJVIURP
*URXS
3DUHQW
%DQNVRWKHUILQDQFLDO
LQVWLWXWLRQVDQGLQGLYLGXDOV 3 3 3 3 %63
2WKHUV
3 3 3 3 %LOOVSD\DEOHWREDQNVDQGRWKHUILQDQFLDOLQVWLWXWLRQVFRQVLVWPDLQO\RIDPRUWL]HGFRVW
EDODQFHRIVKRUWWHUPERUURZLQJV
%LOOVSD\DEOHWR%63PDLQO\UHSUHVHQWVKRUWWHUPERUURZLQJVDYDLOHGRIXQGHUWKH
UHGLVFRXQWLQJIDFLOLW\RIWKH%637KHVHDUHFROODWHUDOL]HGE\HOLJLEOHORDQV
VHH1RWH
7KHEUHDNGRZQRIELOOVSD\DEOHDVWRFXUUHQF\IROORZV
*URXS
3DUHQW
)RUHLJQFXUUHQF\
3KLOLSSLQHSHVR
3 3 3 3 3 3 3 3 %LOOV3D\DEOHDQG1RWHV3D\DEOH
7KHEUHDNGRZQRILQWHUHVWH[SHQVHRQELOOVSD\DEOHIROORZ
*URXSDQG3DUHQW
%DQNVRWKHUILQDQFLDO
LQVWLWXWLRQVDQGLQGLYLGXDOV %63
2WKHUV
3
3
3
3
3
3
7KHUDQJHRILQWHUHVWUDWHVRIELOOVSD\DEOHSHUFXUUHQF\IROORZV
*URXSDQG3DUHQW
3KLOLSSLQHSHVR
)RUHLJQFXUUHQF\
WR WR WR WR WR WR 127(63$<$%/(
7KH*URXS·VQRWHVSD\DEOHDVRI'HFHPEHURI3SHUWDLQWRWKH
RXWVWDQGLQJEDODQFHRIXQVHFXUHGVXERUGLQDWHGQRWHVWKH1RWHVRIZKLFK3
ZDVLVVXHGE\WKH*URXSRQ2FWREHUGXHRQ2FWREHUDQGFDOODEOHRQ
2FWREHUDQG3ZDVLVVXHGE\WKHIRUPHUL%DQNRQ0DUFK
GXHRQ6HSWHPEHUDQGFDOODEOHRQ6HSWHPEHU2Q-XO\WKH
%2'DSSURYHGWRH[HUFLVHWKHFDOORSWLRQRQWKHODWWHUXQVHFXUHGVXERUGLQDWHGQRWH
$FFRUGLQJO\RQWKHFDOORSWLRQGDWHRI6HSWHPEHUWKH%DQNH[HUFLVHGWKH
RSWLRQDQGUHGHHPHGWKHRXWVWDQGLQJQRWHIURPQRWHKROGHUV&RQVHTXHQWO\WKH
EDODQFHRIWKH1RWHVDVRI'HFHPEHUDQGDPRXQWHGWR3
1RJDLQRUORVVZDVUHFRJQL]HGRQWKHWUDQVDFWLRQ
$PRQJWKHVLJQLILFDQWWHUPVDQGFRQGLWLRQVRIWKH1RWHVIROORZ
D 7KH1RWHVZHUHLVVXHGRQWKHLQLWLDOLVVXHGDWHDWRIWKHIDFHYDOXHRIWKH
1RWHV6XEVHTXHQWLVVXDQFHRIWKH1RWHVLIDQ\ZLOOEHLVVXHGDWSDUGLVFRXQWRU
SUHPLXPGHSHQGLQJRQPDUNHWFRQGLWLRQVDWWKHWLPHRILWVLVVXDQFH
DQGZLOOLQFOXGHDSULFHDGMXVWPHQWIRULQWHUHVWDFFUXHGDVRIWKHLQLWLDOLVVXHGDWH
EDVHGRQDIRUPXODWREHXQLIRUPO\DSSOLHGSHUWUDQFKH
E 7KH1RWHVVKDOOQRWEHXVHGDVFROODWHUDOIRUDQ\ORDQPDGHE\WKH3DUHQW&RPSDQ\
RUDQ\RILWVVXEVLGLDULHVDQGDIILOLDWHV7KH1RWHKROGHUVRUWKHLUWUDQVIHUHHVVKDOO
QRWEHDOORZHGDQGZDLYHWKHLUULJKWWRVHWRIIDQ\DPRXQWWKDWPD\EHGXHWKH
3DUHQW&RPSDQ\
F 7KH1RWHVFRQVWLWXWHGLUHFWXQFRQGLWLRQDOXQVHFXUHGDQGVXERUGLQDWHGREOLJDWLRQV
RIWKH3DUHQW&RPSDQ\&ODLPVRI1RWHKROGHUVLQUHVSHFWRIWKH1RWHVVKDOODWDOO
WLPHVUDQNSDULSDVVXDQGZLWKRXWDQ\SUHIHUHQFHDPRQJWKHPVHOYHVDQG
G 7KH1RWHVVKDOOQRWEHUHGHHPDEOHRUWHUPLQDEOHDWWKHLQVWDQFHRIWKH1RWHKROGHUV
EHIRUHWKHPDWXULW\GDWHXQOHVVRWKHUZLVHH[SUHVVO\SURYLGHGWKHUHLQ
1RWHV3D\DEOHDQG2WKHU/LDELOLWLHV
7KH31RWHVEHDULQWHUHVWDWWKHUDWHRISHUDQQXPSD\DEOHTXDUWHUO\LQ
DUUHDUVWRWKH1RWHKROGHUVRQ2FWREHU-DQXDU\$SULODQG-XO\RIHDFK\HDU
ZLWKWKHILUVWLQWHUHVWSD\PHQWGDWHRQ-DQXDU\IRUWKHSHULRGIURPDQGLQFOXGLQJ
WKHLVVXHGDWHXSWREXWH[FOXGLQJWKHILUVWEDQNLQJGD\RIWKHVWLQWHUHVWSHULRG
LIWKHFDOORSWLRQLVQRWH[HUFLVHGRUWKHFDOORSWLRQGDWHLIWKHFDOORSWLRQLVH[HUFLVHG
7KHLQWHUHVWUDWHIURPDQGLQFOXGLQJ2FWREHUXSWREXWH[FOXGLQJ
2FWREHUZLOOEHUHVHWDQGVXFKVWHSXSLQWHUHVWUDWHVKDOOEHSD\DEOHWRWKH
1RWHKROGHUVEHJLQQLQJRQWKHVWLQWHUHVWSHULRGXSWRWKHODVWLQWHUHVWSHULRGLQWKH
HYHQWWKDWWKH3DUHQW&RPSDQ\GRHVQRWH[HUFLVHWKHFDOORSWLRQ
2QWKHRWKHUKDQGWKH31RWHVERUHLQWHUHVWDWWKHUDWHRISHUDQQXP
SD\DEOHVHPLDQQXDOO\LQDUUHDUVWRWKHQRWHKROGHUVRQ6HSWHPEHUDQG0DUFKRI
HDFK\HDUZLWKWKHILUVWLQWHUHVWSD\PHQWGDWHRQ6HSWHPEHUIRUWKHSHULRG
IURPDQGLQFOXGLQJWKHLVVXHGDWHXSWREXWH[FOXGLQJWKHODVWGD\RIWKHWKLQWHUHVW
SHULRGLIWKHFDOORSWLRQZDVQRWH[HUFLVHGRUWKHFDOORSWLRQGDWHLIWKHFDOORSWLRQ
ZDVH[HUFLVHG
,QWHUHVWH[SHQVHRQQRWHVSD\DEOHDPRXQWHGWR3LQ3LQ
DQG3LQDQGLVLQFOXGHGXQGHU,QWHUHVW([SHQVHRQ%LOOV3D\DEOHDQG
2WKHU/LDELOLWLHVDFFRXQWLQWKHVWDWHPHQWVRILQFRPH
27+(5/,$%,/,7,(6
2WKHUOLDELOLWLHVFRQVLVWRIWKHIROORZLQJDVRI'HFHPEHU
*URXS
3DUHQW
0DQDJHU·VFKHFNV
3UHQHHGUHVHUYH
'XHWR7UHDVXUHURIWKH
3KLOLSSLQHV
'RPHVWLFELOOVSXUFKDVHG
$FFUXHGWD[HV
DQGRWKHUH[SHQVHV
$FFRXQWVSD\DEOH
VHH1RWH
2WKHUGRUPDQWFUHGLWV
3D\PHQWRUGHUVSD\DEOH
:LWKKROGLQJWD[HVSD\DEOH
0LVFHOODQHRXV
3 3 3 3 3 3 3 3 2WKHU/LDELOLWLHVDQG&DSLWDO)XQGV
7KHEUHDNGRZQRI$FFUXHGWD[HVDQGRWKHUH[SHQVHVDFFRXQWIROORZV
$FFUXHGLQWHUHVWSD\DEOH
$FFUXHGVLFNOHDYHEHQHILWV
$FFUXHGLQFRPHDQG
RWKHUWD[HV
2WKHUDFFUXDOV
3
*URXS
3 3
3DUHQW
3 3 3 3 3 2WKHUDFFUXDOVUHSUHVHQWPDLQO\IULQJHDQGRWKHU%DQNSHUVRQQHOEHQHILWV
&$3,7$/)81'6
&RPPRQ6WRFN
7KHDXWKRUL]HGFDSLWDOVWRFNRIWKH%DQNLVDW3GLYLGHGLQWRPLOOLRQ
VKDUHV7KH%DQN·VRXWVWDQGLQJFRPPRQVWRFNDVRI'HFHPEHUDQGRI
3FRQVLVWVRIPLOOLRQVKDUHVZLWK3SDUYDOXH
2Q-XQHWKH%DQNZDVRULJLQDOO\OLVWHGZLWKWKHQ0DNDWL6WRFN([FKDQJHQRZ
36($WRWDORIPLOOLRQVKDUHVZHUHLVVXHGDWDQLVVXHSULFHRI3$VRI
'HFHPEHUDQGWKHUHDUHPLOOLRQVKDUHVOLVWHGDWWKH36(7KH
QXPEHURIKROGHUVDQGWKHFORVLQJSULFHRIWKHVDLGVKDUHVLVDQG3SHU
VKDUHLQUHVSHFWLYHO\DQGDQG3SHUVKDUHLQUHVSHFWLYHO\
6XUSOXV)UHH
7KHIROORZLQJLVDVXPPDU\RIWKHGLYLGHQGVGHFODUHGDQGGLVWULEXWHGE\WKH*URXSLQ
DQG
'DWHRI
'HFODUDWLRQ 'DWHRI
5HFRUG
'DWHRI
%63$SSURYDO 'DWHRI
3D\PHQW
'LYLGHQG 6KDUHV
SHU6KDUH 2XWVWDQGLQJ 7RWDO$PRXQW
-DQXDU\0DUFK)HEUXDU\ $SULO3 3 -DQXDU\ $SULO 0DUFK 0D\
-DQXDU\ 0D\ $SULO -XQH
,QFRPSOLDQFHZLWK%63UHJXODWLRQVWKH%DQNHQVXUHVWKDWDGHTXDWHUHVHUYHVDUHLQ
SODFHIRUIXWXUHEDQNH[SDQVLRQUHTXLUHPHQWV7KHIRUHJRLQJFDVKGLYLGHQG
GHFODUDWLRQVZHUHPDGHZLWKLQWKH%63·VDOORZDEOHOLPLWRIGLYLGHQGV
&DSLWDO)XQGVDQG6HUYLFH&KDUJHV)HHVDQG&RPPLVVLRQV
&DSLWDO$OORFDWLRQ
7KHDOORFDWLRQRIFDSLWDOEHWZHHQVSHFLILFRSHUDWLRQVDQGDFWLYLWLHVLVWRDODUJHH[WHQW
GULYHQE\RSWLPL]DWLRQRIWKHUHWXUQDFKLHYHGRQWKHFDSLWDODOORFDWHG7KHDPRXQWRI
FDSLWDODOORFDWHGWRHDFKRSHUDWLRQRUDFWLYLW\LVEDVHGSULPDULO\XSRQWKHUHJXODWRU\
FDSLWDOEXWLQVRPHFDVHVWKHUHJXODWRU\UHTXLUHPHQWVGRQRWUHIOHFWIXOO\WKH
YDU\LQJGHJUHHRIULVNDVVRFLDWHGZLWKGLIIHUHQWDFWLYLWLHV,QVXFKFDVHVWKHFDSLWDO
UHTXLUHPHQWVPD\EHIOH[HGWRUHIOHFWGLIIHULQJULVNSURILOHVVXEMHFWWRWKHRYHUDOOOHYHO
RIFDSLWDOWRVXSSRUWDSDUWLFXODURSHUDWLRQRUDFWLYLW\QRWIDOOLQJEHORZWKHPLQLPXP
UHTXLUHGIRUUHJXODWRU\SXUSRVHV7KHSURFHVVRIDOORFDWLQJFDSLWDOWRVSHFLILF
RSHUDWLRQVDQGDFWLYLWLHVLVXQGHUWDNHQLQGHSHQGHQWO\RIWKRVHUHVSRQVLEOHIRUWKH
RSHUDWLRQDQGLVVXEMHFWWRUHYLHZE\WKH$/&2
$OWKRXJKPD[LPL]DWLRQRIWKHUHWXUQRQULVNDGMXVWHGFDSLWDOLVWKHSULQFLSDOEDVLVXVHG
LQGHWHUPLQLQJKRZFDSLWDOLVDOORFDWHGZLWKLQWKH%DQNWRSDUWLFXODURSHUDWLRQV
RUDFWLYLWLHVLWLVQRWWKHVROHEDVLVXVHGIRUGHFLVLRQPDNLQJ$OVRWDNHQLQWR
FRQVLGHUDWLRQVDUHV\QHUJLHVZLWKRWKHURSHUDWLRQVDQGDFWLYLWLHVWKHDYDLODELOLW\RI
