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SEC FORM 20-IS

DEFINITIVE INFORMATION STATEMENT PURSUANT TO SECTION 20 OF THE SECURITIES REGULATION CODE

A. GENERAL INFORMATION

Item 1. DATE, TIME AND PLACE OF MEETING OF SECURITY HOLDERS

(a) A Special Stockholders’ Meeting of the Philippine National Bank (hereafter, the “Bank”) will be held on March 6, 2012 at 10:00 a.m. at the Grand Ballroom, Upper Lobby, Century Park Hotel, 599 Pablo Ocampo, Sr. St., Malate, Manila, Philippines. The Bank holds its principal office at PNB Financial Center, President Diosdado Macapagal Blvd., Pasay City 1300, Philippines.

(b) The Definitive Information Statement, together with the Notice of Meeting, will be sent to

qualified stockholders not later than February 14, 2012.

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE NOT BEING REQUESTED TO SEND US A PROXY AT THIS TIME.

Item 2. DISSENTER’S RIGHT OF APPRAISAL

(a) Title X – Section 81 of the Corporation Code of the Philippines allows a stockholder to exercise his right to dissent and demand payment of the fair value of his shares in certain instances, to wit: (1) in case an amendment to the Articles of Incorporation will change or restrict the rights of such stockholder or otherwise extend or shorten the term of the company; (2) in case of the sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the company’s properties; or (3) in cases of merger or consolidation. Under Section 42 of the Corporation Code, a stockholder is likewise given an appraisal right in cases where a Corporation decides to invest its funds in another corporation or business. The stockholder must have voted against the proposed corporate action in order to avail himself of the appraisal right.

(b) The proposed meeting is called, among others, for the approval of the Amended Plan of

Merger between Philippine National Bank and Allied Banking Corporation (“Allied Bank”). In accordance with Section 82 of the Corporate Code, a dissenting stockholder may exercise his appraisal right in this instance by voting against the proposed matter during the meeting and 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. Failure to make such a written demand within such period shall be deemed a waiver of his appraisal right.

(c) The appraisal right shall be exercised in accordance with Title X (Sections 81 to 86) of the

Corporation Code, subject to the directives and regulations of the Bangko Sentral ng Pilipinas(“BSP”).

Item 3. INTEREST OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS TO BE ACTED UPON

(a) Mr. Lucio C. Tan, incumbent Director of the Bank, is also a shareholder of Allied Bank

owning 99,285 shares (3% of the outstanding capital stock). The approval of the Amended Plan of Merger of PNB and Allied Bank with PNB as the surviving company is the sole item on the agenda for approval.

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Other than the abovestated, no other person who has been a director or officer of the Registrant from the beginning of fiscal year 2011, or any associate of any of the foregoing, has any interest in any matter to be acted upon.

(b) The Bank has not received any information from any director that he intends to oppose any matter to be acted upon in the meeting.

B. CONTROL AND COMPENSATION INFORMATION

Item 4. VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

(a) Total number of common shares outstanding as of December 31, 2011 is 662,245,916 with a par value of P40 per share. Pursuant to Article IV, Section 4.9 of the Bank’s Amended By-Laws, every stockholder shall be entitled to one (1) vote for each share of common stock standing in his name in the books of the Bank on the Record Date.

(b) Stockholders of record of the Bank as of February 6, 2012 (“the Record Date”) shall be

entitled to notice of, and to vote at, the Special Stockholders’ Meeting. (c) Security Ownership of Certain Record and Beneficial Owners and Management.

(1) Security Ownership of Certain Record and Beneficial Owners (more than 5% of any class of voting securities as of December 31, 2011)

Title of Class

Name, Address of Record Owner and Relationship with

Issuer

Name of Beneficial Owner and Relationship with Record

Owner

Citizenship

No. of Shares

Held

Percentage of Ownership

Common All Seasons Realty Corporation – Makati City –

7,123,387 shares

shareholder

Filipino 445,015,401 67.1979079445

Common Allmark Holdings Corporation

- Quezon City - 14,754,256 shares

shareholder

Filipino

Common Donfar Management Ltd. - Makati City -

21,890,077 shares

shareholder

The records in the possession of the Bank show

that the beneficial

ownership of these

companies/ individuals

belongs to the shareholders of record of said companies or to the individual himself, as the case maybe.1

The bank has not been advised

otherwise.

British

Common Donfar Management Ltd. - Makati City -

21,890,077 shares

shareholder

British

5

Title of Class

Name, Address of Record Owner and Relationship with

Issuer

Name of Beneficial Owner and Relationship with Record

Owner

Citizenship

No. of Shares

Held

Percentage of Ownership

Common Dreyfus Mutual Investments, Inc. - Pasay City –

7,833,794 shares

shareholder

Filipino

Common Dynaworld Holdings, Inc. - Pasig City –

8,107,051 shares

shareholder

Filipino

Common Fairlink Holdings Corporation

– Makati City - 17,945,960 shares

shareholder

Filipino

Common

Fast Return Enterprises, Ltd. - Makati City -

12,926,481 shares

shareholder

British

Common Fil-Care Holdings, Inc. - Quezon City -

18,119,076 shares

shareholder

Filipino

Common Fragile Touch Investment Ltd. – Makati City -

16,157,859 shares

shareholder

British

Common Integrion Investments, Inc.

– Pasay City - 7,833,794 shares

shareholder

Filipino

Common Ivory Holdings, Inc. – Makati City -

14,780,714 shares

shareholder

Filipino

6

Title of Class

Name, Address of Record Owner and Relationship with

Issuer

Name of Beneficial Owner and Relationship with Record

Owner

Citizenship

No. of Shares

Held

Percentage of Ownership

Common Kenrock Holdings Corporation

– Quezon City - 18,522,961 shares

shareholder

Filipino

Common Kentron Holdings and Equities Corporation

– Pasig City - - 17,343,270 shares

shareholder

Filipino

Common Kentwood Development Corporation – Pasig City -

12,271,396 shares

shareholder

Filipino

Common La Vida Development Corporation A/C#2423

– Quezon City – 10,371,574 shares

shareholder

Filipino

Common La Vida Development Corporation

- Quezon City – 3,587,300 shares

shareholder

Filipino

Common Leadway Holdings, Inc. – Quezon City - 46,495,880 shares

shareholder

Filipino

Common Local Trade and Development Corporation - Makati City -

5,836,153 shares

Shareholder

Filipino

Common Lucio C. Tan – Quezon City –

10 shares

shareholder; director

Filipino

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Title of Class

Name, Address of Record Owner and Relationship with

Issuer

Name of Beneficial Owner and Relationship with Record

Owner

Citizenship

No. of Shares

Held

Percentage of Ownership

Common Luys Securities Co., Inc.

- Makati City – 17,898 shares

shareholder

Filipino

Common Mandarin Securities Corporation – Makati City – 13,281 shares

shareholder

Filipino

Common Mavelstone International Ltd. – Makati City –

21,055,186 shares

shareholder

British

Common Merit Holdings and Equities Corporation – Quezon City – 12,377,119 shares

shareholder

Filipino

Common Multiple Star Holdings Corporation

– Quezon City - 21,925,853 shares

shareholder

Filipino

Common Opulent Land-Owners, Inc. – Quezon City – 4,105,313 shares

shareholder

Filipino

Common Pioneer Holdings Equities, Inc. – Pasig City –

24,386,295 shares

shareholder

Filipino

Common Power Realty Development Corporation

– Quezon City - 589,268 shares

shareholder

Filipino

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Title of Class

Name, Address of Record Owner and Relationship with

Issuer

Name of Beneficial Owner and Relationship with Record

Owner

Citizenship

No. of Shares

Held

Percentage of Ownership

Common Profound Holdings, Inc.

- Mandaluyong City - 12,987,043 shares

shareholder

Filipino

Common Purple Crystal Holdings, Inc.

– Mandaluyong City - 17,374,238 shares

shareholder

Filipino

Common Safeway Holdings & Equities, Inc. – Quezon City - 8,577,826 shares

shareholder

Filipino

Common Society Holdings Corporation

– Quezon City - 12,315,399 shares

shareholder

Filipino

Common Total Holdings Corporation – Pasig City -

11,387,186 shares

shareholder

Filipino

Common Total Holdings Corporation – Pasig City -

11,387,186 shares

shareholder

Filipino

Common Uttermost Success, Ltd. – Makati City -

21,523,715 shares

shareholder

British

Common Witter Webber & Schwab

Investment, Inc. – Pasay City –

7,833,795 shares

shareholder

Filipino

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Title of Class

Name, Address of Record Owner and Relationship with

Issuer

Name of Beneficial Owner and Relationship with Record

Owner

Citizenship

No. of Shares

Held

Percentage of Ownership

Common Zebra Holdings, Inc. – Marikina City - 6,432,773 shares

shareholder

Filipino

Common Lucio K. Tan, Jr. – Quezon City – 2,000 shares

shareholder; director

Filipino

1 The companies issued proxies/special powers of attorney (SPA) to Mr. Lucio C. Tan as their authorized proxy/attorney-in-fact to

vote their shares during stockholders’ meetings. Said proxies/special powers of attorney are renewed by the foregoing

shareholders on a year-to- year basis.

Other than the proxies/SPA mentioned above, the Bank is not aware of any other relationship between Mr. Tan and the above-

stated companies. Mr. Domingo T. Chua is a brother-in-law of Mr. Lucio C. Tan and Mr. Lucio K. Tan, Jr. is a son of Mr. Lucio C.

Tan.

(2) Security Ownership of Management (Individual Directors and Executive Officers as

of December 31, 2011)

Title of Class

Name of Beneficial

Owner

Amount and Nature of Beneficial Ownership

Citizenship

Percentage of Ownership

Common Shares

Florencia G. Tarriela Chairperson Independent Director

2 shares P80.00 (R)

Filipino

0.0000003020

Carlos A. Pedrosa President and CEO Vice Chairman

2 shares P80.00 (R)

Filipino 0.0000003020

Florido P. Casuela Director

100 shares P4,000.00

(R)

Filipino 0.0000151001

Estelito P. Mendoza Director

1,000 shares P40,000.00

(R)

Filipino 0.0001510013

Omar Byron T. Mier Director

120,200 shares P4,808,000.00

(R)

Filipino 0. 0181503573

Feliciano L. Miranda, Jr.* Director

100 shares P4,000.00

(R)

Filipino 0.0000151001

Washington Z. Sycip Director

34,010 shares P1,360,400.00

(R)

American 0.0051355545

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Title of Class

Name of Beneficial

Owner

Amount and Nature of Beneficial Ownership

Citizenship

Percentage of Ownership

John G. Tan Director

1,000 shares P40,000.00

(R)

Filipino 0.0001510013

Lucio C. Tan Director

10 shares P400.00

(R)

Filipino 0.0000015100

Lucio K. Tan, Jr. Director

2,000 shares P80,000.00

(R)

Filipino 0.0003020026

Deogracias N. Vistan Independent Director

100 shares P4,000.00

(R)

Filipino 0.0000151001

Sub-total 158,524 shares P6,340,960.00

0.0239373315

All Executive Officers & Directors as a Group

167,550 shares P6,702,000.00

0.0253002693

Note: (*) Mr. Feliciano L. Miranda, Jr. resigned as member of the Board of Directors effective December 31, 2011. He was

replaced by Mr. Felix Enrico R. Alfiler who was elected as member of the Board of Directors effective January 1, 2012.

Mr. Alfiler owns 100 PNB shares.

Item 5. MERGER

(a) The parties to the Merger are the Registrant and Allied Banking Corporation

The Registrant, Philippine National Bank, is a universal banking corporation existing under the laws of the Philippines with principal place of business at the PNB Financial Center, President Diosdado Macapagal Blvd. Pasay City, 1300 Philippines, and telephone numbers: 891-6040 to 70 and 526-3131 to 91. Allied Bank is a universal banking corporation existing under the laws of the Philippines with principal place of business at the Allied Bank Center, 6754 Ayala Avenue corner Legaspi St., Makati City, Philippines and telephone numbers: 816-3311 to 50. On April 30, 2008 and June 24, 2008, the Board of Directors and the stockholders of PNB and Allied Bank, at separate meetings, approved the merger of both banks with PNB as the surviving entity. At that time, the stockholders of both banks approved the Exchange Ratio of 140 PNB common shares for one Allied Bank common share and 30.73 PNB common shares for one Allied Bank preferred share at the issue price of P55.00 per share. Thereafter, PNB sought for the approval of the merger with the Securities and Exchange Commission (“SEC”), the BSP and the Philippine Deposit Insurance Corporation (“PDIC”) as well as foreign regulators for its operations abroad. Due to certain regulatory requirements, however, the merger was delayed. PNB has since complied with the regulatory requirements and both banks now seek to proceed with the merger. Due to the passage of time since the Board and shareholders’ approvals in 2008, both banks decided to review the exchange ratio for their respective shares. Upon the recommendation of ING Bank N. V. (“ING”), the exchange ratio is proposed to be amended as follows: 1. 130 PNB common shares for each Allied Bank common share 2. 22.763 PNB common shares for each Allied Bank preferred share

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Further, the issue price is recommended to be increased to P70.00 per share. Other minor revisions to the Plan of Merger are proposed, including (1) the change in the effective date of the Merger, (2) the inclusion of deferred tax assets and creditable taxes in the properties to be assigned to PNB, and (3) the effectivity of the merger shall be subject to the approval of the BSP, the SEC and the PDIC. The parties will file an application with the Bureau of Internal Revenue (“BIR”) for the issuance of a ruling that the merger qualifies as a tax-free merger under Section 40(c)2 of the National Internal Revenue Code of 1997.

(b) Summary of the Material Features of the Merger

The Merger will be undertaken via a share-for-share swap transaction. All the issued and outstanding common shares of Allied Bank will be converted to fully-paid and non-assessable common shares of PNB at a ratio of 130 PNB common shares for each issued Allied Bank common share (“Exchange Ratio for Allied Bank Common Shares”). All the issued and outstanding preferred stock of Allied Bank will also be converted to fully-paid and non-assessable PNB common shares at a ratio of 22.763 PNB common shares for each issued Allied Bank preferred share (“Exchange Ratio for Allied Bank Preferred Shares”). The Exchange Ratio for Allied Bank common shares and the Exchange Ratio for Allied preferred shares shall be collectively referred to as the “Exchange Ratio”.

To be able to do this, PNB will reclassify its 195,175,444 authorized preferred shares into common shares thereby increasing its authorized common stock to 1,250,000,001. Thereupon, the Bank will issue 423,962,500 new PNB common shares out of its authorized and unissued capital stock to be valued at P70.00 per share to swap for the outstanding Allied Bank common shares and preferred shares. The PNB common shares to be issued in exchange of Allied Bank shares will be listed on the Philippine Stock Exchange (“PSE”). In case of any resulting fractional shares from the above Exchange Ratio, each holder of Allied Bank common shares and Allied Bank preferred shares who would otherwise be entitled to such fractional share shall be entitled to an amount in cash, without interest, rounded to the nearest centavo equal to the product of (a) the amount of the fractional share interest in a PNB common share to which such holder is entitled and (b) the average of the closing sale prices for PNB common shares in the PSE for each of the thirty (30) consecutive trading days ending on the date of execution by the parties of the Amended Plan of Merger. As a result of the Merger, the Bank will have a combined outstanding capital stock of 1,086,208,416 common shares, of which approximately 423,962,500 new common shares are issued to the Allied Bank stockholders. Necessarily, the merger will result in the dilution of the PNB shareholders. Allied Bank currently has 50,000 outstanding preferred shares. Among the terms of such preferred shares is a cumulative and guaranteed dividend equivalent to 15% per annum of their par value. As of December 31, 2011, total dividends in arrears is estimated at P30 million. Conversion shall be at the rate of peso for peso of par value of the preferred shares to prevailing book value of the common shares at the time of exercise of such option. On December 16, 2011, the Board of Directors of Allied Bank approved the declaration and payment of accumulated cash dividends in arrears on the preferred shares as of December 31, 2011, subject to the approval of the BSP and other appropriate regulatory agencies.

(c) Reasons for the Merger

PNB and Allied Bank wish to enter into a merger in order to strengthen and consolidate their long-term strategic business plans with PNB as the surviving bank.

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The Merger will mark a special milestone for both PNB and Allied Bank. The synergies arising from the broadened network, diversified deposit base and improved scale will provide a compelling value proposition for their various stakeholders. In creating the country’s fourth largest privately-owned bank, the merged bank will be in prime position to improve the customer experience and lead industry innovation. Moreover, it will yield substantial benefits for its customers and provide more opportunities for its employees. The merged bank will be the 4th largest private domestic bank in the Philippines with a combined distribution network of 646 branches nationwide and combined total assets of P514 billion as of September 30, 2011. In addition, it will have the largest international footprint across the Asia Pacific Region, Europe, the Middle East and North America. It will have a stronger platform to offer a wider range of personal and corporate banking products and services, and become a leading player in its chosen markets. The Merger is expected to result in revenue enhancements and cost savings. Cost savings will potentially come from branch re-engineering, economies of scale, consolidation of overlapping systems and corporate indirect overheads, realignment of front offices and the optimization of back office processing and support functions.

(d) Material differences in the rights of security holders as a result of the Merger

No material differences in the rights of security holders will result from the transaction. The new shares to be issued by PNB shall rank pari passu in all respects with its existing shares.

(e) Accounting treatment of the transaction

The Merger will be accounted for under the Purchase Method. Under the Purchase Method, the following main principles will be applied:

- Assets and Liabilities, including unrecorded intangible assets and contingent liabilities

of the “acquiree”, will be taken up at fair value as of the date of the Merger in the books of the “acquiror”.

- Prior years’ financial statements will not be restated and the income statement will

only incorporate the results of the “acquiree” from the date of Merger. - Equity of the “acquiror” is increased by the amount of the acquisition cost, equivalent

to the number of new shares of the “acquiror” to be issued multiplied by the issue price.

- Difference between the acquisition cost and fair value of the net assets of the

“acquiree” as of the date of the Merger will be recorded as goodwill.

(f) ING, Financial Advisor to the majority shareholders of PNB and Allied Bank, proposed a

share swap ratio between PNB and Allied Bank for approval by their respective Boards. The majority shareholders of PNB and Allied Bank considered several investment banks and selected ING on the basis of its qualifications and advisory track record in Philippine bank mergers and acquisitions.

ING is a Financial Advisor with a long track record in advising on mergers and acquisitions transactions in the Philippines. ING has advised in at least 19 merger and acquisitions and advisory transactions involving banks and other financial institutions in the Philippines, including landmark deals such as the privatization of Philippine National Bank in 2005 and the merger between Banco de Oro and Equitable PCI Bank in 2008. ING has acted as the Financial Advisor for the majority shareholders of PNB and Allied Bank in relation to the proposed merger since 2007. ING is also accredited by the PSE to issue fairness opinions and valuation reports for listed companies and prospective listing applicants.

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Apart from normal professional fees payable to ING in connection with this engagement, no arrangement exists whereby ING will receive any fees or benefits from Allied Bank or PNB, or any party acting, or presumed to be acting, in concert with Allied Bank or PNB in connection with this engagement. In June 2011, ING acted as Sole Lead Arranger for PNB’s P6.5 billion unsecured subordinated notes issue. ING’s recommendation is based solely on publicly available information and other information on Allied Bank and PNB provided to ING by the management teams of Allied Bank and PNB, Roxas de Los Reyes Laurel Rosario & Leagogo Law Office and SGV & Co. (collectively known as “Management and Advisers”). In formulating the recommendation, ING has relied on the Management and Advisers to ensure that the information and facts supplied by them are true, accurate and complete in all material respects as of the date hereof and that all information which is or may be relevant, has been provided to ING. We have also relied on the discussions with members of the management of Allied Bank and PNB regarding their respective financial projections and other information provided to ING. ING has not independently verified such information nor conducted any independent in-depth investigation into the business, and the affairs, of Allied Bank, PNB, or the merged entity.

To determine the swap ratio, ING used contribution analysis to examine the relative contribution of PNB and Allied Bank to a hypothetical combined entity and thereby determine the ownership levels between both banks’ shareholders in the enlarged entity. Various methodologies were used, including (a) Relative “Fair Values” (e.g., Dividend Discount Model, Adjusted Net Asset Value, Comparables Analysis), (b) Relative Size (e.g., Total Assets, Interest-Earning Assets, Deposits, Stockholders’ Equity), and (c) Relative Operating Performance (e.g., Interest Income, Net Interest Income, Net Interest Income + Non-Interest Income, Underlying Profit). Each methodology yielded a certain relative contribution ratio between PNB and Allied Bank. Based on the relative contribution ratio and current outstanding capital stock of PNB, the required number of PNB common shares to be issued to Allied Bank shareholders, commensurate to Allied Bank’s contribution to the enlarged entity, was computed. Such number of PNB common shares was, in turn, divided by the current outstanding capital stock of Allied Bank to arrive at an implied share swap ratio. After discussions with PNB and Allied Bank management and majority shareholders, ING proposed a specific share swap ratio within the range of implied share swap ratios for the various methodologies and presented such to PNB’s and Allied Bank’s Board of Directors for approval. Representatives of ING will present their recommendation at the shareholders’ meeting, will have an opportunity to make a statement, and are expected to be available to respond to appropriate questions.

(g) There are no dividends in arrears/defaults in principal or interest in respect of any

securities of PNB. Allied Bank currently has 50,000 outstanding preferred shares. Among the terms of such preferred shares is a cumulative and guaranteed dividend equivalent to 15% per annum of their par value. As of December 31, 2010 and September 30, 2011, the total dividends in arrears accrued on the preferred shares amount to P22.50 million and P28.13 million respectively. On December 16, 2011, the Board of Directors of Allied Bank approved the declaration and payment of accumulated cash dividends on the preferred shares as of December 31, 2011 at the rate of P600.00 per preferred share, subject to the approval of the BSP and other appropriate regulatory agencies.

(h) Historical information of the Registrant and Allied Bank for the last three fiscal years

and quarter-end September 30, 2011 Under the Acquisition Method, prior years’ financial statements will not be restated and the income statement will only incorporate the results of the “acquiree” from the date of

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Merger. The pro forma numbers are shown only for illustrative purposes. Exact fair value adjustments will only be determined only post-merger. For pro forma figures in this section, the corresponding numbers of PNB and Allied Bank have just been added, except for the conversion of P50,000,000.00 preferred shares into common stock.

Philippine National Bank Allied Banking Corporation Merged Bank (Pro Forma)

(in Million Pesos) 9.30.11 2010 2009 2008 9.30.11 2010 2009 2008 9.30.11 2010 2009 2008

Operating Revenues 1/ 10,179 16,582 15,200 12,164 7,989 10,400 9,379 7,348 18,168 26,982 24,579 19,512

Income from Continuing Operations 2,271 3,536 2,200 1,120 1,029 1,298 1,196 501 3,300 4,834 3,396 1,621

Long-Term Obligations 2/ 12,500 11,500 11,500 14,500 4,500 4,500 4,500 4,500 17,000 16,000 16,000 19,000

Redeemable Preferred Stocks

- - - - 50 50 50 50

1/ Operating Revenues Net Interest Income 5,548 7,802 7,879 6,619 5,012 6,791 6,488 5,225 Other Income 3,066 6,655 5,061 3,192 2,385 2,812 2,545 1,431 Net Service Fees and

Commission 1,565 2,125 2,260 2,353 592 797 346 692

10,179 16,582 15,200 12,164 7,989 10,400 9,379 7,348 2/PNB 2008 – Lower Tier 2 (2004, 2006 and 2008) 2009 – Lower Tier 2 (2006 and 2008) 2010 – Lower Tier 2 (2006 and 2008) 9.30.2011– Lower Tier 2 (2008 and 2011)

Allied Bank 2008 – Lower Tier 2 in 2008 2009 – Lower Tier 2 in 2008 2010 – Lower Tier 2 in 2008 9.30.2011– Lower Tier 2 in 2008 Note: Long-term obligations, as used in this section, are limited to Lower Tier 2 debt obligations only. The figures represent the face value of these obligations.

(i) Per share data of the Registrant and Allied Bank for the last three fiscal years and quarter-end September 30, 2011

For the pro forma per share figures, it has been assumed that PNB’s number of shares will be augmented by the number of shares to be issued to Allied Bank stockholders (423,962,500). It has also been assumed that PNB’s book value will be augmented by number of shares multiplied by P70.00, the issue price approved by both Boards. The pro forma numbers do not include any fair market value adjustments nor recognition of goodwill. Under the Acquisition Method, exact fair value adjustments will be determined only post-merger.

Philippine National Bank Allied Banking Corporation Merged Bank (Pro Forma)

(in Pesos) 9.30.11 2010 2009 2008 9.30.11 2010 2009 2008 9.30.11 2010 2009 2008

Book Value per Share 3/ 52.36 50.31 46.59 44.07 See sub-table below* 59.24 58.00 55.73 54.19

Cash Dividends per Share - - - - - - - - - - - -

Income per Share 4/ (attributable to equity holders of the parent co.)

3.42 5.31 3.30 1.67 274.72 359.71 344.07 146.28 2.91 4.48 3.04 1.46

9.30.11

2010

2009

2008

9.30.11

2010

2009

2008

9.30.11

2010

2009

2008

3/ Equity attributable to Parent company shareholders

(in P million)

34,672 33,318 30,855 29,187 64,349 62,995 60,532 58,864

No. of Outstanding Shares (in millions)

662.2 662.2 662.2 662.2 1,086.2 1,086.2 1,086.2 1,086.2

BV per share 52.36 50.31 46.59 44.07 59.24 58.00 55.73 54.19 4/ Net income to Parent

co. shareholders 2,264 3,515 2,186 1,108 894 1,170 1,119 476 3,158 4,865 3,305

1,584

Wtd. Ave. No. of Shares (in millions)

662.2 662.2 662.2 662.2 3.252 3.252 3.252 3.252 1,086.2 1,086.2 1,086.2 1,086.2

Income per share 3.42 5.31 3.30 1.67 274.72 359.71 344.07 146.28 2.91 4.48 3.04 1.46 Note: Pro Forma Weighted Ave. No. of Shares assumes additional 423.96 million PNB shares

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*Allied Banking Corporation

(in Pesos) 9.30.11 2010 2009 2008

Book Value per Share Preferred Stock (Note 1) 1,564.00 1,450.00 1,300.00 1,150.00 Common Stock (Note 2) 6,543.00 6,351.62 5,762.30 5,161.29 1. Includes dividends in arrears (in P million, unless otherwise stated)

Preferred stock 50 50 50 50 Dividends in arrears 28.2 22.5 15 7.5 Book value for preferred in shares 78.2 72.5 65 57.5 No. of preferred shares (in millions) 0.05 0.05 0.05 0.05 Book value/ preferred shares (in Pesos) 1,564.00 1,450.00 1,300.00 1,150.00

2. Computed at consolidated level (in P million, unless otherwise stated)

Equity attributable to Parent co. Shareholders 21,356 20,728 18,804 16,842 Less: Preferred stock (50) (50) (50) (50) Less: Dividends in arrears (28.2) (22.5) (15) (7.5) Book value for common shares 21,277.8 20,655.5 18,739.0 16,784.5 No. of common shares (million) 3.252 3.252 3.252 3.252 Book value/ common share (Pesos) 6,543.00 6,351.62 5,762.30 5,161.29

(j) The effectivity of the Amended Plan of Merger will be subject to the approval of the BSP,

the SEC, and the PDIC. The Bank will also apply with the Bureau of Internal Revenue (BIR) for the confirmation of the tax-free treatment of the transaction pursuant to Section 40(c)2 of the National Internal Revenue Code of 1997.

(k) A Fairness Opinion was received from UBS Investments Philippines, Inc. (“UBS”) as to the fairness, from a financial point of view, of the Merger Share Swap Ratios. UBS was incorporated as an investment house in the Philippines and is a subsidiary of UBS AG, a Swiss company (the parent company). UBS performs underwriting and financial advisory services.

UBS was engaged by the Board of Directors of PNB, in connection with the acquisition by PNB of 100% of the issued share capital of Allied Bank (the "Transaction"), to provide a Fairness Opinion, from a financial point of view, on the Merger Share Swap Ratios of 130 common shares of PNB for each common share of Allied Bank and 22.763 common shares of PNB for each preferred share of Allied Bank.

