PSE Circular for Brokers No. 2358-98

October 14, 1998 PSE CIRCULAR FOR BROKERS NO. 2358-98 October 13, 1998 SECURITIES AND EXCHANGE COMMISSION SEC FORM 11-C CURRENT REPORT PURSUANT TO SECTION 11 OF THE REVISED SECURITIES ACT AND RSA RULE 11(a)-1 (b)(24) THERE UNDER 1. Date of Report: October 13, 1998 2. Commission Identification No. 9248240 3. BIR TIN- 480000509006 4. Exact name of registrant as specified in its charter URBAN BANK, INC. 5. Incorporated in Mandaluyong City, Philippines on July 8, 1980 6. Industry Classification Code 7. Address of registrant's principal office Postal Code Urban Bank Plaza, Urban Avenue, Makati City 1200 8. Registrant's telephone number: 844-1981; 878-0769 9. Former name, former address and former fiscal year, if changed since last report not applicable 10. Securities registered pursuant to Sections 4 and 8 of the PSA Title of each class Number of Share of common stock outstanding or amount of debt outstanding asset backed securities worth P500 Million indicate the item numbers reported herein: Item 4 Please be informed of the election of former President Fidel V. Ramos as Chairman Emeritus of the Board of Directors of Urban Bank subject to the requirements of the Bangko Sentral ng Pilipinas. Item 9 Please informed of the following corporate acquisitions, expansion and strategies of Urban Bank. 1. To focus on two strategic niche-creating activities: Virtual Banking and Home Mortgage Securitization . Virtual Banking Urban Bank is continuously investing in automation, and is in fact the only bank in the country with its own Internet Service Provider (ISP) integrated into its own banking platform aside from being the only ISO 9001-certified bank. Thus, with the necessary platform already in place Virtual Banking is now its project phase where the Bank can rationalize its branches network via two strategic moves: the acquisition of thrift banks outside Metro Manila and the creation of strategic mini-head offices, or Regional Offices , in Central Business District across Metro Manila and provincial cities nationwide, that will replace the Bank's redundant branches. LLpr With this Virtual Banking-influenced branching strategy, the Bank is currently in the final stage of its negotiations with several thrift banks. Last week, the Bank also purchased a 640-sqm prime office space in Alabang's Madrigal Business Park , to serve as it South Metro Manila Regional Office. Last April, it purchased a 750-sqm prime office space in Cebu Business Park for its Cebu Regional Office. It is now looking for other prime office spaces in Quezon City and provincial cities. Urban Bank Plaza, the Bank's Premium-Grade 37-storey Makati headquarters with a gross floor space (GFA) of 65,000 square meters , is expected to complement the branching strategy as the building provides substantial office space for future expansion and for technology and telecommunications infrastructure support for seamless integration with the Regional Offices. With this expansion in office space, the Banks therefore aggressively adding to its present corps of 700 officers and associates, especially in the areas of Private Banking Investment Banking and Systems, which is seen to total to 800 by year-end. Home Mortgage Securitization Home Mortgage Securitization is Urban Bank's contribution to the government objective in generating economic activity, where Pag-IBIG will originate loans above its aim of PHP500,000 up to PHP3.5 million, which Urban Bank will take out and securitize via the issuance of mortgage-backed certificates. Philippine Home Development Finance Corporation ("Homecorp") , a finance company established to act as Service for the loans and transfer agent for the securities, recently announced the election of former Senator Alberto Romulo as Chairman, and former Pag-IBIG CEO Monico Jacob as member of the Board of Directors of Homecorp. Urban Bank also announced its commitment to fund PHP4 billion for the first year to support the program. The Bank has also reorganized its various marketing departments, branch banking and operations groups, to cope with the anticipated demands and requirements of a full-scale mortgage-banking operation. prLL 2. Request for Monetary Board approval for a regular commercial bank status. In light of the present capital requirement imposed by the Bangko Sentral of PHP5.4 billion by end 2000 for expanded commercial banks and PHP2.8 billion for regular commercial banks. Urban Bank filed a request for Monetary Board approval for a regular commercial bank status after the Bank closely evaluated the benefits of additional capital contribution vis-a-vis the cost of dilution to the present stockholders. The Bank has already met the capitalization for commercial banks required for the year 2000, and it is confident it will continue growing with its various subsidiaries of affiliates which include an investment house, a life and non-life insurance company, a publicly listed realty developer firm, a stockbrokerage house, and a technology company among others. As a matter of strategy, the Urban Bank Group is currently evaluating the entry of new investors in Urbancorp Investment, Inc. (UII), the investment house, rather than in the Bank. Just recently, UII approved the increase in its authorized capital stock for PHP500 million to PHP1.5 billion and subsequently declared last month a 110% stock dividend. Nonetheless, Urban Bank, with its present capital, is significantly underleveraged, and as in fact one of the most solvent banks in the industry. The Bank's total assets-to-capital ratio currently stand in 4.0x while the commercial banking system is at 8.3x. Without increasing its present capital. Urban Bank can more than double its balance sheet and still maintain the BSP-mandated capital-to-assets ratio. For the past 10 years, Urban Bank's total assets have been growing at 31% per annum compounded annually. Its capital has grown even more phenomenally at a rate of 47% per annum compounded annually during the same 10-year period. Cdphil Having made the decision on where it would go, Urban Bank is now consolidating its resources to enable it focus on the niche it has chosen to compete in. With its present capital, the Bank realized that it can do a lot more: via the Virtual Banking project, which is part of the overall program to expand the Bank's geographical reach without increasing its overhead; and the Home Mortgage Securitization which is expected expand prudently but effectively the Bank's balance sheet portfolio. SIGNATURES Pursuant to the requirement of the Revised Securities Act, the registrant has duly causes this report to be signed on its behalf by the undersigned hereunto duly authorized. JUSTINA F. CALLANGAN Assistant Corporate Secretary