PDQDJHPHQWDQGRWKHUUHVRXUFHVDQGWKHILWRIWKHDFWLYLW\ZLWKWKH%DQN·VORQJHUWHUP
VWUDWHJLFREMHFWLYHV7KH%DQN·VSROLFLHVLQUHVSHFWRIFDSLWDOPDQDJHPHQWDQG
DOORFDWLRQDUHUHYLHZHGUHJXODUO\E\LWV%2'
6(59,&(&+$5*(6)((6$1'&200,66,216
7KLVDFFRXQWLVEURNHQGRZQDVIROORZV
6HUYLFHFKDUJHV
%DQNFRPPLVVLRQV
2WKHUV
6HUYLFHFKDUJHV
%DQNFRPPLVVLRQV
2WKHUV
3
3 3
3
3
3
3 3
3
3
*URXS
3
3DUHQW
3
0LVFHOODQHRXV,QFRPHDQG([SHQVHV
0,6&(//$1(286,1&20($1'(;3(16(6
0LVFHOODQHRXV,QFRPH
0LVFHOODQHRXVLQFRPHLVFRPSRVHGRIWKHIROORZLQJ
*URXS 1RWHV 'LYLGHQG
3
,QFRPHIURPWUXVWRSHUDWLRQV )DLUYDOXHJDLQVRQ
LQYHVWPHQWSURSHUWLHV²QHW )RUHLJQH[FKDQJH
JDLQV²QHW
3HQDOWLHV
*DLQORVVIURPVDOHRIDVVHWV
5HQWDO
*DLQVIURPDFTXLVLWLRQ
RILQYHVWPHQWSURSHUWLHV 2WKHUV
3 3 3
'LYLGHQG
3
)DLUYDOXHJDLQVRQ
LQYHVWPHQWSURSHUWLHV
)RUHLJQH[FKDQJH
JDLQV²QHW
3HQDOWLHV
,QFRPHIURPWUXVWRSHUDWLRQV *DLQORVVIURPVDOHRIDVVHWV
5HQWDO
*DLQVIURPDFTXLVLWLRQ
RILQYHVWPHQWSURSHUWLHV 2WKHUV
3 3
1RWHV 3DUHQW
3 3
3 3 3
0LVFHOODQHRXV,QFRPHDQG([SHQVHV
0LVFHOODQHRXV([SHQVHV
7KHEUHDNGRZQRIPLVFHOODQHRXVH[SHQVHVIROORZV
3 3 3
,QVXUDQFH
2XWVLGHVHUYLFHV
5HSDLUVDQGPDLQWHQDQFH 0DQDJHPHQWDQGSURIHVVLRQDOIHHV
/LWLJDWLRQ
&RPPXQLFDWLRQ
6WDWLRQHU\DQGVXSSOLHV
6XSHUYLVLRQIHHV
7UDQVSRUWDWLRQDQGWUDYHO 5HSUHVHQWDWLRQDQGHQWHUWDLQPHQW
$GYHUWLVLQJDQGSXEOLFLW\ 2WKHUV
,QVXUDQFH
2XWVLGHVHUYLFHV
5HSDLUVDQGPDLQWHQDQFH 0DQDJHPHQWDQGSURIHVVLRQDOIHHV
/LWLJDWLRQ
&RPPXQLFDWLRQ
6WDWLRQHU\DQGVXSSOLHV
6XSHUYLVLRQIHHV
7UDQVSRUWDWLRQDQGWUDYHO 5HSUHVHQWDWLRQDQGHQWHUWDLQPHQW
$GYHUWLVLQJDQGSXEOLFLW\ 2WKHUV
3
3
3 *URXS
3DUHQW
3
3 3
3 3 3
6DODULHVDQG(PSOR\HH%HQHILWV
6$/$5,(6$1'(03/2<((%(1(),76
6DODULHVDQG(PSOR\HH%HQHILWV([SHQVH
([SHQVHVUHFRJQL]HGIRUHPSOR\HHEHQHILWVDUHDVIROORZV
3 3 3
3 3 3
6DODULHVDQGZDJHV
%RQXVHV
)ULQJHEHQHILWV
3RVWHPSOR\PHQWEHQHILWV
6RFLDOVHFXULW\FRVWV
2WKHUEHQHILWV
6DODULHVDQGZDJHV
%RQXVHV
)ULQJHEHQHILWV
6RFLDOVHFXULW\FRVWV
2WKHUEHQHILWV
*URXS
3 3 3DUHQW
3
3 3 3
3RVWHPSOR\PHQW%HQHILWV
7KH*URXSPDLQWDLQVDWD[TXDOLILHGQRQFRQWULEXWRU\SHQVLRQSODQWKDWLVEHLQJ
DGPLQLVWHUHGE\WKH%DQN·V7UXVWDQG,QYHVWPHQW6HUYLFHV*URXS7,6*FRYHULQJDOO
UHJXODUIXOOWLPHHPSOR\HHV8QGHUWKLVSHQVLRQSODQDOOFRYHUHGHPSOR\HHVDUHHQWLWOHG
WRFDVKEHQHILWVDIWHUVDWLVI\LQJFHUWDLQDJHDQGVHUYLFHUHTXLUHPHQWV$FWXDULDO
YDOXDWLRQVDUHPDGHDQQXDOO\WRXSGDWHWKHSRVWHPSOR\PHQWEHQHILWFRVWVDQGWKH
DPRXQWRIFRQWULEXWLRQV
7KH%DQNPDLQWDLQVWZRVHSDUDWHUHWLUHPHQWSODQVIRU8QLRQ%DQNDQGIRUPHUL%DQN
HPSOR\HHVKHQFHWKH%DQNSUHVHQWVSHQVLRQLQIRUPDWLRQLQLWVILQDQFLDOVWDWHPHQWV
VHSDUDWHO\IRUWKHWZRSODQV
7KHDPRXQWVRIUHWLUHPHQWEHQHILWDVVHWOLDELOLW\IRU8QLRQ%DQNSODQUHFRJQL]HGDUH
GHWHUPLQHGDVIROORZVVHH1RWH
3UHVHQWYDOXHRIWKHREOLJDWLRQ
)DLUYDOXHRISODQDVVHWV
'HILFLHQF\RISODQDVVHWV 8QUHFRJQL]HGDFWXDULDOORVV 3
*URXS
3 3 3
3
3
3UHVHQWYDOXHRIREOLJDWLRQ
'HILFLHQF\RISODQDVVHWV
8QUHFRJQL]HGDFWXDULDOORVV
3
3UHVHQWYDOXHRIREOLJDWLRQ
'HILFLHQF\RISODQDVVHWV
8QUHFRJQL]HGDFWXDULDOORVV
3DUHQW²8QLRQ%DQN3ODQ
3 3 3
3
3
3
3DUHQW²)RUPHUL%DQN3ODQ
3
3
3
3
3
7KHPRYHPHQWVLQWKHSUHVHQWYDOXHRIWKHUHWLUHPHQWEHQHILWREOLJDWLRQUHFRJQL]HGLQ
WKHERRNVIROORZ
%DODQFHDWEHJLQQLQJRI\HDU $FWXDULDOORVV
&XUUHQWVHUYLFHFRVW
,QWHUHVWFRVW
%HQHILWVSDLGE\WKHSODQ %DODQFHDWHQGRI\HDU
3 3 3
3 3 3
*URXS
%DODQFHDWEHJLQQLQJRI\HDU $FWXDULDOORVV
&XUUHQWVHUYLFHFRVW
,QWHUHVWFRVW
%HQHILWVSDLGE\WKHSODQ %DODQFHDWHQGRI\HDU
3 3 3
3 3 3
%DODQFHDWEHJLQQLQJRI\HDU &XUUHQWVHUYLFHFRVW
,QWHUHVWFRVW
$FWXDULDOORVVJDLQ
%HQHILWVSDLGE\WKHSODQ 3
%DODQFHDWHQGRI\HDU
3
3
3
3
3
7KHPRYHPHQWVLQWKHIDLUYDOXHRISODQDVVHWVIROORZ
3 3 3
3 3 3
%DODQFHDWEHJLQQLQJRI\HDU &RQWULEXWLRQVSDLGLQWRWKHSODQ
%HQHILWVSDLGE\WKHSODQ ([SHFWHGUHWXUQRQSODQDVVHWV
$FWXDULDOJDLQ
3
%DODQFHDWHQGRI\HDU
3 3 3
([SHFWHGUHWXUQRQSODQDVVHWV
%HQHILWVSDLGE\WKHSODQ $FWXDULDOJDLQ
%DODQFHDWHQGRI\HDU
3
%DODQFHDWHQGRI\HDU
3
3 3
*URXS
%HQHILWVSDLGE\WKHSODQ ([SHFWHGUHWXUQRQSODQDVVHWV
$FWXDULDOJDLQ
)RUPHUL%DQN3ODQ
3
3
3
3
7KHSODQDVVHWVFRQVLVWRIWKHIROORZLQJ
3
3 3 3
3 3 3
,QYHVWPHQWVLQ
(TXLW\VHFXULWLHV
'HEWVHFXULWLHV
%DQNGHSRVLWV
2WKHUV
3 3
*URXS
,QYHVWPHQWVLQ
(TXLW\VHFXULWLHV
'HEWVHFXULWLHV
%DQNGHSRVLWV
2WKHUV
3
3
3
3 3
3
(TXLW\VHFXULWLHVXQGHUWKHIXQGDUHSULPDULO\LQYHVWPHQWVLQFRUSRUDWLRQVOLVWHGLQWKH
36(ZKLFKLQFOXGHV3LQYHVWPHQWLQWKHVKDUHVRIVWRFNVRIWKH%DQN
VHH1RWHZKLOHGHEWVHFXULWLHVUHSUHVHQWLQYHVWPHQWVLQJRYHUQPHQWDQG
FRUSRUDWHERQGV7KHUHWLUHPHQWIXQGQHLWKHUSURYLGHVDQ\JXDUDQWHHRUVXUHW\IRUDQ\
REOLJDWLRQRIWKH%DQNQRULWVLQYHVWPHQWVLQWKH%DQN·VVKDUHVRIVWRFNVFRYHUHGE\
DQ\UHVWULFWLRQDQGOLHQV%DQNGHSRVLWVDUHPDLQWDLQHGZLWKUHSXWDEOHILQDQFLDO
LQVWLWXWLRQVZKLFKLQFOXGHV3GHSRVLWVWRWKH%DQN
$FWXDOUHWXUQVRQSODQDVVHWVZHUH3LQ3LQDQG3LQ
IRU8QLRQ%DQNDQG3LQ3LQDQG3LQIRU
L%DQN
7KHDPRXQWVRIUHWLUHPHQWEHQHILWVUHFRJQL]HGLQWKHVWDWHPHQWVRILQFRPHDUHDV
IROORZV
,QYHVWPHQWVLQ
(TXLW\VHFXULWLHV
'HEWVHFXULWLHV
%DQNGHSRVLWV
2WKHUV
3
3
&XUUHQWVHUYLFHFRVW
,QWHUHVWFRVW
1HWDFWXDULDOORVVUHFRJQL]HG 3
&XUUHQWVHUYLFHFRVW
,QWHUHVWFRVW
1HWDFWXDULDOORVVUHFRJQL]HG 3 3
3
&XUUHQWVHUYLFHFRVW
,QWHUHVWFRVW
1HWDFWXDULDOORVVUHFRJQL]HG 3
3
3
3
3
3
*URXS
3
3
3
3
3
3
3
3
3
7KHPRYHPHQWVLQUHWLUHPHQWEHQHILWDVVHWDUHDVIROORZV
%DODQFHDWEHJLQQLQJRI\HDU ([SHQVHUHFRJQL]HG
$FWXDOFRQWULEXWLRQV
%DODQFHDWHQGRI\HDU
$FWXDOFRQWULEXWLRQV
3
3
3
3
3
3
3
%DODQFHDWHQGRI\HDU
3
3
3
$FWXDOFRQWULEXWLRQV
3
3
3
%DODQFHDWHQGRI\HDU
3
3
3
*URXS
3
3
3UHVHQWHGEHORZDUHWKHKLVWRULFDOLQIRUPDWLRQUHODWHGWRWKHSUHVHQWYDOXHRIWKH
UHWLUHPHQWEHQHILWREOLJDWLRQIDLUYDOXHRISODQDVVHWVDQGH[FHVVRUGHILFLWLQWKHSODQ
DVZHOODVH[SHULHQFHDGMXVWPHQWVDULVLQJRQSODQDVVHWVDQGOLDELOLWLHV
8QLRQ%DQN3ODQ
3UHVHQWYDOXHRIWKHREOLJDWLRQ 3 3 3 3 3
'HILFLWLQWKHSODQ
3 3 3 3 3
([SHULHQFHDGMXVWPHQWV
DULVLQJRQSODQOLDELOLWLHV
DULVLQJRQSODQDVVHWV
3
3
3
3
)RUPHUL%DQN3ODQ
3UHVHQWYDOXHRIWKHREOLJDWLRQ
3
3
3
'HILFLWLQWKHSODQ
3
3
3
DULVLQJRQSODQOLDELOLWLHV ([SHULHQFHDGMXVWPHQWV
DULVLQJRQSODQDVVHWV
3
3
3
7KH%DQNH[SHFWVWRFRQWULEXWH3PLOOLRQIRUWKH8QLRQ%DQN3ODQDQG
3PLOOLRQIRUWKH)RUPHUL%DQN3ODQLQ
,QGHWHUPLQLQJWKHUHWLUHPHQWEHQHILWVWKHIROORZLQJDFWXDULDODVVXPSWLRQVZHUHXVHG
5HWLUHPHQWDJH
$YHUDJHUHPDLQLQJZRUNLQJOLIH 'LVFRXQWUDWH