In selecting the independent financial advisor, the PNB Board considered, among other factors, the qualifications and industry experience of its top management and key personnel, its track record, its independence, and the reasonableness of its advisory fees.

UBS has opined on January 27, 2011, to the Board of Directors of PNB, that the Merger Share Swap Ratios to be offered by PNB are fair to PNB from a financial point of view. In determining its opinion, UBS used such customary valuation methodologies; conducted such financial studies, analyses, and investigations; and considered such information as it deemed necessary or appropriate.

UBS made use of, among others, (i) certain publicly available business and historical financial information relating to PNB and Allied Bank; (ii) certain financial information and other data provided by PNB and Allied Bank and not publicly available; (iii) current and historic share prices for PNB and publicly available financial and stock market information with respect to certain other companies in lines of business generally comparable to those of PNB and Allied Bank; (iv) statements made by members of the senior management of PNB and Allied Bank relating to the respective business and financial prospects of PNB and Allied Bank; and (v) such other financial studies, analyses, and investigations, and considered such other information as they deemed necessary or appropriate. The methodologies used by UBS included, among others, (i) an analysis of the relative contribution of PNB and Allied Bank to the combined balance sheet and earnings of the merged company; (ii) derivation of standalone values based on certain widely-used valuation methodologies, including trading comparable analysis and dividend discount model analysis, for PNB and Allied Bank; and (iii) a study or comparison of the financial terms in precedent mergers in the Philippine banking sector and other relevant transactions.

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UBS acted as financial adviser to the Board of Directors of PNB in connection with the Transaction and will receive a fee for its services, which includes the issuance of the Fairness Opinion. From time to time, UBS, other members of the UBS Group (meaning UBS AG and any subsidiary, branch or affiliate of UBS AG [including UBS]) and any of their predecessors may have provided investment banking services to PNB and Allied Bank or any of their affiliates and received customary compensation for the rendering of such services.

In the ordinary course of business, UBS, any member of the UBS Group or their successors may trade securities of PNB and Allied Bank for their own account or for the accounts of their customers and, accordingly, may at any time hold long or short positions in such securities. UBS has been confirmed by the Philippine Stock Exchange to be independent of PNB in relation to the issuance of this opinion. UBS is accredited by the PSE for the purpose of issuing fairness opinions and valuation reports for listed companies and prospective initial listing applicants with the PSE.

UBS's opinion did not address the relative merits of the Transaction as compared to other business strategies or transactions that might be available with respect to PNB or the underlying business decision of PNB to effect the Transaction. As agreed with PNB, UBS was not asked to, nor did UBS offer, any opinion as to the material terms of the Transaction (including the form of the consideration of the Transaction), other than the Merger Share Swap Ratios. UBS expressed no opinion as to what the value of the shares in Allied Bank or what the value of the shares in PNB will be as a result of, or when issued pursuant to, the Transaction or the prices at which they will trade in the future.

UBS's opinion did not constitute an offer by it, or represent a price at which it would be willing to purchase, sell, enter into, assign, terminate or settle any transaction. In rendering its opinion, UBS assumed, with the agreement of PNB, that the Transaction as consummated will not differ in any material respect from that described to it by the PNB's management team.

In connection with UBS's review, and with PNB’s consent, UBS assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or was furnished to UBS by or on behalf of PNB and Allied Bank, or otherwise reviewed by UBS for the purposes of this opinion, and UBS does not assume any responsibility or liability therefor. No dataroom due diligence was conducted. In addition, with PNB's consent, UBS did not make any independent valuation or appraisal of the physical assets of PNB or Allied Bank, nor was UBS furnished with any such evaluation or appraisal.

With respect to the financial forecasts, estimates, pro forma effects and calculations of synergies prepared by PNB and Allied Bank management as referred to above, UBS assumed, with PNB's consent, that they have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of PNB and Allied Bank respectively as to the future performance of PNB and Allied. In addition, UBS assumed with the approval of PNB that the future financial results referred to above will be realized in the amounts and time periods contemplated thereby.

To the extent UBS relied on publicly available financial forecasts from various equity research analysts, UBS assumed that they have been reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by the analysts as to the expected future results of operations and financial condition of the referred companies which are the subject of such analysts’ forecasts that UBS relied upon.

With respect to draft unaudited financial statements of PNB and Allied Bank covering periods ending prior to and dates prior to the date of the Fairness Opinion, UBS assumed that such unaudited financial statements reflect the results that will ultimately be reported in the respective audited financial statements of PNB and Allied Bank for such periods and dates.

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UBS also assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Transaction will be obtained without any material adverse effect on PNB, Allied Bank or the Transaction. UBS's opinion was necessarily based on the economic, regulatory, market and other conditions as in effect on, and the information made available to UBS as of, the date of the opinion. It should be understood that subsequent developments may affect UBS's opinion, which UBS is under no obligation to update, revise or reaffirm.

UBS does not accept any responsibility for the accounting or other data and commercial assumptions on which UBS's opinion is based. Furthermore, UBS's opinion does not address any legal, regulatory, taxation or accounting matters, as PNB has obtained such advice as it deemed necessary from qualified professionals.

UBS’s opinion was provided to and for the benefit of the Board, in its capacity as such, in connection with and for the purposes of its evaluation of the Transaction. The Fairness Opinion issued was not on behalf of, and does not confer rights or remedies upon, may not be relied upon, and does not constitute a recommendation by UBS to any holder of securities of PNB or Allied Bank or any other person.

UBS AG, acting through its business group, UBS Investment Bank, acted as sole global

coordinator, bookrunner and international lead manager for PNB's equity capital raising in August 2007.

UBS has had no material relationship with PNB in the past two (2) years which may have influenced, or tended to influence, the objectivity and reliability of its fairness opinion.

(l) Material contracts, arrangements between PNB and Allied Bank In 2008, the merger of Philippine National Bank and Allied Banking Corporation was approved by the respective Board of Directors and stockholders of both banks. Due to certain regulatory requirements, the merger was delayed. In view of the delay, both banks decided to review the Exchange Ratio, thus, the proposed amendment of the Plan of Merger. In 2009, PNB acquired a 39.4% stake in Allied Commercial Bank (“ACB”) based in Xiamen, China for a consideration of CNY394.1 million or US$57.7 million, equivalent to P2.8 billion. ACB is a 51% owned subsidiary of Allied Bank. Aside from the merger and PNB’s investment in ACB, there are no past, present or other proposed material contracts, arrangements, understanding, relationships or transactions during the past two (2) fiscal years between Allied Bank or its affiliates and the Registrant or its affiliates.

(m) Market Information

All issued PNB common shares are listed and traded on the Philippine Stock Exchange, Inc. The high and low sale prices of PNB shares for each quarter for the last two (2) fiscal years are:

2010 2011 High Low High Low Jan – Mar 28.50 20.75 64.25 42.05 Apr – Jun 33.50 26.50 68.60 56.00 July – Sep 73.50 28.50 65.20 41.00 Oct – Dec 74.50 55.80 60.00 43.90

The trading price of each PNB common share as of December 29, 2011 was P56.40.

The principal market of Allied Bank’s preferred shares is the Philippines Stock Exchange. However, the P50 million preferred shares were fully subscribed and paid by two (2) of its shareholders. Thus, no trading was made on the listed shares of stocks since 1982.

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(n) The representative/s of the principal accountants for the current year and for the most recently completed fiscal year (i) are expected to be present at the Special Stockholders’ Meeting; (ii) will have the opportunity to make a statement if they desire to do so and (iii) are expected to be available to respond to appropriate questions.

(o) Description of the Business of the Registrant and Allied Bank

Please refer to pages 1 to 13 of the accompanying Management Report of PNB. Please refer to pages 1 to 8 of the accompanying Management Report of Allied Bank.

(p) Transactions With and/or Dependence on Related Parties

Please refer to page 3, Item 5 of the accompanying Management Report of PNB. Please refer to page 40, Item 11 of the accompanying Management Report of Allied Bank for a discussion on this matter.

(q) Description of the Property of the Registrant and Allied Bank

Please refer to pages 3 to 6 of the accompanying Management Report of PNB. Please refer to page 8, Item 2 of the accompanying Management Report of Allied Bank. Other than the properties acquired pursuant to the Merger, PNB does not intend to acquire any material properties in the next twelve (12) months. Allied Bank does not intend to acquire any material properties in the next twelve (12) months.

(r) Legal Proceedings involving the Registrant

The Bank and some of its subsidiaries are parties to various legal proceedings which arose in the ordinary course of operations. None of such legal proceedings, either individually or in the aggregate, are expected to have a material adverse effect on the Bank and its subsidiaries or their financial condition. Please refer to page 11, Item 3 of the accompanying Management Report of Allied Bank for a discussion on the pending legal proceedings involving the same.

(s) Information required by Part II, paragraph (A) of “Annex C,” market price of and dividends on the Registrants' common equity and related stockholder matters, information required by Part III, paragraphs (A) and (B) of “Annex C.”

(1) Market Price of and Dividends on Registrant’s Common Equity and Related

Stockholder Matters

a. Market Information

All issued PNB common shares are listed and traded on the Philippine Stock Exchange, Inc. The high and low sale prices of PNB shares for each quarter for the last two (2) fiscal years are:

2010 2011 High Low High Low Jan – Mar 28.50 20.75 64.25 42.05 Apr – Jun 33.50 26.50 68.60 56.00 July – Sep 73.50 28.50 65.20 41.00 Oct – Dec 74.50 55.80 60.00 43.90

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The trading price of each PNB common share as of December 29, 2011 was P56.40. The principal market of Allied Bank’s preferred shares is the Philippines Stock Exchange. However, the P50 million preferred shares of Allied Bank were fully subscribed and paid by two (2) of its shareholders. Thus, no trading was made on the listed shares of stocks since 1982.

b. Holders

There are 31,301 shareholders as of December 31, 2011. The top twenty (20) holders of common shares, the number of shares held, and the percentage to total shares outstanding held by each are as follows:

No.

Stockholders

Common Shares

Percentage To Total

Outstanding Capital Stock

1 PCD Nominee Corp. (Filipino) 96,782,373 14.6142649825 2 PCD Nominee Corp. (Non-Filipino) 74,341,368 11.2256438589 3 Leadway Holdings, Inc. 46,495,880 7.0209387294 4 Pioneer Holdings Equities, Inc. 24,386,295 3.6823624594 5 Multiple Star Holdings, Corp. 21,925,853 3.3108324975 6 Donfar Management Ltd. 21,890,077 3.3054302746 7 Uttermost Success, Ltd. 21,523,715 3.2501091332 8 Mavelstone Int'l Ltd. 21,055,186 3.1793606410 9 Kenrock Holdings Corp. 18,522,961 2.7969913521 10 Fil-Care Holdings, Inc. 18,119,076 2.7360041885 11 Fairlink Holdings Corp. 17,945,960 2.7098634460 12 Purple Crystal Holdings, Inc. 17,374,238 2.6235326757 13 Kentron Holdings & Equities Corp. 17,343,270 2.6188564672 14 Fragile Touch Investment, Ltd. 16,157,859 2.4398578549 15 Pan Asia Securities Corporation 15,622,881 2.3590754767 16 Ivory Holdings, Inc. 14,780,714 2.2319071576 17 Allmark Holdings Corporation 14,754,256 2.2279119650 18 Profound Holdings, Inc. 12,987,043 1.9610604892 19 Fast Return Enterprises, Ltd. 12,926,481 1.9519155479 20 Merit Holdings & Equities Corp. 12,377,119 1.8689611670

Please refer to Annex “C” of the accompanying Management Report of Allied Bank for the list of its Top 20 shareholders and other current shareholders.

c. Dividends

The Bank has not declared any cash dividends on its common equity for the fiscal years 2010 and 2011. The Bank’s ability to pay dividends is contingent on its ability to set aside unrestricted retained earnings for dividend distribution. Please refer to page 13, Item (g) of the accompanying Management Report of Allied Bank for a discussion on Allied Bank’s dividend payments.

d. Recent Sales of Unregistered or Exempt Securities, Including Recent Issuance of

Securities Constituting Exempt Transactions

There are no securities of PNB sold by it within the past three (3) years which were not registered under the Code.

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Allied Bank issued the following debt and equity securities during the period 2004 – 2009:

Date Particulars Amount

Name of Under -writers

Call Option Maturity Date

Remarks/ Additional Details

12-23-04 Raised Upper Tier 2 Capital - Unsecured Subordinated Notes through the issuance in the international market

US$50 million ING Bank N.V. (Lead arranger)

Callable in 2009; convertible into shares of the ABC at the noteholder’s option upon approval of the 2/3 of Allied Bank shareholders

12-23-14 Bears interest rate at 5% p.a.; interest payable semi-annually in arrears on June 23 and December 23 of each year, starting December 23, 2004. The unsecured notes are not insured with PDIC.

03-06-08 Issued Lower Tier 2 Capital - Fixed Rate Unsecured Subordinated Notes through public offering

P4.5 billion ING Bank N.V. (Lead arranger)

Callable with step-up in 2013

03-06-18 if not redeemed earlier

Bears interest at 7.13% p.a., payable to the noteholder for the period from and including the issue date up to the maturity date if the call option is not exercised on the call option date. Interest shall be payable quarterly in arrears on March 6, June 6, September 6 and December 6 of each year, commencing on June 6, 2008

03-12-08 Increase in authorized capital stock from 450,000 to 11,450,000 common shares

From P450 million to P11.45 billion

SEC approved the Amendment of Article Seventh of Allied Bank’s Articles of Incorporation on July 24, 2008

03-12-08 Conversion of US$50 million Upper Tier 2 Capital - to 2,808,200 common shares at P1,000.00 par value per share

P2.81 billion P592.15 million adjustment charged to equity

10-22-09 Issued Long –Term Negotiable Certificates of Time Deposit (LTNCD) Notes through public offering

P3.5 billion Deutsche Bank and ING N.V. (Joint lead arrangers)

10-23-14 Bears interest at 7.00% p.a.; interest payable quarterly in arrears on January 23, April 23, July 23 and October 23 of each year, commencing on January 23, 2010. LTNCDs are insured with PDIC

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(2) Description of Registrant’s Securities

• As of December 31, 2011, the Bank’s authorized capital stock amounted to P50,000,000,040.00 divided into 1,054,824,557 common shares having a par value of P40.00 per share and 195,175,444 preferred shares with a par value of P40.00 per share. The total number of shares issued and outstanding is 662,245,916 of which 494,119,801 shares (or 74.61274%) are held by Filipino-Private Stockholders while the remaining 168,126,115 shares (or 25.38726%) are held by Foreign-Private Stockholders. The Bank has a total of P26,489,836,640.00 subscribed capital.

• The Bank’s stockholders have no pre-emptive right to subscribe to any new or

additional issuance of shares by the Bank, regardless of the class of shares, whether the same are issued from the Bank’s unissued capital stock or in support of an increase in capital, x x x. (Article Seven of PNB’s Amended Articles of Incorporation)

• At each meeting of the stockholders, every stockholder entitled to vote on a

particular question involved shall be entitled to one (1) vote for each share of stock standing in his name on the books of the Bank at the time of the closing of the transfer books for such meeting or on the record date fixed by the Board of Directors x x x. (Section 4.9 of PNB’s Amended By-Laws).

• Section 24 of the Corporation Code of the Philippines provides that “x x x every

stockholder entitled to vote shall have the right to vote in person or by proxy the number of shares of stock standing, at the time fixed by the by-laws, in his own name on the stock books of the corporation x x x and said stockholder 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, x x x.”

Please refer to page 12, Item 5 (C) of the Management Report of Allied Bank for a discussion on its issued securities.

(t) Management’s Discussion and Analysis

The following is the discussion on the consolidated financial condition and results of operations of PNB and its Subsidiaries (the Group) based on the Audited Financial Statements as of and for the years ended December 31, 2010, 2009, 2008 and for the nine months ended September 30, 2011 (unaudited) and September 30, 2010 (unaudited). Key Performance Indicators

• Capital Adequacy

The Group’s consolidated risk-based capital adequacy ratio computed based on BSP guidelines were 19.8%, 19.4%, 18.5% and 17.6% as of September 30, 2011, December 31, 2010, 2009 and 2008, respectively, improving and well above the minimum 10% required by BSP.

• Asset Quality

Non-performing loans (NPL) (gross of allowance) were P7.0, P7.7 billion, P8.0 billion and P10.0 billion as of September 30, 2011, year-end 2010, 2009 and 2008, respectively.

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• Profitability 9/30/2011 2010 2009 2008

Return on Equity 1/ 8.9% 11.0% 7.3% 3.8% Return on Assets 2/ 1.0% 1.2% 0.8% 0.4% Net Interest Income 3/ 3.0% 3.5% 3.8% 3.7%

1 net income divided by average total equity for the period indicated 2 net income divided by average total assets for the period indicated 3 net interest income divided by average interest-earning assets for the period indicated

• Liquidity

The ratios of liquid assets to total assets were 33.2%, 34.7%, 31.5% and 28.1% as of September 30, 2011, December 31, 2010, 2009 and 2008, respectively. The Bank is in compliance with the liquidity and legal reserve requirements of BSP for deposit liabilities.

• Cost Efficiency

The ratios of total operating expenses (excluding provision for impairment and credit losses) to total operating income were 71.8%, 59.9%, 70.6%, and 75.9% for September 30, 2011, year-end 2010, 2009 and 2008, respectively.

Known trends, demands, commitments, events and uncertainties The Bank presently has more than adequate liquid assets to meet known funding requirements and there are no known trends, demands, commitments, events or uncertainties that will have a material impact on the Bank’s liquidity.

Events that will trigger direct or contingent financial obligation

In the normal course of business, the Group makes various commitments and incurs certain contingent liabilities that are not presented in the financial statements, including several suits and claims which remain unsettled. No specific disclosures on such unsettled assets and claims are made because any such disclosures would prejudice the Group’s position with the other parties with whom it is in dispute. Such exemption from disclosures is allowed under PAS 37, Provisions, Contingent Liabilities and Contingent Assets. The Group and its legal counsel believe that any losses arising from these contingencies which are not specifically provided for will not have a material adverse effect on the financial statements. Material off-balance sheet transactions, arrangement or obligation The following is a summary of various commitments and contingent liabilities of the Group as of September 30, 2011 and 2010 at their equivalent peso contractual amounts: 9/30/11 12/31/10 (In Thousand Pesos)

Trust department accounts P=52,944,057 P=30,427,482 Deficiency claims receivable 6,335,470 7,516,669 Inward bills for collection 1,562,747 2,621,934 Outstanding guarantees issued 1,123,406 938,361 Outward bills for collection 112,894 76,911 Unused commercial letters of credit 72,117 11,414 Confirmed export letters of credit 5,495 14,603 Items held as collateral 194 262 Other contingent accounts 41,281 41,316

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Capital Expenditures The Bank plans to purchase hardware and software requirements needed for the implementation of and new ATM acquisitions and upgrades, Flexcube licenses & upgrades, Trust and Treasury system upgrades among others. Significant Elements of Income or Loss Significant elements of net income of the Bank came from its continuing operations. Seasonal Aspects There are no seasonal aspects that have material effect on the Bank’s financial condition or results of operations. Financial Condition 9/30/2011 vs. 2010

• The Group’s consolidated assets reached P318.7 billion as of September 30, 2011, P16.6 billion or 5.5% higher compared to P302.1 billion as of December 31, 2010. The growth in resources was funded by the increase in deposits and proceeds from the issuance of P6.5 billion unsecured subordinated notes eligible as Tier 2 Capital in June 2011. Significant changes (more than 5%) in assets were registered in the following accounts: - Loans and Receivables grew by 17.6% or P19.4 billion, from P110.3 billion to

P129.7 billion, attributable mainly to P28.1 billion new loan releases partly offset by loan collections of P6.7 billion, P1.4 billion decline in Other Receivables and P0.7 billion increase in the provision for probable losses.

- Securities Held Under Agreements to Resell increased by P3.7 billion, from P6.8 billion to P10.5 billion, as lending transactions with BSP increased.

- Due from BSP went up by P9.0 billion, from P24.3 billion to P33.3 billion, accounted for by the increase in the reserve deposit account with the BSP.

- Financial Assets at Fair Value Through Profit or Loss was lower by P7.4 billion from P15.9 billion to P8.5 billion, attributed mainly to the sale of government and other investment securities.

- Interbank Loans Receivable decreased by P3.9 billion, from P12.7 billion to P8.8 billion, in view of lower interbank lending.

- Held to Maturity Investments declined by P2.9 billion, from P38.2 billion to P35.3 billion, on account of matured investments.

- Receivables from Special Purpose Vehicle went up by P0.1 billion, from P0.6 billion to P0.7 billion, due to the lower requirement for provision for impairment loss.

- Other Assets was lower by P0.9 billion, from P7.2 billion to P6.3 billion. - Due from Other Banks was higher by P0.5 billion, from P5.1 billion to P5.6 billion,

while Cash and Other Cash Items declined by P1.3 billion, from P5.5 billion to P4.2 billion.

• The consolidated liabilities increased by P15.3 billion from P268.7 billion as of

December 31, 2010 to P284.0 billion as of September 30, 2011. Major changes in liability accounts were as follows:

- Deposit Liabilities grew by P12.3 billion, from P226.4 billion to P238.7 billion. The

growth came from P14.5 billion and P0.2 billion increase in savings deposits and in demand deposits, respectively partly offset by the decline of P2.5 billion in time deposit.

- Bills and Acceptances Payable increased by P3.9 billion, from P12.0 billion to P15.9 billion, on account of additional borrowings from other banks.

- Subordinated Debt increased by P1.0 billion, from P5.5 billion to P6.5 billion. On June 15, 2011, the Bank issued P6.5 billion in Unsecured Subordinated Notes eligible as Tier 2 Capital to refinance the Bank’s P5.5 billion Lower Tier 2 Subordinated Notes which were redeemed in August 2011 and to raise additional

24

Tier 2 Capital in order to finance asset growth and strengthen the Bank’s capital base.

- Other Liabilities decreased by P1.9 billion, from P13.1 billion to P11.2 billion.

• The consolidated equity stood at P34.7 billion as of September 30, 2011, up by P1.2 billion from P33.5 billion as of December 31, 2010. The increase in capital accounts was accounted for by the P2.3 billion net income for the first nine months of 2011 and P0.1 billion improvement in the accumulated translation adjustment partly offset by the P0.1 billion decrease in non-controlling interest in a subsidiary, P0.7 billion amortization of deferred losses from sale of non-performing assets to SPV companies, and P0.4 billion net unrealized loss on mark to market valuation of available for sale investments.

2010 vs. 2009

• The Group’s consolidated assets reached P302.1 billion as of December 31, 2010, P18.8 billion above P283.3 billion as of end 2009. Significant changes (more than 5%) in assets were registered in the following accounts:

- Securities Held Under Agreements to Resell increased by P1.2 billion, from P5.6

billion to P6.8 billion, as lending transactions with BSP increased. - Available for Sale Securities was higher by P17.9 billion, from P16.6 billion to

P34.5 billion, on account of purchases of government securities. - Financial Assets at Fair Value Through Profit or Loss went up by P5.4 billion, from

P10.5 billion to P15.9 billion, attributed mainly to acquisition of government securities.

- Due from BSP increased by P3.4 billion, from P20.9 billion to P24.3 billion, accounted for by the reserve deposit account with BSP.

- Loans and Receivables went up by P9.8 billion, from P100.5 billion to P110.3 billion, attributable to new loan releases.

- Interbank Loans Receivable was lower by P11.6 billion, from P24.3 billion to P12.7 billion, due to lower interbank lending.

- Receivables from Special Purpose Vehicle went up by P0.1 billion, from P0.5 billion to P0.6 billion.

- Held to Maturity Investments decreased by P3.7 billion, from P41.9 billion to P38.2 billion, attributed to matured investments in government securities.

- Cash and Other Cash Items and Due from Other Banks were lower by P0.6 billion and P0.3 billion, respectively.

- Investment Properties declined by P2.5 billion, from P22.2 billion to P19.7 billion, mainly, due to sale of properties.

- Other Assets decreased by P0.5 billion, from P7.7 billion to P7.2 billion • The consolidated liabilities increased by P16.4 billion from P252.3 billion as of

December 31, 2009 to P268.7 billion as of December 31, 2010. Major changes in liability accounts were as follows: - Deposit Liabilities went up by P12.1 billion, from P214.3 billion to P226.4 billion.

Demand, savings and time deposits increased by P4.9 billion, P4.3 billion and P2.9 billion, respectively.

- Bills and Acceptances Payable was higher by P4.2 billion, from P7.8 billion to P12.0 billion, on account of additional borrowings from other banks.

- Accrued Taxes, Interest and Other Expenses increased by P0.1 billion, from P4.9 billion to P5.0 billion, in view of accruals on deposit liabilities.

- Other liabilities increased by P0.1 billion, from P13.0 billion to P13.1 billion. - Financial Liabilities at Fair Value Through Profit or Loss decreased by P0.1 billion,

from P6.7 billion to P6.6 billion.

• The consolidated equity reached P33.5 billion as of December 31, 2010, up by P2.5 billion from P31.0 billion as of December 31, 2009. The increase in capital accounts came primarily from the P3.5 billion net income and P0.1 billion revaluation increment on land and building partly offset by the P0.3 billion net unrealized loss on

25

mark to market valuation of available for sale investments and by the P0.8 billion amortization of deferred losses from sale of non-performing assets to SPV companies.

2009 vs. 2008

• As of December 2009, the Group’s consolidated resources stood at P283.3 billion, a P7.9 billion or 2.9% growth compared to P275.4 billion level as of end December 2008. Major changes were reflected in the following accounts:

- Interbank Loans Receivable was higher by P11.4 billion, from P12.9 billion to

P24.3 billion, due to an increase in lending to BSP and foreign banks. - Available for Sale Investments went up by P2.0 billion, from P14.6 billion to P16.6

billion, attributed mainly to the acquisition of new government securities. - Investments in Subsidiaries and an Associate increased by P2.8 billion. In August

2009, PNB and Allied Bank invested Chinese Yuan (CNY) 394.1 million and CNY196.9 million, respectively or a combined additional equity of CNY591 million in its US Dollar equivalent in Allied Commercial Bank (ACB) in Xiamen, China. The investments of PNB and Allied Bank in ACB translate to equity holdings of 39.4% and 51.0%, respectively.

- Cash and Other Cash Items was lower by P0.4 billion, from P6.4 billion to P6.0 billion.

- Due from Other Banks was P5.4 billion, a decrease by P1.3 billion from P6.7 billion.

- Financial Assets at Fair Value Through Profit or Loss decreased by P0.6 billion from P11.1 billion to P10.5 billion.

- Receivables from Special Purpose Vehicle went down by P0.1 billion, from P0.7 billion to P0.6 billion, due to additional provision for impairment losses.

- Held to Maturity Investments declined by P2.2 billion, from P44.1 billion to P41.9 billion, on account of matured investments.

- Investment Properties was P22.2 billion, lower by P1.3 billion from P23.5 billion, due to disposition of foreclosed properties.

- Other Assets decreased by P1.3 billion, from P9.0 billion to P7.7 billion, mainly due to the P0.7 billion amortization of deferred losses from sale of nonperforming assets to Special Purpose Vehicle (SPV) companies.

• The consolidated liabilities increased by P6.2 billion, from P246.1 billion as of December 31, 2008 to P252.3 billion as of December 31, 2009, mainly accounted for by the major changes in the following accounts:

- Deposit Liabilities grew by P13.0 billion, from P201.3 billion to P214.3 billion.

Demand, savings and time deposits increased by P0.3 billion, P5.6 billion and P7.1 billion, respectively. Time deposits include the P3.25 billion, 6.5% Long-Term Negotiable Certificates of Time Deposit due in 2014 which were issued in March 2009.

- Accrued Taxes, Interest and Other Expenses increased by P0.6 billion, from P4.4 billion to P5.0 billion.

- Bills and Acceptances Payable went down by P4.8 billion, from P12.6 billion to P7.8 billion, due to settlement of borrowings from BSP under its rediscounting facilities.

- Subordinated Debt decreased by P2.9 billion, from P8.4 billion to P5.5 billion, attributed to the P3.0 billion Subordinated Notes which were redeemed in February 2009 prior to maturity in 2015 under the exercise of call option.