([SHFWHGUDWHRIUHWXUQRQSODQDVVHWV
([SHFWHGUDWHRIVDODU\
LQFUHDVH
5HWLUHPHQWDJH
$YHUDJHUHPDLQLQJZRUNLQJOLIH 'LVFRXQWUDWH
([SHFWHGUDWHRIUHWXUQRQSODQDVVHWV
([SHFWHGUDWHRIVDODU\
LQFUHDVH
\HDUV \HDUV \HDUV
)RUPHUL%DQN3ODQ
\HDUV \HDUV \HDUV $VVXPSWLRQVUHJDUGLQJIXWXUHPRUWDOLW\DQGGLVDELOLW\DUHEDVHGRQSXEOLVKHGVWDWLVWLFV
DQGPRUWDOLW\WDEOHV
7KHH[SHFWHGORQJWHUPUDWHRIUHWXUQLVEDVHGRQWKHSRUWIROLRDVDZKROHDQGQRWRQ
WKHVXPRIWKHUHWXUQVRQLQGLYLGXDODVVHWFDWHJRULHV7KHUHWXUQLVEDVHGH[FOXVLYHO\RQ
KLVWRULFDOUHWXUQVZLWKRXWDGMXVWPHQWV
7D[HV
7$;(6
&XUUHQWDQG'HIHUUHG7D[HV
7KHFRPSRQHQWVRIWD[H[SHQVHIRUWKH\HDUVHQGHG'HFHPEHUDQG
DUHDVIROORZV
*URXS &XUUHQWWD[H[SHQVH
)LQDOWD[DWDQG 3 3
5HJXODUFRUSRUDWHLQFRPHWD[5&,7
DW
0&,7DW
'HIHUUHGWD[H[SHQVHLQFRPH
UHODWLQJWRRULJLQDWLRQDQG
UHYHUVDORIWHPSRUDU\GLIIHUHQFHV 7D[H[SHQVHUHSRUWHG
LQSURILWRUORVV
3 3
7D[H[SHQVHUHSRUWHG
LQRWKHUFRPSUHKHQVLYHLQFRPH
3
3
3
7KHUHFRQFLOLDWLRQRIWKHWD[RQSUHWD[SURILWFRPSXWHGDWWKHVWDWXWRU\WD[UDWHVWRWD[
H[SHQVHLVVKRZQEHORZ
&XUUHQWWD[H[SHQVH
)LQDOWD[DWDQG 0&,7DW
'HIHUUHGWD[H[SHQVHLQFRPH
UHODWLQJWRRULJLQDWLRQDQG
UHYHUVDORIWHPSRUDU\GLIIHUHQFHV
7D[H[SHQVHUHSRUWHG
LQSURILWRUORVV
3
3
3
3
3
3DUHQW 3
3 3
3
3 3
7D[H[SHQVHUHSRUWHG
LQRWKHUFRPSUHKHQVLYHLQFRPH 7D[RQSUHWD[SURILWDW $GMXVWPHQWIRULQFRPHVXEMHFWHG
WRORZHULQFRPHWD[UDWHV 7D[HIIHFWVRI
)&'8LQFRPHEHIRUHWD[ 1RQWD[DEOHLQFRPH
1RQGHGXFWLEOHH[SHQVHV 8QUHFRJQL]HGGHIHUUHGWD[DVVHW
2WKHUV
7D[H[SHQVHUHSRUWHGLQ
SURILWRUORVV
3 3 3
3
3
*URXS
3
7D[HV
7D[RQSUHWD[SURILWDW $GMXVWPHQWIRULQFRPHVXEMHFWHG
WRORZHULQFRPHWD[UDWHV 7D[HIIHFWVRI
)&'8LQFRPHEHIRUHWD[ 1RQWD[DEOHLQFRPH
1RQGHGXFWLEOHH[SHQVHV 8QUHFRJQL]HGGHIHUUHGWD[DVVHW
2WKHUV
7D[H[SHQVHUHSRUWHGLQWKH
SURILWRUORVV
3 3 3
3
3DUHQW
3
3
7KHFRPSRQHQWVRIWKHQHWGHIHUUHGWD[DVVHWVSUHVHQWHGXQGHU2WKHU5HVRXUFHV²VHH
1RWHDVRI'HFHPEHUDQGDUHDVIROORZV
'HIHUUHGWD[DVVHWV
$OORZDQFHIRULPSDLUPHQWORVVHV
$FFUXHGRWKHUH[SHQVHV 6LFNOHDYHEHQHILWV
8QUHDOL]HGIDLUYDOXHORVV
RQ$)6ILQDQFLDODVVHWV 8QUHDOL]HGIRUHLJQH[FKDQJHORVV
2WKHUV
'HIHUUHGWD[OLDELOLWLHV
)DLUYDOXHJDLQVRQLQYHVWPHQW
SURSHUWLHV
)RUHLJQFXUUHQF\VZDS
UHYDOXDWLRQJDLQ
&DSLWDOL]HGLQWHUHVW
8QUHDOL]HGIRUHLJQH[FKDQJHJDLQ
8QUHDOL]HGIDLUYDOXHJDLQV RQ$)6ILQDQFLDODVVHWV 2WKHUV
1HWGHIHUUHGWD[DVVHWV
3 3 3
*URXS6WDWHPHQWVRI)LQDQFLDO3RVLWLRQ
3 3 3
7D[HV
'HIHUUHGWD[DVVHWV
$OORZDQFHIRULPSDLUPHQWORVVHV
$FFUXHGRWKHUH[SHQVHV 6LFNOHDYHEHQHILWV
8QUHDOL]HGIDLUYDOXHORVV
RQ$)6ILQDQFLDODVVHWV 8QUHDOL]HGIRUHLJQH[FKDQJHORVV
2WKHUV
'HIHUUHGWD[OLDELOLWLHV
)DLUYDOXHJDLQVRQLQYHVWPHQW
SURSHUWLHV
)RUHLJQFXUUHQF\VZDS
UHYDOXDWLRQJDLQ
&DSLWDOL]HGLQWHUHVW
8QUHDOL]HGIRUHLJQH[FKDQJHJDLQ
8QUHDOL]HGIDLUYDOXHJDLQV
RQ$)6ILQDQFLDODVVHWV 2WKHUV
1HWGHIHUUHGWD[DVVHWV
)RUHLJQFXUUHQF\VZDSUHYDOXDWLRQ
ORVVJDLQ
,PSDLUPHQWORVVHV
8QUHDOL]HGIRUHLJQH[FKDQJH
ORVVJDLQ
$FFUXHGRWKHUH[SHQVHV
1HWIDLUYDOXHJDLQVORVVHVRQ
12/&2
0&,7
2WKHUV
3 3 3
3 3 3 *URXS6WDWHPHQWVRI,QFRPH 3
3DUHQW6WDWHPHQWVRI)LQDQFLDO3RVLWLRQ
3
3
'HIHUUHGWD[H[SHQVHLQFRPH 3
3DUHQW&RPSDQ\6WDWHPHQWVRI,QFRPH
3
'HIHUUHGWD[H[SHQVHLQFRPH )RUHLJQFXUUHQF\VZDSUHYDOXDWLRQ
ORVVJDLQ
,PSDLUPHQWORVVHV
8QUHDOL]HGIRUHLJQH[FKDQJH
ORVVJDLQ
$FFUXHGRWKHUH[SHQVHV
1HWIDLUYDOXHJDLQVORVVHVRQ
12/&2
0&,7
2WKHUV
3
3
3
3
3
3
3
'HIHUUHGWD[H[SHQVHUHSRUWHGLQRWKHUFRPSUHKHQVLYHLQFRPHDPRXQWHGWR3LQ
3LQDQG3LQ
7D[HV
7KHXQUHFRJQL]HGGHIHUUHGWD[DVVHWVDVRI'HFHPEHUDQGSHUWDLQWRWKH
IROORZLQJWHPSRUDU\GLIIHUHQFHV
*URXS
12/&2
0&,7
2WKHUV
3
3
3
3
3DUHQW
12/&2
0&,7
3
3
3
3
7KH*URXSGLGQRWUHFRJQL]HWKHDERYHGHIHUUHGWD[DVVHWVPDLQO\RQ12/&2DQG
0&,7VLQFHPDQDJHPHQWEHOLHYHVWKDWLWLVQRWUHDVRQDEO\SRVVLEOHWKDWWKHUHODWHGWD[
EHQHILWVIURPWKHVHGHIHUUHGWD[DVVHWVPD\EHUHDOL]HGLQWKHIXWXUH
7KHEUHDNGRZQRI12/&2RIWKH3DUHQW&RPSDQ\QLOIRUWKHVXEVLGLDULHVIROORZV
,QFHSWLRQ <HDU
$PRXQW
3
3
$SSOLHG
([SLUHG 3
3
%DODQFH
([SLU\<HDU 3
3
7KHEUHDNGRZQRIWKH3DUHQW&RPSDQ\·VQLOIRUVXEVLGLDULHV0&,7IROORZV
,QFHSWLRQ <HDU
$PRXQW
3
3
0RYHPHQWV 3
3
3
3
%DODQFH
([SLU\<HDU 7D[HV
5HOHYDQW7D[5HJXODWLRQV
7KHIROORZLQJDUHWKHUHOHYDQWWD[UHJXODWLRQVDIIHFWLQJWKH*URXS
,QFRPH7D[
D 0&,7RIEDVHGRQJURVVLQFRPHDVGHILQHGXQGHUWKH7D[&RGHLVUHTXLUHGWR
EHFRPSXWHGDQGSDLGLIKLJKHUWKDQWKH5&,7DWWKHHQGRIHDFKTXDUWHU
EHJLQQLQJRQWKHLQFRPHWD[UHWXUQIRUILVFDOTXDUWHUHQGLQJ6HSWHPEHUDV
SURYLGHGIRUXQGHU5HYHQXH5HJXODWLRQ55
E 12/&2FDQEHFODLPHGDVGHGXFWLRQDJDLQVWWD[DEOHLQFRPHZLWKLQWKUHH\HDUV
DIWHU12/&2LVLQFXUUHG
F )&'8WUDQVDFWLRQVZLWKQRQUHVLGHQWVRIWKH3KLOLSSLQHVDQGRWKHURIIVKRUH
EDQNLQJXQLWVRIIVKRUHLQFRPHDUHWD[H[HPSWZKLOHLQWHUHVWLQFRPHRQIRUHLJQ
FXUUHQF\ORDQVIURPUHVLGHQWVRWKHUWKDQ2%8VRURWKHUGHSRVLWRU\EDQNVXQGHU
WKHH[SDQGHGV\VWHPLVVXEMHFWWRLQFRPHWD[
G:LWKKROGLQJWD[RILVLPSRVHGRQLQWHUHVWHDUQHGE\UHVLGHQWVXQGHUWKH
H[SDQGHGIRUHLJQFXUUHQF\GHSRVLWV\VWHP
'RFXPHQWDU\6WDPS7D[
'RFXPHQWDU\VWDPSWD[HV'67DWYDU\LQJUDWHVDUHLPSRVHGRQWKHIROORZLQJ
D %DQNFKHFNVGUDIWVRUFHUWLILFDWHRIGHSRVLWQRWEHDULQJLQWHUHVWDQGRWKHU
LQVWUXPHQWV
E %RQGVORDQDJUHHPHQWVSURPLVVRU\QRWHVELOOVRIH[FKDQJHGUDIWVLQVWUXPHQWV
DQGVHFXULWLHVLVVXHGE\WKH*RYHUQPHQWRUDQ\RILWVLQVWUXPHQWDOLWLHVGHSRVLW
VXEVWLWXWHGHEWLQVWUXPHQWVFHUWLILFDWHVRIGHSRVLWVEHDULQJLQWHUHVWDQGRWKHUQRW
SD\DEOHRQVLJKWRUGHPDQG
F $FFHSWDQFHRIELOOVRIH[FKDQJHDQGOHWWHUVRIFUHGLWDQG
G %LOOVRIODGLQJRUUHFHLSW
2Q)HEUXDU\5$$Q$FW5DWLRQDOL]LQJWKH3URYLVLRQVRQWKH'RFXPHQWDU\
6WDPS7D[RIWKH1,5&ZDVSDVVHGDPHQGLQJWKHUDWHVRI'67WKHVLJQLILFDQW
SURYLVLRQVRIZKLFKDUHVXPPDUL]HGEHORZ
D 2QHYHU\LVVXHRIGHEWLQVWUXPHQWVWKHUHVKDOOEHFROOHFWHGD'67RI3RQHDFK
3RUIUDFWLRQDOSDUWWKHUHRIRIWKHLVVXHSULFHRIDQ\VXFKGHEWLQVWUXPHQW
SURYLGHGWKDWIRUVXFKGHEWLQVWUXPHQWVZLWKWHUPVRIOHVVWKDQRQH\HDUWKH'67
WREHFROOHFWHGVKDOOEHRIDSURSRUWLRQDODPRXQWLQDFFRUGDQFHZLWKWKHUDWLRRILWV
WHUPLQQXPEHURIGD\VWRGD\VSURYLGHGIXUWKHUWKDWRQO\RQH'67VKDOOEH
LPSRVHGRQHLWKHUORDQDJUHHPHQWRUSURPLVVRU\QRWHVWRVHFXUHVXFKORDQ
E 2QDOOVDOHVRUWUDQVIHURIVKDUHVRUFHUWLILFDWHVRIVWRFNLQDQ\FRUSRUDWLRQWKHUH
VKDOOEHFROOHFWHGD'67RI3RQHDFK3RUIUDFWLRQDOSDUWWKHUHRIRIWKH
SDUYDOXHRIVXFKVWRFN
7D[HVDQG7UXVW2SHUDWLRQV
F 2QDOOELOOVRIH[FKDQJHRUGUDIWVWKHUHVKDOOEHFROOHFWHGD'67RI3RQHDFK