• The consolidated equity reached P31.0 billion as of year-end 2009, up by P1.7 billion

from P29.3 billion as of year-end 2008. The increase in capital accounts came primarily from the P2.2 billion annual net income and the P0.3 billion recovery from net unrealized losses on mark to market valuation of available for sale investments, partly offset by the P0.7 billion amortization of deferred losses from sale of non-performing assets to SPV companies and the P0.1 billion translation adjustment.

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2008 vs. 2007

• As of December 31, 2008, the Group’s consolidated assets reached P275.4 billion, an increase of 14.9% or P35.7 billion from P239.7 billion as of December 31, 2007. The considerable growth primarily came from fresh lending to corporate, institutional and retail accounts as well as new investments, fueled by a hefty growth in deposits and proceeds from the additional P6.0 billion Tier 2 Capital issued in June 2008.

The following are the significant changes in asset accounts:

- Loans and Receivables went up by P25.8 billion, from P76.6 billion to P102.4

billion, attributable to new loan releases. - Held to Maturity Investments increased by P43.7 billion, from P0.4 billion to P44.1

billion, primarily due to reclassification of investment securities from Held for Trading amounting to P1.5 billion and Available for Sale Securities amounting to P42.4 billion in September 2008 in line with SEC Memorandum Circular No. 10, partly offset by matured investments.

- Financial Assets at Fair Value Through Profit or Loss was higher by P7.9 billion, from P3.2 billion to P11.1 billion, accounted for by additional investments in foreign securities.

- Due from Other Banks increased by P2.7 billion, from P4.0 billion to P6.7 billion, as the balance of accounts maintained with foreign correspondent banks increased.

- Cash and other cash items increased by P1.6 billion, from P4.8 billion to P6.4 billion.

- Available for Sale Securities went down by P30.2 billion, from P44.8 billion to P14.6 billion, due to reclassification of P42.4 billion securities to Held to Maturity Investments, partly offset by additional investments in government securities.

- Investment in Subsidiaries and an Associate went down to P5.1 million from P0.7 billion. In November 2008, the Bank sold its 40% ownership interest in Benlife.

- Securities Held Under Resell Agreement decreased by P5.6 billion, from P11.2 billion to P5.6 billion, on account of lower placements in government securities.

- Due from BSP declined by P7.9 billion, from P28.0 billion to P20.1 billion, due to the maturity of special deposits with the BSP.

- Investment Properties decreased by P1.3 billion, from P24.8 billion to P23.5 billion, attributed mainly to the sale of properties.

- Deferred Tax Asset decreased by P0.1 billion, from P1.8 billion to P1.7 billion.

• Consolidated liabilities grew by P36.6 billion from P209.5 billion as of December 31, 2007 to P246.1 billion as of December 31, 2008 as a result of vigorous deposit generation efforts and the issuance of additional P6.0 billion Tier 2 Capital.

Major changes in liability accounts are as follows:

Deposit Liabilities grew by P22.5 billion, from P178.8 billion to P201.3 billion. The growth came from savings and demand deposits, up by P24.0 billion and P2.6 billion, respectively, partly offset by a decrease in time deposits by P4.1 billion.

- The increase in the Financial Liabilities at Fair Value Through Profit or Loss

pertains to the additional P6.0 billion Tier 2 Capital issued in June 2008 primarily to refinance outstanding Tier 2 notes callable in February 2009 and to further strengthen capital.

- Bills and Acceptances Payable was higher by P8.3 billion, from P4.3 billion to P12.6 billion, accounted mainly by availments of the rediscounting facilities of BSP.

• The consolidated equity stood at P29.3 billion and P30.2 billion as of December 31, 2008 and 2007, respectively. The P0.9 billion decrease in capital accounts was due to a combination of the net unrealized losses on mark to market valuation of available for sale investments and amortization of deferred losses on sale of non-performing assets to SPV companies, partly offset by the net income for the year.

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Results of Operations

9/30/2011 vs. 9/30/2010

• The Group reported a consolidated net income of P 2.3 billion for the nine months ended September 30, 2011, slightly lower by 8.0% or P0.2 billion compared to the P2.5 billion net income for the same period last year, attributed mainly to lower gains from trading and investments securities.

• Interest income increased by P0.2 billion to P9.5 billion for the nine months ended

September 30, 2011 from P9.3 billion in the same period last year which was attributed mainly to higher ADB on loans and receivables and investment securities partly offset by the decrease in income from deposits with other banks. Interest expense was slightly up by P0.4 billion from P3.5 billion to P3.9 billion due to an increase in average daily balance of deposit liabilities.

• Net service fees and commission income was slightly lower at P1.6 billion compared

to P1.7 billion reported for the same period last year. • For the first nine months of 2011, fee-based and other income was lower by P2.6

billion to P3.1 billion from P5.7 billion in the previous year. Trading and investment net gains went down by P2.1 billion mainly due to mark to market losses on valuation of investment securities. Miscellaneous income also decreased from P2.4 billion to P1.7 billion this year. On the other hand, foreign exchange net gains went up by P0.3 billion.

• Administrative and other operating expenses decreased by P2.7 billion, from P10.1

billion to P7.4 billion, largely due to the lower provision for impairment and credit losses, depreciation and amortization and miscellaneous expense by P2.3 billion, P0.1 billion and P0.3 billion, respectively.

• Provision for income tax for the nine months ended September 30, 2011 and 2010

amounted to P0.5 billion and P0.6 billion, respectively.

2010 vs. 2009

• PNB posted a consolidated net income of P3.5 billion for the year ended December 31, 2010 or a hefty growth of 59.1% or P1.3 billion compared to the P2.2 billion consolidated net income for the same period last year.

• Net interest income stood at P7.8 billion for the year ended December 31, 2010, slightly lower than the P7.9 billion net interest income reported for the same period last year, due mainly to lower average yield rate on loans and investments. Interest expense went down by P0.3 billion from P5.1 billion to P4.8 billion.

• Net service fees and commission income was slightly lower at P2.1 billion compared to P2.3 billion reported for the same period last year.

• Fee-based and other income improved by P1.6 billion to P6.7 billion from P5.1 billion. This was brought about by trading and investment securities gains which increased by P1.6 billion on account of higher gains on the sale of securities as well as favorable mark to market valuation and an increment of P0.7 billion in miscellaneous income mainly from gain on sale of foreclosed properties. On the other hand, foreign exchange net gains was lower by P0.7 billion.

• Administrative and other operating expenses was a little higher by P0.1 billion, from P12.2 billion to P12.3 billion, largely due to the additional provision for impairment losses on investment properties for P1.0 billion partly offset by a decline in compensation and fringe benefits considering that expenses related to the early retirement program effective December 31, 2008 and the new Collective Bargaining Agreement were taken up in 2009.

• Provision for income tax remained at P0.8 billion for 2010 and 2009.

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2009 vs. 2008 • The Group’s consolidated net income for 2009 was P2.2 billion, doubling the P1.1

billion net income for 2008. The financial performance was driven by strong gains in its core businesses, improvement in asset quality and higher operating efficiencies.

• Net interest income rose by P1.3 billion, from P6.6 billion in 2008 to P7.9 billion, in

2009. The improvement in net interest margin was mainly attributed to higher interest income at P13.0 billion from P11.7 billion due to increased lending activities while there was only a slight increase in interest expense from P5.0 billion to P5.1 billion.

• For 2009 and 2008, net service fees and commission income was maintained at P2.3

billion. • Other income improved by P1.9 billion to P5.1 billion in 2009 from P3.2 billion in the

previous year. Earnings from trading and investment securities recovered by P2.3 billion to a positive P1.4 billion from a negative P0.9 billion attributed to favorable mark-to-market valuation of securities. Foreign exchange net gains arising mainly from revaluation of foreign currency denominated accounts went down by P0.9 billion attributable to Philippine peso appreciation against US dollar in 2009. Miscellaneous income increased by P0.5 billion due to gain on sale of acquired assets.

• Total operating expenses went up by P2.0 billion, from P10.2 billion to P12.2 billion.

Provision for impairment and credit losses increased by P0.5 billion. Compensation and fringe benefits increased by P0.4 billion attributed to the early retirement program offered effective December 31, 2008 and the new collective bargaining agreement between management and the employees’ union. Depreciation, occupancy and miscellaneous expenses increased by P0.4 billion, P0.1 billion and P0.5 billion, respectively.

• Provision for income tax was P0.8 billion for 2009 and 2008.

2008 vs. 2007

• The Group reported a consolidated net income of P1.1 billion for 2008, down by 25.3% or P0.4 billion compared to P1.5 billion net income for 2007, attributed mainly to losses in mark to market valuation of investments securities influenced by the global financial crisis.

• Despite market adversities, net interest income increased by P0.7 billion to P6.6

billion for 2008 from P5.9 billion in the previous year which was attributed mainly to lower cost of deposits due to favorable changes in the deposit mix.

• Net service fees and commission income remained significant at P2.4 billion for 2008

and 2007. • For 2008, trading and investment losses amounted to P0.9 billion from a net gain of

P1.1 billion in 2007 due to unfavorable mark to market valuation adjustments resulting from the volatility of the financial market. On the other hand, foreign exchange net gains went up by P1.7 billion from P0.9 billion to P2.7 billion as the Philippine peso depreciated against the US dollar. Miscellaneous income was lower in 2008 at P1.6 billion from P4.3 billion in view of higher fair value gains on foreclosed properties in 2007.

• Total operating expenses was reduced by P2.1 billion from P12.3 billion in 2007 to

P10.2 billion in 2008, mainly due to lower provision for impairment and credit losses attributed to better management of risks and the Bank’s continuing expense rationalization program which includes, among others, branch realignments and manpower productivity measures.

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• Provision for income tax amounted to P0.8 billion and P0.6 billion for 2008 and 2007, respectively. The increase was mainly due to higher final taxes on investments.

Please refer to pages 15 to 34 of the Allied Bank’s Management Report for its Management’s Discussion and Analysis or Plan of Operation.

(u) Changes in and/or Disagreements with Accountants on Accounting and Financial Disclosure

The auditing firm of SGV and Co. is the incumbent external auditor of the Bank for the fiscal year 2011. The audit partner-in-charge, Ms. Janeth Nunez, was appointed on May 31, 2011. In accordance with SRC Rule 68, there is no need at this time to change said audit partner.

The representatives of the said firm are expected to be present at the stockholders’ meeting, will have an opportunity to make a statement if they so desire, and are expected to be available to respond to appropriate questions.

There were no changes in, or disagreements with, the registrant’s accountants on any accounting and financial disclosure during the two most recent fiscal years or any subsequent interim period.

(v) Directors, executive officers, promoters and control persons

(1) Directors and Executive Officers

There are eleven (11) members of the Bank’s Board of Directors. Among the Directors, Ms. Florencia G. Tarriela and Mr. Carlos A. Pedrosa were elected as Independent Directors at the 2011 Annual Shareholders’ Meeting. Subsequently, Mr. Deogracias A. Vistan was elected as Independent Director replacing Mr. Pedrosa who was appointed as Vice Chairman and President and Chief Executive Officer to fill up the seat vacated by Mr. Eugene S. Acevedo on August 1, 2011. Mr. Felix Enrico R. Alfiler was elected as Independent Director on December 16, 2011 to fill up the seat vacated by Mr. Feliciano L. Miranda, Jr. who resigned effective December 31, 2011.

As used in Section 38 of the Securities and Regulation Code, an Independent Director means a person who, apart from his fees and shareholdings, is independent of management and free from any business or other relationship which could, or could reasonably be perceived, to materially interfere with his exercise of independent judgment in carrying out his responsibilities as a director in any covered company. Profile of Directors and Executive Officers together with their Business Experience covering at least the Past Five (5) Years DIRECTORS: FLORENCIA G. TARRIELA, 65, Filipino, first elected as Director on May 29, 2001, has been serving as Chairman of the Board of Directors of the Bank since May 24, 2005, and as an Independent Director since May 30, 2006. She also serves as an Independent Director of PNB Capital and Investment Corporation and as Chairman of PNB Global Remittance and Financial Co., HK Ltd. She is also a Director of PNB RCI Holdings Co., Ltd., PNB Life Insurance, Inc. and PNB (Europe) Plc. She obtained her Bachelor of Science in Business Administration, Major in Economics, at the University of the Philippines and her Masters in Economics from the University of California, Los Angeles, where she topped the Masters Comprehensive Examination. Ms. Tarriela is currently a columnist for “Business Options” of the Manila Bulletin. She is a Life Sustaining Member of the Bankers Institute of the Philippines (BAIPHIL) and the Financial Executive Institute (Finex), a Trustee of Finex Foundation, TSPI Development Corporation, Kilosbayan and the Summer Institute of Linguistics (SIL). She was formerly an Independent Director of the Philippine Depository and Trust Corporation, the Philippine Dealing and Exchange Corporation and the Philippine

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Dealing System Holding Corporation. Ms. Tarriela was former Undersecretary of Finance, and an alternate Member of the Monetary Board of the BSP, Land Bank of the Philippines and the Philippine Deposit Insurance Corporation. She was formerly Deputy Country Head, Managing Partner and the first Filipino lady Vice President of Citibank N. A., Philippine Branch. She is a co-author of several books “Coincidence or Miracle?/Blessings in Disguise/Against All Odds”, Books I and IV, “Oops - Don’t Throw Those Weeds Away!” and “The Secret is in the Soil”.

CARLOS A. PEDROSA, 67, Filipino, has over 30 years of banking experience. His distinguished career in banking started in 1964 with Banco Condal in Barcelona, Spain where he was a foreign exchange trader concurrent with his position as head of its Private Banking Department and assistant to the Manager, International Division. After a four-year stint abroad, Mr. Pedrosa returned to the Philippines and joined Metropolitan Bank and Trust Company (Metrobank) where, from a starting position of Foreign Exchange Trader, he assumed greater responsibilities as Executive Vice President supervising its various operations, particularly Domestic and International Banking Operations, Treasury, Credit, Domestic Subsidiaries and Overseas Branches, Merchant Banking and Information Technology and Strategic Planning. Recognizing his banking acumen, he was chosen by the Bank of Tokyo as its nominee to the Board of Directors of Pilipinas Bank and was subsequently appointed as the bank’s President and Chief Executive Officer from 1993 to 1997. He was also tapped by the First Pacific to be the President of PDCP Bank which he converted to First E-Bank (2000-2003) and later served as Director appointee of the Philippines Deposit Insurance Corporation to United Coconut Planters Bank (2004-2006). He was later tapped once again to serve as Director of Metrobank (2008-2009). Over the years, he was connected with different corporations, serving them in several capacities: Vice-Chairman of Toyota Motor Philippines, Chairman of Philippine AXA Life Insurance Corporation, Executive Director of Global Power Corporation and QSpan Technologies Ltd. and Director of Pilipino Telephone Corporation (PILTEL). He was also an Independent Governor of Philippine Dealing and Exchange Corporation (PDEX) from 2009 to 2011. Mr. Pedrosa, who joined PNB as an Independent Director last May 2011, is now the President and Chief Executive Officer of the Bank effective August 1, 2011. At present, he is the Chairman of Japan-PNB Leasing and Finance Corporation, PNB Capital and Investment Corporation, PNB Italy SpA and Asia Speedy Phils., Inc. He is also the President of Peace, Inc., a family corporation, and a Director of Bulawan Mining Corporation. He graduated from the University of Barcelona in 1967 with a degree of Profesorado Mercantil (BSBA) and was conferred a Doctorate in Humanities Honoris Causa by the University of Baguio in 2009. FLORIDO P. CASUELA, 70, Filipino, has been serving as Director of the Bank since May 30, 2006. A Certified Public Accountant, he obtained his degree in Bachelor of Science in Business Administration, Major in Accounting, and his Masters in Business Administration from the University of the Philippines. He took the Advanced Management Program for Overseas Bankers conducted by the Philadelphia National Bank in conjunction with the Wharton School of the University of Pennsylvania. Mr. Casuela was one of the ten (10) awardees of the 2001 Distinguished Alumni Award of the UP College of Business Administration. He is currently a Director of PNB Holdings Corporation, PNB Securities, Inc., PNB Remittance Center, Inc., PNB RCI Holdings Co., Inc., and PNB Corporation Guam. He is also a Director of Surigao Micro Credit Corporation and a Senior Adviser of the Rural Bank of Makati, Inc. He is a Director of Sagittarius Mines, Inc. as well as its subsidiaries namely: Tampakan Mineral Resources Corporation, PacificRim Land Realty Corporation and Hillcrest, Inc., where he is also the President. He is a Trustee of the LBP Countryside Development Foundation. He was formerly the President of Land Bank of the Philippines from July 1998 to August 2000, Maybank Philippines, Inc. from February 1992 to July 1993 and Surigao Micro Credit Corporation from June 2001 to November 2004. He was formerly a BSP Consultant/Senior Adviser for the Philippine National Bank. Mr. Casuela was also formerly the Chairman of the National Livelihood Support Fund, LBP Countryside Development Foundation, Inc., LBP Insurance Brokerage, Inc., LBP Leasing Corporation, LBP Realty Development Corporation, Masaganang Sakahan, Inc., LBP Financial Services SPA, and Republic Planters Bank Venture Capital. He was Vice Chairman of the Land Bank of the Philippines, People’s Credit Finance Corporation and Westmont Forex. Mr. Casuela was also a Member of the Board of Directors of the

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Cotton Development Authority, National Food Authority, Philippine Crop Insurance Corporation, Asean Finance Corporation, Ltd. (Singapore), Manila Electric Company, All Asia Capital and Trust Corporation, Petrochemical Corporation of Asia Pacific, Pacific Cement Corporation, EBECOM Holdings, and Westmont Securities, Inc. ESTELITO P. MENDOZA, 82, Filipino, was elected Director of the Bank effective January 1, 2009. He obtained his Bachelor of Laws from the University of the Philippines and Master of Laws from Harvard Law School. A practicing lawyer for more than fifty-five years, he has been consistently listed for several years as a “Leading Individual in Dispute Resolution” among lawyers in the Philippines in the following directories/journals: “The Asia Legal 500”, “Chambers of Asia” and “Which Lawyer?” yearbooks. He has also been a Professional Lecturer of law at the University of the Philippines, and served as Solicitor General, Minister of Justice, Member of the Batasang Pambansa and Provincial Governor of Pampanga. He was the Chairman of the Sixth (Legal) Committee, 31st Session of the UN General Assembly and the Special Committee on the Charter of the United Nations and the Strengthening of the Role of the Organization. He currently serves as a member of the Board of Directors of PNB Global Remittance and Financial Co., HK, PNB Remittance (Company) Canada, Philippine Airlines, Inc., San Miguel Corporation, Meralco, and Petron Corporation. OMAR BYRON T. MIER, 65, Filipino, has been serving as Director of the Bank since May 25, 2005 and was formerly President & Chief Executive Officer of the Bank until May 24, 2010. Mr. Mier, a Certified Public Accountant, obtained his degrees in Bachelor of Science in Business Administration, Major in Accounting, Bachelor of Arts in Economics, and Master of Arts in Economics from the University of the Philippines. He is currently Chairman of the Bank’s Executive Committee and Director of PNB RCI Holdings Co., Ltd., PNB Holdings Corporation, Japan-PNB Leasing and Finance Corporation, Japan-PNB Equipment Rentals Corporation, and PNB Global Remittance and Financial Co., HK, Ltd. He is a member of the Board of Directors of Citra Metro Manila Tollways Corporation and the Credit Information Corporation. He also serves as a consultant of Victorias Milling Company, Inc. Prior to his appointment as Member of the Board, he served as Executive Vice President and Chief Credit Officer of the Bank from August 16, 2002 to April 10, 2005 before being appointed as Acting President on April 11, 2005. He worked with Citibank N.A. (Manila and Malaysia) for 24 years where he held the positions of Country Risk Manager/Senior Credit Officer and Head of the Risk Management Group and World Corporation Group. Before joining the Bank in 2002, he served as Deputy General Manager & Corporate Banking Department Head of Deutsche Bank, Manila from 1995 to 2001. FELICIANO L. MIRANDA, JR., 82, Filipino, was first elected as Director of the Bank on December 8, 1999 up to May 26, 2003. He was appointed President and CEO of the Bank on January 21, 2000 and served as such up to April 10, 2002. He was re-elected as a Director of the Bank on May 24, 2005 and served continuously up to December 31, 2011. A Certified Public Accountant, he obtained his degree in Bachelor of Science in Commerce, Major in Accounting, from the Far Eastern University. He completed all curricular requirements and passed the comprehensive examination for a Master of Arts degree in Economics (Comparative Monetary Policies) from Georgetown University in Washington D. C., U.S.A. At the time of his resignation, Mr. Miranda was a Director of PNB Holdings Corporation, PNB Corporation Guam, PNB International Investments Corporation, PNB Securities, Inc., PNB Global Remittance and Financial Co., HK Ltd., Bulawan Mining Corporation, PNB Forex, Inc. and EK Holdings, Inc. Mr. Miranda was formerly the Deputy Governor, Supervision and Examination Sector of the Bangko Sentral ng Pilipinas (BSP) where he spent forty-one (41) years of service. After his retirement from the BSP in 1994, he served as Consultant to the Monetary Board, the World Bank, the Asian Development Bank and various domestic banks and local units of foreign banks. He was also Chairman of Allied Savings Bank and a Director of the Bank of Commerce, Sumigin Investment Co., and LBP Leasing Corporation. WASHINGTON Z. SYCIP, 90, American, has been serving as Director of the Bank since May 30, 2000. He is the founder of the SGV Group, a well-known firm of auditors and management consultants. He is also the Chairman Emeritus of the Board of

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Trustees and Board of Governors of the Asian Institute of Management, member of the Board of Overseers, Columbia University's Graduate School of Business, member of the International Advisory Boards of the American International Group and Council on Foreign Relations (1995 – 2010), and Global Counselors of the Conference Board. He is presently an Independent Director of Belle Corporation, Lopez Holdings (formerly Benpres Holdings Corporation), Commonwealth Foods, Inc., First Philippine Holdings, Inc., Highlands Prime, Inc., Philippine Equity Management, Inc., Philippine Hotelier, Inc., Philamlife, Inc., Realty Investment, Inc., the PHINMA Group, Stateland, Inc. and Century Properties, Inc. He is the Chairman of Cityland Development Corporation, Lufthansa Technik Philippines, Inc., Macroasia Corporation and STEAG State Power, Inc. and State Properties Corporation. Among his awards are the Management Man of the Year given by the Management Association of the Philippines in 1967, Ramon Magsaysay Award for International Understanding in 1992, the Officer’s Cross of the Order of Merit given by the Federal Republic of Germany in 2006, Star of the Order of Merit Conferred by the Republic of Austria in 1976, the Officer First Class of the Royal Order of the Polar Star awarded by H.M. the King of Sweden in 1987 and The Order of Lakandula, The Rank of Grand Cross, conferred by Philippine President Benigno S. Aquino, III on June 30, 2011. JOHN G. TAN, 43, Filipino, obtained his degree in Bachelor of Arts in Human Resource Management at the De La Salle University. He served as Vice President of Landcom Realty Corporation for 12 years and is currently an Independent Director of Filipino Fund, Inc. for almost 3 years. He assumed his Directorship in the field of finance and banking at PNB in September 2009. Presently, he is a Director of PNB Remittance (Company) Canada and PNB Global Remittance and Financial Co., HK, and a Board Advisor of PNB Remittance Center, Inc. He previously served as PNB International Finance, Ltd. (HK) and PNB Securities, Inc. In the mid-90’s, he worked at PAL’s Maintenance and Engineering Department, then as Vice President of Nugget Foods Corporation before going to Landcom Realty. He also served as Vice President for Operations and Network Management and Telecommunications Services of Philippine Airlines for two (2) years. Mr. Tan is an associate member of the Institute of Corporate Directors. An honorary member in the Philippine Military Academy Maringal Class of ’88, he holds a rank of Major in the Marines as a reservist in the AFP. He is a brother in the Grand Lodge of Free and Accepted Masons of the Philippines. LUCIO C. TAN, 77, Filipino, has been serving as Director of the Bank since December 8, 1999. He studied at Far Eastern University and later obtained his Chemical Engineering degree from the University of Santo Tomas (UST). In 2003, he earned the degree of Doctor of Philosophy, Major in Commerce, from UST. From humble origins, Dr. Tan became Chairman of Allied Banking Corporation from 1977 to 1999. He is presently Chairman and CEO of Philippine Airlines, Inc., Eton Properties Philippines, Inc., Lucky Travel Corporation, PAL Holdings, Inc., Tanduay Holdings, Inc. and Tanduay Distillers, Inc. He is also the Chairman of Asia Brewery, Inc., Basic Holdings Corporation, Himmel Industries, Inc., Fortune Tobacco Corporation and PMFTC Inc. Dr. Tan is the President of Grandspan Development Corporation and a Director of PNB Life Insurance, Inc. Despite Dr. Tan’s various business pursuits, he continues to share his time and resources with the community. In 1986, he founded the Tan Yan Kee Foundation, Inc., of which he is Chairman and President. He is likewise Chairman Emeritus of the Federation of Filipino-Chinese Chambers of Commerce and Industry, Inc. (FFCCCII). He is also the founder and Vice Chairman of the Foundation for Upgrading the Standard of Education, Inc. (FUSE). He is the Adviser/Benefactor of the medical scholarship program of Asia Brewery, Inc. and Benefactor/Honorary Adviser of other professional and socio-civic groups. For his outstanding achievements and leadership, Dr. Tan received the following honorary degrees: Doctor of Humane Letters, University of Guam (Guam, USA); Doctor of Applied Agriculture, Central Luzon State University (Muñoz, Nueva Ecija); Doctor of Technology Management, Western Visayas College of Science and Technology (La Paz, Iloilo), Doctor of Science in International Business and Entrepreneurship, Cavite State University (Cavite); Doctor of Humanities, Western Mindanao State University (Zamboanga); Doctor of Business Management, St. Paul University Philippines (Tuguegarao, Cagayan); Doctor of Institutional Development and Management,

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Isabela State University (Cauayan, Isabela); Doctor of Humanities, University of Mindanao (Davao City); Doctor of Business and Industrial Management Engineering, Central Philippine University (Iloilo City); Doctor of Humanities in Business and Entrepreneurship, Lyceum-Northwestern University (Dagupan City, Pangasinan); and Doctor of Humanities, San Beda College (Manila). He was chosen as a Lifetime Achievement Awardee by the Dr. Jose P. Rizal Awards for Excellence, adopted to the Ancient Order of the Chamorri and designated Ambassador-at-Large of the U.S. Island-territory of Guam, and conferred the Diploma of Merit by the Socialist Republic of Vietnam, one of the highest honors conferred by the Vietnamese Government on foreign nationals. Dr. Tan was named Outstanding Manilan for the year 2000 by the City Government of Manila and conferred the UST Medal of Excellence in 1999, the highest award given by the Pontifical and Royal University of Santo Tomas. Aside from being named Most Distinguished Bicolano Business Icon in 2005, Dr. Tan was also conferred the following awards: “2003 Most Outstanding Member Award” by the Philippine Chamber of Commerce and Industry (PCCI) in recognition of his altruism and philanthropy, business acumen, hard work and perseverance in his numerous business ventures, Award of Distinction by the Cebu Chamber of Commerce and Industry, Award for Exemplary Civilian Service of the Philippine Medical Association, Honorary Mayor and Adopted Son of Bacolod City and Adopted Son of Cauayan City, Isabela. He was named Entrepreneurial Son of Zamboanga, awarded as distinguished fellow during the 25th Conference of the ASEAN Federation of Engineering Association, and conferred the 2008 achievement award for service to the chemistry profession during the 10th Eurasia Conference on Chemical Sciences. In recognition of his achievements, the City of San Francisco, U.S.A. declared May 11 of each year as Dr. Lucio Tan's Day in the Bay area. The island-territory of Guam also celebrates Lucio Tan Day on November 2 of each year. LUCIO K. TAN, JR., 45, Filipino, has been serving as Director of the Bank since September 28, 2007. He obtained his degree in Bachelor of Science in Civil Engineering (Minors in classical Chinese Mandarin and Mathematics) from the University of California Davis in 1991. He completed the academic requirements for his MBA at the J.L. Kellogg School of Management of Northwestern University and the School of Business and Management of the Hong Kong University of Science and Technology in 2006. He also attended courses in Basic and Intermediate Japanese Language. He worked with MacroAsia Corporation for 7 years where he held the rank of President and Chief Executive Officer. Mr. Tan is currently President and CEO of Tanduay Distillers, Inc. He is a member of the Board of Directors of Phillip Morris Fortune Tobacco Corporation (PMFTC), Inc., Bulawan Mining Corporation, PNB Capital and Investment Corporation, PNB RCI Holding Co. Ltd., PNB (Europe) Plc, PNB Italy SpA, Philippine Airlines, Inc., PAL Holdings, Inc., Air Philippines Corporation, MacroAsia Corporation, Tanduay Holdings, Inc., Allied Bankers Insurance Corporation and Eton Properties Phils., Inc. He is also a Board Advisor of PNB Remittance Center, Inc. (RCI), Executive Director of Dynamic Holdings Limited, and Executive Vice President of Fortune Tobacco Corporation and Foremost Farms, Inc. DEOGRACIAS N. VISTAN, 67, Filipino, was appointed as Independent Director of the bank on August 1, 2011. He obtained his AB and BSBA degrees from the De La Salle University and earned his MBA from Wharton Graduate School. Mr. Vistan’s extensive banking experience includes being Chairman of United Coconut Planters Bank (2003-2004), Vice Chairman of Metropolitan Bank and Trust Company (2000-2001), and President of Equitable-PCI Bank (2001-2002), Solidbank Corporation (1992-2000) and Land Bank of the Philippines (1986-1992). He also served as President of FNCB Finance (1979-1980). Mr. Vistan likewise held various management positions in Citibank Manila, Cebu and New York (1968-1986). He is a former Presidential Consultant on Housing (2002-2003) and President of the Bankers Association of the Philippines (1997-1999). He is currently a member of the Board of PNB Capital and Investment Corporation, PNB Italy SpA, PDS Holdings Corporation, Lorenzo Shipping Corporation and U-bix Corporation. He also serves as Board Advisor of PNB Remittance Centers, Inc. and as Chairman of Creamline Dairy Corporation.

FELIX ENRICO R. ALFILER, 62, Filipino, was elected as Independent Director of the Bank effective January 1, 2012 to fill up the seat vacated by Mr. Feliciano L. Miranda. Mr. Alfiler completed his undergraduate and graduate studies in Statistics

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at the University of the Philippines in 1973 and 1976. He undertook various continuing education programs, including financial analysis and policy at the IMF Institute of Washington, D.C. in 1981 and on the restructured electricity industry of the UK in London in 1996. He has published articles relating to, among others, the globalization of the Philippine financial market, policy responses to surges in capital inflows and the Philippine debt crisis of 1985. Among the various positions he held were: Philippine Representative to World Bank Group Executive Board in Washington, D.C., Special Assistant to the Philippine Secretary of Finance for International Operations and Privatization, Director of the Bangko Sentral ng Pilipinas, Assistant to the Governor of the Central Bank of the Philippines, Advisor to the Executive Director at the International Monetary Fund, Associate Director at the Central Bank and Head of the Technical Group of the CB Open Market Committee. Mr. Alfiler was also the Monetary Policy Expert in the Economics Sub-Committee of the 1985-1986 Philippine Debt Negotiating Team which negotiated with over 400 private international creditors for rescheduling of the Philippines’ medium and long-term foreign debts. In the private sector, Mr. Alfiler was Advisor at Lazaro Tiu and Associates, Inc., President of Pilgrims (Asia Pacific) Advisors, Ltd., President of the Cement Manufacturers Association of the Philippines (CeMAP), Board Member of the Federation of Philippine Industries (FPI), Vice President of the Philippine Product Safety and Quality Foundation, Inc., and Convenor for Fair Trade Alliance.

DORIS S. TE, 31, Filipino, was appointed as Corporate Secretary of the Bank on January 20, 2012. She obtained her degree in Bachelor of Science in Business Management in 2001 and earned her Juris Doctor in 2005 at the Ateneo de Manila University. She began her law career as a Junior Associate in Zambrano & Gruba Law Offices. She was a Junior Associate in Quiason Makalintal Barot Torres Ibarra & Sison Law Office before she joined the Bank in 2009. Prior to her recent appointment, she was Assistant Corporate Secretary and later Acting Corporate Secretary of the Bank. Presently, she also serves as Director and Corporate Secretary of Valuehub, Inc., a family-owned distribution company. The following are the Executive Officers of the Bank as of March 2011: SENIOR OFFICERS: HORACIO E. CEBRERO III, 49, Filipino, Executive Vice President, is Head of the Treasury Group. He obtained his Bachelor of Science in Commerce degree, Major in Marketing, from the De La Salle University. Prior to joining PNB, he was Executive Vice President and Treasurer of EastWest Banking Corporation. He also held the post of Senior Vice President and Deputy Treasurer of Rizal Commercial Banking Corporation, Vice President Head of the Foreign Exchange Desk of Citibank Manila and Vice President Chief Dealer of the Treasury Group of Asian Bank Corporation. He brings with him 27 years of experience in the banking industry starting from Loans and Credit, Branch Banking, Fixed Income Sales, Trust Banking, Foreign Exchange and Fixed Income Trading, Portfolio Management and other Treasury-related activities. JOVENCIO B. HERNANDEZ, 58, Filipino, Executive Vice President, is Head of the Retail Banking Group. A Certified Public Accountant, he obtained his Bachelor of Science in Commerce, Major in Accounting, from the De La Salle College. Prior to joining PNB, he was Senior Vice President and Head of the Consumer Banking Group of Security Bank and was also the Senior Vice President for Retail Banking of Union Bank of the Philippines in 2004, Commercial Director of Colgate Palmolive in 1996, Senior Country Operations Officer of Citibank in 1995, and Group Product Manager of CFC Corporation and Unilever in 1982 and 1980, respectively. He was formerly the President of Security Finance in 2004 and First Union Plans in 2003. He was also a Director of SB Forex and Security – Phil Am. He was a Treasurer, Director and Executive Committee Member of Bancnet in 2004. CARMEN G. HUANG, 61, Filipino, is Executive Vice President and Chief Financial Officer since 2002. She also served as Director of the Bank from May 2007 to September 2009. She is currently a Director of PNB International Investments Corporation and PNB Life Insurance Corporation. A Certified Public Accountant, she

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obtained her Bachelor of Arts, Major in Mathematics, and her Bachelor of Science in Commerce, Major in Accounting (Cum Laude), from St. Scholastica’s College in 1974 and has completed her academics for her Master in Business Administration at the Ateneo de Manila University. She worked with Land Bank of the Philippines for 16 years where she held the rank of Senior Vice President. She was EVP of UBIX Corporation, EVP/CFO of Crown Equities, Inc. and SVP & Chief of Staff to the President of Equitable PCIB before joining PNB in August 2002. She was also a Director of Ecology Savings Bank, Inc., Jardine Land, Inc., PCIB Properties, Inc., Strategic Property Holdings, Equitable PCI Life Insurance Corporation, and Optimum Development Bank. MA. ELENA B. PICCIO, 63, Filipino, Executive Vice President, is Head of the Institutional Banking Group since February 2008. She obtained her Bachelor of Arts in Business Administration from Maryknoll College (Dean’s List). She worked with Citibank, N.A. for twenty-eight (28) years and held various positions including Group Head of the Financial Institutions Division and the Global Relationship Banking Group until 2003. She was a project consultant for Asian Development Bank in 2004 and ING Asia Pacific Hong Kong Limited up to January 2008. RAMON EDUARDO E. ABASOLO, 48, Filipino, First Senior Vice President, is Head of the Information Technology (IT) Group. He obtained his Bachelor of Science in Management Engineering from the Ateneo de Manila University. He began his career in technology in 1985 with Citibank Philippines and also worked in Citibank Tokyo from 1990 to 1998. He has served as Country Technology Head for Citibank Philippines and Country Technology Infrastructure Head for Citibank Indonesia. Before joining PNB in 2010, he was Senior Vice President for IT in Banco de Oro. CENON C. AUDENCIAL, JR., 53, Filipino, First Senior Vice President, is the Head of the Corporate Banking Group and the Government Banking Group. Before joining the Bank in 2009, he headed the Institutional and Corporate Bank of ANZ, prior to which he was a Senior Relationship Manager of Corporate Banking and Unit Head of Global Relationship Banking for Citibank N.A. He previously served as Vice President and Unit Head of Standard Chartered Bank’s Relationship Management Group, and was a Relationship Manager in Citytrust Banking Corporation. Before his 20-year stint as a relationship manager, he was a credit analyst for Saudi French Bank and AEA Development Corporation. Mr. Audencial obtained his Bachelor of Arts in Economics from the Ateneo de Manila University. RAFAEL G. AYUSTE, JR., 48, Filipino, First Senior Vice President, is the Bank’s Trust Officer and Head of the Trust Banking Group. He finished his Bachelor of Science Major in Business Administration at the University of Santo Tomas. He is a nominee for both Masters in Business Administration at the De La Salle University and Executive Master in Business Economics at the University of Asia and the Pacific. In addition, he has trained in the fields of banking, investments, finance and risk management through various specialized trainings here and abroad. He has been in the banking industry for 25 years where he gained considerable experience in managing a diverse range of trust products with complex structures in a number of jurisdictions. His career includes stints in Rizal Commercial Banking Corporation, Banco Santander, Security Bank, Global Business Bank, Inc. where he served as Head for Trust Banking Group, Metrobank as Deputy Group Head for Trust, and more recently, Cititbank N.A. as Head of Sales and Distribution. He has also significantly contributed to the development of the Trust Industry in various capacities, including as a three-term member of the board, one-time president and current vice president of the Trust Officers Association of the Philippines (TOAP). Among his notable contributions was the creation of the UITF Council to sustain the viability and expansion of the UITF industry. He has also constantly indulged in his passion for teaching by joining the faculty of the Management of Financial Institutions Department of De La Salle University and serving as regular lecturer of most, if not all, of his affiliated associations. ALVIN C. GO, 50, Filipino, First Senior Vice President, is the Chief Legal Counsel. He obtained his Bachelor of Arts, Major in Political Science, from the Immaculate Concepcion College, Ozamis City, and his Bachelor of Laws from Misamis University.

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He was an Associate Lawyer in Salonga Ordoñez Yap Law Offices from 1985-1989. Thereafter, he served as Prosecution Attorney from 1989 to 1990 and State Prosecutor of the Department of Justice from 1990 to 1993. Prior to PNB, he was a Senior Partner of Go, Cojuangco, Mendoza, Ligon and Castro Law Offices from 1994 to 1999 and Go and Castro Law Offices from 1999 to 2003. RAMON L. LIM, 60, Filipino, First Senior Vice President, is currently the President and CEO of PNB Securities, Inc., a wholly-owned subsidiary of the Bank. He obtained his Bachelor of Science in Commerce Major in Accounting (Magna Cum Laude) from the University of San Carlos in April 1971. A Certified Public Accountant, he completed his Master in Business Management at the Asian Institute of Management (AIM) in 1980 as full scholar under the Post-Graduate Scholarship Program of Citibank Manila where he worked from 1975 to 1993. He began his overseas postings at Citibank’s Head Office in New York in 1984; next, at its Taipei Branch as Vice President and Deputy Treasurer; and finally, at its Hong Kong Regional Office as Senior Trader and Currency Fund Manager. He then moved to become the Managing Director of Solid Pacific Finance Ltd., Hong Kong from 1993 to 1995, and Investment Manager of MHK Properties and Investment Ltd, HK from 1996 to 1997. He was Treasurer, then Business Manager and Trust Officer of Union Bank of the Philippines from 1997 to 2002. He joined the Bank in November 2002 as Deputy Head, Treasury Group. He was designated as Head of International and Branch Offices Sector in 2005 and 2006. He was re-assigned back to the Treasury Group as its Head in January 2007 until July 2010. He was designated the Chief of Staff of the PNB President from May 2010 until July 2011, at that time, in concurrent capacity as President and CEO of PNB Securities, Inc. EDGARDO T. NALLAS, 54, Filipino, First Senior Vice President, is Head of the Human Resource Group. He obtained his degree in AB Economics (Accelerated) from the De La Salle University in 1977 and has earned units in Masters in Business Administration (MBA) from said school. He started his career in Human Resource in 1977 with PhilBanking Corporation. Prior to PNB, he held various HR positions at SolidBank Corporation (1992–1995), BA Savings Bank (1997) and Philippine Bank of Communications (1998–2005). EMELINE C. CENTENO, 53, Filipino, Senior Vice President, is Head of the Corporate Planning and Research Division. She obtained her Bachelor of Science in Statistics (Dean’s lister) and completed the coursework in Master of Arts in Economics (on scholarship) from the University of the Philippines. She joined PNB in 1983, rose from the ranks and held various positions at the Department of Economics and Research, Product Development, Monitoring and Implementation Division and the Corporate Planning Division before assuming her present position as Head of the merged Corporate Planning and Research Division. Ms. Centeno was awarded as one of the Ten Outstanding Employees of the Bank in 1987. ALICE Z. CORDERO, 54, Filipino, Senior Vice President, was appointed Chief Compliance Officer of the Bank on June 16, 2010 with oversight on Parent Bank including all subsidiaries, affiliates and foreign branches. She obtained her degree of Bachelor of Science in Business Economics from the University of the Philippines - Diliman, Q.C. She has earned units in Masters in Business Administration at Ateneo Graduate School of Business. Prior to joining the Bank, she was the Chief Compliance Officer of Allied Banking Corporation (2007-2010). She worked with Citibank N.A - Manila Branch (1988-2007) for nineteen (19) years and held various senior positions in the Consumer Banking Group, including Compliance and Control Director (2000-2005) and concurrent Regional Compliance and Control Director for Philippines and Guam (2004). Her 31 years of banking experience include working for Allied Banking Corporation (1979-1983; 2007-2010), First National Bank of Chicago - Manila Branch (1983-1986), Far East Bank and Trust Company (1986-1988) and Citibank N.A. - Manila Branch (1988-2007) holding department head positions in Credit Policy, Credit & Research Management, Financial Control, Corporate Regulatory Reporting, Asset Strategy, Business Development, Risk Management and Compliance.

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MIGUEL ANGEL G. GONZALEZ, 53, Filipino, Senior Vice President, is the Chief Credit Officer and Head of the Remedial and Credit Management Group since June 1, 2010. He entered the bank in March 2010 as Senior Vice President for Commercial Banking Group. He obtained his Bachelor of Science in Industrial Engineering from the University of the Philippines and Masters in Business Management from Asian Institute of Management. He started his banking career with Citibank NA in 1984. He then headed the Branch Banking Group of Land Bank of the Philippines in 1989 then joined Union Bank of the Philippines in 1994 where he was Senior Vice President and head of Credit and Market Risk Group. In 2007, he became the Country Manager for Genpact Services LLC. MARIA PAZ D. LIM, 51, Filipino, Senior Vice President, is the Corporate Treasurer. She obtained her Bachelor of Science in Business Administration, Major in Finance and Marketing, from the University of the Philippines and Master in Business Administration from the Ateneo de Manila University. She joined PNB on June 23, 1981, rose from the ranks and occupied various officer positions at the Department of Economics & Research, Budget Office and Corporate Disbursing Office prior to her present position.

JOHN HOWARD D. MEDINA, 42, Filipino, Senior Vice President, is the Head of the Global Operations Group. He holds a Bachelor of Science in Industrial Engineering from the University of the Philippines and a Master in Business Administration from the Shidler College of Business at the University of Hawaii at Manoa. He was an East-West Center Degree Fellow and the recipient of a full scholarship while at the University of Hawaii. He later received a grant from the Schidler School of Business for additional graduate studies at the Handelshjskolen I Aarhus (The Aarhus School of Business) in Denmark. He also has Graduate Certificates in International Management (Pacific Asian Management Institute), Leadership (East-West Center), and European Management (European Summer School for Advanced Management held in Marseilles, France). He started his banking career as management consultant to Citibank-Asia Pacific for several years. Mr. Medina also worked with Union Bank of the Philippine from 1998 t0 2003 where he was instrumental in the development and implementation of ground-breaking electronic banking products and services. From 2004 through 2008, he was the Head of the Business Systems Support Group at PNB where he facilitated the policy, process and technology retooling of the bank. Aside from his banking career in the Philippines, Mr. Medina was a process consultant to US banks. He founded LibSal, a private consultancy firm based in Delaware that specialized in designing and reengineering processes for financial institutions and electronic commerce firms.

CARMELA A. PAMA, 55, Filipino, Senior Vice President, is the Bank’s Chief Risk Officer. A Certified Public Accountant, she obtained her Bachelor of Science in Business Administration and Accountancy from the University of the Philippines and Master in Business Administration from the Stern School of Business, New York University. She started her banking career with Citibank N.A. (Phils.) where she held various positions in the areas of Treasury Trading and Marketing, and Operations and Quality Development. She left Citibank with the rank of Vice President and moved to Banco Santander to open its operations in the Philippines. She moved back to Citibank, N.A. (Phils.) in 1996 to head various operation units. Prior to joining PNB in October 9, 2006, she was a Consulting Services Practice Manager at Oracle Corporation (Phils.) from 1999 to 2005. Further to her role as CRO, she also coordinates the ICAAP implementation of the PNB Group. The ICAAP is the enterprise-wide program to ensure the group continually reviews its level of risk and ensures the adequacy of capital commensurate to its risk-taking abilities. With the pending merger with ABC, she has also assumed the lead for the Integration Monitoring Project Office to ensure all integration activities are monitored and reported accordingly to the Integration Steering Committee. Her more than 5 years with PNB has continually improved her proficiency in all facets of banking operations. EMMANUEL GERMAN V. PLAN II, 59, Filipino, Senior Vice President, is the Head of the Special Assets Management Group. He holds a Bachelor of Science Degree in Commerce, Major in Accounting, from the University of Santo Tomas and took up Masteral Studies at the Letran College. Prior to joining the Bank, he was the Senior

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Vice President of Special Assets Group of Allied Banking Corporation. He concurrently held the position of Senior Vice President of State Investment Trust and State Properties Corporation. He also acted as Managing Director of Bear Sterns State Asia and Northeast Land Development Corporation. He has exposure in investment banking, account management, credit and collection. He has been involved in acquired assets management and in real estate development since 1997. Mr. Plan is also into social, religious and charitable undertakings through his active involvement in different educational and religious foundations like SEFI, LSQCPF, UST-EHSGAA and Magis Deo, to name a few. CESAR C. SANTOS, JR., 54, Filipino, Senior Vice President, is the Head of the Global Filipino Banking Group (GFBG) which manages PNB’s overseas network of branches and remittance subsidiaries in Asia, Europe, the Middle East, and North America. Mr. Santos obtained his Bachelor of Science in Mechanical Engineering (Cum Laude) from the University of the Philippines in 1980 and his Masters in Business Management (with Distinction) from the Asian Institute of Management in 1984. He joined Citibank Philippines in 1984 where he worked in various capacities in Operations, Transaction Services, Risk Management, and Treasury Sales and Trading. His last assignment in the Philippines was Head of Operations for the Corporate Bank. In 2002, he moved to Citibank Indonesia to become head of the Treasury Group of the Corporate Bank. In 2005, he moved to Citibank Singapore to become the Asia Pacific Regional Business Manager for the Fixed Income, Currencies, and Commodities Trading Group. He joined PNB in July 2010 as Branch Manager for PNB Singapore and concurrently as Regional Head for the GFBG business in Asia and the Middle East. In September 2010, he was subsequently promoted to his present position as Group Head of the GFBG. At various times, he was the President of the Money Market Association of the Philippines (MART), a director of the Philippine Central Depository (PCD), a member of the Banker’s Association of the Philippines (BAP) Operations Clearing and Settlements Sub-committee, a member of ACI Philippines and ACI Indonesia, and a lecturer at the Ateneo-BAP Institute of Banking. ELFREN ANTONIO S. SARTE, 52, Filipino, Senior Vice President and Head of Consumer Finance Group and Consumer Credit and Collection Division. He obtained his of Bachelor of Science in Industrial Management Engineering minor in Mechanical Engineering from the De La Salle University. From 1995 to 2010, he was connected with the Unionbank of the Philippines, holding various positions the latest of which was First Vice President and Head of Retail Risk Management Division responsible for the management and approval of consumer loan products. He was also a concurrent Head of Retail Collections (2008-2009). Previous to that, from 1983 to 1995, he was the Business Unit Manager of Credit Information Bureau, Inc. (CIBI). He was also a Rating Analyst with the Credit Rating Division of CIBI. EMMANUEL A. TUAZON, 48, Filipino, Senior Vice President, is the Bank’s Chief Marketing Officer and Head of the Marketing Group. He obtained his Bachelor of Science Major in Mathematics degree at the University of the Philippines. He started his banking career in 1984 and held various positions in marketing, branch banking and consumer banking at Citibank, Bank of the Philippine Islands, Solid Bank, PBCOM, Jardine Pacific Finance, ABN AMRO Savings Bank, and Robinsons Bank. Prior to joining PNB, he was the Vice President for Marketing of Security Bank. VICENTE S. PAGDATOON II, 54, Filipino, Vice President and OIC of the Internal Audit Group, has been serving PNB since 1981 in the branch operations and subsequently, the Internal Audit Group where he held various officer positions from Audit Manager to Vice President and Deputy Chief Audit Executive from 1994 up to the present. At one time, he was appointed OIC of the PNB Compliance Office from 2008 to December 2009. He graduated from the University of Santo Tomas with a degree in Bachelor of Laws in 1985. He obtained his Bachelor of Science in Commerce, Major in Accounting, at the University of Nueva Caceres in 1977. He is a CPA, CESO eligible and Certified Real Estate Broker. He had a previous stint with Metrobank as Audit Examiner from 1978 to July 1981. He has various exposures in fraud investigation, domestic and overseas audit of PNB operations in the Asia Pacific, Europe and the North Americas from 1995 to 2009.

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(2) Identify Significant Employees

There is no person who is not an executive officer who is expected to make a significant contribution to the business.

(3) Family Relationships

Directors Lucio K. Tan, Jr. and John G. Tan are sons of Mr. Lucio C. Tan.

(4) Involvement in Certain Legal Proceedings

Neither the Directors nor any of the Executive Officers have, for a period covering the past five (5) years, reported:

i. any petition for bankruptcy filed by or against a business with which they are

related as a general partner or executive officer; ii. any criminal conviction by final judgment or being subject to a pending criminal

proceeding, domestic or foreign; iii. being subject to any order, judgment, or decree of a competent court, domestic

or foreign, permanently or temporarily enjoining, barring, suspending or limiting their involvement in any type of business, securities, commodities or banking activities; and

iv. being found by a domestic or foreign court of competent jurisdiction (in a civil

action), the Commission or comparable foreign body, or a domestic or foreign Exchange or other organized trading market or self-regulatory organization, to have violated a securities or commodities law or regulation, and the judgment has not been reversed, suspended, or vacated.

C. ISSUANCE AND EXCHANGE OF SECURITIES

Item 6. Authorization or Issuance of Securities Other than for Exchange

(1) Common Stock Issuance

a) Pursuant to the merger between Allied Banking Corporation and Philippine National Bank, PNB will issue a total of 423,962,500 new PNB Common Shares out of its authorized and unissued capital stock. The Bank will also reclassify its Authorized Preferred Shares into Common Shares for purposes of this issuance.

b) The new PNB Common Shares, when issued, shall rank pari passu in all respects with

the existing shares.

As such, no other material rights shall accrue to the additional shares to be issued by the Bank.

c) There is no provision in the charter or by-laws that would delay, defer or prevent a

change in the control of the registrant.

(2) Preferred Stock Issuance

None

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Brief Description of transaction in which securities are to be issued

(1) Nature and appropriate amount of consideration to be received

The Bank shall receive Allied Bank shares in exchange for the new PNB shares to be issued pursuant to the merger. All the issued and outstanding Common Stock of Allied Bank will be converted into fully-paid and non-assessable Common Stock of PNB at a ratio of 130 PNB Common Shares for each issued Allied Bank Common Share. Further, all the issued and outstanding Preferred Stock of Allied Bank will also be converted into fully-paid and non-assessable PNB Common Stock at a ratio of 22.763 PNB Common Shares for each issued Allied Bank Preferred Share. In both cases, the PNB shares are issued at P70.00 per share. As contemplated in the merger, upon exchange of PNB shares and approval of the merger by the SEC, Allied Bank shall cease to exist.

(2) Approximate amount devoted to each purpose

Not Applicable Item 7. Modification or Exchange of Securities

1. Pursuant to the merger between Allied Bank and PNB, the latter will issue a total of 423,962,500 new common shares, to be valued at P70.00 per share, out of its authorized and unissued capital stock. In order to do so, the Bank will reclassify its 195,175,444 authorized preferred shares into common shares, thereby increasing its total authorized common stock to 1,250,000,001.

2. No material difference exists between the outstanding and the new securities to be issued

by the Bank as the new shares shall rank pari passu in all respects with the existing common shares of PNB.

3. The proposed exchange of PNB shares for Allied Bank shares made pursuant to the merger

of Philippine National Bank and Allied Bank. The issuance of new PNB shares will necessarily result to a dilution of ownership in the bank of existing security holders.

4. The Bank intends to list the additional shares to be issued pursuant to the merger with the

Philippine Stock Exchange.

Other than the abovestated, there are no other material features of the proposed modification/exchange.

Item 8. Voting Procedures

The affirmative vote of the stockholders present in person or by proxy representing 2/3 of the outstanding capital stock of the Bank shall be required to approve the Amended Plan of Merger of PNB and Allied Bank.

The manner of voting and counting of votes will be as follows:

a) Every stockholder entitled to vote shall have the right to vote, either in person or by

proxy, the number of shares registered in his/her respective name on record as of the close of business hours on 6 February 2012. Only written proxies signed by the stockholders and duly presented to the Corporate Secretary on or before 1 March 2012 for inspection and recording, shall be honored for purposes of voting.

b) Unless required by law, or upon motion by any stockholder, voting need not be by ballot

and may be done by show of hands.

c) The manner of election and the counting of the votes to be cast shall be under the supervision of the Corporate Secretary.

AMENDED PLAN OF MERGER

This Amended Plan of Merger, dated this is entered into by and

between:

ALLIED BANKING CORPORATION, a universal

bank organized and existing under the laws of the

Philippines, with principal place of business at the Allied

Bank Center, 6754 Ayala Avenue, Makati City,

Philippines 0716, represented in this act by its duly

authorized President, ANTHONY Q. CHUA, (“ALLIED

BANK”);

and

PHILIPPINE NATIONAL BANK, a universal bank

organized and existing under the laws of the Philippines,

with principal place of business at the 10th Floor, PNB

Financial Center, Pres. Diosdado Macapagal Boulevard,

Pasay City 1300, represented in this act by its duly

authorized President, CARLOS A. PEDROSA (“PNB”).

WITNESSETH, That:

WHEREAS, the respective Boards of Directors of each of ALLIED BANK

and PNB deem it advisable and in the best interest of each bank and its respective

stockholders that ALLIED BANK and PNB engage in a business combination in

order to advance their long-term strategic business interests;

WHEREAS, the respective Boards of Directors of each of ALLIED BANK

and PNB have determined that the combination of ALLIED BANK and PNB shall be

effected through a merger, which merger (the “Merger”) is in furtherance of and

consistent with their respective business strategies and is in the best interest of their

respective stockholders; and

WHEREAS, in furtherance thereof, the respective Boards of Directors of each

of ALLIED BANK and PNB have approved the terms and conditions set forth in this

Plan of Merger and recommended that the respective stockholders of ALLIED BANK

and PNB adopt the following Plan of Merger.

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PLAN OF MERGER

ARTICLE I

THE MERGER

ARTICLE 1.1. The Merger. Upon the terms and subject to the conditions of this

Plan of Merger and on the Effective Date (as hereinafter defined), ALLIED BANK

(hereinafter referred to as the “Absorbed Bank”) shall merge with and into PNB.

PNB shall be the surviving corporation (hereinafter sometimes called the “Surviving

Bank” or the “Merged Bank”) of the Merger, and shall continue its corporate

existence under the laws of the Republic of the Philippines. On Effective Date, the

separate existence of ALLIED BANK shall terminate.