3RUIUDFWLRQDOSDUWWKHUHRIRIWKHIDFHYDOXHRIDQ\VXFKELOORIH[FKDQJHRU
GUDIW
G 7KHIROORZLQJLQVWUXPHQWVGRFXPHQWVDQGSDSHUVVKDOOEHH[HPSWIURP'67
x %RUURZLQJVDQGOHQGLQJRIVHFXULWLHVH[HFXWHGXQGHUWKH6HFXULWLHV%RUURZLQJ
DQG/HQGLQJ3URJUDPRIDUHJLVWHUHGH[FKDQJHRULQDFFRUGDQFHZLWK
UHJXODWLRQVSUHVFULEHGE\WKHDSSURSULDWHUHJXODWRU\DXWKRULW\
x /RDQDJUHHPHQWVRUSURPLVVRU\QRWHVWKHDJJUHJDWHRIZKLFKGRHVQRWH[FHHG
3RUDQ\VXFKDPRXQWDVPD\EHGHWHUPLQHGE\WKH6HFUHWDU\RI
)LQDQFHH[HFXWHGE\DQLQGLYLGXDOIRUKLVSXUFKDVHRQLQVWDOOPHQWIRUKLV
SHUVRQDOXVH
x 6DOHEDUWHURUH[FKDQJHRIVKDUHVRIVWRFNOLVWHGDQGWUDGHGWKURXJKWKHORFDO
VWRFNH[FKDQJHDVDPHQGHGE\5$
x )L[HGLQFRPHDQGRWKHUVHFXULWLHVWUDGHGLQWKHVHFRQGDU\PDUNHWRUWKURXJKDQ
H[FKDQJH
x 'HULYDWLYHVLQFOXGLQJUHSXUFKDVHDJUHHPHQWVDQGUHYHUVHUHSXUFKDVH
DJUHHPHQWV
x %DQNGHSRVLWDFFRXQWVZLWKRXWDIL[HGWHUPRUPDWXULW\DQG
x ,QWHUEDQNFDOOORDQVZLWKPDWXULW\RIQRWPRUHWKDQVHYHQGD\VWRFRYHU
GHILFLHQF\LQUHVHUYHDJDLQVWGHSRVLWOLDELOLWLHV
2SWLRQDO6WDQGDUG'HGXFWLRQ
,QDQGWKH%DQNRSWHGWRFODLPLWHPL]HGGHGXFWLRQV
7586723(5$7,216
7KHIROORZLQJVHFXULWLHVDQGRWKHUSURSHUWLHVKHOGE\WKH%DQNLQILGXFLDU\RUDJHQF\
FDSDFLW\IRUDIHHIRULWVFXVWRPHUVDUHQRWLQFOXGHGLQWKHDFFRPSDQ\LQJVWDWHPHQWRI
ILQDQFLDOSRVLWLRQVLQFHWKHVHDUHQRWSURSHUWLHVRIWKH%DQNVHH1RWH
,QYHVWPHQWV
2WKHUV
3
3
3
3
7UXVW2SHUDWLRQV
,QFRPSOLDQFHZLWKWKHUHTXLUHPHQWVRIWKH*HQHUDO%DQNLQJ$FWUHODWLYHWRWKH%DQN·V
WUXVWIXQFWLRQV
D ,QYHVWPHQWLQJRYHUQPHQWVHFXULWLHVVKRZQDVSDUWRI$)6ILQDQFLDODVVHWVZLWKD
WRWDOIDFHYDOXHRI3DVRI'HFHPEHUDQGDUHGHSRVLWHGZLWK
%63DVVHFXULW\IRUWKH%DQN·VIDLWKIXOFRPSOLDQFHZLWKLWVILGXFLDU\REOLJDWLRQVVHH
1RWHDQG
E 7HQSHUFHQWRIWKH%DQN·VWUXVWLQFRPHLVWUDQVIHUUHGWRVXUSOXVUHVHUYHV7KLV
\HDUO\WUDQVIHULVUHTXLUHGXQWLOWKHVXUSOXVUHVHUYHVIRUWUXVWIXQFWLRQLVHTXLYDOHQW
WRRIWKH%DQN·VDXWKRUL]HGFDSLWDOVWRFN1RSDUWRIVXFKUHVHUYHVVKDOODW
DQ\WLPHEHSDLGRXWDVGLYLGHQGVEXWORVVHVDFFUXLQJLQWKHFRXUVHRIEXVLQHVVPD\
EHFKDUJHGDJDLQVWVXFKVXUSOXV$VRI'HFHPEHUWKHUHVHUYHIRUWUXVW
IXQFWLRQVDPRXQWHGWR3DQGLVLQFOXGHGDVSDUWRI6XUSOXV5HVHUYHVLQWKH
VWDWHPHQWRIFKDQJHVLQFDSLWDOIXQGV
$OVRLQDFFRUGDQFHZLWK%63UHJXODWLRQVWKH8,7)VPDQDJHGE\WKH%DQN·V7,6*
PDLQWDLQUHVHUYHGHSRVLWDFFRXQWZLWKWKH%63DQGJRYHUQPHQWVHFXULWLHVWRPHHWWKH
UHVHUYHUHTXLUHPHQWRQSHVRGHQRPLQDWHG8,7)VDQGRWKHUVLPLODUO\PDQDJHGIXQGV
7KHEDODQFHVRIWKH%63UHVHUYHGHSRVLWDFFRXQWDPRXQWHGWR3DVRI
'HFHPEHUQLODVRI'HFHPEHU,QFRPHIURPWUXVWRSHUDWLRQVRIWKH
*URXSDPRXQWHGWR33DQG3IRUWKH\HDUVHQGHG
'HFHPEHUDQGUHVSHFWLYHO\DQGVKRZQDV,QFRPHIURPWUXVW
RSHUDWLRQVDFFRXQWXQGHU0LVFHOODQHRXV,QFRPHLQWKH*URXSVWDWHPHQWVRILQFRPH
VHH1RWH
5HODWHG3DUW\7UDQVDFWLRQV
5(/$7('3$57<75$16$&7,216
7KH*URXS·VDQG3DUHQW&RPSDQ\·VUHODWHGSDUWLHVLQFOXGHVXEVLGLDULHVVWRFNKROGHUV
NH\PDQDJHPHQWSHUVRQQHODQGRWKHUVDVGHVFULEHGEHORZ
7KHVXPPDU\RIWKH%DQN·VVLJQLILFDQWWUDQVDFWLRQVZLWKLWVUHODWHGSDUWLHVDVRIDQGIRU
WKH\HDUVHQGHG'HFHPEHUDQGDUHDVIROORZV
5HODWHG3DUW\
$PRXQWRI 2XWVWDQGLQJ $PRXQWRI 2XWVWDQGLQJ &DWHJRU\
1RWHV 7UDQVDFWLRQ %DODQFH 7UDQVDFWLRQ %DODQFH 6XEVLGLDULHV
/HDVHRISURSHUWLHV
3
3
3
3
0DQDJHPHQWVHUYLFHV
'HSRVLWOLDELOLWLHV
2XWVWDQGLQJEDODQFH
1HWPRYHPHQWV
,QWHUHVWH[SHQVHRQGHSRVLWV
$GYDQFHV 6WRFNKROGHUV 'HSRVLWOLDELOLWLHV
2XWVWDQGLQJEDODQFH
1HWPRYHPHQWV
,QWHUHVWH[SHQVHRQGHSRVLWV
.H\PDQDJHPHQWSHUVRQQHO 2WKHUV
'265,
'LUHFWRUVDQGRIILFHUV 6WRFNKROGHUV
2WKHUUHODWHGLQWHUHVWV 2XWVWDQGLQJUHFHLYDEOHVIURPDQGSD\DEOHVWRUHODWHGSDUWLHVLIDQ\DULVLQJIURPOHDVHRI
SURSHUWLHVPDQDJHPHQWVHUYLFHVDQGDGYDQFHVDUHXQVHFXUHGQRQLQWHUHVWEHDULQJDQG
JHQHUDOO\VHWWOHGLQFDVKZLWKLQPRQWKVRUXSRQGHPDQG
7KH%DQNDQGLWVVXEVLGLDULHV·UHWLUHPHQWSODQVKDYHWUDQVDFWLRQVGLUHFWO\DQGLQGLUHFWO\
ZLWKWKH%DQNDVRI'HFHPEHUDVIROORZV
$PRXQWRI 2XWVWDQGLQJ
7UDQVDFWLRQ %DODQFH
,QYHVWPHQWLQ%DQNVKDUHV
,QYHVWPHQWLQ%DQN·VQRWHVSD\DEOH
2XWVWDQGLQJEDODQFH
1HWPRYHPHQWV
,QWHUHVWLQFRPH
$FFUXHGLQWHUHVWLQFRPH
'HSRVLWV
2XWVWDQGLQJEDODQFH
1HWPRYHPHQWV
,QWHUHVWLQFRPHRQGHSRVLWV
'LYLGHQGLQFRPH
7UDGLQJJDLQ
3
3
/HDVHRI3URSHUWLHV
7KH%DQNHQWHUHGLQWRDQDJUHHPHQWZLWK83,ZKHUHE\WKHODWWHUOHDVHVRXWRQHRILWV
LQYHVWPHQWSURSHUWLHVWRWKHIRUPHUIRUDSHULRGRIILYH\HDUV,QFRQVLGHUDWLRQIRU
WKHVHWKH%DQNSD\VDPRQWKO\UHQWRI39$7H[FOXVLYH
0DQDJHPHQW6HUYLFHV
7KH%DQNHQWHUHGLQWRDVDOHVPDQDJHPHQWDJUHHPHQWZLWK)8'&ZKHUHE\WKHODWWHU
VHOOV8QLRQ%DQN9LVD&UHGLW&DUGVWKURXJKLWVGLUHFWVHOOLQJQHWZRUN8QGHUWKHWHUPV
RIWKHDJUHHPHQWWKH%DQNSD\VDIL[HGPRQWKO\VDOHVPDQDJHPHQWIHHRI3
QHWRIDSSOLFDEOHWD[HVSOXVFRPPLVVLRQSHUDSSURYHGSULQFLSDOFDUG
'HSRVLW/LDELOLWLHVDQG,QWHUHVW([SHQVH
7KHGHSRVLWDFFRXQWVRIVXEVLGLDULHVDQGVWRFNKROGHUVZLWKWKH%DQNJHQHUDOO\HDUQ
LQWHUHVWEDVHGRQGDLO\EDQNGHSRVLWUDWHV
$GYDQFHV
7KH%DQNKDVDOVRQRQLQWHUHVWEHDULQJDQGXQVHFXUHGDGYDQFHVWR8%36,ZKLFKDUH
JHQHUDOO\VHWWOHGLQFDVKXSRQGHPDQG7KHUHZHUHQRPRYHPHQWVRQWKLVDFFRXQWDV
RI'HFHPEHUDQG1RLPSDLUPHQWORVVHVZHUHSURYLGHGIRUWKHVH
DGYDQFHVDVRI'HFHPEHUDQG
.H\0DQDJHPHQW3HUVRQQHO&RPSHQVDWLRQ
7KHFRPSHQVDWLRQRINH\PDQDJHPHQWSHUVRQQHOIRUWKH*URXSDQG3DUHQW&RPSDQ\
IROORZV
3
3
3
3
3
3
3
3
3
3
3
6KRUWWHUPEHQHILWV
2WKHUORQJWHUPEHQHILWV
6KRUWWHUPEHQHILWV
2WKHUORQJWHUPEHQHILWV
3
*URXS
3DUHQW
'LUHFWRUV·IHHVLQFXUUHGE\WKH*URXSDPRXQWHGWR3LQ3LQ
DQG3LQDQGE\WKH3DUHQW&RPSDQ\DPRXQWHGWR3LQ
3LQDQG3LQ
'265,
,QWKHRUGLQDU\FRXUVHRIEXVLQHVVWKH*URXSKDVORDQVGHSRVLWVDQGRWKHU
WUDQVDFWLRQVZLWKLWVUHODWHGSDUWLHVDQGZLWKFHUWDLQ'265,8QGHUWKH*URXS·V
H[LVWLQJSROLFLHVWKHVHWUDQVDFWLRQVDUHPDGHVXEVWDQWLDOO\RQWKHVDPHWHUPVDQG
FRQGLWLRQVDVWUDQVDFWLRQVZLWKRWKHULQGLYLGXDOVDQGEXVLQHVVHVRIFRPSDUDEOHULVNV
7KHDPRXQWRILQGLYLGXDOORDQVWR'265,RIZKLFKPXVWEHVHFXUHGVKRXOGQRW
H[FHHGWKHDPRXQWRIWKHGHSRVLWDQGERRNYDOXHRIWKHLULQYHVWPHQWLQWKH*URXS,Q
WKHDJJUHJDWHORDQVWR'265,JHQHUDOO\VKRXOGQRWH[FHHGWKHWRWDOHTXLW\RURI
WKHWRWDOORDQSRUWIROLRRIWKH*URXSZKLFKHYHULVORZHU$VRI'HFHPEHU
DQGWKH%DQNLVLQFRPSOLDQFHZLWKWKHVHUHJXODWRU\UHTXLUHPHQWV
7KHIROORZLQJDGGLWLRQDOLQIRUPDWLRQLVSUHVHQWHGUHODWLYHWR'265,ORDQV
*URXSDQG3DUHQW
7RWDO'265,ORDQV
3 3
8QVHFXUHG'265,ORDQV
RI'265,ORDQVWRWRWDO
ORDQSRUWIROLR
RIXQVHFXUHG'265,ORDQV
WRWRWDO'265,ORDQV
RISDVWGXH'265,ORDQVWR
WRWDO'265,ORDQV
RIQRQDFFUXLQJ'265,
DFFRXQWVWRWRWDO'265,
ORDQV
2Q-DQXDU\%63LVVXHG&LUFXODU1RZKLFKSURYLGHVWKHUXOHVDQG