ARTICLE 1.2. Effective Date. The Merger shall become effective on the first day of

the month following the issuance by the Securities and Exchange Commission

(“SEC”) of a Certificate of Filing of Articles of Merger (the “Certificate of Merger”),

subject to compliance with Article 1.4 of this Plan of Merger, or such later time as

may be agreed to by ALLIED BANK and PNB.

ARTICLE 1.3. Effects of the Merger. At and after the Effective Date, all of the legal

consequences set forth in Section 80 of the Corporation Code shall take effect with

respect to the Merger, including the following:

(a) ALLIED BANK and PNB shall become a single corporation, with PNB as the

surviving corporation and ALLIED BANK shall cease to exist and its legal

personality shall be terminated;

(b) PNB shall continue to possess all its rights, privileges, immunities and powers

and shall continue to be a subject to all its duties and liabilities, as those

existing immediately prior to the Merger;

(c) All the rights, privileges, immunities, franchises and powers of ALLIED

BANK shall be deemed transferred to and possessed by the Merged Bank, in

addition to those originally belonging to PNB;

(d) All the properties of ALLIED BANK, real or personal, tangible or intangible,

including the right to the name “Allied Banking Corporation” and all

receivables due on whatever account, including subscription to shares,

deferred tax assets, creditable taxes and choses in action, and all and every

other interest of, belonging to, or due to ALLIED BANK shall be deemed

transferred to the Merged Bank without further act or deed; and

(e) All liabilities and obligations of ALLIED BANK shall be transferred to and

become the liabilities and obligations of the Merged Bank in the same manner

as if the Merged Bank has itself incurred such liabilities and obligations and in

order that the rights and interest of creditors of ALLIED BANK or liens upon

the property of ALLIED BANK shall not be impaired by the Merger.

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ARTICLE 1.4. Approvals. The effectivity of this Amended Plan of Merger shall be

subject to the approval of the Bangko Sentral ng Pilipinas (“BSP”), the SEC, and the

Philippine Deposit and Insurance Corporation (“PDIC”). The Parties will file an

application with the Bureau of Internal Revenue (“BIR”) for the issuance of a ruling

that the Merger qualifies as a tax-free merger under Section 40 (c) 2 of the National

Internal Revenue Code of 1997.

ARTICLE 2

EXCHANGE OF SHARES

ARTICLE 2.1. Exchange Ratio. As of the Effective Date, subject to Article 1.4 of

this Plan of Merger:

2.1.1 all the issued and outstanding common stock of ALLIED BANK (the

“ALLIED BANK Common Shares”) shall be converted into fully-paid

and non-assessable common stock of PNB (the “PNB Common

Shares”) at the ratio of 130 PNB Common Shares for each issued

ALLIED BANK Common Share (the “Exchange Ratio for Allied Bank

Common Shares”); and

2.1.2 all the issued and outstanding preferred stock of ALLIED BANK (the

“ALLIED BANK Preferred Shares”) shall be converted into fully-paid

and non-assessable PNB Common Shares at the ratio of 22.763 PNB

Common Shares for each issued ALLIED BANK Preferred Share (the

“Exchange Ratio for Allied Bank Preferred Shares”)

(The Exchange Ratio for Allied Common Shares and the Exchange Ratio for

Allied Preferred Shares to be hereafter collectively referred to as the

“Exchange Ratio”.)

The Exchange Ratio was determined pursuant to consultations with third party

financial advisers and approximates the relative contributions of PNB and ALLIED

BANK to the Merged Bank. Applying the Exchange Ratio, PNB will issue a total of

423,962,500 common shares to the shareholders of ALLIED BANK.

ARTICLE 2.2. Issue Price of PNB Common Shares. The PNB Common Shares to be

issued pursuant to this Merger shall be issued at a price of Seventy Pesos (P70.00) per

share.

ARTICLE 2.3. Exchange Procedure. As soon as reasonably practicable after the

Effective Date, PNB shall issue PNB Common Shares to the stockholders of ALLIED

BANK corresponding to each ALLIED BANK Common Share or ALLIED BANK

Preferred Share, as the case may be, held by them in accordance with the aforesaid

Exchange Ratio. Provided that in lieu of any fractional shares, each holder of

ALLIED BANK Common Shares and ALLIED BANK Preferred Shares who would

otherwise be entitled to such fractional share shall be entitled to an amount in cash,

without interest, rounded to the nearest centavo equal to the product of (a) the amount

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of the fractional share interest in a PNB Common Share to which such holder is

entitled and (b) the average of the closing sale prices for PNB Common Shares on the

Philippine Stock Exchange (“PSE”) for each of the thirty (30) consecutive trading

days ending on the date of execution by the parties of this Amended Plan of Merger.

ARTICLE 2.4. Registration and Listing of Issued Shares. Simultaneous with the

reclassification of its preferred stock into common stock and the filing of the merger

application, PNB shall proceed to secure from the SEC the appropriate exemption

from the registration requirements of the Securities Regulation Code the PNB

Common Shares to be issued pursuant to this Merger and to list such PNB Common

Shares at the PSE.

ARTICLE 3

UNDERTAKINGS AND ADDITIONAL AGREEMENTS

Article 3.1. Amendment of the Articles of Incorporation of PNB. Further to the

Exchange of Shares contemplated in the foregoing Article, PNB shall, simultaneous

with the filing of the Merger Application, cause the amendment of its articles of

incorporation specifically for the following purposes:

3.1.1 Reclassification of PNB Preferred Shares. The PNB authorized

preferred stock shall be reclassified into authorized common stock in

order to make available sufficient unissued common stock for the

issuance of the necessary PNB Common Shares in accordance with the

Exchange Ratio described above.

3.1.2 Increase in Number of Directors. The number of directors in the

Board of Directors shall be increased from the current eleven (11) to

fifteen (15) directors.

Article 3.2. Each of ALLIED BANK and PNB hereby undertake to:

3.2.1 Stockholders’ Approval. Secure the conformity to and approval of this

Plan of Merger by their respective stockholders representing at least

two-thirds (2/3) of their respective outstanding capital stock at their

respective stockholders’ meetings called for such purpose;

3.2.2 Consents, Approvals, or Waivers of Third Parties. Obtain any and all

required consents, approvals, or waivers of other parties, including

their respective creditors, to the Plan of Merger; and

3.2.3 Government Approvals. Jointly exert their best efforts to secure the

approval of the Merger and its related transactions from the

government authorities as provided for in Article 1.4 hereof, including

the listing with the PSE of the issued PNB Common Shares pursuant to

the Merger and the approval of the PDIC for the transfer to the Merged

Bank of the insurance policy covering deposits in ALLIED BANK.

5

ARTICLE 3.3. Business Prior to Effective Date. Prior to the Effective Date, each of

ALLIED BANK and PNB shall conduct their respective business in substantially the

same manner as previously conducted and shall continue to preserve said business as

a going concern.

ARTICLE 3.4. Articles of Incorporation and By-Laws. The Amended Articles of

Incorporation and By-Laws of PNB approved as of the Effective Date shall continue

to be the Articles of Incorporation and By-Laws of the Merged Bank until thereafter

changed or amended in accordance with law.

ARTICLE 3.5. Board of Directors. The directors of PNB as of the Effective Date

shall continue to be the directors of the Merged Bank, each to hold office in

accordance with the Articles of Incorporation and By-Laws of PNB and applicable

law, and until their respective successors are duly elected and qualified.

ARTICLE 3.6. Other Deeds and Instruments. ALLIED BANK and PNB shall

execute and deliver, or cause to be executed and delivered, all deeds and other

instruments and shall take, or cause to be taken, all such other and further acts

desirable in order to fully carry out the intent and purposes of this Amended Plan of

Merger.

ARTICLE 3.7. Confidentiality. Unless otherwise required by law or regulation or as

may be agreed upon by the parties, each of ALLIED BANK and PNB will use its best

efforts to keep confidential any information obtained from the other party in

connection herewith, and in the event the Merger is abandoned or not consummated,

ALLIED BANK and PNB shall return all documents and other written information

and materials obtained in connection herewith.

ARTICLE 3.8. Expenses. All fees, costs and expenses relating to only one party

shall be borne exclusively by the party incurring the same. All common costs and

expenses shall be equally borne by each of ALLIED BANK and PNB.

ARTICLE 4

SPECIAL PROVISIONS

ARTICLE 4.1. Authorization. This Amended Plan of Merger has been approved by

the respective Boards of Directors of ALLIED BANK and PNB and shall be

submitted to their respective shareholders for approval in accordance with law and the

respective by-laws of ALLIED BANK and PNB; provided, that the approval of this

Amended Plan of Merger by the shareholders of ALLIED BANK and PNB will

constitute an authorization to their respective Boards of Directors by majority vote to

amend, modify of supplement this Amended Plan of Merger; provided further, that

such amendment, modification or supplement shall not substantially change the terms

of the Merger.

6

ARTICLE 4.2. Substitution. As soon as practicable after the Effective Date, the

Merged Bank shall take such steps or measures as it may deem necessary or advisable

to substitute itself in all suits and proceedings where the Absorbed Bank is a party and

to substitute its name for ALLIED BANK in all titles and registers.

ARTICLE 4.3. Incentives. As soon as practicable after the Effective Date, the

Merged Bank shall apply for and avail itself of the merger incentives or other similar

incentives granted by the BSP and other government agencies, as may be applicable

or allowed under existing law, rules and regulations.

ARTICLE 4.4. Articles of Merger. Upon approval of this Amended Plan of Merger

by the required votes of shareholders of ALLIED BANK and PNB during their

respective special shareholders’ meeting called for the purpose, the attached Articles

of Merger, marked as Annex “A” and made an integral part of this Amended Plan of

Merger shall be executed by ALLIED BANK and PNB, to be signed by the President

and certified by the Corporate Secretary of each of ALLIED BANK and PNB setting

forth this Plan of Merger, the number of shares outstanding of ALLIED BANK and

PNB, and the number of shares voting for and against this Amended Plan of Merger,

respectively.

ARTICLE 4.5. Non-Consummation. In the event that the Merger is not consummated

for whatsoever reason, each of ALLIED BANK and PNB, their respective

stockholders, directors and agents, successors and assigns shall hold each other free

and harmless from any and all liabilities and damages arising from or incurred by

reason of the non-consummation of the Merger.

IN WITNESS WHEREOF, the parties have hereunto signed these presents

on the first date abovestated.

ALLIED BANKING CORPORATION PHILIPPINE NATIONAL BANK

By: By:

ANTHONY Q. CHUA CARLOS A. PEDROSA

Witnesses

________________________ _________________________

7

A C K N O W L E D G M E N T

REPUBLIC OF THE PHILIPPINES )

) SS.

BEFORE ME, a Notary Public, for and in the City of Makati on this ___ day of

_______ 2012, personally appeared the following:

NAME Passport No. DATE/PLACE OF ISSUE

Allied Banking Corporation

By: Anthony Q. Chua

Philippine National Bank

By: Carlos A. Pedrosa

known to me and to me known to be the same persons who executed the foregoing

Plan of Merger consisting of seven (7) pages, including the page upon which this

Acknowledgment is written and who acknowledged to me that the same is their free

and voluntary act and deed as well as that of the corporations therein represented.

WITNESS MY HAND AND SEAL on the date and place first above written. Doc. No. ___; Page No. ___; Book No. ___;

Series of 2011.

1

PRO-FORMA FS OF PHILIPPINE NATIONAL BANK AND ALLIED BANKING CORPORATION - CONSOLIDATED

BALANCE SHEET

As of September 30, 2011

(In Thousand Pesos)

Adjustments/ 2/

PNB 1/ ABC 1/ Merger Combined

ASSETS

Cash and Other Cash Items

4,237,975

3,377,195 (28,125)

a/ 7,587,045

Due from Bangko Sentral ng Pilipinas

33,329,505

19,494,046 -

52,823,551

Due from Other Banks

5,594,917

9,459,496 -

15,054,413

Interbank Loans Receivable

8,788,249

7,821,239 -

16,609,488

Financial Assets at Fair Value through Profit or Loss

8,503,374

4,185,754 -

12,689,128

Securities Held Under Agreements to Resell

10,500,000

7,798,072 -

18,298,072

Available-for-Sale Investments

34,766,739

18,259,252 -

53,025,991

Held-to-Maturity Investments

35,359,129

21,104,302

1,152,719

b/

57,616,150

Loans and Receivable

129,706,848

91,626,059

(2,458,400)

b/

218,874,507

Receivables from Special Purpose Vehicle

725,756 -

-

725,756

Investments in Subsidiaries and Associates

2,885,083 -

(2,880,022)

d/ 5,061

Property and Equipment

16,671,530

4,533,871

21,205,401

Investment Properties

19,501,813

4,062,458 1,493,536

b/ 25,057,807

Goodwill -

88,936 8,161,173

c/ 8,250,109

Other Assets

8,144,119

3,693,668 -

11,837,787

TOTAL ASSETS

318,715,037

195,504,348 5,440,881

519,660,266

-

LIABILITIES AND EQUITY

LIABILITIES

Deposit Liabilities 238,674,743

143,517,590 -

382,192,333

Financial Liabilities at Fair Value Through Profit or Loss

6,749,876 6,749,876

Bills Payable 15,924,822

3,623,358 - 19,548,180

Accrued Taxes, Interest and Other Expenses 4,985,038

1,319,529 - 6,304,567

Subordinated Debt 6,451,481

4,480,244 - 10,931,725

Other Liabilities 11,212,377

15,892,111 - 27,104,488

TOTAL LIABILITIES 283,998,337

168,832,832 - 452,831,169

2

EQUITY

Equity Attributable to Equity Holders of Parent Company

Preferred stock -

50,000 (50,000) e/ -

Common stock

26,489,837

3,252,495 13,706,005 c/ 43,448,337

Capital paid in excess of par value

2,037,272 12,718,875 c/ 14,756,147

Surplus reserve

560,216

199,214

(199,214) c/ 560,216

Surplus (deficit)

4,702,045

15,888,737

(15,888,737) abc/ 4,702,045 Net unrealized gain (loss) on available-for-sale investments

(1,560,449)

563,720

(563,720) c/

(1,560,449)

Translation adjustment and other equity accounts

(374,037)

(70,801) 70,801 c/

(374,037)

Revaluation increment in property and equipment

2,816,962

1,473,107

(1,473,107) c/ 2,816,962

34,671,846

21,356,472 8,320,903 64,349,221

MINORITY INTEREST

44,854

5,315,044

(2,880,022) d/ 2,479,876

TOTAL EQUITY

34,716,700

26,671,516 5,440,881 66,829,097

TOTAL LIABILITIES AND EQUITY

318,715,037

195,504,348 5,440,881 519,660,266

-

1/ Based on SEC 17Q Report as submitted to SEC -

2/ Accounting treatment and entries to implement the merger:

a/ Payment of dividends in arrears to ABC preferred shareholders based on information provided by ABC

Entries:

Dr. Surplus

28,125

Cr. Cash and Other Cash Items 28,125

b/ Fair value of ABC investment properties and financial instruments including loans & receivables and held to maturity investments

are recognized.

Entries:

Dr. Held-to-Maturity Investments

1,152,719

Dr. Loans and Receivable

2,458,400

Dr. Investment Properties

1,493,536

Cr. Surplus

187,855

Note: FV of ABC assets was based on information provided in the 2010 ABC Audited FS as confirmed with ABC, updated FV as of

09/30/2011 is not yet available

c/ Merger Adjustments:

-

Swap ratio: 130 PNB common shares for each ABC common share and 22.763 PNB common shares for each ABC Preferred

share

- Issue price for 423,962,500 new PNB shares at Php70, as approved by respective Boards

- Goodwill represents difference between acquisition cost and fair value of ABC's net assets (preliminary estimate only; exact

amount to be determined post-merger)

3

d/ Eliminate minority interest of Allied Commercial Bank

Dr. Minority interest (ACB) 2,880,022

Cr. Equity Investment 2,880,022

Entries:

Dr. Common stock

3,252,495

Dr. Preferred stock

50,000

Dr. Surplus

13,656,005

Cr. Common stock

16,958,500

Dr. Goodwill

8,161,173

Dr. Surplus reserve

199,214

Dr. Revaluation increment on property

1,473,107

Dr. Net unrealized gain (loss) on AFS

563,720

Dr. Surplus

2,392,462

Cr. Capital paid in excess of par value

12,718,875

Cr. Translation adjustment from equity 70,801

12,789,676

12,789,676

Common stock (in thousand)

3,252

130 share swap

130

PNB shares with 130 share swap (in thousand)

422,824.350

Par value per share

40

Total par value of shares to be issued

16,912,974

Capital of ABC, before

445,295

UT2 conversion to common stock

2,807,200

Capital of ABC, after

3,252,495

Preferred stock (in thousand)

50

22.763 share swap

22.76

PNB shares with 22.763 share swap (in

thousand)

1,138.150

Par value per share

40

Total par value of shares to be issued

45,526

4

Net Assets of ABC, as adjusted

21,516,202

PNB shares to be issued (in thousand)

423,962.500

Market value of PNB share

70.00

Acquisition cost of ABC

29,677,375

29,677,375

Less par value of shares issued

16,958,500

APIC

12,718,875

Goodwill

8,161,173

Computation of Net Asset Value of ABC:

Total Assets of ABC 195,504,348

Less: Total Liabilities 168,832,832

Minority Interest 5,315,044

Net Asset of ABC 21,356,472

Fair Value Adjustments:

Held-to-Maturity Investments 1,152,719

Loans and Receivable (2,458,400)

Investment Properties 1,493,536

187,855

Payment of dividend in arrears of Preferred Shares (28,125)

Net Assets of ABC, as adjusted 21,516,202

Net Assets of ABC, as adjusted 21,516,202

PNB shares to be issued (in thousand) 423,962.500

Market value of PNB share 70.00

Acquisition cost of ABC 29,677,375 29,677,375

Less par value of shares issued 16,958,500

APIC 12,718,875

Goodwill 8,161,173

PRO-FORMA FS OF PHILIPPINE NATIONAL BANK AND ALLIED BANKING CORPORATION – CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 (IN THOUSAND PESOS)

PNB 1/ ABC

1/ Combined

INTEREST INCOME ON

Loans and receivables 5,568,099 4,339,802 9,907,901

Investment securities 3,479,107 2,037,448 5,516,555

Deposits with banks and others 460,896 627,277 1,088,173

9,508,102

7,004,527

16,512,629

INTEREST EXPENSE ON

Deposits liabilities 2,994,710 1,782,688 4,777,398

Bills payable and other borrowings 965,112 210,227 1,175,339

3,959,822

1,992,915

5,952,737

NET INTEREST INCOME 5,548,280

5,011,612

10,559,892

Service charges, fees and commissions income 2/ 1,716,498 592,457 2,308,955

Service charges, fees and commissions expense 151,450 - 151,450

NET SERVICE FEES AND COMMISSION INCOME 1,565,048 592,457

2,157,505

Trading and investment securities gains (losses) - net 444,042 313,468 757,510

Foreign exchange gains-net 948,725 86,028 1,034,753

Miscellaneous 1,672,877 1,985,018 3,657,895

TOTAL OPERATING INCOME 10,178,972

7,988,583

18,167,555

OTHER EXPENSES

Compensation and fringe benefits 2,743,094 2,093,836 4,836,930

Provision for impairment and credit losses 112,561 373,516 486,077

Depreciation and amortization 686,344 325,212 1,011,556

Taxes and licenses 907,212 560,726 1,467,938

Occupancy and equipment related costs 732,487 618,526 1,351,013

Miscellaneous 2,235,971 2,713,594 4,949,565

TOTAL OPERATING EXPENSES 7,417,669

6,685,410

14,103,079

INCOME BEFORE SHARE IN NET INCOME

OF AN ASSOCIATE AND INCOME TAX 2,761,303 1,303,173 4,064,476

SHARE IN NET INCOME OF AN ASSOCIATE 53,999 45,319 99,318

INCOME BEFORE INCOME TAX 2,815,302

1,348,492

4,163,794

PROVISION FOR INCOME TAX 544,786 319,478 864,264

NET INCOME 2,270,516

1,029,014

3,299,530

ATTRIBUTABLE TO:

Equity Holders of the Parent Company 2,264,059 899,153 3,163,212

Minority Interest 6,457 129,861 136,318

2,270,516

1,029,014

3,299,530

1/ SEC 17Q Report as of September 30, 2011

2/ Labeled as 'Commissions and handling charges' under ABC

1

PHILIPPINE NATIONAL BANK

MANAGEMENT REPORT Item 1. Business A. Business Development

The Philippine National Bank (the “Bank”), the country’s first universal bank, is the fourth largest

private local commercial bank in terms of assets as of September 30, 2011. The Bank was established as a government-owned banking institution on July 22, 1916. As an instrument of economic development, the Bank led the industry through the years with its agricultural modernization program and trade finance support for the country’s agricultural exports, pioneering efforts in the Overseas Filipino Workers (OFW) remittance business, as well as the introduction of many innovations such as Bank on Wheels, computerized banking, ATM banking, mobile money changing, domestic traveler’s checks, and electronic filing and payment system for large taxpayers. The Bank has the widest overseas office network and one of the largest domestic branch networks among local banks.

Pursuant to its policy of rationalizing its involvement in corporate ventures and privatization of

Government Owned and Controlled Corporations (GOCCs) under Proclamation No. 50, the Government offered to the Philippine public 30% of the outstanding shares of the Bank in June 1989. The Government further disposed 13% and afterwards, 7.2% of its outstanding shares in the Bank to the Philippine public in March 1992 and December 1995, respectively.

In July 2002, the Bank secured the consent of the Securities and Exchange Commission (SEC) to

undergo a quasi-reorganization which reduced the par value of its shares from P60.00 to P40.00. This was done in order to accommodate the P7.8 billion debt-to-equity conversion of the Philippine Deposit Insurance Corporation (PDIC) through the issuance of 195,175,444 preferred shares. These events resulted in the Government, through the PDIC, increasing its stake in the Bank to 44.98%, at par with the 44.98% voting stake of the Lucio Tan Group (LTG)1.

In August 2005, the Government offered 186,033,908 shares for sale out of its 257,845,799 shares in

the Bank. The companies and persons affiliated/associated with the LTG, as the other major stockholders, exercised their right of first refusal, reducing the Government’s aggregate share to 12.5% and raising that of the LTG to 77.43%.

The Bank concluded its 5-year Rehabilitation Plan as approved by the Bangko Sentral ng Pilipinas (BSP)

in May 2007. The Bank also settled its P6.1 billion loan with PDIC in June 2007, more than four (4) years ahead of the loan’s due date. The loan repayment was a clear indication of the Bank’s renewed financial health.

In August 2007, the Bank completed its Tier 1 Follow-On Equity Offering when it raised about P5.0

billion in Tier 1 Capital. Together with the sale of 89 million primary shares, 71.8 million secondary shares owned by the Government through the PDIC and Department of Finance (DOF) were sold to the public, paving the way for a complete exit of the Government from the Bank. Notwithstanding its status as a private bank, PNB remains one of the Government’s depository banks, having been granted by the BSP the authority to accept government deposits on a continuing basis since the Bank has successfully met the BSP’s requirements.

B. Business Description

1. Product and Services

The Bank, through its Head Office and 334 branches, provides a full range of banking and financial services to large corporate, middle-market, Small Medium Enterprises (SMEs) and retail customers, including OFWs, as well as to the Philippine National Government, National Government Agencies (NGAs), Local Government Units (LGUs) and GOCCs in the Philippines. Its principal commercial banking activities include deposit-taking, lending, trade financing, bills discounting, fund transfers/remittance servicing, asset management, treasury securities trading, and comprehensive trust, retail banking and other related financial services.

1 A group of companies and individual shareholders affiliated/associated with and/or given special powers of attorney to

Mr. Lucio C. Tan.

2

Its banking activities are undertaken through the following groups within the Bank, namely: Institutional Banking Group The Bank’s Institutional Banking Group is responsible for credit relationships with large corporate, middle-market and SMEs, as well as with the Government and government-related agencies and financial institutions. With the substantial reduction in the non-performing assets, the Bank’s focus has now shifted to growing its loan portfolio. Retail Banking Group The principal focus of the Retail Banking Group is the generation of low cost funds for the Bank’s operations. In addition, the RBG also cross-sells the different consumer finance products and services through its retail distribution channels consisting of its 334 branches nationwide. Consumer Finance Group The Consumer Finance Group provides multi-purpose personal loans, home mortgage loans, vehicle financing and credit card services to the bank’s retail clients. Global Filipino Banking Group The Global Filipino Banking Group covers PNB’s overseas offices which essentially provide convenient and safe remittance services to numerous OFWs abroad and full banking services in selected jurisdictions. The Bank has the largest overseas network among Philippine banks with 101 branches, representative offices, remittance centers and subsidiaries in the United States of America (USA), Canada, Europe, the Middle East and Asia. The Bank also maintains correspondent relationships with 989 banks and financial institutions worldwide. Treasury Group The Treasury Group manages the treasury operations of the Bank and its subsidiaries. It also monitors the Bank's compliance with the reserve requirements and guidelines of the BSP. It engages in inter-bank lending/borrowing, investment in peso and foreign-exchange denominated bonds and securities, currency trading, equities trading and investment in structured products. Trust Banking Group The Bank provides a wide range of personal and corporate trust and fiduciary banking products and services. Personal trust products and services for customers include living trust accounts, custodianship, educational trust, estate planning, guardianship, life insurance trust and investment management. Corporate trust services and products include trusteeship, securitization, investment portfolio management, administration of employee benefits, pension and retirement plans, and trust indenture services for local corporations. Trust agency services include acting as bond registrar, collecting and paying agent, loan facility agent, escrow agent, share transfer agent, and domestic receiving bank. Remedial and Credit Management Group The Remedial and Credit Management Group was established to focus on reducing the level of the Bank’s Non-Performing Loans (NPLs) to within the industry average. Special Asset Management Group The main objective of the Special Assets Management Group is the disposal and/or lease of the Bank’s Real and Other Properties Acquired (ROPA) and Bank-owned properties.

2. Competition

The Bank faces competition from both domestic and foreign banks, in part as a result of the liberalization of the banking industry by the National Government which allowed the entry of more foreign banks. The presence of these foreign banks has also increased competition in the corporate market, resulting in more domestic banks focusing on SMEs. As of September 30, 2011, the Bank’s ranking and market share in terms of key performance areas among local private commercial banks are as follows:

3

Performance Area Market Share Rank Total Assets 5% 4 Loans and Receivables1/ 4% 6 Total Deposits 5% 4 Capital 5% 7

1/ Excluding Interbank Call Loans

Source : Bank’s Report to SEC (SEC Form 17-Q) as of September 30, 2011.

3. Revenue Derived from Foreign Operations The Bank and its subsidiaries (the Group) offer a wide range of financial services in the Philippines. In addition, the Group provides remittance services in the USA, Canada, Asia, the Middle East and Europe. The following shows the percentage distribution of the consolidated revenues for the last three (3) years:

9/30/22011 2010 2009 2008 Philippines 92% 91% 91% 90% Canada and USA 3% 4% 5% 5% Asia (excluding the Philippines)/ Middle East

4% 4% 3% 4%

United Kingdom & Other European Union Countries

1% 1% 1% 1%

Total

100% 100% 100% 100%

4. New Products and Services

The Bank has re-launched the following products and services in 2011: - Special loans offered to SMEs which provide financing for franchise business, whether start-up

or existing; short-term funding for working capital; and medium- to long-term funding for fixed asset acquisition, business expansion, or permanent working capital; and

- Second-hand car loans which allow up to seven (7) years maximum age of vehicle for financing

and up to 48 months maximum loan term.

5. Related Party Transactions In the ordinary course of business, the Bank has loans and other transactions with its subsidiaries and affiliates, and with certain Directors, Officers, Stockholders and Related Interests (DOSRI). Under the Bank’s policy, these loans and other transactions are made substantially on the same terms as those of other individuals and businesses of comparable risk. Under BSP Circular 423, the amount of direct credit accommodations to each of the Bank’s DOSRI, 70% of which must be secured, should not exceed the amount of their respective deposits and book value of their respective investments in the Bank. In the aggregate, DOSRI loans generally should not exceed the Bank’s net worth or 15% of the Bank’s total loan portfolio, whichever is lower. As of September 30, 2011 and December 31, 2010, the Bank was in compliance with such BSP regulations.