UHJXODWLRQVWKDWJRYHUQORDQVRWKHUFUHGLWDFFRPPRGDWLRQVDQGJXDUDQWHHVJUDQWHGWR
VXEVLGLDULHVDQGDIILOLDWHVRIEDQNVDQGTXDVLEDQNV8QGHUWKHVDLGFLUFXODUWKHWRWDO
RXWVWDQGLQJH[SRVXUHVWRHDFKRIWKH%DQN·VVXEVLGLDULHVDQGDIILOLDWHVVKDOOQRWH[FHHG
RIEDQN·VQHWZRUWKWKHXQVHFXUHGSRUWLRQRIZKLFKVKDOOQRWH[FHHGRIVXFK
QHWZRUWK)XUWKHUWKHWRWDORXWVWDQGLQJH[SRVXUHVWRVXEVLGLDULHVDQGDIILOLDWHVVKDOO
QRWH[FHHGRIWKHQHWZRUWKRIWKHOHQGLQJEDQN
7UDQVDFWLRQVZLWKWKH5HWLUHPHQW3ODQ
7KHUHWLUHPHQWIXQGRIWKH%DQNFRYHUHGXQGHUGHILQHGEHQHILWSRVWHPSOR\PHQWSODQ
PDLQWDLQHGIRUTXDOLILHGHPSOR\HHVLVDGPLQLVWHUHGE\WKH5HWLUHPHQW&RPPLWWHH7KH
PHPEHUVRIWKH5HWLUHPHQW&RPPLWWHHDUH6HQLRU([HFXWLYHVDQGRIILFHUVRIWKH%DQN
DVDSSURYHGE\WKH&KDLUPDQ&(27KURXJKLWV5HWLUHPHQW&RPPLWWHHLWKDV
DSSRLQWHG7,6*DVWKHWUXVWHHIRUWKHUHWLUHPHQWIXQGZKLFKLVFRYHUHGE\WUXVW
DJUHHPHQWV
5HODWHG3DUW\7UDQVDFWLRQVDQG(DUQLQJVSHU6KDUH
7KHUHWLUHPHQWSODQDVVHWVDQGWKHLUFDUU\LQJYDOXHVRIWKH%DQNDQGLWVVXEVLGLDULHVDV
RI'HFHPEHUDUHWKHIROORZLQJ
*URXS
3DUHQW
,QYHVWPHQWVLQ
(TXLW\VHFXULWLHV
3
'HEWVHFXULWLHV
%DQNGHSRVLWV
2WKHUV
3
3
$VRI'HFHPEHUWKHFDUU\LQJYDOXHRIWKHIXQGLVHTXLYDOHQWWRLWVIDLUYDOXH
7KH%DQN·VUHWLUHPHQWIXQGLQFOXGHVLQYHVWPHQWVLQVKDUHVRIVWRFNDQGQRWHVSD\DEOH
RIWKH%DQNDPRXQWLQJWR3DQG3UHVSHFWLYHO\DVRI
'HFHPEHU7KHLQYHVWPHQWLQ%DQNVKDUHVDUHSULPDULO\KHOGIRUUHVDOHDQG
WKH%DQN·VUHWLUHPHQWIXQGGRHVQRWLQWHQGWRH[HUFLVHLWVYRWLQJULJKWVRYHUWKRVH
VKDUHV7KHWHUPVRIWKHLQYHVWPHQWLQQRWHVSD\DEOHDUHGLVFXVVHGLQ1RWH
7KHUHWLUHPHQWIXQGRIWKH%DQNDQGWKHFRPELQHGUHWLUHPHQWIXQGVRIWKH*URXS
KDYHGHPDQGGHSRVLWVZLWKWKH%DQNDPRXQWLQJWR3DQG3UHVSHFWLYHO\DV
RI'HFHPEHU
7KHUHODWHGGLYLGHQGLQFRPHLQWHUHVWLQFRPHDQGWUDGLQJJDLQDPRXQWHGWR3
3DQG3UHVSHFWLYHO\LQ
($51,1*63(56+$5(
%DVLFHDUQLQJVSHUVKDUHZHUHFRPSXWHGDVIROORZV
1HWSURILW
3 3 3
'LYLGHGE\WKHZHLJKWHGDYHUDJHQXPEHU
RIRXWVWDQGLQJFRPPRQVKDUHV %DVLFHDUQLQJVSHUVKDUH
*URXS
3
3
3
3DUHQW 1HWSURILW
3 3 3
'LYLGHGE\WKHZHLJKWHGDYHUDJHQXPEHU
RIRXWVWDQGLQJFRPPRQVKDUHV %DVLFHDUQLQJVSHUVKDUH
3
3
3
$V RI 'HFHPEHU DQG WKH *URXS DQG 3DUHQW &RPSDQ\ KDYH QR
RXWVWDQGLQJ SRWHQWLDOO\ GLOXWLYH VHFXULWLHV KHQFH EDVLF HDUQLQJV SHU VKDUH DUH HTXDO WR
GLOXWHGHDUQLQJVSHUVKDUH
6HOHFWHG)LQDQFLDO3HUIRUPDQFH,QGLFDWRUV
6(/(&7('),1$1&,$/3(5)250$1&(,1',&$7256
7KHIROORZLQJDUHVRPHPHDVXUHVRIWKH%DQN·VILQDQFLDOSHUIRUPDQFH
5HWXUQRQDYHUDJHUHVRXUFHV
1HWSURILW
$YHUDJHWRWDOUHVRXUFHV
1HWLQWHUHVWPDUJLQ
1HWLQWHUHVWLQFRPH
$YHUDJHLQWHUHVWHDUQLQJUHVRXUFHV
/LTXLGLW\UDWLR
'HEWWRHTXLW\UDWLR
5HWXUQRQDYHUDJHFDSLWDOIXQGV 1HWSURILW
$YHUDJHWRWDOFDSLWDOIXQGV
/LDELOLWLHV
(TXLW\
$VVHWWRHTXLW\UDWLR
,QWHUHVWUDWHFRYHUDJHUDWLR
(DUQLQJVEHIRUHLQWHUHVWVDQGWD[HV ,QWHUHVWH[SHQVH
&XUUHQW$VVHWV
&XUUHQW/LDELOLWLHV
$VVHW
(TXLW\
&RPPLWPHQWVDQG&RQWLQJHQW/LDELOLWLHV
&200,70(176$1'&217,1*(17/,$%,/,7,(6
/HDVHV
7KH%DQNOHDVHVYDULRXVEUDQFKSUHPLVHVIRUDQDYHUDJHRIVHYHQ\HDUV7KHOHDVH
FRQWUDFWVDUHFDQFHODEOHRUUHQHZDEOHDWWKH%DQN·VRSWLRQXQGHUFHUWDLQWHUPVDQG
FRQGLWLRQV9DULRXVOHDVHFRQWUDFWVLQFOXGHHVFDODWLRQFODXVHVPRVWRIZKLFKEHDU
DQDQQXDOUHQWLQFUHDVHRI6RPHOHDVHVLQFOXGHDFODXVHWRHQDEOHDGMXVWPHQW
RIWKHUHQWDOFKDUJHRQDQDQQXDOEDVLVEDVHGRQSUHYDLOLQJPDUNHWUDWHV$VRI
'HFHPEHUDQGWKH%DQNKDVQHLWKHUDFRQWLQJHQWUHQWSD\DEOHQRU
DQDVVHWUHVWRUDWLRQREOLJDWLRQLQUHODWLRQZLWKWKHVHOHDVHDJUHHPHQWV
5HQWDOVFKDUJHGDJDLQVWFXUUHQWRSHUDWLRQVLQFOXGHGXQGHU2FFXSDQF\DFFRXQWLQWKH
VWDWHPHQWVRILQFRPHDUHDVIROORZV
*URXS
%DQN
3
3 3
7KHHVWLPDWHGPLQLPXPIXWXUHDQQXDOUHQWDOVSD\DEOHXQGHUQRQFDQFHOODEOHRSHUDWLQJ
OHDVHVIROORZV
:LWKLQRQH\HDU
%H\RQGRQH\HDUEXW
ZLWKLQILYH\HDUV
%H\RQGILYH\HDUV
:LWKLQRQH\HDU
%H\RQGRQH\HDUEXW
ZLWKLQILYH\HDUV
%H\RQGILYH\HDUV
3
3 3
3
3DUHQW 3
3
3
3
3
*URXS
3
3
3
7KH*URXSKDVHQWHUHGLQWRFRPPHUFLDOSURSHUW\OHDVHVRQWKH*URXS·VVXUSOXVRIILFHV
7KHVHQRQFDQFHOODEOHOHDVHVKDYHUHPDLQLQJQRQFDQFHOODEOHOHDVHWHUPVRIEHWZHHQ
RQHDQGIRXU\HDUV
7RWDOUHQWLQFRPHHDUQHGLQFOXGHGXQGHU2WKHU2SHUDWLQJ,QFRPHDFFRXQWLQWKH
VWDWHPHQWVRILQFRPH²VHH1RWHE\WKH*URXSDQGWKH%DQNIRUWKH\HDUVHQGHG
'HFHPEHUDQGDUHDVIROORZV *URXS
%DQN
3
3 3
&RPPLWPHQWVDQG&RQWLQJHQW/LDELOLWLHV
7KHHVWLPDWHGPLQLPXPIXWXUHDQQXDOUHQWDOVUHFHLYDEOHXQGHUQRQFDQFHODEOH
RSHUDWLQJOHDVHVIROORZV
:LWKLQRQH\HDU
%H\RQGRQH\HDUEXW
ZLWKLQILYH\HDUV
3
3
3
3
3
3
3
3
3
*URXS
3
3
:LWKLQRQH\HDU
%H\RQGRQH\HDUEXW
ZLWKLQILYH\HDUV
3
3DUHQW
2WKHUV
,QWKHQRUPDOFRXUVHRIWKH*URXS·VRSHUDWLRQVWKHUHDUHYDULRXVRXWVWDQGLQJ
FRPPLWPHQWVDQGFRQWLQJHQWOLDELOLWLHVVXFKDVJXDUDQWHHVFRPPLWPHQWVWRH[WHQG
FUHGLWHWFZKLFKDUHQRWUHIOHFWHGLQWKHDFFRPSDQ\LQJILQDQFLDOVWDWHPHQWV7KH
*URXSUHFRJQL]HVLQLWVERRNVDQ\ORVVHVDQGOLDELOLWLHVLQFXUUHGLQWKHFRXUVHRILWV
RSHUDWLRQVDVVRRQDVWKHVHEHFRPHGHWHUPLQDEOHDQGTXDQWLILDEOH0DQDJHPHQW
EHOLHYHVWKDWDVRI'HFHPEHUQRDGGLWLRQDOPDWHULDOORVVHVRUOLDELOLWLHVDUH
UHTXLUHGWREHUHFRJQL]HGLQWKHDFFRPSDQ\LQJILQDQFLDOVWDWHPHQWVDVDUHVXOWRIWKH
DERYHFRPPLWPHQWVDQGWUDQVDFWLRQV
)ROORZLQJLVDVXPPDU\RIWKH%DQN·VFRPPLWPHQWVDQGFRQWLQJHQWDFFRXQWV
1RWH 7UXVWGHSDUWPHQWDFFRXQWV 8QXVHGFRPPHUFLDOOHWWHUVRIFUHGLW
,QZDUGELOOVIRUFROOHFWLRQV 2XWVWDQGLQJJXDUDQWHHVLVVXHG /DWHGHSRVLWVSD\PHQWVUHFHLYHG 2XWZDUGELOOVIRUFROOHFWLRQ 8QVROGWUDYHOOHUV·FKHFNV 2WKHUFRQWLQJHQWDFFRXQWV 3 3 7KHUHDUHVHYHUDOVXLWVDQGFODLPVWKDWUHPDLQXQVHWWOHG0DQDJHPHQWEHOLHYHVEDVHG
RQWKHRSLQLRQRILWVOHJDOFRXQVHOVWKDWWKHXOWLPDWHRXWFRPHRIVXFKFDVHVDQGFODLPV
ZLOOQRWKDYHDPDWHULDOHIIHFWRQWKH%DQN·VILQDQFLDOSRVLWLRQDQGUHVXOWVRIRSHUDWLRQV
83,DFWVDVWKHSURMHFWDQGIXQGPDQDJHURI.LQJVZRRG3URMHFW$VIXQGPDQDJHU
83,LVUHVSRQVLEOHIRUWKHWUHDVXU\DQGPRQH\PDQDJHPHQWDVZHOODVDUUDQJLQJWKH
QHFHVVDU\IDFLOLWLHVDQGDFFRXQWLQJIRUWKHGHYHORSPHQWRIWKHSURMHFW83,DOVR
UHFHLYHVDFHUWDLQSHUFHQWDJHRIWKHVDOHVSULFHUHODWHGWR.LQJVZRRG3URMHFWDVVDOHV
FRPPLVVLRQDQGWRFRPSHQVDWHIRUWKHPDUNHWLQJH[SHQVHVLQFXUUHG
(YHQWV$IWHUWKH5HSRUWLQJ3HULRGDQG6XSSOHPHQWDU\,QIRUPDWLRQ
5HTXLUHGE\WKH%XUHDXRI,QWHUQDO5HYHQXH
(9(176$)7(57+((1'2)7+(5(3257,1*3(5,2'
'LYLGHQG'HFODUDWLRQ
2Q-DQXDU\WKH%2'DSSURYHGWKHGHFODUDWLRQRIFDVKGLYLGHQGVDW
3SHUVKDUHRUIRUDWRWDORI3EDVHGRQWKHRXWVWDQGLQJFRPPRQVWRFNRI
VKDUHVDVRI'HFHPEHU7KH%63LQLWVOHWWHUWRWKH%DQNGDWHG
0DUFKKDVDSSURYHGWKHFDVKGLYLGHQGGHFODUDWLRQRIWKH%DQNZLWKUHFRUG
GDWHRI0DUFKDQGSD\PHQWGDWHRI$SULO