6. Patents, Trademarks, Licenses, Franchises, Concessions and Royalty Agreements

The Bank’s operations are not dependent on any patents, trademarks, copyrights, franchises, concessions, and royalty agreements. The Bank has licenses to use the following IT softwares and systems in its operations:

• Corebanking System (FLEXCUBE) December 1, 2011 to November 30, 2012) – provides support

services to various bank operations for workflow development. • IBM Websphere MQ Processor (July 1, 2011 to June 30, 2012) – As part of the requirement for

the Flexcube implementation, this software is vital for in-house and other third party systems connecting directly to Flexcube.

4

• Operations Processing Integrated Control System (OPICS) (August 29, 2003 to August 28, 2013)

– The agreement will continue for ten (10) years or until terminated earlier in accordance with the terms of the contract. There is continuous renewal of maintenance service. The system is being used by Treasury Group in the processing of foreign exchange, money market, securities and Reuters interface.

• Anti-Virus Software Sophos (January 2010 to December 2013) - Unless revoked by PNB, the

agreement will automatically be renewed on a year-to-year basis. • IBM Lotus Domino Server Processor Value Unit (PVU) License SW Subscription and Support for

12 months (January 1, 2012 to December 31, 2012) – Unless revoked by PNB, the agreement shall automatically be renewed on a year-to-year basis.

• Trust Application Processing Management System (License term is perpetual and scope of use

is for one [1] Production Database, twenty [20] users and twenty-five [25] Pro-IV Runtime Licenses) - provides support for Trust transactions. There is continuous payment of the necessary fees to ensure support for use of the software.

• Phonebanking System - provides support for PNB’s Phonebanking System. The PNB Version is

one (1) year from the date of Application Software – PNB Version Acceptance. There is continuous renewal of annual maintenance services.

• Internet Banking System – provides support for the Internet Banking System of PNB.

- All Microsoft products have Per Seat Licensing. - IBSWEB � Verisign Global Server ID (IBS Internet) – IBS, PNB.COM (March 12, 2011 to March 16, 2012) � Verisign Code Signing ID (IBS Internet) – IBSAPPS (April 24, 2011 to April 24, 2012) � Verisign Global Server ID for MDC Internet Banking System (IBS) Internet Web Server (PNBWEBMDC01) (July 21, 2011 to July 21, 2012)

- Global Server ID from Verisign c/o mySecureSign for IBSWEB has a 1-year license which will expire on July 21, 2012.

- Global Server ID from Verisign c/o mySecureSign for PNBWEBMDC01 has a 1-year license which will expire on April 24, 2012.

- Code Signing license from Verisign c/o mySecureSign for PNB IBS

• Tandem/Base24 ATM System - HP Nonstop/Tandem S76 HW/SW (October 8, 2011 to October 7, 2012) - The platform

wherein the Base24 ATM/CMS/FHM application runs. The machine has to be operational 24X7, hence the requirement for continuous renewal of maintenance services. Maintenance agreement will be renewed on a yearly basis.

- Atalla A9100/SCA – The hardware which performs the PIN authentication for ATM and IBS

enrollment transactions. ATM and IBS enrollment services are 24X7, hence the requirement for continuous renewal of maintenance services. Maintenance agreement is being renewed on a yearly basis.

- Maintenance Agreement with HP (October 8, 2011 to October 7, 2012) – Safeguard

security software ensures that the security policies are enforced to protect the HP Nonstop and Base24 processes. Maintenance agreement is being renewed on a yearly basis.

- Prognosis – ATM Monitoring (March 1, 2011 to August 31, 2011) – Prognosis monitoring

software allows for the CUI-based monitoring and downloading of ATMs. Prognosis also makes it possible for the system alerts and ATM tickets to be broadcasted to specified e-mail addresses. It is also being utilized in report and statistics generation. Maintenance agreement will be renewed on a yearly basis.

- Tandem Himalaya Hardware is the backup machine to be utilized after the declaration of

a disaster involving HP Nonstop in MDC. The machine is currently in PNB’s Business Recovery Center in Quezon City. An on-call maintenance agreement is in place with HP Philippines.

5

- Base24 ATM/CMS/FHM is the 24X7 ATM system of the bank. Maintenance is being renewed on a yearly basis.

• Base24 Application Software Maintenance – PNB version and its component will operate and

perform substantially in accordance with the published specifications from the date of the User Acceptance of Application Software – PNB Version. Maintenance is being renewed on a yearly basis.

• PNB Debit Card and Prepaid MasterCard (December 7, 2011 to December 6, 2012) - Banknet

Software License and support services. Enables the Bank to launch a Debit and Prepaid MasterCard that will replace the existing PNB ATM Card and Global Filipino Card, allowing international ATM and Point-of-Sale (POS) access.

• GIFTSWEBB and Enhanced Due Diligence System (November 5, 2011 to November 5, 2012).

Provides support services to various bank operations for workflow development. • Cash Management System License (September 20, 2011 to September 20, 2012) - Provides

support services to various Verisign Global Server ID (128-bit Encryption Strength) Verisign Digital Server License – Cash Management System.

• ASG Zena – Job Scheduler (December 22, 2011 to December 21, 2012) – Provides support

services to various bank operations for workflow development. • IVRS Hardware Maintenance (August 1, 2011 to July 31, 2012) – Provides support services to

various bank operations for workflow development. • Microsoft MS Premiere Support Agreement – 180 hours (December 28, 2011 to December 27,

2012) - Provides support services, problem resolution and technical advice on issues/problems on all Microsoft software products.

• PNB Public IP Address and Autonomous System Number (January 11, 2011 to February 1, 2012)

– Enables the Bank to have its own Internet identity in the World Wide Web and will help achieve a lower latency response by maintaining a standard routing in the internet.

• Network Devices

1. Security Devices – May 26, 2011 to May 25, 2012 - SSL VPN Firewall - MARS Device - BRC ASA Firewall - ACS Software

2. PABC – December 27, 2010 to December 26, 2012 3. Cisco Network Devices – March 19, 2011 to March 18, 2012

The renewal of maintenance agreements is required to provide extended support in case of hardware and software issues that may arise during its operation. The SSL VPN firewall is used for the access of external clients such as ARS, WEBPORTAL, and WEBPORTAL Production. The SSL connection provides assurance and protection from viruses and Trojans that can come from external clients. The BRC Firewall protects the PNB Intellectual Property located at the Disaster Recovery Site. This includes all servers such as BRC Core servers, etc. The Cisco MARS is a network security tool that collectively gathers all security and network logs, SNMP, Netflow packets, network access control, and other information from Cisco devices such as firewalls, IDS, ACS-TACACs, switches and routers. It aggregates and analyzes all these information, producing an intelligent and cohesive in-depth analysis of the network security threats encountered by the Bank. The Cisco Secure Access Control Server (ACS) software license is an access policy control platform designed to comply with regulatory and corporate requirements. The Cisco MARS network security equipment and ACS software license are recommended to be supported by Trends and Technologies for security reasons.

• Enterprise Monitoring System (December 1, 2011 to December 1, 2012) – Open view support Maintenance

• Oracle Adaptive Access Manager (November 9, 2011 to November 8, 2012) – Maintenance support

for OAAM Authentication System

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• MySecuresign - Verisign Global Server ID (IBS Internet) – IBS, PNB.COM.PH – March 12, 2011 to March 12, 2012 - Verisign Code Signing ID (IBS Internet) – IBSAPPS – April 24, 2011 to April 24, 2012 - Verisign Global Server ID for MDC Internet Banking System (IBS) Internet Web Server

(PNBWEBMDC01) – July 21, 2011 to July 21, 2012 - Verisign Global Server ID for MDC GCash Servers (GCASH.PNB.COM.PH & CGASH2.PNB.COM.PH)

– October 7, 2011 to October 7, 2012 - Verisign Global Server ID (128-bit Encryption Strength) Verisign Digital License – Cash

Management System – September 5, 2011 to September 5, 2012

7. Government Approval of Principal Products or Services

Generally, e-banking products and services require BSP approval. New deposit products require notification to the BSP. The Bank has complied with said BSP requirements.

8. Number of Employees

As of December 31, 2011, the Bank had a total of 5,289 employees (2,138 officers and 3,151 rank and file). The Bank will pursue selective and purposive hiring of manpower to replace normal resignations and retirements. Except for those in selected offices, all regular employees (rank-and-file) of the Bank are covered by the existing Collective Bargaining Agreement (CBA) which will expire on June 30, 2012. The Bank has no other supplemental benefits or incentive arrangements with its employees.

9. Risk Management The risk management function is embedded in all levels of the organization. Headed by the Chief Risk Officer (CRO) and reporting to the Risk Management Committee, the Risk Management Group is primarily responsible for the risk management functions to ensure that a robust organization is maintained. The group, independent from the business lines, is organized into 4 divisions: Credit Risk and BASEL II and ICAAP Implementation Division, Market & ALM Division, Operational & Information Technology Security Risk Management and Business Intelligence Division. Each division maintains basic policies for risk management applicable to the organization. These policies clearly define the kinds of risks to be managed, set forth the organizational structure and provide appropriate training necessary. The policies also provide for audits to measure the effectiveness and suitability of the risk management structure. In line with these basic policies, the group continues to implement the following risk management tools and reporting requirements to strengthen and enhance the sophistication of the Bank’s risk management system and address the volatile risk environment.

• Risk Management Assessment Review Sheet (RMARS) • Risk-based compliance testing commensurate with risk levels identified and regular monitoring

of the resolutions or regulatory findings of US Fed, MAS, FSA, etc. • Risk & Control Self Assessment (RCSA) • Loss Event Report (LER) • Business Continuity Management (BCM) • Daily Value-at-Risk Report (VAR) • Monthly Liquidaty Gap (MCO) • Monthly repricing gap and Earnings at Risk (EAR) • Annual review of Product Manuals • Health Check Review, a periodic review of internal controls and compliance with the Bank

policies and procedures • Daily monitoring of account balances of overseas branches and subsidiaries with Head Office

(NOSTRO/VOSTRO) • Monthly review of temporary accounts • Credit Risk Dashboard • Internal Risk Rating

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• Stress Testing • Monitoring of credit limits • Annual Loss Rate

In the subsequent sections, each major risks are discussed accordingly as this applies to the process for the board-approved enterprise risk management framework. Market Risk

1. Price Risk in the Trading Portfolio

The Bank’s trading positions are sensitive to changes in the market prices and rates. The Bank is subject to trading market risk in its position-taking activities for fixed income, foreign exchange and equities markets. To calculate the risks in the trading portfolio, the Bank employs the Value-at-Risk (VAR) methodology with 99% confidence level and one (1) day holding period (equities and FX VAR) to ten (10) day holding period for fixed income VAR. VAR limits are established annually and exposures against the VAR limits are monitored on a daily basis. The VAR figures are back-tested against actual (interest rates) and hypothetical profit and loss (FX and Equities) to validate the robustness of the VAR model.

The Bank also employs the stop-loss monitoring tool to monitor the exposure in the price risks. Stop-loss limits are set up to avoid further losses resulting from mark-to-market.

To complement the VAR measure, the Bank performs stress testing and scenario analysis wherein the trading portfolios are valued under several market scenarios.

2. Structural Market Risk Structural interest rate risk arises from mismatches in the interest profile of the Bank’s assets and liabilities. To monitor the structural interest rate risk, the Bank uses a repricing gap report wherein the repricing characteristics of its balance sheet positions are analyzed to come up with a repricing gap per tenor bucket. The total repricing gap covering the one-year period is multiplied by the assumed change in interest rates based on observed volatility at 99% confidence level to obtain an approximation of the change in net interest earnings. Limits have been set on the tolerable level of Earnings-at-Risk to the Bank. Compliance with the limits is monitored regularly.

3. Liquidity and Funding Risk

Liquidity risk is generally defined as the current and prospective risk to earnings or capital arising from the Parent Company’s inability to meet its obligations when they come due without incurring unacceptable losses or costs. Liquidity risk includes the inability to manage unplanned decreases or changes in funding sources. Liquidity obligations arise from withdrawals of deposits, extension of credit, working capital requirements and repayment of other obligations. The Bank manages its liquidity through active management of liabilities, regular analysis of the availability of liquid asset portfolio as well as regular testing of the availability of money market lines and repurchase facilities aimed to address any unexpected liquidity situations. The tools used for monitoring liquidity include gap analysis of maturities of relevant assets and liabilities reflected in the maximum cumulative outflow (MCO) report, as well as an analysis of sufficiency of liquid assets over deposit liabilities and regular monitoring of concentration risks in deposits by tracking accounts with large balances. The MCO focuses on a 12-month period wherein the 12-month cumulative outflow is compared to the acceptable MCO limit set by the Bank.

2011 Key Milestones - Full implementation and Go-Live of the OPICS Risk Plus (ORP) which is a risk management

software designed to improve the Value-At-Risk (VAR) calculations of the Bank from its manual in-house worksheet process.

- Implementation of the Eagle Eye (EE) Project which is an additional limit monitoring tool in the oversight of Treasury activities. This will supplement the built-in limit monitoring capability of the OPICS Treasury system. The system’s go-Live was rescheduled to January 2012.

- Closer Monitoring of subsidiaries by requiring all subsidiaries to set up risk limits such as Value-at-Risk, Liquidity Gap limits and Earnings-at-Risk (EAR) limit.

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- Full participation in the conduct of various simulations related to the Transfer Pool Rate Methodology of the Bank and the eventual engagement of the Market & ALM Division in the weekly computation of the TPR figure for presentation in the weekly meeting of the Asset and Liability Committee (ALCO).

- Participation of the Market & ALM Division in the activities related to the preparation of the Bank’s application for Derivative License for Interest Rate Swap (IRS).

- Involvement in the HTM sell-down exercise by computing the risk impact to the Bank using various scenarios which serves as input to the Treasury’s presentation to the EXCOM and Board.

- Adoption of both hypothetical and actual approach in the back testing activities and more frequent reporting of the results of summary of back testing.

- More frequent scenario analysis and stress testing exercises related to the market-driven scenarios which would impact earnings and liquidity.

- Set-up of credit risk factors (CRF) for interest rate swaps and cross currency swaps. - Enhancement of reports related to Large Funders - Enhancement of the EAR methodology

Credit Risk

Credit Risk is defined as the potential risk when a bank borrower fails to meet its obligations in accordance with agreed terms, thus subjecting the Bank to financial loss. Sources of credit risk are: defaulting borrowers, counterparties, issuers, or guarantors. It arises any time bank funds are extended, committed, invested, or otherwise exposed through actual or implied contractual agreements, whether reflected on or off the balance sheet.

Credit Policies and Procedures All credit risk policies issued by the regulatory bodies (BSP, SEC, PDIC, etc.) automatically form part of the Bank’s board-approved credit risk policies. These credit risk policies reflect the Bank’s lending profile and focus on: (a) the risk tolerance and/or risk appetite (b) the required return on asset that the Bank expects to achieve (c) the adequacy of capital for credit risk Credit Risk Functional Organization The credit risk functional organization of the Bank conforms with BSP regulations. This ensures that the risk management function is independent of the business line. In order to maintain a system of “check and balance”, the Bank observes three (3) primary functions involved in the credit risk management process, namely: (a) risk-taking personnel (b) risk management function (c) the compliance function

The risk-taking personnel are governed by a code of conduct for account officers and related stakeholders set to ensure maintenance of the integrity of the Bank’s credit risk management culture. Approving authorities are clearly defined in the board-approved Manual of Signing Authority (MSA).

Credit Limit Structure The Bank adopts a credit limit structure (regulatory and internal limits) as a quantitative measure of the risk tolerance duly approved by the Board. Breaches in limits are monitored via the monthly credit dashboard. Stringent Credit Evaluation Repayment capacity of prospective borrowers are evaluated using an effective internal risk rating model for corporate and Micro Small Medium Enterprise (MSME) accounts and appropriate credit scoring program for consumer loans. These models are validated to determine predictive ability.

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Reporting System An effective Management Information System (MIS) is in place and, at a minimum, has the capacity to capture accurate credit risk exposure/position of the Bank real time. A monthly credit dashboard is used as the reporting tool for appropriate and timely risk management process. Remedial Management System A work-out system for managing problem credits is in place. These are, among others, renewals, extension of payment, restructuring, take-out of loans by other banks, and regular review of the sufficiency of valuation reserves. Event-driven Stress Testing Techniques are conducted to determine the payment capacity of affected borrower accounts. A Rapid Loan Portfolio Review Program is in place to quickly identify possible problem credits on account of evolving events both domestic and global. Results of the stress testing show minimum impact and no material effect on the Bank’s NPL ratio and Capital Adequacy Ratio (CAR). 2011 Key Milestones - Increased the “value creation” of the active loan portfolio management performed by RMG by

highlighting “red flags” in the credit dashboard (e.g. status of past due large exposures, risk profile of the clean exposures, abrupt migration in the ratings, mitigants of defaulted exposures which help minimize credit exposure). These red flags serve as the basis for issuing management directives.

- Implemented enterprise monitoring of credit risk (i.e. credit exposures of domestic subsidiaries and overseas branches are under the oversight of the independent RMG).

- Improved stress testing model by implementing stress testing of conglomerate exposures and industry exposures (e.g. new scenario on LTGC contagion effect). Effects of macroeconomic metrics, natural calamities and global risk events are also considered in the model. � Close monitoring of the consistency of the Bank’s internal risk rating versus the BSP risk

classification to ensure adequacy of loan loss provisioning and accuracy of data. � Improvement of the impairment analysis process to ensure that all loans identified as

specifically impaired are subjected to the appropriate impairment process and to ensure the reasonableness of the assumptions used for estimating projected cash flows for impairment purposes.

� Active involvement in the credit policy formulation (i.e. statistical trends of data in the credit risk dashboard) is being used by Management as “feedback mechanism” in the review of existing credit policies.

- Transformed credit controls through information-driven approach by implementing the enterprise data warehouse reporting/analytics software solution that provide timeliness of data required for decision making.

Operational Risk

1. People Risk In most reference books and articles, it is mentioned that the most dynamic of all sources of operational risk factors is people risk. Internal controls are often blamed for operational breakdowns, whereas the true cause of many operational losses can be traced to people failures. Every CEO has argued that people are the most important resource, yet the difficulty in measuring and modeling people risk has often led management to shy away from the problem when it comes to evaluating this aspect of operational risk.

The Bank’s operational losses may be attributed to human error which can be brought about by inadequate training and management. This issue is being addressed through formal means (continuously conducted trainings) or informal means (monthly meetings and discussing issues at hand) means. These trainings also address the issue of relying on key performers instead of cross-training each team member.

Furthermore, there is the risk of “non-fit” personnel being “forced” to occupy positions that they are not qualified for. Annual evaluation and the implementation of balanced scorecards are used to ensure that ill-fitted personnel are either re-trained, re-tooled or re-skilled to equip them better.

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2. Process Risk In financial institutions, most processes are designed with audited fail-safes and checking procedures. Since processes interact with other risky variables such as external environment, business strategy and people, it is difficult to sound the all-clear. However, processes can make the institution vulnerable in many ways.

To address this risk, the Bank has documented policies and procedures duly approved by the Board. The Internal Audit Group, as well as the various officers tasked with the review function, regularly monitors the implementation of these documented policies and procedures. 2011 Key Milestones - Completion of Business Continuity Awareness Training for Head Office/Domestic Subsidiaries - Conducted Business Continuity Awareness Training for Domestic Branches - Completion of Business Impact Analysis for the Head Office, Overseas and Domestic

Subsidiaries - Completion of Business Continuity Team to conduct Alternate Site Tests - Completion of customized Risk and Control Self Assessment (RCSA) and rationale for Control

Adequacy for a more realistic risk rating and robust self-assessment - Conducted re-orientation sessions of Operational Risk Tools to Metro Manila Sales and

Service Heads and Risk Overseers of the Head Office

Information Technology Risk The growing dependence of financial institutions on IT systems is a key source of operational risk. Data corruption problems, whether accidental or deliberate, have been sources of embarrassing and costly operational mistakes. The Bank’s Information Technology Group has introduced risk mitigation measures, which include but are not limited to ensuring the existence of run sheets. These run sheets provide guidance as to the operational requirements of specific systems. Losses may also result from a simple change in program, which end up being incorrectly tested prior to cut-over to production. The process for system cut-over, from development to testing to production, is always subject for review. Each review reduces the probability of errors being introduced into the production version. Further, the group’s strict compliance to the system roll-out life cycle can very well cut these losses. In addition, more often, only IT people (who are sometimes far removed from the banking business) have a full understanding of the technology/technical aspects behind many new banking systems. Those in the business may not have a thorough understanding of how IT can enable their processes and make them more efficient. This then may contribute to systems not being utilized properly, being wrongly or inadequately utilized. To close this gap, meetings are conducted continuously. Further, the bank has formalized the Project Implementation Process for defined systems implementation to include, among others, the creation of a PROJECT STEERING COMMITTEE to oversee the project’s progress and to ensure that the project’s objectives are achieved. 2011 Key Milestones - Roll-out of Health Check Manual - Annual health checks for implementation of major technology and electronic banking projects - Completion of Electronic Banking Information Security Program (EBISP) - Roll-out of Branch Information Security Officer (BISO) Work Up Program - Health Check and Security Risk Assessment of Data Center - Risk Assessment of the Bank’s Alternate Site

Business Intelligence This division manages the design and implementation of enterprise data warehouse as the single source of truth for reporting, analytics and implementation of various decision support systems. It ensures the enterprise wide data quality management process; formulates Statistical and Database Management policies and procedures; assists other Divisions/Units of the Risk Management Group (RMG) in managing the group’s database(s), statistical model development & calibration, and database analysis.

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2011 Key Milestones - Analysis, Design, Development and Implementation of the MIS Operational Data Store (ODS) for

Deposits, Loans and General Ledger - Data Mapping and Development of Extraction & Loading Programs for the Oracle Reveleus

Global Banking Model covering Loans, Deposits, LCs & Bills (Phase 1) - Development and Rollout of the Data Quality Management Monitoring System (CIF) - with

Reporting Dashboard - Reconciliation of Subsidiary Ledger (SL) vs General Ledger (GL) Balances for Deposits and Loans - Creation of the Credit Dashboard (including Actionable Items Reports) and Deposit Dashboard - Creation of Over 120 Reports for Operational Analysis and Reporting - Evaluation, Selection and Implementation of the Statistical and Analytical Solution for the

enhancement of the Credit Risk Rating Model C. Business Development/Description of Significant Subsidiaries

The Bank, through its subsidiaries, engages in a number of diversified financial and related businesses such as remittance servicing, non-life insurance, investment banking, stock brokerage, leasing, and other related services. The following are the Bank’s significant subsidiaries:

Domestic Subsidiaries:

� PNB Capital and Investment Corporation (PNB Cap), an investment house with a non-bank, non-quasi-banking license, was established in 1997. It is a wholly-owned subsidiary of the Bank. As of December 31, 2010, it had an authorized and paid-up capital of P350.0 million or 3,500,000 shares at P100.0 par value. The principal business of PNB Cap is to provide investment banking services which includes debt underwriting, equity underwriting, private placements, loan arrangements, loan syndications, project financing and general financial advisory services. PNB Cap is authorized to buy and sell, for its own account, securities issued by private corporations and the government of the Republic of the Philippines. As of December 31, 2010, total assets and total capital of PNB Cap were P548.9 million and P544.0 million, respectively. For the year ended December 31, 2010, net income was P89.0 million. As of September 30, 2011, total assets reached P530.8 million while total capital was already at P525.3 million. Net income for the period ended September 30, 2011 was at P22.7 million.

� PNB Holdings Corporation (PHC), a wholly-owned subsidiary of the Bank, was established in 1920 as

Philippine Exchange Co., Inc. In 1991, it was converted into a holding company and was used as a vehicle for the Bank to go into the insurance business. PHC is the parent company of PNB General Insurers Co., Inc. (PNB Gen) which was acquired in 1991. As of December 31, 2010, PHC had an authorized capital of P500.0 million or 5 million shares at P100 par value per share. Total paid-up capital, on the other hand, is P255.1 million while additional paid-in capital is P3.6 million. During the same period, total assets and total capital of PHC were P3.7 billion and P1.3 billion, respectively. Net income was P3.3 million (determined on a parent only basis). Including PNB Gen, net income for the same period was P99.6 million. As of September 30, 2011, total assets and total capital were at P3.4 billion and P1.4 billion, respectively. Net income for the period ended September 30, 2011 was at P1.9 million (parent only) but including PNB Gen, net income is at P90.1 million.

PNB General Insurers Co., Inc. (PNB Gen), a wholly-owned subsidiary of PNB Holdings was established in 1991. It is a non-life insurance company that offers fire and allied perils, marine, motor car, aviation, surety, casualty, engineering, accident insurance and other specialized lines. As of December 31, 2010, total assets and total capital of PNB Gen was at P3.6 billion and P1.2 billion, respectively. Its net income grew from P65.9 million in 2009 to P96.3 million in 2010. As of September 30, 2011, total assets and total capital of PNB Gen was at P3.289 billion and P1.289 billion, respectively. Net income for the period ended September 30, 2011 was P88.18 million.

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� PNB Securities, Inc. (PNBSI), a wholly-owned subsidiary of the Bank, was established in 1991 with an

authorized capital of P200.0 million or 2.0 million shares at P100 par value per share. Total paid-up capital is at P68.1 million. PNBSI is engaged in the stockbrokerage business that deals in the trading of shares of stocks listed at the stock exchange. As of December 31, 2010, total assets and total capital of PNBSI were P195.6 million and P163.3 million, respectively. Net income in 2010 was P19.8 million, or almost twofold of its 2009 net income of P11.2 million. As of September 30, 2011, total assets and total capital were P227.0 million and P176.2 million, respectively. Net income for the period September 30, 2011 was at P9.0 million.

� Japan-PNB Leasing and Finance Corporation (JPNB Leasing) was formerly PF Leasing and Finance

Corporation (“PF Leasing”) and was incorporated in 1996 under the auspices of the Provident Fund of PNB. PF Leasing was largely inactive until it was used as the vehicle for the joint venture between PNB (60.0%), IBJ Leasing Co. Ltd., Tokyo (20.0%), Industrial Bank of Japan, now called Mizuho Corporate Bank (5.0%) and Mitsubishi Trust Banking Corporation (15.0%). The corporate name was changed to Japan-PNB Leasing and Finance Corporation and the joint venture company commenced operations as such in February 1998. Its major activities are financial leasing, chattel mortgage loans and installment note discounting. All the leasing and lending activities of the company are in the domestic market. As of December 31, 2001, IBJ Leasing Co. increased its stake in the company when it acquired the 15% shareholding of Mitsubishi Trust Banking Corp. Effective January 31, 2011, PNB increased its equity interest in JPNB Leasing from 60.0% to 90.0%. PNB’s additional holdings were acquired from minority partners, IBJ Leasing Co., Ltd. (IBJL) and Mizuho Corporate Bank which divested their 25.0% and 5.0% equity interest, respectively. IBJL remains as an active joint venture partner with a 10.0% equity interest. As of December 31, 2010, J-PNB Leasing had an authorized capital of P150.0 million, represented by 1.5 million shares with a par value of P100 per share, which are fully subscribed and paid up. As of December 31, 2010, J-PNB’s total assets and total equity stood at P2.142 billion and P382.5 million, respectively, and its net income was P49.1 million, posting over 37.5% increase from its net income of P35.7 million in 2009. As of September 30, 2011, J-PNB’s total assets and total equity stood at P2,561 million and P443.8 million, respectively. Net income for the period ended September 30, 2011 was P61.3 million. Foreign Subsidiaries:

PNB International Investment Corporation (PNB IIC), formerly Century Bank Holding Corporation, a wholly-owned subsidiary of PNB, is a U.S. non-bank holding company incorporated in California on December 21, 1979. It changed its name to PNB International Investment Corporation on December 1, 1999. PNB IIC owns PNB Remittance Center, Inc. (PNB RCI) which was incorporated in California on October 19, 1990. PNB RCI is a company engaged in the business of transmitting money to the Philippines. As of December 31, 2011, PNB RCI has 44 branches in 11 states of the United States of America. PNB RCI owns PNB RCI Holding Company, Ltd. which was incorporated in California on August 18, 1999. PNB RCI Holding Company, Ltd. is the holding company for PNB Remittance Company Canada (PNB RCC). PNB RCC is also a money transfer company incorporated in Canada on April 26, 2000. PNB RCC has 8 branches in Canada as of year-end 2011. PNB RCI is regulated by the U.S. Internal Revenue Service and the Department of Financial Institutions of the State of California and other state regulators of financial institutions. PNB RCC is regulated by the Office of the Superintendent of Financial Institutions of Canada and Financial Transactions and Reports Analysis Centre of Canada. PNB IIC does not actively compete for business, being a holding company only. PNB RCI and PNB RCC have numerous competitors from local US banks, Philippine bank affiliates doing business in North America, as well as other money transfer companies like Western Union, Money Gram, Lucky Money and LBC.

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PNB Global Remittance & Financial Company (HK) Limited (PNB Global), a wholly-owned subsidiary of PNB, is registered with the Registrar of Companies in Hong Kong. On July 1, 2010, PNB Global merged with PNB Remittance Center, Ltd. with the former as the surviving entity. PNB Global now operates as a remittance company and money lender. As of December 31, 2011, it maintains 7 offices in Hong Kong. Its major competitors are Metro, BDO, RCBC, BPI, Asia Pacific, I-Remit, Pinoy Express, LBC, Western Union, Czarina and Calsons. PNB (Europe) Plc was originally established as PNB London Branch in 1976 and later converted into PNB (Europe) Plc as a wholly-owned subsidiary of PNB in 1997. PNB (Europe) Plc holds a full banking license and is primarily engaged in deposit-taking, foreign exchange remittances, money market operations, export-import financing and corporate and consumer lending. It is also authorized to offer cross-border services to 18 member states of the European Economic Area (EEA). These services include acceptance of deposits and money transmission services. PNB (Europe) Plc maintains an extension office at NottingHill Gate and Earl’s Court which provides remittance services only. In 2007, PNB (Europe) Plc opened a branch in Paris, France which renders remittance services. PNB (Europe) Plc is regulated by the United Kingdom Financial Services Authority while its Paris branch is governed by the Banque de France. In order to streamline its operations, PNB Europe Plc applied for an Authorized Payment Institution (API) license in the United Kingdom in November 2011. This application is still being evaluated and processed by the UK regulator, the Financial Services Authority. The major competitors of the subsidiary are Metro Remittance UK Ltd., Bank of the Philippine Islands (Europe) Plc, BDO, Peso Express (RCBC), Philrem, I-Remit, CBN, LCC, and Money Gram. Competition in Paris consists of BPI (tie-up with Banque DÉscompte), Money Gram, and RIA. PNB Corporation, Guam (PCG) is a wholly-owned subsidiary of PNB, which was incorporated in September 1990. PCG is organized to engage in the money transfer business particularly as “PNB Foreign Exchange”. PNB Guam is regulated by the Banking Securities and Insurance Commission of the Department of Revenue and Taxation of the Government of Guam. The following are PCG’s major competitors: Metrobank, Rustan’s Delivery, Banco de Oro, LBC Express, Pinoy Express, APEX, Ora Mismo, and Dollar-Peso Exchange. PNB Italy, SpA, a wholly-owned subsidiary of PNB, was incorporated in 1994. PNB Italy is engaged in money transfers and lending. Its main office is located in Rome while its branches are situated in Milan and Florence. It also has 39 individual accredited agents. PNB Italy is regulated by Banca d’Italia (Bank of Italy). PNB Italy’s major competitors include Metrobank, BPI, BDO, RCBC, Land Bank, Western Union, Money Gram, I-Remit, Telegiro, RIA, I Transfer, NYBR. PNB Austria Financial Services GmbH was established as a wholly-owned subsidiary of PNB which started operations on June 6, 2006. It is registered as a limited liability company in Vienna to engage in remittance business. PNB Austria is regulated by the Austrian Financial Market Authority. Its principal competitors are Metrobank, I-Remit, CBN (Banco de Oro) and Coinstar. To streamline operations, the subsidiary was closed on April 30, 2011 and servicing of its clients was moved to PNB (Europe) Plc.

Item 2. Directors and Executive Officers

Please refer to pages 29 to 38 of the Information Statement.

Item 3. Audited Consolidated Financial Statements

The Audited Financial Statements (AFS) of the Bank and its Subsidiaries, which comprise the Statements of Financial Position as of December 31, 2010 and 2009, the Statements of Income, Statements of Comprehensive Income, Statements of Changes in Equity and Statements of Cash Flows for each of the three (3) years in the period ended December 31, 2010, Notes to Financial Statements, Independent Auditors’ Report and the Statement of Management’s Responsibility are filed as part of this Management Report.

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Item 4. Information on Independent Accountant, Changes in Accounting Principles and Other Related Matters

A. Audit and other related fees

The following are the engagement fees billed and paid for each of the last two fiscal years for the professional services rendered by the Bank’s external auditor, SyCip Gorres Velayo and Co.:

2011

• P6.91 million engagement fee for the audit of the Bank’s Financial Statement as of December 31, 2011 (inclusive of Out-of-Pocket Expenses [OPE] but excluding Value Added Tax [VAT]).

• P3.92 million engagement fee for review of interim condensed Financial Statement (September 30, 2009 and 2010) relative to the issuance of P6.50 billion Subordinated Notes, as Tier 2 Capital in June 2011.

• P1.176 million engagement fee for the due diligence review relative to the issuance of P3.1 billion Long Term Negotiable Certificates of Time Deposit in November 2011.

2010

• P6.74 million engagement fee for the audit of the Bank’s Financial Statement as of December 31, 2010 (inclusive of Out-of-Pocket Expenses [OPE] but excluding Value Added Tax [VAT]).

• P286 thousand travel expenses relative to the Bank’s Financial Statement as of December 31, 2010.

The approval of audit engagement fees is based on the Bank’s existing Manual of Signing Authority.

B. Changes in Accounting Policies

The accounting policies adopted are consistent with those of the previous financial year except for the following new and amended Philippine Financial Reporting Standards (PFRSs) and Philippine Interpretations which were adopted as of 1 January 2011. PAS 24, Related Party Transactions (Amendment) PAS 24 clarifies the definitions of a related party. The new definitions emphasize a symmetrical view of related party relationships and clarify the circumstances in which persons and key management personnel affect related party relationships of an entity. In addition, the amendment introduces an exemption from the general related party disclosure requirements for transactions with the government and entities that are controlled, jointly controlled or significantly influenced by the same government as the reporting entity. The adoption of the amendment did not have any impact on the financial position or performance of the Group. PAS 32, Financial Instruments: Presentation (Amendment) The amendment alters the definition of a financial liability in PAS 32 to enable entities to classify rights issues and certain options or warrants as equity instruments. The amendment is applicable if the rights are given pro rata to all of the existing owners of the same class of an entity’s non-derivative equity instruments, to acquire a fixed number of the entity’s own equity instruments for a fixed amount in any currency. The amendment has had no effect on the financial position or performance of the Group because the Group does not have these types of instruments. Philippine Interpretation IFRIC 14, Prepayments of a Minimum Funding Requirement (Amendment) The amendment removes an unintended consequence when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover such requirements. The amendment permits a prepayment of future service cost by the entity to be recognized as a pension asset. The Group is not subject to minimum funding requirements in the Philippines, therefore the amendment of the interpretation has no effect on the financial position nor performance of the Group. Improvements to PFRSs (issued 2010) Improvements to PFRSs, an omnibus of amendments to standards, deal primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for

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each standard. The adoption of the following amendments resulted in changes to accounting policies but did not have any impact on the financial position or performance of the Group. • PFRS 3, Business Combinations: The measurement options available for non-controlling interest (NCI) were amended. Only components of NCI that constitute a present ownership interest that entitles their holder to a proportionate share of the entity’s net assets in the event of liquidation should be measured at either fair value or at the present ownership instruments’ proportionate share of the acquiree’s identifiable net assets. All other components are to be measured at their acquisition date fair value. The amendments to PFRS 3 are effective for annual periods beginning on or after 1 July 2011. The Group, however, adopted these as of January 1, 2011 and changed its accounting policy accordingly as the amendment was issued to eliminate unintended consequences that may arise from the adoption of PFRS 3. • PFRS 7, Financial Instruments — Disclosures: The amendment was intended to simplify the disclosures provided by reducing the volume of disclosures around collateral held and improving disclosures by requiring qualitative information to put the quantitative information in context. The Group reflects the revised disclosure requirements. • PAS 1, Presentation of Financial Statements: The amendment clarifies that an entity may present an analysis of each component of other comprehensive income maybe either in the statement of changes in equity or in the notes to the financial statements. Other amendments resulting from the 2010 Improvements to PFRSs to the following standards did not have any impact on the accounting policies, financial position or performance of the Group: • PFRS 3, Business Combinations (Contingent consideration arising from business combination

prior to adoption of PFRS 3 [as revised in 2008]) • PFRS 3, Business Combinations (Un-replaced and voluntarily replaced share-based payment

awards) • PAS 27, Consolidated and Separate Financial Statements • PAS 34, Interim Financial Statements The following interpretation and amendments to interpretations did not have any impact on the accounting policies, financial position or performance of the Group: • Philippine Interpretation IFRIC 13, Customer Loyalty Programmes (determining the fair value

of award credits) • Philippine Interpretation IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments

C. Disagreements with Accountants The Bank and its subsidiaries had no disagreement with the Bank’s auditors on any matter of accounting principles or practices, financial statements disclosure, or auditing scope procedure.

Item 5. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is the discussion on the consolidated financial condition and results of operations of PNB and its Subsidiaries (the Group) based on the Audited Financial Statements as of and for the years ended December 31, 2010, 2009, 2008 and for the nine months ended September 30, 2011 (unaudited) and September 30, 2010 (unaudited). Key Performance Indicators

• Capital Adequacy The Group’s consolidated risk-based capital adequacy ratio computed based on BSP guidelines

were 19.8%, 19.4%, 18.5% and 17.6% as of September 30, 2011, December 31, 2010, 2009 and 2008, respectively, improving and well above the minimum 10% required by BSP.

16

• Asset Quality Non-performing loans (NPL) (gross of allowance) were P7.0, P7.7 billion, P8.0 billion and

P10.0 billion as of September 30, 2011, year-end 2010, 2009 and 2008, respectively. • Profitability

9/30/11 2010 2009 2008

Return on Equity 1/ 8.9% 11.0% 7.3% 3.8% Return on Assets 2/ 1.0% 1.2% 0.8% 0.4% Net Interest Income 3/ 3.0% 3.5% 3.8% 3.7% 1 net income divided by average total equity for the period indicated 2 net income divided by average total assets for the period indicated 3 net interest income divided by average interest-earning assets for the period indicated

• Liquidity The ratios of liquid assets to total assets were 33.2%, 34.7%, 31.5% and 28.1% as of September

30, 2011, December 31, 2010, 2009 and 2008, respectively. The Bank is in compliance with the liquidity and legal reserve requirements of BSP for deposit

liabilities. • Cost Efficiency The ratios of total operating expenses (excluding provision for impairment and credit losses)

to total operating income were 71.8%, 59.9%, 70.6%, and 75.9% for September 30, 2011, year-end 2010, 2009 and 2008, respectively.

Known trends, demands, commitments, events and uncertainties The Bank presently has more than adequate liquid assets to meet known funding requirements

and there are no known trends, demands, commitments, events or uncertainties that will have a material impact on the Bank’s liquidity.

Events that will trigger direct or contingent financial obligation In the normal course of business, the Group makes various commitments and incurs certain

contingent liabilities that are not presented in the financial statements, including several suits and claims which remain unsettled. No specific disclosures on such unsettled assets and claims are made because any such disclosures would prejudice the Group’s position with the other parties with whom it is in dispute. Such exemption from disclosures is allowed under PAS 37, Provisions, Contingent Liabilities and Contingent Assets. The Group and its legal counsel believe that any losses arising from these contingencies which are not specifically provided for will not have a material adverse effect on the financial statements.

Material off-balance sheet transactions, arrangement or obligation The following is a summary of various commitments and contingent liabilities of the Group as

of September 30, 2011 and 2010 at their equivalent peso contractual amounts:

9/30/11 12/31/10 (In Thousand Pesos) Trust department accounts P=52,944,057 P=30,427,482 Deficiency claims receivable 6,335,470 7,516,669 Inward bills for collection 1,562,747 2,621,934 Outstanding guarantees issued 1,123,406 938,361 Outward bills for collection 112,894 76,911 Unused commercial letters of credit 72,117 11,414

17

Confirmed export letters of credit 5,495 14,603 Items held as collateral 194 262 Other contingent accounts 41,281 41,316

Capital Expenditures The Bank plans to purchase hardware and software requirements needed for the

implementation of and new ATM acquisitions and upgrades, Flexcube licenses & upgrades, Trust and Treasury system upgrades among others.

Significant Elements of Income or Loss Significant elements of net income of the Bank came from its continuing operations. Seasonal Aspects There are no seasonal aspects that have material effect on the Bank’s financial condition or

results of operations. Financial Condition 9/30/2011 vs. 2010

• The Group’s consolidated assets reached P318.7 billion as of September 30, 2011, P16.6 billion or 5.5% higher compared to P302.1 billion as of December 31, 2010. The growth in resources was funded by the increase in deposits and proceeds from the issuance of P6.5 billion unsecured subordinated notes eligible as Tier 2 Capital in June 2011. Significant changes (more than 5%) in assets were registered in the following accounts:

- Loans and Receivables grew by 17.6% or P19.4 billion, from P110.3 billion to P129.7 billion,

attributable mainly to P28.1 billion new loan releases partly offset by loan collections of P6.7 billion, P1.4 billion decline in Other Receivables and P0.7 billion increase in the provision for probable losses.

- Securities Held Under Agreements to Resell increased by P3.7 billion, from P6.8 billion to P10.5 billion, as lending transactions with BSP increased.

- Due from BSP went up by P9.0 billion, from P24.3 billion to P33.3 billion, accounted for by the increase in the reserve deposit account with the BSP.

- Financial Assets at Fair Value Through Profit or Loss was lower by P7.4 billion from P15.9 billion to P8.5 billion, attributed mainly to the sale of government and other investment securities.

- Interbank Loans Receivable decreased by P3.9 billion, from P12.7 billion to P8.8 billion, in view of lower interbank lending.

- Held to Maturity Investments declined by P2.9 billion, from P38.2 billion to P35.3 billion, on account of matured investments.

- Receivables from Special Purpose Vehicle went up by P0.1 billion, from P0.6 billion to P0.7 billion, due to the lower requirement for provision for impairment loss.

- Other Assets was lower by P0.9 billion, from P7.2 billion to P6.3 billion. - Due from Other Banks was higher by P0.5 billion, from P5.1 billion to P5.6 billion, while Cash

and Other Cash Items declined by P1.3 billion, from P5.5 billion to P4.2 billion. • The consolidated liabilities increased by P15.3 billion from P268.7 billion as of December 31,

2010 to P284.0 billion as of September 30, 2011. Major changes in liability accounts were as follows:

- Deposit Liabilities grew by P12.3 billion, from P226.4 billion to P238.7 billion. The growth

came from P14.5 billion and P0.2 billion increase in savings deposits and in demand deposits, respectively partly offset by the decline of P2.5 billion in time deposit.

- Bills and Acceptances Payable increased by P3.9 billion, from P12.0 billion to P15.9 billion, on account of additional borrowings from other banks.

- Subordinated Debt increased by P1.0 billion, from P5.5 billion to P6.5 billion. On June 15, 2011, the Bank issued P6.5 billion in Unsecured Subordinated Notes eligible as Tier 2 Capital

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to refinance the Bank’s P5.5 billion Lower Tier 2 Subordinated Notes which were redeemed in August 2011 and to raise additional Tier 2 Capital in order to finance asset growth and strengthen the Bank’s capital base.

- Other Liabilities decreased by P1.9 billion, from P13.1 billion to P11.2 billion. • The consolidated equity stood at P34.7 billion as of September 30, 2011, up by P1.2 billion

from P33.5 billion as of December 31, 2010. The increase in capital accounts was accounted for by the P2.3 billion net income for the first nine months of 2011 and P0.1 billion improvement in the accumulated translation adjustment partly offset by the P0.1 billion decrease in non-controlling interest in a subsidiary, P0.7 billion amortization of deferred losses from sale of non-performing assets to SPV companies, and P0.4 billion net unrealized loss on mark to market valuation of available for sale investments.

2010 vs. 2009

• The Group’s consolidated assets reached P302.1 billion as of December 31, 2010, P18.8 billion above P283.3 billion as of end 2009. Significant changes (more than 5%) in assets were registered in the following accounts:

- Securities Held Under Agreements to Resell increased by P1.2 billion, from P5.6 billion to P6.8

billion, as lending transactions with BSP increased. - Available for Sale Securities was higher by P17.9 billion, from P16.6 billion to P34.5 billion, on

account of purchases of government securities. - Financial Assets at Fair Value Through Profit or Loss went up by P5.4 billion, from P10.5

billion to P15.9 billion, attributed mainly to acquisition of government securities. - Due from BSP increased by P3.4 billion, from P20.9 billion to P24.3 billion, accounted for by

the reserve deposit account with BSP. - Loans and Receivables went up by P9.8 billion, from P100.5 billion to P110.3 billion,

attributable to new loan releases. - Interbank Loans Receivable was lower by P11.6 billion, from P24.3 billion to P12.7 billion, due

to lower interbank lending. - Receivables from Special Purpose Vehicle went up by P0.1 billion, from P0.5 billion to P0.6

billion. - Held to Maturity Investments decreased by P3.7 billion, from P41.9 billion to P38.2 billion,

attributed to matured investments in government securities. - Cash and Other Cash Items and Due from Other Banks were lower by P0.6 billion and P0.3

billion, respectively. - Investment Properties declined by P2.5 billion, from P22.2 billion to P19.7 billion, mainly, due

to sale of properties. - Other Assets decreased by P0.5 billion, from P7.7 billion to P7.2 billion • The consolidated liabilities increased by P16.4 billion from P252.3 billion as of December 31,

2009 to P268.7 billion as of December 31, 2010. Major changes in liability accounts were as follows:

- Deposit Liabilities went up by P12.1 billion, from P214.3 billion to P226.4 billion. Demand,

savings and time deposits increased by P4.9 billion, P4.3 billion and P2.9 billion, respectively. - Bills and Acceptances Payable was higher by P4.2 billion, from P7.8 billion to P12.0 billion, on

account of additional borrowings from other banks. - Accrued Taxes, Interest and Other Expenses increased by P0.1 billion, from P4.9 billion to

P5.0 billion, in view of accruals on deposit liabilities. - Other liabilities increased by P0.1 billion, from P13.0 billion to P13.1 billion. - Financial Liabilities at Fair Value Through Profit or Loss decreased by P0.1 billion, from P6.7

billion to P6.6 billion. • The consolidated equity reached P33.5 billion as of December 31, 2010, up by P2.5 billion

from P31.0 billion as of December 31, 2009. The increase in capital accounts came primarily from the P3.5 billion net income and P0.1 billion revaluation increment on land and building partly offset by the P0.3 billion net unrealized loss on mark to market valuation of available for sale investments and by the P0.8 billion amortization of deferred losses from sale of non-performing assets to SPV companies.

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2009 vs. 2008

• As of December 2009, the Group’s consolidated resources stood at P283.3 billion, a P7.9 billion or 2.9% growth compared to P275.4 billion level as of end December 2008. Major changes were reflected in the following accounts:

- Interbank Loans Receivable was higher by P11.4 billion, from P12.9 billion to P24.3 billion,

due to an increase in lending to BSP and foreign banks. - Available for Sale Investments went up by P2.0 billion, from P14.6 billion to P16.6 billion,

attributed mainly to the acquisition of new government securities. - Investments in Subsidiaries and an Associate increased by P2.8 billion. In August 2009, PNB

and Allied Bank invested Chinese Yuan (CNY) 394.1 million and CNY196.9 million, respectively or a combined additional equity of CNY591 million in its US Dollar equivalent in Allied Commercial Bank (ACB) in Xiamen, China. The investments of PNB and Allied Bank in ACB translate to equity holdings of 39.4% and 51.0%, respectively.

- Cash and Other Cash Items was lower by P0.4 billion, from P6.4 billion to P6.0 billion. - Due from Other Banks was P5.4 billion, a decrease by P1.3 billion from P6.7 billion. - Financial Assets at Fair Value Through Profit or Loss decreased by P0.6 billion from P11.1

billion to P10.5 billion. - Receivables from Special Purpose Vehicle went down by P0.1 billion, from P0.7 billion to P0.6

billion, due to additional provision for impairment losses. - Held to Maturity Investments declined by P2.2 billion, from P44.1 billion to P41.9 billion, on

account of matured investments. - Investment Properties was P22.2 billion, lower by P1.3 billion from P23.5 billion, due to

disposition of foreclosed properties. - Other Assets decreased by P1.3 billion, from P9.0 billion to P7.7 billion, mainly due to the

P0.7 billion amortization of deferred losses from sale of nonperforming assets to Special Purpose Vehicle (SPV) companies.

• The consolidated liabilities increased by P6.2 billion, from P246.1 billion as of December 31,

2008 to P252.3 billion as of December 31, 2009, mainly accounted for by the major changes in the following accounts:

- Deposit Liabilities grew by P13.0 billion, from P201.3 billion to P214.3 billion. Demand,

savings and time deposits increased by P0.3 billion, P5.6 billion and P7.1 billion, respectively. Time deposits include the P3.25 billion, 6.5% Long-Term Negotiable Certificates of Time Deposit due in 2014 which were issued in March 2009.

- Accrued Taxes, Interest and Other Expenses increased by P0.6 billion, from P4.4 billion to P5.0 billion.

- Bills and Acceptances Payable went down by P4.8 billion, from P12.6 billion to P7.8 billion, due to settlement of borrowings from BSP under its rediscounting facilities.

- Subordinated Debt decreased by P2.9 billion, from P8.4 billion to P5.5 billion, attributed to the P3.0 billion Subordinated Notes which were redeemed in February 2009 prior to maturity in 2015 under the exercise of call option.

• The consolidated equity reached P31.0 billion as of year-end 2009, up by P1.7 billion from

P29.3 billion as of year-end 2008. The increase in capital accounts came primarily from the P2.2 billion annual net income and the P0.3 billion recovery from net unrealized losses on mark to market valuation of available for sale investments, partly offset by the P0.7 billion amortization of deferred losses from sale of non-performing assets to SPV companies and the P0.1 billion translation adjustment.

2008 vs. 2007

• As of December 31, 2008, the Group’s consolidated assets reached P275.4 billion, an increase of 14.9% or P35.7 billion from P239.7 billion as of December 31, 2007. The considerable growth primarily came from fresh lending to corporate, institutional and retail accounts as well as new investments, fueled by a hefty growth in deposits and proceeds from the additional P6.0 billion Tier 2 Capital issued in June 2008.

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The following are the significant changes in asset accounts: - Loans and Receivables went up by P25.8 billion, from P76.6 billion to P102.4 billion,

attributable to new loan releases. - Held to Maturity Investments increased by P43.7 billion, from P0.4 billion to P44.1 billion,

primarily due to reclassification of investment securities from Held for Trading amounting to P1.5 billion and Available for Sale Securities amounting to P42.4 billion in September 2008 in line with SEC Memorandum Circular No. 10, partly offset by matured investments.

- Financial Assets at Fair Value Through Profit or Loss was higher by P7.9 billion, from P3.2 billion to P11.1 billion, accounted for by additional investments in foreign securities.

- Due from Other Banks increased by P2.7 billion, from P4.0 billion to P6.7 billion, as the balance of accounts maintained with foreign correspondent banks increased.

- Cash and other cash items increased by P1.6 billion, from P4.8 billion to P6.4 billion. - Available for Sale Securities went down by P30.2 billion, from P44.8 billion to P14.6 billion,

due to reclassification of P42.4 billion securities to Held to Maturity Investments, partly offset by additional investments in government securities.

- Investment in Subsidiaries and an Associate went down to P5.1 million from P0.7 billion. In November 2008, the Bank sold its 40% ownership interest in Benlife.

- Securities Held Under Resell Agreement decreased by P5.6 billion, from P11.2 billion to P5.6 billion, on account of lower placements in government securities.

- Due from BSP declined by P7.9 billion, from P28.0 billion to P20.1 billion, due to the maturity of special deposits with the BSP.

- Investment Properties decreased by P1.3 billion, from P24.8 billion to P23.5 billion, attributed mainly to the sale of properties.

- Deferred Tax Asset decreased by P0.1 billion, from P1.8 billion to P1.7 billion. • Consolidated liabilities grew by P36.6 billion from P209.5 billion as of December 31, 2007 to

P246.1 billion as of December 31, 2008 as a result of vigorous deposit generation efforts and the issuance of additional P6.0 billion Tier 2 Capital.

Major changes in liability accounts are as follows: Deposit Liabilities grew by P22.5 billion, from P178.8 billion to P201.3 billion. The growth came from savings and demand deposits, up by P24.0 billion and P2.6 billion, respectively, partly offset by a decrease in time deposits by P4.1 billion. - The increase in the Financial Liabilities at Fair Value Through Profit or Loss pertains to the

additional P6.0 billion Tier 2 Capital issued in June 2008 primarily to refinance outstanding Tier 2 notes callable in February 2009 and to further strengthen capital.

- Bills and Acceptances Payable was higher by P8.3 billion, from P4.3 billion to P12.6 billion, accounted mainly by availments of the rediscounting facilities of BSP.

• The consolidated equity stood at P29.3 billion and P30.2 billion as of December 31, 2008 and 2007, respectively. The P0.9 billion decrease in capital accounts was due to a combination of the net unrealized losses on mark to market valuation of available for sale investments and amortization of deferred losses on sale of non-performing assets to SPV companies, partly offset by the net income for the year.

Results of Operations 9/30/2011 vs. 9/30/2010

• The Group reported a consolidated net income of P 2.3 billion for the nine months ended September 30, 2011, slightly lower by 8.0% or P0.2 billion compared to the P2.5 billion net income for the same period last year, attributed mainly to lower gains from trading and investments securities.

• Interest income increased by P0.2 billion to P9.5 billion for the nine months ended September

30, 2011 from P9.3 billion in the same period last year which was attributed mainly to higher ADB on loans and receivables and investment securities partly offset by the decrease in

21

income from deposits with other banks. Interest expense was slightly up by P0.4 billion from P3.5 billion to P3.9 billion due to an increase in average daily balance of deposit liabilities.

• Net service fees and commission income was slightly lower at P1.6 billion compared to P1.7

billion reported for the same period last year. • For the first nine months of 2011, fee-based and other income was lower by P2.6 billion to

P3.1 billion from P5.7 billion in the previous year. Trading and investment net gains went down by P2.1 billion mainly due to mark to market losses on valuation of investment securities. Miscellaneous income also decreased from P2.4 billion to P1.7 billion this year. On the other hand, foreign exchange net gains went up by P0.3 billion.

• Administrative and other operating expenses decreased by P2.7 billion, from P10.1 billion to

P7.4 billion, largely due to the lower provision for impairment and credit losses, depreciation and amortization and miscellaneous expense by P2.3 billion, P0.1 billion and P0.3 billion, respectively.

• Provision for income tax for the nine months ended September 30, 2011 and 2010 amounted

to P0.5 billion and P0.6 billion, respectively. 2010 vs. 2009 • PNB posted a consolidated net income of P3.5 billion for the year ended December 31, 2010

or a hefty growth of 59.1% or P1.3 billion compared to the P2.2 billion consolidated net income for the same period last year.

• Net interest income stood at P7.8 billion for the year ended December 31, 2010, slightly lower

than the P7.9 billion net interest income reported for the same period last year, due mainly to lower average yield rate on loans and investments. Interest expense went down by P0.3 billion from P5.1 billion to P4.8 billion.

• Net service fees and commission income was slightly lower at P2.1 billion compared to P2.3

billion reported for the same period last year. • Fee-based and other income improved by P1.6 billion to P6.7 billion from P5.1 billion. This

was brought about by trading and investment securities gains which increased by P1.6 billion on account of higher gains on the sale of securities as well as favorable mark to market valuation and an increment of P0.7 billion in miscellaneous income mainly from gain on sale of foreclosed properties. On the other hand, foreign exchange net gains was lower by P0.7 billion.