$FTXLVLWLRQRI&LW\6DYLQJV%DQN,QF
2Q-DQXDU\WKH%2'DSSURYHGWKHSXUFKDVHRIDOOWKHLVVXHGDQGRXWVWDQGLQJ
VKDUHVRI&LW\6DYLQJV%DQN,QF&6%KHOGE\$(9,DQGLWVZKROO\RZQHGVXEVLGLDU\
3LOPLFR)RRGV&RUSRUDWLRQ3)&$(9,DQG3)&RZQRI&6%·VLVVXHGDQG
RXWVWDQGLQJFDSLWDOVWRFN$(9,RZQVVKDUHVRUZKLOH3)&RZQV
VKDUHVRU7KHDFTXLVLWLRQZDVDSSURYHGE\WKH0RQHWDU\%RDUGRIWKH
%63RQ0DUFK
6833/(0(17$5< ,1)250$7,21 5(48,5(' %< 7+( %85($8 2)
,17(51$/5(9(18(
3UHVHQWHGEHORZLVWKHVXSSOHPHQWDU\LQIRUPDWLRQUHTXLUHGE\WKH%XUHDXRI,QWHUQDO
5HYHQXH%,5XQGHULWVH[LVWLQJUHYHQXHUHJXODWLRQVWREHGLVFORVHGDVSDUWRIWKH
QRWHVWRILQDQFLDOVWDWHPHQWV7KLVVXSSOHPHQWDU\LQIRUPDWLRQLVQRWDUHTXLUHG
GLVFORVXUHXQGHU3)56
5HTXLUHPHQWVXQGHU5HYHQXH5HJXODWLRQV55
D *URVV5HFHLSWV7D[
,QOLHXRIWKHYDOXHDGGHGWD[9$7WKH%DQNLVVXEMHFWWRWKHJURVVUHFHLSWVWD[
*57LPSRVHGRQDOOEDQNVDQGQRQEDQNILQDQFLDOLQWHUPHGLDULHVSXUVXDQWWR6HFWLRQ
RIWKH7D[&RGH
7KH%DQNUHSRUWHGWRWDO*57DPRXQWLQJWR3LQDVVKRZQXQGHU7D[HV
DQG/LFHQVHVDFFRXQW>VHH1RWHG@*57SDLGIRUWKH\HDUDPRXQWHGWR
3QHWRIFUHGLWDEOHSHUFHQWDJHWD[ZLWKKHOGE\JRYHUQPHQWSD\RU7RWDO*57
SD\DEOHDVRI'HFHPEHUDPRXQWHGWR3LQFOXGHGXQGHU$FFUXHG7D[HV
DQG2WKHU([SHQVHVDFFRXQWVHH1RWH
E 'RFXPHQWDU\6WDPS7D[
7KH%DQNLVHQUROOHGXQGHUWKH(OHFWURQLF'676\VWHP,QJHQHUDOWKH%DQN·V'67
WUDQVDFWLRQVDULVHIURPWKHH[HFXWLRQRIGHEWLQVWUXPHQWVVHFXULW\GRFXPHQWVDQGELOOV
RIH[FKDQJH
)RUWKH\HDUHQGHG'HFHPEHU'67DIIL[HGDPRXQWHGWR32IWKLV
DPRXQW3ZDVFKDUJHGWRFOLHQWVZKLOHWKHEDODQFHRI3ZDVIRUWKH
DFFRXQWRIWKH%DQNDQGDFFRUGLQJO\FKDUJHGWRSURILWDQGORVV
6XSSOHPHQWDU\,QIRUPDWLRQ5HTXLUHGE\WKH%XUHDXRI,QWHUQDO5HYHQXH
F
:LWKKROGLQJ7D[HV
7KHGHWDLOVRIWRWDOZLWKKROGLQJWD[HVIRUWKH\HDUHQGHG'HFHPEHUDUHVKRZQ
EHORZ
)LQDO
3
&RPSHQVDWLRQDQGEHQHILWV ([SDQGHG
3 G 7D[HVDQG/LFHQVHV
7KHGHWDLOVRIWD[HVDQGOLFHQVHVLQRIWKH3DUHQW&RPSDQ\DUHDVIROORZV
1RWHV *57
'67
5HDOSURSHUW\WD[HV
)ULQJHEHQHILWVWD[)%7
/RFDOWD[HVDQGEXVLQHVVSHUPLWV
0LVFHOODQHRXV
D E /HVV
'67FKDUJHGWRFXVWRPHUV
)%7FKDUJHGWRHPSOR\HHEHQHILWV
H
E
3
3
([FLVH7D[HV
7KH%DQNGRHVQRWKDYHH[FLVHWD[HVDFFUXHGVLQFHLWGRHVQRWKDYHDQ\WUDQVDFWLRQV
VXEMHFWWRH[FLVHWD[
I
'HILFLHQF\7D[$VVHVVPHQWVDQG7D[&DVHV
7KH%DQNKDVQRRXWVWDQGLQJGHILFLHQF\WD[DVVHVVPHQWVSHQGLQJZLWKWKH%,5
7KH%DQN·VH[LVWLQJWD[DVVHVVPHQWVSHQGLQJZLWKWKH&RXUWRI7D[$SSHDOV&7$IRU
WD[OLDELOLWLHVRIWKHIRUPHUL%DQNDQGWKH%DQNZHUHDOOFRYHUHGE\WKH%,5·VWD[
DPQHVW\SURJUDPIRUFDOHQGDU\HDUVDQGHDUOLHUSXUVXDQWWR5$$Q$FW
(QKDQFLQJ5HYHQXH$GPLQLVWUDWLRQDQG&ROOHFWLRQE\*UDQWLQJDQ$PQHVW\RQ$OO
8QSDLG,QWHUQDO5HYHQXH7D[HV7KH%DQNDYDLOHGRIWKLVDPQHVW\SURJUDPRQ
)HEUXDU\DQG&RQVHTXHQWO\WKH%DQNFRQWHQGVWKDWWKHVHWD[DVVHVVPHQWV
SHQGLQJZLWKWKH&7$KDYHEHFRPHPRRWDQGDFDGHPLF
3ULRUWRWKH%DQN·VDYDLOPHQWRIWKHWD[DPQHVW\SURJUDPRQ-XQHSXUVXDQW
WR55WKH%DQNILOHGDSSOLFDWLRQVIRUDGPLQLVWUDWLYHDEDWHPHQWRIWKH
%DQN·VDQGWKHIRUPHUL%DQN·V'67DVVHVVPHQWVIRU\HDUVDQGHDUOLHUIRUZKLFK
WKH%DQNSDLGWKH%,5DWRWDORI3)RXURIWKHVHDSSOLFDWLRQVZHUH
VXEVHTXHQWO\GHQLHGZKLOHWKHRWKHUHLJKWZHUHQRWDFWHGXSRQE\WKH%,5%HFDXVHRI
WKH%,5·VLQDFWLRQDQGGHQLDORIWKHVHDSSOLFDWLRQVFRXSOHGZLWKWKH%DQN·VDYDLOPHQWRI
WKHWD[DPQHVW\SURJUDPRQ0DUFKWKH%DQNILOHGZLWKWKH%,5D
FODLPIRUUHIXQGDQGRULVVXDQFHRI7D[&UHGLW&HUWLILFDWHIRUWKHDPRXQWSDLGXQGHU
WKHDEDWHPHQWSURJUDP%HFDXVHRIWKHLQDFWLRQRIWKH%,5RQWKHFODLPIRUUHIXQGRQ
-XQHWKH%DQNHOHYDWHGWKHFODLPZLWKWKH&RXUWRI7D[$SSHDOVWRWROOWKH
UXQQLQJRIWKHWZR\HDUSUHVFULSWLYHSHULRGLPSRVHGRQFODLPVIRUUHIXQG
J 2WKHU5HTXLUHG7D[,QIRUPDWLRQ
7KH%DQNKDVQRWSDLGRUDFFUXHGDQ\H[FLVHWD[HVRUFXVWRPV·GXWLHVDQGWDULIIIHHVDV
LWKDVQRLPSRUWDWLRQIRUWKH\HDUHQGHG'HFHPEHU
5HTXLUHPHQWVXQGHU55
2Q'HFHPEHUWKH%,5LVVXHG55ZKLFKSUHVFULEHVWKHQHZIRUPIRU
LQFRPHWD[ILOLQJFRYHULQJDQGVWDUWLQJZLWKSHULRGHQGLQJ'HFHPEHU
7KHDPRXQWVRIWD[DEOHUHYHQXHVDQGLQFRPHDQGGHGXFWLEOHFRVWVDQGH[SHQVHV
SUHVHQWHGEHORZDUHEDVHGRQUHOHYDQWWD[UHJXODWLRQVLVVXHGE\WKH%,5KHQFHWKHVH
PD\QRWEHWKHVDPHDVWKHDPRXQWVUHIOHFWHGLQWKHVWDWHPHQWRIFRPSUHKHQVLYH
LQFRPH
D 7D[DEOH5HYHQXHV
7KH%DQN·VWD[DEOHUHYHQXHDPRXQWHGWR3UHSUHVHQWLQJLQWHUHVWLQFRPHIRU
WKH\HDUHQGHG'HFHPEHU
E 'HGXFWLEOH&RVWVRI6HUYLFHV
'HGXFWLEOHFRVWVRIVHUYLFHVIRUWKH\HDUHQGHG'HFHPEHUFRPSULVHWKH
IROORZLQJ
&RVWRIVHUYLFHV
,QWHUHVWH[SHQVH
3
6DODULHV
,QVXUDQFH
6XSHUYLVLRQIHH
3
F 7D[DEOH1RQRSHUDWLQJDQG2WKHU,QFRPH
7KHGHWDLOVRIWD[DEOHQRQRSHUDWLQJDQGRWKHULQFRPHLQZKLFKDUHVXEMHFWWR
UHJXODUWD[UDWHDUHVKRZQEHORZ
6HUYLFHFKDUJHVIHHVDQGFRPPLVVLRQV
3
1HWUHDOL]HGIRUHLJQH[FKDQJHJDLQ 3URILWIURPDVVHWVVROG
2WKHULQFRPH
3
G ,WHPL]HG'HGXFWLRQV
7KHDPRXQWVRILWHPL]HGGHGXFWLRQVIRUWKH\HDUHQGHG'HFHPEHUDUHDV
IROORZV
6DODULHVDQGDOORZDQFHV
7D[HVDQGOLFHQVHV
5HQWDO
'HSUHFLDWLRQ
0LVFHOODQHRXV
12/&2DSSOLHG
3
3
UNIONBANK OF THE PHILIPPINES
INDEX TO SUPPLEMENTARY SCHEDULES
DECEMBER 31, 2012
Statement of Management’s Responsibility for the Financial Statements
Independent Auditors’ Report on the SEC Supplementary Schedules
Filed Separately from the Basic Financial Statements
Schedule of Philippine Financial Reporting Standards and Interpretations
Adopted by the Securities and Exchange Commission and the
Financial Reporting Standards Council as of December 31, 2012
Supplementary Schedules to Financial Statements (Form 17-A, Item 7)
Content
Schedule
A
Page
Financial Assets
Financial Assets at Fair Value Through Profit or Loss
Held-to-maturity Investments
Available-for-sale Financial Assets
*
*
1
Amounts Receivable from Directors, Officers, Employees, Related Parties
and Principal Stockholders (Other than Affiliates)
3
Amounts Receivable from Related Parties which are eliminated during the
Consolidation of Financial Statements
4
D
Intangible Assets
5
E
Long-term Debt
6
F
Indebtedness to Related Parties (Long-term Loans
from Related Companies)
*
G
Guarantees of Securities of Other Issuers
*
H
Capital Stock
7
B
C
Schedule of Financial Indicators for December 31, 2012 and 2011
Reconciliation of Parent Company Surplus Free for Dividend Declaration
Map Showing the Relationship Between and Among the Bank and its Related Entities
* These schedules and supplementary information are not included as these are not applicable to Group.
81,21%$1.2)7+(3+,/,33,1(6
6FKHGXOHRI3KLOLSSLQH)LQDQFLDO5HSRUWLQJ6WDQGDUGVDQG,QWHUSUHWDWLRQV
$GRSWHGE\WKH6HFXULWLHVDQG([FKDQJH&RPPLVVLRQDQGWKH
)LQDQFLDO5HSRUWLQJ6WDQGDUGV&RXQFLODVRI'HFHPEHU
3+,/,33,1(),1$1&,$/5(3257,1*67$1'$5'6$1',17(535(7$7,216
$GRSWHG
)UDPHZRUNIRUWKH3UHSDUDWLRQDQG3UHVHQWDWLRQRI)LQDQFLDO6WDWHPHQWV
&RQFHSWXDO)UDPHZRUN3KDVH$2EMHFWLYHVDQG4XDOLWDWLYH&KDUDFWHULVWLFV
3UDFWLFH6WDWHPHQW0DQDJHPHQW&RPPHQWDU\
1RW
$GRSWHG
1RW
$SSOLFDEOH
3KLOLSSLQH)LQDQFLDO5HSRUWLQJ6WDQGDUGV3)56
3)56
5HYLVHG
3)56
3)56
5HYLVHG
3)56
)LUVWWLPH$GRSWLRQRI3KLOLSSLQH)LQDQFLDO5HSRUWLQJ6WDQGDUGV
$PHQGPHQWVWR3)56$GGLWLRQDO([HPSWLRQVIRU)LUVWWLPH$GRSWHUV
$PHQGPHQWWR3)56/LPLWHG([HPSWLRQIURP&RPSDUDWLYH3)56'LVFORVXUHVIRU)LUVW
WLPH$GRSWHUV
$PHQGPHQWVWR3)566HYHUH+\SHULQIODWLRQDQG5HPRYDORI)L[HG'DWHIRU)LUVWWLPH
$GRSWHUV
$PHQGPHQWVWR3)56*RYHUQPHQW/RDQVHIIHFWLYH-DQXDU\
6KDUHEDVHG3D\PHQW
$PHQGPHQWVWR3)569HVWLQJ&RQGLWLRQVDQG&DQFHOODWLRQV
$PHQGPHQWVWR3)56*URXS&DVKVHWWOHG6KDUHEDVHG3D\PHQW7UDQVDFWLRQV
%XVLQHVV&RPELQDWLRQV
,QVXUDQFH&RQWUDFWV
$PHQGPHQWVWR3$6DQG3)56)LQDQFLDO*XDUDQWHH&RQWUDFWV
3)56
1RQFXUUHQW$VVHWV+HOGIRU6DOHDQG'LVFRQWLQXHG2SHUDWLRQV
3)56
([SORUDWLRQIRUDQG(YDOXDWLRQRI0LQHUDO5HVRXUFHV
3)56
)LQDQFLDO,QVWUXPHQWV'LVFORVXUHV
$PHQGPHQWVWR3)567UDQVLWLRQ
$PHQGPHQWVWR3$6DQG3)565HFODVVLILFDWLRQRI)LQDQFLDO$VVHWV
$PHQGPHQWVWR3$6DQG3)565HFODVVLILFDWLRQRI)LQDQFLDO$VVHWV(IIHFWLYH'DWHDQG
7UDQVLWLRQ
$PHQGPHQWVWR3)56,PSURYLQJ'LVFORVXUHVDERXW)LQDQFLDO,QVWUXPHQWV
$PHQGPHQWVWR3)56'LVFORVXUHV7UDQVIHUVRI)LQDQFLDO$VVHWV
$PHQGPHQWVWR3)56'LVFORVXUHV²2IIVHWWLQJ)LQDQFLDO$VVHWVDQG)LQDQFLDO/LDELOLWLHV
HIIHFWLYH-DQXDU\
$PHQGPHQWVWR3)560DQGDWRU\(IIHFWLYH'DWHRI3)56DQG7UDQVLWLRQ'LVFORVXUHV
HIIHFWLYH-DQXDU\
3)56
3)56
3)56
3)56
3)56
3)56
2SHUDWLQJ6HJPHQWV
)LQDQFLDO,QVWUXPHQWVHIIHFWLYH-DQXDU\
$PHQGPHQWVWR3)560DQGDWRU\(IIHFWLYH'DWHRI3)56DQG7UDQVLWLRQ'LVFORVXUHV
HIIHFWLYH-DQXDU\
&RQVROLGDWHG)LQDQFLDO6WDWHPHQWVHIIHFWLYH-DQXDU\
$PHQGPHQWVWR3)567UDQVLWLRQ*XLGDQFHHIIHFWLYH-DQXDU\
$PHQGPHQWVWR3)56,QYHVWPHQW(QWLWLHVHIIHFWLYH-DQXDU\
-RLQW$UUDQJHPHQWVHIIHFWLYH-DQXDU\
'LVFORVXUHRI,QWHUHVWVLQ2WKHU(QWLWLHVHIIHFWLYH-DQXDU\
$PHQGPHQWVWR3)56,QYHVWPHQW(QWLWLHVHIIHFWLYH-DQXDU\
)DLU9DOXH0HDVXUHPHQWHIIHFWLYH-DQXDU\
3+,/,33,1(),1$1&,$/5(3257,1*67$1'$5'6$1',17(535(7$7,216
$GRSWHG
1RW
$GRSWHG
1RW
$SSOLFDEOH
3KLOLSSLQH$FFRXQWLQJ6WDQGDUGV3$6
3$6
5HYLVHG
3UHVHQWDWLRQRI)LQDQFLDO6WDWHPHQWV
$PHQGPHQWVWR3$6DQG3$63XWWDEOH)LQDQFLDO,QVWUXPHQWVDQG2EOLJDWLRQV$ULVLQJ
RQ/LTXLGDWLRQ
$PHQGPHQWVWR3$63UHVHQWDWLRQRI,WHPVRI2WKHU&RPSUHKHQVLYH,QFRPH
3$6
,QYHQWRULHV
3$6
6WDWHPHQWRI&DVK)ORZV
3$6
$FFRXQWLQJ3ROLFLHV&KDQJHVLQ$FFRXQWLQJ(VWLPDWHVDQG(UURUV
3$6
(YHQWVDIWHUWKH5HSRUWLQJ3HULRG
&RQVWUXFWLRQ&RQWUDFWV
,QFRPH7D[HV
3$6
3$6
3$6
$PHQGPHQWWR3$6'HIHUUHG7D[5HFRYHU\RI8QGHUO\LQJ$VVHWV
3URSHUW\3ODQWDQG(TXLSPHQW
3$6
/HDVHV
3$6
5HYHQXH
3$6
(PSOR\HH%HQHILWV
$PHQGPHQWVWR3$6$FWXDULDO*DLQVDQG/RVVHV*URXS3ODQVDQG'LVFORVXUHV
3$6
5HYLVHG
(PSOR\HH%HQHILWVHIIHFWLYH-DQXDU\
3$6
$FFRXQWLQJIRU*RYHUQPHQW*UDQWVDQG'LVFORVXUHRI*RYHUQPHQW$VVLVWDQFH
7KH(IIHFWVRI&KDQJHVLQ)RUHLJQ([FKDQJH5DWHV
$PHQGPHQW1HW,QYHVWPHQWLQD)RUHLJQ2SHUDWLRQ
%RUURZLQJ&RVWV
3$6
5HYLVHG
5HODWHG3DUW\'LVFORVXUHV
3$6
$FFRXQWLQJDQG5HSRUWLQJE\5HWLUHPHQW%HQHILW3ODQV
3$6
&RQVROLGDWHGDQG6HSDUDWH)LQDQFLDO6WDWHPHQWV
$PHQGPHQWVWR3)56DQG3$6&RVWRIDQ,QYHVWPHQWLQ6XEVLGLDU\-RLQWO\&RQWUROOHG
(QWLW\RU$VVRFLDWH
3$6
3$6
5HYLVHG
3$6
$PHQGHG
6HSDUDWH)LQDQFLDO6WDWHPHQWVHIIHFWLYH-DQXDU\
$PHQGPHQWVWR3$6$PHQGHG,QYHVWPHQW(QWLWLHVHIIHFWLYH-DQXDU\
3$6
,QYHVWPHQWVLQ$VVRFLDWHV
3$6
$PHQGHG
,QYHVWPHQWVLQ$VVRFLDWHVDQG-RLQW9HQWXUHVHIIHFWLYH-DQXDU\
3$6
)LQDQFLDO5HSRUWLQJLQ+\SHULQIODWLRQDU\(FRQRPLHV
3$6
,QWHUHVWVLQ-RLQW9HQWXUHV
3$6
)LQDQFLDO,QVWUXPHQWV3UHVHQWDWLRQ
$PHQGPHQWVWR3$6DQG3$63XWWDEOH)LQDQFLDO,QVWUXPHQWVDQG2EOLJDWLRQV$ULVLQJ
RQ/LTXLGDWLRQ
$PHQGPHQWWR3$6&ODVVLILFDWLRQRI5LJKWV,VVXHV
$PHQGPHQWVWR3$62IIVHWWLQJ)LQDQFLDO$VVHWVDQG)LQDQFLDO/LDELOLWLHVHIIHFWLYH-DQXDU\
3+,/,33,1(),1$1&,$/5(3257,1*67$1'$5'6$1',17(535(7$7,216
$GRSWHG
3$6
(DUQLQJVSHU6KDUH
3$6
,QWHULP)LQDQFLDO5HSRUWLQJ
3$6
,PSDLUPHQWRI$VVHWV
3$6
3URYLVLRQV&RQWLQJHQW/LDELOLWLHVDQG&RQWLQJHQW$VVHWV
3$6
,QWDQJLEOH$VVHWV
3$6
1RW
$GRSWHG
1RW
$SSOLFDEOH
)LQDQFLDO,QVWUXPHQWV5HFRJQLWLRQDQG0HDVXUHPHQW
$PHQGPHQWVWR3$67UDQVLWLRQDQG,QLWLDO5HFRJQLWLRQRI)LQDQFLDO$VVHWVDQG)LQDQFLDO
/LDELOLWLHV
$PHQGPHQWVWR3$6&DVK)ORZ+HGJH$FFRXQWLQJRI)RUHFDVW,QWUDJURXS7UDQVDFWLRQV
$PHQGPHQWVWR3$67KH)DLU9DOXH2SWLRQ
$PHQGPHQWVWR3$6DQG3)56)LQDQFLDO*XDUDQWHH&RQWUDFWV
$PHQGPHQWVWR3$6DQG3)565HFODVVLILFDWLRQRI)LQDQFLDO$VVHWV
$PHQGPHQWVWR3$6DQG3)565HFODVVLILFDWLRQRI)LQDQFLDO$VVHWV²(IIHFWLYH'DWH
DQG7UDQVLWLRQ
$PHQGPHQWVWR3KLOLSSLQH,QWHUSUHWDWLRQ,)5,&DQG3$6(PEHGGHG'HULYDWLYHV
$PHQGPHQWWR3$6(OLJLEOH+HGJHG,WHPV
3$6
,QYHVWPHQW3URSHUW\
3$6
$JULFXOWXUH
3KLOLSSLQH,QWHUSUHWDWLRQV,QWHUQDWLRQDO)LQDQFLDO5HSRUWLQJ,QWHUSUHWDWLRQV&RPPLWWHH,)5,&
,)5,&
&KDQJHVLQ([LVWLQJ'HFRPPLVVLRQLQJ5HVWRUDWLRQDQG6LPLODU/LDELOLWLHV
,)5,&
0HPEHUV
6KDUHLQ&RRSHUDWLYH(QWLWLHVDQG6LPLODU,QVWUXPHQWV
,)5,&
'HWHUPLQLQJ:KHWKHUDQ$UUDQJHPHQW&RQWDLQVD/HDVH
,)5,&
,)5,&
,)5,&
,)5,&
,)5,&
5LJKWVWR,QWHUHVWV$ULVLQJIURP'HFRPPLVVLRQLQJ5HVWRUDWLRQDQG(QYLURQPHQWDO
5HKDELOLWDWLRQ)XQGV
/LDELOLWLHV$ULVLQJIURP3DUWLFLSDWLQJLQD6SHFLILF0DUNHW:DVWH(OHFWULFDODQG(OHFWURQLF
(TXLSPHQW
$SSO\LQJWKH5HVWDWHPHQW$SSURDFKXQGHU3$6)LQDQFLDO5HSRUWLQJLQ+\SHULQIODWLRQDU\
(FRQRPLHV
5HDVVHVVPHQWRI(PEHGGHG'HULYDWLYHV
$PHQGPHQWVWR3KLOLSSLQH,QWHUSUHWDWLRQ,)5,&²DQG3$6(PEHGGHG'HULYDWLYHV
,QWHULP)LQDQFLDO5HSRUWLQJDQG,PSDLUPHQW
,)5,&
6HUYLFH&RQFHVVLRQ$UUDQJHPHQWV
,)5,&
&XVWRPHU/R\DOW\3URJUDPPHV
,)5,&
3$67KH/LPLWRQD'HILQHG%HQHILW$VVHW0LQLPXP)XQGLQJ5HTXLUHPHQWVDQGWKHLU
,QWHUDFWLRQ
$PHQGPHQWVWR3KLOLSSLQH,QWHUSUHWDWLRQV,)5,&3UHSD\PHQWVRID0LQLPXP)XQGLQJ
5HTXLUHPHQWDQGWKHLU,QWHUDFWLRQ
,)5,&
+HGJHVRID1HW,QYHVWPHQWLQD)RUHLJQ2SHUDWLRQ
,)5,&
'LVWULEXWLRQVRI1RQFDVK$VVHWVWR2ZQHUV
,)5,&
7UDQVIHUVRI$VVHWVIURP&XVWRPHUV
,)5,&
([WLQJXLVKLQJ)LQDQFLDO/LDELOLWLHVZLWK(TXLW\,QVWUXPHQWV
,)5,&
6WULSSLQJ&RVWVLQWKH3URGXFWLRQ3KDVHRID6XUIDFH0LQHHIIHFWLYH-DQXDU\
3+,/,33,1(),1$1&,$/5(3257,1*67$1'$5'6$1',17(535(7$7,216
$GRSWHG
1RW
$GRSWHG
1RW
$SSOLFDEOH
3KLOLSSLQH,QWHUSUHWDWLRQV6WDQGLQJ,QWHUSUHWDWLRQV&RPPLWWHH6,&
6,&
,QWURGXFWLRQRIWKH(XUR
6,&
*RYHUQPHQW$VVLVWDQFH1R6SHFLILF5HODWLRQWR2SHUDWLQJ$FWLYLWLHV
6,&
&RQVROLGDWLRQ6SHFLDO3XUSRVH(QWLWLHV
$PHQGPHQWWR6,&6FRSHRI6,&
6,&
-RLQWO\&RQWUROOHG(QWLWLHV1RQ0RQHWDU\&RQWULEXWLRQVE\9HQWXUHUV
6,&
2SHUDWLQJ/HDVHV,QFHQWLYHV
6,&
,QFRPH7D[HV&KDQJHVLQWKH7D[6WDWXVRIDQ(QWLW\RULWV6KDUHKROGHUV
6,&
(YDOXDWLQJWKH6XEVWDQFHRI7UDQVDFWLRQV,QYROYLQJWKH/HJDO)RUPRID/HDVH
6,&
6HUYLFH&RQFHVVLRQ$UUDQJHPHQWV'LVFORVXUHV
6,&
5HYHQXH%DUWHU7UDQVDFWLRQV,QYROYLQJ$GYHUWLVLQJ6HUYLFHV
6,&
,QWDQJLEOH$VVHWV:HE6LWH&RVWV
7KHVHVWDQGDUGVZLOOEHHIIHFWLYHIRUSHULRGVVXEVHTXHQWWRDQGDUHQRWHDUO\DGRSWHGE\WKH&RPSDQ\
7KHVHVWDQGDUGVKDYHEHHQDGRSWHGLQWKHSUHSDUDWLRQRIILQDQFLDOVWDWHPHQWVEXWWKH&RPSDQ\KDVQRVLJQLILFDQWWUDQVDFWLRQVFRYHUHG
LQERWK\HDUVSUHVHQWHG
8QLRQ%DQNRIWKH3KLOLSSLQHV
6(&5HOHDVHG$PHQGHG65&5XOH
$QQH[(
6FKHGXOH$)LQDQFLDO$VVHWV
'HFHPEHU
DPHRI,VVXLQJ(QWLW\DQG$VVRFLDWLRQRI(DFK,VVXH
9DOXH%DVHGRQ0DUNHW
4XRWDWLRQDW6WDWHPHQWRI
&RQGLWLRQ'DWH
,QFRPH5HFHLYHGDQG$FFUXHG
3
3
3
3
3
3
3
3
3
$PRXQW6KRZQLQWKH
1XPEHURI6KDUHVRU3ULQFLSDO
$PRXQWRI%RQGVDQG1RWHV 6WDWHPHQW)LQDQFLDO3RVLWLRQ
$9$,/$%/()256$/(),1$1&,$/$66(76
*RYHUQPHQWERQGV
%XUHDXRI7UHDVXU\
5HSXEOLFRIWKH3KLOLSSLQHV
%XRQL3ROLHQQDOLGHO7HV
+RPH*XDUDQWHH&RUSRUDWLRQ
+RPH'HYHORSPHQW0XWXDO)XQG
1DWLRQDO'HYHORSPHQW&RUSRUDWLRQ
1DWLRQDO)RRG$XWKRULW\
/DQG%DQNRIWKH3KLOLSSLQHV
'HYHORSPHQW%DQNRIWKH3KLOLSSLQHV
3RZHU6HFWRU$VVHW/LDELOLWLHV0DQDJHPHQW
5HSXEOLFRI,QGRQHVLD
(TXLW\6HFXULWLHV
(PSLUH(DVW/DQG,QF
)LOLQYHVW/DQG,QF
*2*URXS,QF
%DVLF&RQVROLGDWHG$
3KLOLSSLQH2YHUVHDV
2ULHQWDO3HWUROHXP%
3HWURQ
60&6HULHV$
60&6HULHV&
60&6HULHV
$ODEDQJ&RXQWU\&OXE
$OWD9LVWD&OXE%
$\DOD$ODEDQJ&RXQWU\&OXE
%DJXLR&RXQWU\&OXE
%$1&1(7
%$3&RQVXOWLQJ,QF
%$3&UHGLW%XUHDX
%DWXODR*ROI&OXE
&DODWDJDQ*ROI&OXE,QF
&DQOXEDQJ*ROI&RXQWU\&OXE,QF
&DSLWRO+LOOV*ROI
&HEX&RXQWU\&OXE
&HOHEULW\6SRUWV&OXE
&LW\6SRUWV&OXE&HEX
&OXE)LOLSLQR
&OXE6WUDWD
&RRS6RFLHW\6ZLIW
&UX]WHOFR
(DVWHUQ9LVD\DV7HO&R
(OHFWURQLF%DVLF([FKDQJH,QFRUSRUDWLRQ0(*$/,1.
)L[HG,QFRPH([FKDQJH
*UHHQ9DOOH\&RXQWU\&OXE%DJXLRDQG3DVLJ
,ORLOR*ROI&RXQWU\&OXE
/RFDO*RY
W8QLW*XDUDQW\&RUS
0DNDWL([HFXWLYH&HQWHU
0DNDWL6SRUWV&OXE
0DODUD\D*ROI&RXQWU\&OXE
0DQLOD3ROR&OXE
0DQLOD6RXWKZRRGV
0HUDOFR
0HWUR&OXE
0HWURSROLWDQ7KUHDWHU
1$:$6$
2UFKDUG*ROI&RXQWU\&OXE
3DOPV&RXQWU\&OXE
3+,/&/($5,1*+286(&253
3KLODP
3KLODP3URSHUWLHV&RUS
3KLOLSSLQH&HQWUDO'HSRVLWRU\,QFRUSRUDWHG
3KLOLSSLQH&OHDULQJ+RXVH&RUSRUDWLRQ
3,/7(/
3XHEOR'H2UR*ROI$QG&RXQWU\&OXE,QF
$QQH[(
6FKHGXOH$)LQDQFLDO$VVHWV
'HFHPEHU
DPHRI,VVXLQJ(QWLW\DQG$VVRFLDWLRQRI(DFK,VVXH
4XH]RQ&LW\6SRUWV&OXE
5RFNZHOO/DQG&RUSRUDWLRQ
6WHHO$VLD
7DJD\WD\0LGODQGV*ROI&OXE
7KH&RXQWU\&OXE7DJD\WD\+LJKODQGV
9DOOH\*ROI&OXE
$%$&86&216
(03,5(($67
),/,19(67/$1'
),5673+,/+2/',1*6
.28.3+,/3523VXVSHQGHG
),/(67$7(/$1'
0(752$//+/'*
0(*$:25/'&253
021'5$*21,17
%'2/($6,1*VWRFNGLY
3(7521&253
3/'7&RPPXQLFDWLRQVDQG(TXLW\9HQWXUHV
5(38%/,&*/$66
62/,'*5283,1&
81,9(56$/5,*+7),(/'&253
$%2,7,=75$166<67(0&253
$%2,7,=
%$1&2'(252(3&,
$625,$12&253
3/'75
3/'7<
352-(&748(67
352-(&748(67
0(5$/&2%
3+,/,33,1(&(175$/'(326,725<,1&
3/'75
3/'76
3/'77
'HEWVHFXULWLHV
-*6XPPLW
60,QYHVWPHQW&RUSRUDWLRQ
5&%&
$OOLDQFH*OREDO*URXS,QF
9LVWD/DQG/DQGVFDSHV,QF
7UDYHOHUV,QWHUQDWLRQDO+RWHO*URXS,QF
0HJDZRUOG
:RRUL%DQN
37$GDUR,QGRQHVLD
37,QGRVDW7%.
3HUXVDKDDQ/LVWULN1HJDUD3/1,QGRQHVLD
,&,&,%DQN
373HUWDPLQD3HUVHUR
3RO\VLQGR(.$3HUNDVD
3XWQDP&%2,,/LPLWHG&RUS
$WODQWLF*OREDO
2WKHUSULYDWHGHEWVHFXULWLHV
*5$1'727$/
9DOXH%DVHGRQ0DUNHW
4XRWDWLRQDW6WDWHPHQWRI
&RQGLWLRQ'DWH
,QFRPH5HFHLYHGDQG$FFUXHG
3
3
3
3
3
3
3
3
3
3
3
3
$PRXQW6KRZQLQWKH
1XPEHURI6KDUHVRU3ULQFLSDO
$PRXQWRI%RQGVDQG1RWHV 6WDWHPHQW)LQDQFLDO3RVLWLRQ
$QQH[(
6FKHGXOH%$PRXQWV5HFHLYDEOHIURP'LUHFWRUV2IILFHUV(PSOR\HHV5HODWHG3DUWLHVDQG3ULQFLSDO6WRFNKROGHUV2WKHUWKDQ5HODWHG3DUWLHV
'HFHPEHU
1DPHDQG'HVLJQDWLRQRI'HEWRU
%DODQFHDW
%HJLQQLQJRI<HDU
$GGLWLRQV
'HGXFWLRQV
$PRXQWV:ULWWHQ
RII
$PRXQWV&ROOHFWHG
(QGLQJ%DODQFH
&XUUHQW
1RW&XUUHQW
5(&(,9$%/(6)520',5(&72562)),&(56(03/2<((65(/$7('3$57,(6$1'35,1&,3$/672&.+2/''(56
$5(:,7+,17+(25',1$5<&2856(2)%86,1(662)7+(%$1.
%DODQFHDW(QGRI
<HDU
$QQH[(
6FKHGXOH&$PRXQWV5HFHLYDEOHIURP5HODWHG3DUWLHVZKLFKDUH(OLPLQDWHGGXULQJWKH&RQVROLGDWLRQRI)LQDQFLDO6WDWHPHQWV
'HFHPEHU
1DPHDQG'HVLJQDWLRQRI'HEWRU
8%36HFXULWLHV,QF6XEVLGLDU\
8QLRQ3URSHUWLHV,QF6XEVLGLDU\
%DODQFHDW%HJLQQLQJRI
<HDU
$GGLWLRQV
3
'HGXFWLRQV
$PRXQWV&ROOHFWHG
$PRXQWV:ULWWHQRII
&XUUHQW
(QGLQJ%DODQFH
1RW&XUUHQW
3
3
3
3
3
3
3
3
3
3
3
3
%DODQFHDW(QGRI<HDU
$QQH[(
6FKHGXOH',QWDQJLEOH$VVHWV
'HFHPEHU
'HVFULSWLRQ
*RRGZLOO
&RPSXWHUVRIWZDUH
%HJLQQLQJ%DODQFH
$GGLWLRQVDW&RVW
&KDUJHGWR&RVWDQG
([SHQVHV
&KDUJHGWR2WKHU
$FFRXQWV
2WKHU&KDQJHV$GGLWLRQV
'HGXFWLRQV
(QGLQJ%DODQFH
3
3
3
3
3
3
3
3 3 3
3
XQGHU2WKHU5HVRXUFHV
$QQH[(
6FKHGXOH(/RQJWHUP'HEW
'HFHPEHU
7LWOHRI,VVXHDQG7\SHRI2EOLJDWLRQ
8QVHFXUHG6XERUGLQDWHG1RWHV
$PRXQW$XWKRUL]HGE\
,QGHQWXUH
$PRXQW6KRZQ8QGHU&DSWLRQ&XUUHQW
3RUWLRQRI/RQJWHUP'HEWLQ5HODWHG
6WDWHPHQWRI)LQDQFLDO3RVLWLRQ
$PRXQW6KRZQ8QGHU&DSWLRQ/RQJWHUP
'HEWLQUHODWHG6WDWHPHQWRI)LQDQFLDO
&RQGLWLRQ
3 1$
3
0DWXULW\'DWH
,QWHUHVW5DWH
2FWREHU
'HWDLOV
8QVHFXUHG6XERUGLQDWHG1RWHV
$QQH[(
6FKHGXOH+&DSLWDO6WRFN
'HFHPEHU
7LWOHRI,VVXH
&RPPRQ6WRFN
1XPEHURI6KDUHV
$XWKRUL]HG
1XPEHURI6KDUHV,VVXHG
1XPEHURI6KDUHV
DQG2XWVWDQGLQJDV
5HVHUYHGIRU2SWLRQV
6KRZQ8QGHUWKH5HODWHG
:DUUDQWV&RQYHUVLRQ
6WDWHPHQWRI&RQGLWLRQ
DQG2WKHU5LJKWV
&DSWLRQ
1XPEHURI6KDUHV+HOGE\
5HODWHG3DUWLHV
'LUHFWRUV2IILFHUV
DQG(PSOR\HHV
2WKHUV
81,21%$1.2)7+(3+,/,33,1(6
8QLRQ%DQN3OD]D0HUDOFR$YHQXHFRUQHU2Q\[6WUHHWDQG6DSSKLUH5RDG
2UWLJDV&HQWHU3DVLJ&LW\
6HOHFWHG)LQDQFLDO3HUIRUPDQFH,QGLFDWRUV
'HFHPEHUDQG
1HWSURILW
$YHUDJHWRWDOUHVRXUFHV
1HWLQWHUHVWLQFRPH
$YHUDJHLQWHUHVWHDUQLQJUHVRXUFHV
&XUUHQW$VVHWV
&XUUHQW/LDELOLWLHV
/LDELOLWLHV
(TXLW\
$VVHW
(TXLW\
(DUQLQJVEHIRUHLQWHUHVWVDQGWD[HV
,QWHUHVWH[SHQVH
5HWXUQRQ$YHUDJH&DSLWDO)XQGV
1HWSURILW
$YHUDJHWRWDOFDSLWDOIXQGV
5HWXUQRQDYHUDJHUHVRXUFHV
1HWLQWHUHVWPDUJLQ
/LTXLGLW\UDWLR
'HEWWRHTXLW\UDWLR
$VVHWWRHTXLW\UDWLR
,QWHUHVWUDWHFRYHUDJHUDWLR
81,21%$1.2)7+(3+,/,33,1(6
5HFRQFLOLDWLRQRI5HWDLQHG(DUQLQJV$YDLODEOHIRU'LYLGHQG'HFODUDWLRQ
)RUWKH<HDU(QGHG'HFHPEHU
8QDSSURSULDWHG5HWDLQHG(DUQLQJVDW%HJLQQLQJRI<HDU
3ULRU<HDUV
2XWVWDQGLQJ5HFRQFLOLQJ,WHPVQHWRIWD[
)DLUYDOXHJDLQRQLQYHVWPHQWSURSHUWLHV
3
8QDSSURSULDWHG5HWDLQHG(DUQLQJV$YDLODEOHIRU
'LYLGHQG'HFODUDWLRQDW%HJLQQLQJRI<HDUDV$GMXVWHG
1HW3URILW5HDOL]HGGXULQJWKH<HDU
1HWSURILWSHUDXGLWHGILQDQFLDOVWDWHPHQWV
1RQDFWXDOXQUHDOL]HGLQFRPHQHWRIWD[
8QUHDOL]HGIRUHLJQH[FKDQJHJDLQQHWH[FHSWWKRVH
DWWULEXWDEOHWR&DVKDQG&DVK(TXLYDOHQWV
)DLUYDOXHJDLQRQLQYHVPHQWSURSHUWLHV
3
2WKHU7UDQVDFWLRQV'XULQJWKH<HDU
'LYLGHQGVGHFODUHG
$SSURSULDWLRQRIUHWDLQHGHDUQLQJV
8QDSSURSULDWHG5HWDLQHG(DUQLQJV$YDLODEOHIRU
'LYLGHQG'HFODUDWLRQDW(QGRI<HDU
3
81,21%$1.2)7+(3+,/,33,1(6
0DS6KRZLQJWKH5HODWLRQVKLS%HWZHHQDQG$PRQJWKH%DQN
DQGLWV5HODWHG(QWLWLHV
'HFHPEHU
8QLRQ%DQNRIWKH3KLOLSSLQHV8%3LVHIIHFWLYHO\RZQHGE\$ERLWL](TXLW\9HQWXUHV,QF$(9,
+HQFH8%3LVDQDVVRFLDWHRI$(9,SXUVXDQWWR3$6,QYHVWPHQWVLQ$VVRFLDWHV
UHTXLUHGE\6(&6HFXULWLHV5HJXODWLRQ&RGH5XOHDV$PHQGHGGDWHG2FWREHU

Preliminary Information Statement - April 4, 2013

Transcription

Similar documents

SEC Form 17A - December 31, 2012

Ombudsman indicts Napoles, three senators over pork scam

notes to the financial statements - Bursa Malaysia Stock

2012 - Alliance Global Inc.

Annual Report 2006