• Administrative and other operating expenses was a little higher by P0.1 billion, from P12.2

billion to P12.3 billion, largely due to the additional provision for impairment losses on investment properties for P1.0 billion partly offset by a decline in compensation and fringe benefits considering that expenses related to the early retirement program effective December 31, 2008 and the new Collective Bargaining Agreement were taken up in 2009.

• Provision for income tax remained at P0.8 billion for 2010 and 2009. 2009 vs. 2008 • The Group’s consolidated net income for 2009 was P2.2 billion, doubling the P1.1 billion net

income for 2008. The financial performance was driven by strong gains in its core businesses, improvement in asset quality and higher operating efficiencies.

• Net interest income rose by P1.3 billion, from P6.6 billion in 2008 to P7.9 billion, in 2009. The

improvement in net interest margin was mainly attributed to higher interest income at P13.0 billion from P11.7 billion due to increased lending activities while there was only a slight increase in interest expense from P5.0 billion to P5.1 billion.

• For 2009 and 2008, net service fees and commission income was maintained at P2.3 billion.

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• Other income improved by P1.9 billion to P5.1 billion in 2009 from P3.2 billion in the previous

year. Earnings from trading and investment securities recovered by P2.3 billion to a positive P1.4 billion from a negative P0.9 billion attributed to favorable mark-to-market valuation of securities. Foreign exchange net gains arising mainly from revaluation of foreign currency denominated accounts went down by P0.9 billion attributable to Philippine peso appreciation against US dollar in 2009. Miscellaneous income increased by P0.5 billion due to gain on sale of acquired assets.

• Total operating expenses went up by P2.0 billion, from P10.2 billion to P12.2 billion.

Provision for impairment and credit losses increased by P0.5 billion. Compensation and fringe benefits increased by P0.4 billion attributed to the early retirement program offered effective December 31, 2008 and the new collective bargaining agreement between management and the employees’ union. Depreciation, occupancy and miscellaneous expenses increased by P0.4 billion, P0.1 billion and P0.5 billion, respectively.

• Provision for income tax was P0.8 billion for 2009 and 2008. 2008 vs. 2007 • The Group reported a consolidated net income of P1.1 billion for 2008, down by 25.3% or P0.4

billion compared to P1.5 billion net income for 2007, attributed mainly to losses in mark to market valuation of investments securities influenced by the global financial crisis.

• Despite market adversities, net interest income increased by P0.7 billion to P6.6 billion for

2008 from P5.9 billion in the previous year which was attributed mainly to lower cost of deposits due to favorable changes in the deposit mix.

• Net service fees and commission income remained significant at P2.4 billion for 2008 and 2007. • For 2008, trading and investment losses amounted to P0.9 billion from a net gain of P1.1

billion in 2007 due to unfavorable mark to market valuation adjustments resulting from the volatility of the financial market. On the other hand, foreign exchange net gains went up by P1.7 billion from P0.9 billion to P2.7 billion as the Philippine peso depreciated against the US dollar. Miscellaneous income was lower in 2008 at P1.6 billion from P4.3 billion in view of higher fair value gains on foreclosed properties in 2007.

• Total operating expenses was reduced by P2.1 billion from P12.3 billion in 2007 to P10.2

billion in 2008, mainly due to lower provision for impairment and credit losses attributed to better management of risks and the Bank’s continuing expense rationalization program which includes, among others, branch realignments and manpower productivity measures.

• Provision for income tax amounted to P0.8 billion and P0.6 billion for 2008 and 2007,

respectively. The increase was mainly due to higher final taxes on investments. Item 6. Market Price, Holders and Dividends

Please refer to pages 18 to 19 of the Information Statement.

ANNEX “A”

1. REAL PROPERTIES OWNED: Bank Premises – Land Building

○ Principal Office - Land (PNB Financial Center and CITEM) 7.000 Billion - Building 3.206 Billion 10.206 Billion

○ Others (Domestic and Overseas Branches)

- Land 4.137 Billion - Building 1.075 Billion 5.212 Billion

Net Book Value 15.418 Billion

2. LIST OF ACQUIRED (FORECLOSED AND DACIONED) PROPERTIES OF PNB (P50 MILLION AND UP) As of December 31, 2011

(In Million Pesos)

Property Ledger ID Legal Impediments Property

Class

Net Book Value

(GAAP)

13394 Foreclosure Annulment Case Land 1,440.00

13421 Saleable Land 576.00

4116 Other Impediments/Clauses Land 562.14

13984 Foreclosure Annulment Case Building 476.55

22941 Saleable Land 473.29

19603 Saleable Land 462.63

4117 Other Impediments/Clauses Land 444.15

13356 Saleable Land 405.00

13632 Saleable Land 385.57

4119 Other Impediments/Clauses Land 335.71

23041 Other Impediments/Clauses Land 289.44

12727 Saleable Land 289.28

12728 Saleable Land 286.55

13750 Foreclosure Annulment Case Land 285.16

22436 Sold, But Not Yet Implemented Land 256.43

13423 Saleable Land 216.86

13336 Saleable Land 211.36

13444 Saleable Land 205.29

11846 Foreclosure Annulment Case Land 198.77

13410 Sold, But Not Yet Implemented Land 172.03

6566 Saleable Land 157.25

19636 Sold, But Not Yet Implemented Land 146.34

12725 Sold, But Not Yet Implemented Land 138.18

17562 Other Impediments/Clauses Building 137.93

4118 Other Impediments/Clauses Land 127.85

18656 Foreclosure Annulment Case Land 101.17

22947 Saleable Land 100.02

13746 Saleable Land 97.62

18683 Saleable Building 96.41

12726 Saleable Land 96.26

18651 Foreclosure Annulment Case Land 94.24

19644 Sold, But Not Yet Implemented Land 91.68

13540 Saleable Land 91.50

13403 Sold, But Not Yet Implemented Land 90.20

24553 Saleable Land 88.20

12893 Saleable Land 85.90

18684 Saleable Building 83.84

19637 Sold, But Not Yet Implemented Land 79.82

14175 Saleable Building 73.65

6161 Sold, But Not Yet Implemented Land 70.04

19113 Sold, But Not Yet Implemented Land 66.16

13451 Saleable Land 65.73

22080 Foreclosure Annulment Case Land 65.25

18680 Saleable Building 61.60

17484 Saleable Land 60.03

13749 Other Impediments/Clauses Land 59.61

21709 Saleable Land 54.50

18673 Foreclosure Annulment Case Building 50.36

TOTAL 10,503.54

3. PROPERTIES OF PNB DOMESTIC BRANCHES

Name of Subsidiary

Description of Property/Address

Appraised Value

1. PNB Holdings Corporation Skyland Plaza 2302 Unit SF-201 2nd Floor Skyland Plaza Condominium Sen. Gil Puyat Avenue, Makati City

P87,684,400.00

Summit One Condominium 26th and 42nd Floors Summit One Office Tower 530 Shaw Blvd., Mandaluyong City

P48,050,380.00

2. PNB General Insurers Co., Incorporated 1/

Unit No. 924 9th Floor Cityland Condominium V Bangkal Makati City

P858,500.00

3. PNB Securities, Incorporated Unit No. 902 9th Floor Ayala Triangle Tower 1 Ayala Avenue, Makati City

P9,900,000.00

4. Japan-PNB Leasing and Finance Corporation

Warehouse Building Facility Mactan Export Processing Zone 1 (MPEZ-1) Gross Floor Areas of 732 sq.m.

1/ 100% owned by PNB Holdings Corp., a wholly-owned subsidiary of PNB. 2/ JPNB has only one real property and the same was booked as Lease Contracts Receivable-Foreign under

a finance lease facility and not under Real Properties Owned or Acquired.

4. PROPERTIES OF PNB OVERSEAS BRANCHES AND OFFICES:

The overseas offices bank-owned property was disposed of in 2010.

5. LIST OF DOMESTIC BRANCHES UNDER LEASE

BRANCH NAME ADDRESS Monthly Rental

Expiration of Lease

NORTH METRO 1

Blumentritt PNB Kassco Bldg., cor. Lico and Cavite Sts. Sta Cruz, Manila 16,296.00 November 30, 1985 - under litigation

Caloocan-A.Mabini 451 A. Mabini Corner J. Rodriguez St., Caloocan City 82,687.50 February 15, 2013

Grace Park 354 A-C 10th Ave., Grace Park Caloocan City 84,000.00 September 2014

Dapitan-Gelinos G/F North Forbes Place, 1221 Gelinos St. Sampaloc, Manila 106,990.42 September 5, 2014

Marulas 8 AGS Bldg, Mc Arthur Highway Marulas, Valenzuela City 35,000.00 June 14, 2016

Monumento 419 D&I Bldg., Edsa, Caloocan City 104,675.00 June 30, 2012

Pritil (Tondo) MTSC Bldg. Juan Luna cor. Capulong Ext., Tondo, Manila 1012 115,000.00 October 31, 2015

NORTH METRO 2

Araneta Avenue 128 G. Araneta Ave.Barangay Dona Imelda, Quezon City 79,966.69 March 2012

Delta 101-N dela Merced Bldg. West Avenue corner Quezon Avenue, Q.C. 96,923.42 August 2013

EDSA Roosevelt 1024 Global Trade Center Bldg. EDSA, Quezon City 148,693.64 January 2014

E. Rodriguez Sr.-

Banaue

97 ECCOI Building E Rodriguez Sr Avenue Brgy Tatalon, Quezon City 42,820.85 August 2016

(Renewal is still for

lessor’s confirmation)

Frisco Unit E/F. MCY Bldg. #136 Roosevelt Ave. SFDM, Quezon City 40,787.60 October 2014

Galas 20 A. Bayani St., corner Bustamante, Galas, Quezon City 95,063.86 May 2016

Gilmore Gilmore IT Center No. 08 Gilmore Ave., cor. 1st st., New Manila,

Quezon City

187,474.99 December 2014

Mabuhay Rotonda G/F EU State Tower, #30 Quezon Ave., Quezon City 1113 63,721.28 December 2012

PCSO Philippine International Convention Center-CCP Complex, Roxas

Blvd, Pasay City

64,979.71 October 2012

Retiro 422 N.S. Amoranto St. Edificio Enriqueta Bldg. Sta. Mesa Heights,

Quezon City

147,805.56 Aprril 2013

Timog Ground Floor Newgrange Bldg., 32 Timog Ave., Brgy. Laging Handa,

Quezon City

91,683.89 November 13, 2016

NORTH METRO 3

Batasang Pambansa Main Entrance, Batasan Pambansa Complex, Constitutional Hills, Quezon City

10.00/annum

October 15, 2013

COA COA Building, Commonwealth Avenue, Quezon City 54,529.90

December 31, 2013

Commonwealth G/F LC Square Bldg., 529 Commonwealth Avenue., Quezon City 81,648.00 December 1, 2014

Ever Gotesco Lower G/F Stall No. 20, Ever Gotesco Commonwealth, Quezon City 62,844.46 March 2016

Fairview No. 41 Regalado Ave. West Fairview, Quezon City 103,364.77 May 31, 2016

Lagro JTM Bldg., Regalado Ave. Neopolitan Subd., North Fairview, Quezon

City

45,600.00 May 2013

NFA (SRA ) SRA Building, Brgy. Vastra, North Avenue, Quezon City 33,720.96 August 31, 2016

Novaliches 513 Quiino Highway Talipapa Novaliches, Quezon City 45,063.00 February 25, 2015

Project 8 Mecca Trading Bldg., Congressional Avenue., Project 8, Quezon City 87,166.67 June 01, 2016

SSS Diliman G/F SSS Building., East Avenue Diliman, Quezon City 100,018.80 January 31, 2013

Tandang Sora 102 cor. San Miguel Village, Pasong Tamo, Tandang Sora Quezon City 61,600.00 September 25, 2016

NORTH METRO 4

Cainta RRCG Transport Building, Km. 18 Ortigas Avenue Extension, Brgy. San

Isidro, Cainta, Rizal

72,800.00

September 09, 2016

Eton-Corinthian (Avenida)

Unit 78 E-Life @ Eton Cyberpod Corinthian Ortigas Ave., cor. Edsa Quezon City

111,528.90 March 14, 2015

Greenhills G/F One Kennedy Place, Club Filipino Drive Greenhills, San Juan City 211,422.50 March 07, 2015

Kapasigan Emiliano A. Santos Bldg., A. Mabini Cor. Dr. Sixto Antonio Ave., Pasig

City

140,872.40 September 30, 2015

Pasig Ground Floor Westar Bldg., 611 Shaw Blvd., Pasig City 1600 146,687.57 September 30, 2014

Pasig-Santolan (Kalentong)

Amang Rodriguez Ave., Brgy. Dela Paz, Santolan, Pasig City 88,357.50 December 07, 2013

Pioneer 123 Pioneer Street, Mandaluyong City 103,517.15 April 14, 2014

Rosario-Pasig Unit 117-118 G/F Ever Gotesco Mall, Ortigas Extension, Pasig City 222,315.23 Lease agreement is currently being

reviewed/negotiated by Legal with the owners

San Juan 213 F. Blumentritt St. cor. Lope K Santos, San Juan City 66,304.06 March 31, 2013

Shangri-la Plaza Unit AX 116 P3 Carpark Bldg.Shangri-la Annex Plaza Mall, EDSa

Corner Shaw Blvd. Mandluyong City

115,589.63 September 30, 2012

Tanay Tanay New Public Market Road, Brgy Plaza Aldea, Tanay Rizal 44,800.00 October 29, 2012

Taytay 2 Kadalagahan St, Brgy Dolores, Taytay, Rizal 87,000.00 March 04, 2016

NORTH METRO 5

Ali Mall Alimall II Bldg., Gen. Romulo Ave., cor P. Tuazon Blvd., Cubao, Q.C. 76,020.00 December 31, 2014

Antipolo 89 P. Oliveros St., Kapitoloyo Arcade, San Roque, Antipolo City 1870 56,448.00 December 31, 2014

Katipunan 335 Agcor Bldg., Katipunan Ave., Loyola Heights, Quezon City 161,147.74 December 07, 2011 (Renewal in process)

MWSS MWSS Compound. Katipunan Road, Balara, Quezon City 69,756.57 June 30, 2015 (In process, for signature of

MWSS)

Marikina Shoe Ave. corner W. Paz St., Sta. Elena, Marikina City 1800 Rent Free November, 2012 (after the 25 yrs. BOT Term (Build, Operate & Transfer)

Masinag Silicon Valley Bldg., 169 Sumulong Highway, Mayamot, Antipolo City 60,202.00 December 31, 2011 (proposal for signature of the lessor, last follow-up

was on 12/28/11) NIA EDSA corner NIA Road., Brgy Pinahan, Diliman Quezon City Rent Free February 2017

(after the 25 yrs. BOT term (Build, Operate & Transfer)

NPC Agham Road, Diliman, Quezon City Rent Free November 2013 (after

the 25 yrs. BOT term (Build, Operate & Transfer)

UP Campus No. 3 Apacible Street, UP Campus, Diliman, Quezon City 422,560.32 October 31, 2011 (Renewal in process)

SOUTH METRO 6

Bangkal G/F E. P. Hernandez Bldg., 1646 Evangelista St., Bangkal, Makati

City

118,196.50 November 1, 2012

Benavidez Unit G-1D, G/F BSA Mansion, 108 Benavidez St.Legaspi Village,

Makati City

95,000.00 June 14, 2016

Bonifacio Global City

(Bulan)

PNB Shop 2, The Luxe Residences 28th St., cor 4th Ave., Bonifacio

Global City

171,142.19 November 14, 2014

Edison-Buendia Visard Bldg, #19 Sen. Gil Puyat Ave., Makati City 68,378.95 February 7, 2016

Fort Bonifacio-

McKinley Hill

G/F Unit B, Mc Kinley Hill 810 Bldg. Upper McKinley Road, McKinley

Town Center, Fort Bonifacio, Taguig City

331,408.00 April 7, 2016

Fort Bonifacio-Infinity G/F 101, The Infinity Tower, 26th Street, Fort Bonifacio, Taguig City 213,571.43 May 15, 2016

Guadalupe Pacmac Bldg., 23 EDSA Guadalupe, Makati City 81,257.55 October 19, 2016

Legaspi Village First Life Center 174 Salcedo St., Legaspi Village, Makati City 122,271.07 October 14, 2014

Dasma Makati

(Olympia)

2284 Allegro Center, Chino Roces Avenue Extension, Makati City 115,331.40 October 31, 2015

Sen. Gil Puyat G/F Burgundy Corporate Tower, #252 Sen. Gil Puyat Ave., Makati 205,842.85 December 31, 2011

(Renewal in Process)

SOUTH METRO 7

Alabang G/F Page 1 Building 1215 Acacia Avenue Madrigal Business Park,

Ayala Alabang, Muntinlupa

168,853.40 March 15, 2012

Almanza Hernz Arcade, Alabang-Zapote Road Almanza, Las Pinas City 1750 133,872.54 March 13, 2013

Bicutan VCD Building, 89 Dona Soledad Avenue Betterliving Subdivision,

Bicutan Paranaque City

64,200.00 May 24, 2016

Cartimar-Taft SATA Corp. Bldg., 2217 Taft Avenue Pasay City 94,610.00 October 1, 2014

FTI Lot 52 G/F New Admin Bldg., FTI Complex, Taguig City 102,428.41 December 2015

Muntinlupa G/F Arbar Building, national Highway, Poblacion Muntinlupa City 90,994.30 July 2014

NAIA 1 Arrival Area Lobby, NAIA Complez, Pasay City 28,979.52 January 22, 2012

Terminal 2 Arrival Area Lobby, NAIA Complez, Pasay City 38,524.48 January 22, 2012

Roxas Blvd. Suite 101, CTC Building 2232 roxas Boulevard, Pasay City 127,712.30 February 28, 2017

Sucat G/F Kingslandn Bldg., Dr. A. Santos Avenue Sucat, Paranaque 121,588.71 October 31, 2014

Starmall Alabang Upper Ground Level, Starmall Alabang, South Superhighway, Alabang

Muntuinlupa City, 1770

48,384.00 July 1, 2016

Villamor Air Base G/F Airmens Mall Bldg. cor Andrews & Sales sts. Villamor Air Base,

Pasay City

16,350.00 December 2011

SOUTH METRO 8

Binondo 452 San Fernando St., Binondo, Manila 172,480.00 December 31, 2011

CM Recto Unit 6 & 7 PSPCA 2026-2028 C.M Recto Ave., Quiapo, Manila 115,956.72 March 31, 2012

Divisoria 869 Sto. Cristo St., Binondo, Manila 100,800.00 September 07, 2015

Escolta # 324 G/F Regina Bldg., Escolta, Manila 174,882.00 October 01, 2015

España Doña Anacleta Bldg. España Blvd., cor Galicia St., Sampaloc, Manila 95,200.00 October 25, 2012

Juan Luna 451 Juan Luna St., Binondo, Manila 93,796.10 March 31, 2012

Malacañang J.P Laurel St., San Miguel, Manila Rent Free Indefinite (For Relocation to

Eastwood))

Plaza Sta. Cruz 548 Florentino Torres St., Sta. Cruz, Manila 76,160.00 June 30, 2012

Tutuban-Abad Santos 1450-1452 Coyuco Bldg., Jose Abad Santos, Tondo, Manila 58,728.02 August 31, 2016

SOUTH METRO 9

DPWH DPWH Compound, Bonifacio Drive Port Area Manila 24,491.15 December 31, 2020

Ermita 1343 A. Mabini Street, Ermita, Manila 147,392.78 September 30, 2016

Harrison Plaza RMSC Bldg. A. Adriatico St. Malate Manila Rent Free January 01, 2020

Intramuros G/F Marine Technology Bldg. cor. A. Soriano Ave & Arzobispo Sts.,

Intramuros

132,000.00 June 30, 2014

Luneta PNB Luneta Branch, National Historical Institute (NHI) Compound,

T.M. Kalaw St.,Ermita, Manila

40,000.00 April 26 2018

Taft Avenue (Malate) PNB Taft Avenue Branch Marc 1 Building 1973 Taft Avenue, Malate ,

Manila 1004

157,009.34 July 17, 2016

PGH PGH Compound, Taft Avenue, Ermita Manila Rent Free March 1, 2013

Leon Guinto (Paco) Grd. Floor Marlow Bldg. 2120 Leon Guinto St., Malate Manila 143,350.48 July 15, 2015

Pandacan Jesus Street, Cor. T. San Luis, Pandacan, Manila 59,521.57 October 31, 2015

Port Area G/F Bureau of Customs Compound, Port Area, South Harbor, Manila 84,284.59 November 23, 2013

UN Avenue G/F UMC Bldg., 900 U.N. Avenue, Ermita, Manila 79,134.57 November 30, 2012

SOUTH METRO 10

BSP SU Ground Floor Cafetorium Building, BSP Complex, A. Mabini cor. P.

Ocampo Sts. Malate, Manila

107,354.24 June 30, 2012

BSP Sub-Service Unit Bangko Sentral Ng Pilipinas Security Complex, East Ave., Diliman,

Quezon City

7,168.00 June 30, 2012

GSIS Level 1 GSIS Bldg., Financial Center, Roxas Blvd., Pasay City 79,138.05 May 31, 2013

NORTHERN LUZON 1

Abanao 90 NRC Building, Abanao St., Baguio City 98,784.00 October 8, 2013

La Trinidad Km 5, Brgy. Balili, Benguet State University (BSU) Compound, La Trinidad Benguet 2601

113.67 September 30, 2012

Magsaysay Ave. Unit 102 Lyman Ogilby Centrum, 358 Magsaysay Ave., Baguio City 68,786.39 February 28, 2012

Narvacan Annex Bldg., Narvacan Municipal Hall, Sta. Lucia, Narvacan, Ilocos Sur

45,000.00 September 1, 2013

Pasuquin Farmers Trading Center Bldg., Maharlika Highway, Pob. 1, Pasuquin,

Ilocos Norte

15,326.67 January 31, 2012

NORTHERN LUZON 2

Camiling Poblacion G, Camiling Tarlac Rent Free May 19, 2012

North Zambales Brgy. Hall Pob. South Sta. Cruz, Zambales 13,310.00 January 2, 2012

NORTHERN LUZON 3

Bontoc G/F Mt. Province Commercial Center, Pob. Bontoc, Bontoc, Mountain

Province

27,030.00 September 11, 2016

Lagawe JDT BLDG., INGUILING DRIVE, POBLACION EAST, LAGAWE,IFUGAO 14,000.00 November 10, 2012

Sangitan R. Macapagal Bldg, Maharlika Highway, Brgy Dicarma, Cabanatuan

City

47,432.00 August 31, 2013

Solano National Highway. Poblacion South, Solano, Nueva Vizcaya 44,100.00 August 31, 2013

NORTHERN LUZON 4

Centro Ilagan J. Rizal St., Centro, Ilagan City, Isabela 3300 31,500.00 August 4, 2013

Sanchez Mira C-2 Maharlika Highway Sanchez Mira, Cagayan 3518 30,000.00 December 2, 2022

Tabuk Lua Bldg., Mayangao St., Tabuk, Kalinga 3800 28,300.26 May 31, 2015

Tuao G/F Municipal Bldg., Tuao, Cagayan 3528 5,000.00 July 31, 2012

NORTHERN LUZON 5

Apalit Mc Arthur Highway, San Vicente, Apalit, Pampanga 11,051.26 July 31, 2018

Balagtas G/F D&A Bldg., Mc Arthur Highway, San Juan, Balagtas, Bulacan 60,564.00 June 30, 2013

Dolores Units 4&5 G/F, Peninsula Plaza Bldg., Mc Arthur Highway, Dolores, City of Sn. Fdo., Pamp.

84,124.64 May 1, 2014

East Gate City Walk East Gate CW Commercial Center, Olongapo Gapan Rd., San Jose,

City of Sn Fdo., Pamp.

58,730.50 May 16, 2013

Macabebe Y N CEE Commercial Bldg. Poblacion, San Gabriel Macabebe, Pampanga

30,000.00 March 28, 2016

Robinson's Pulilan Robinsons Mall Pulilan, Maharlika Highway, Cutcut, Pulilan, Bulacan 39,774.00 December 21, 2014

San Jose Del Monte Dalisay Bldg., Quirino Highway, Tungkong Mangga, City of San Jose Del Monte, Bulacan

85,137.22 December 31, 2012

Sta. Maria Jose Corazon De Jesus St., Poblacion, Sta. Maria, Bulacan 65,725.38 September 30, 2013

NORTHERN LUZON 6

BEPZ Luzon Avenue, AFAB, Mariveles, Bataan 33,853.12 March 7, 2019

Clark Field Clark Center Iii, Retail 4 & 5, Berthaphil III, Jose Abad Santos Ave.,

Clarkfield Pampanga

S 2,123.40 May 31, 2019

Dau Grd. Flr. Mendoza Bldg. Hill St., Dau, Mabalacat, Pampanga 59,109.32 May 16, 2012

Dinalupihan AC Commercial Bldg. San Juan Ext., Dinalupihan, Bataan 27,476.71 January 31, 2014

Orani Yneco Bldg. Mcarthur Highway Centro I, Orani, Bataan 25,400.00 February, 2012

Subic Bay Lot 5 Retail 2 Times Square Mall, Sta. Rita Road, Subic Bay Freeport Zone, Olongapo City

74,886.00 October 8, 2014

SOUTHERN LUZON 1

Bauan G/F ADD Building, J.P. Rizal St., Poblacion, Bauan, Batangas 35,000.00 August 11, 2016

Lemery Humarang Bldg. Corner Ilustre Ave. and P. De Joya St., Lemery

Batangas

85,120.00 June 30, 2016

Pinamalayan Mabini St. Zone IV, Pinamalayan, Oriental Mindoro 43,502.39 September 30, 2020

Romblon Republika St., Brgy.1, Romblon, Romblon 16,000.00 October 29, 2014

Tagaytay Vistamart Bldg., Gen. E. Aguilnado Highway, Mendez Crossing West, Tagaytay City

67,200.00 November 30, 2019

Tanauan* G/F V. Luansing Bldg, J.P. Laurel Highway, Tanauan City, Batangas 75,000.00 September 2016

SOUTHERN LUZON 2

Calamba Crossing G/F Unit Building, J. Alcasid Business Center, Crossing Calamba City, Laguna

86,100.00 March 15, 2016

Cavite Dasmariñas

(Labo)

Ground Floor, LCVM Bldg, Aguinaldo Highway Zone IV, Dasmarinas

City, Cavite

147,494.03 December 21, 2015

CEPZ Gen. Trias Drive, Rosario, Cavite 23,980.00 September 2019

Calamba Bucal GF Prime Unit 103 Carolina Center Bldg corner Ipil-Ipil St. Brgy.

Bucal, Calamba City, Laguna

96,757.28 November 30, 2013

Imus GF, J. Antonio Bldg. 1167 Gen. Aguinaldo Highway, Bayan Luma 7, Imus, Cavite

140,397.60 November 11, 2016

Paseo de Santa Rosa Blk. 5 Lot 3B Sta. Rosa Estate 2-A, Balibago Tagaytay Road, Bo. Sto.

Domingo, Sta. Rosa City, 4026 Laguna

151,200.00 May 2016

Sta. Rosa National Highway Balibago City Of Sta Rosa Laguna 91,840.00 June 16, 2016

UPLB Lanzones St. Uplb College Los Banos, Laguna Rent Free March 15, 2014

SOUTHERN LUZON 3

Atimonan Our Lady of the Angels Parish Compund, Quezon Street,

Atimonan,Quezon

32,345.30 September 6, 2015

Boac Gov. Damian Reyes St., Murallon, Boac,Marinduque 31,500.00 June 2014

Maharlika Ground Floor, Kadiwa Bldg., Brgy. Maharlika, Sta. Cruz, Marinduque 16,637.50 June 21, 2015

Siniloan G. Redor St. Siniloan Laguna 64,264.00 January 17, 2016

SOUTHERN LUZON 4

Albay Capitol ANST Bldg. II, Rizal St., Brgy. 14, Albay District., Legaspi City 65,135.27 July 31, 2014

Goa Cor. Rizal and Bautista Sts., Brgy. San Juan Bautista, Goa, Camarines Sur

34,372.80 August 31, 2012

Ligao San Jose St., Dunao, Ligao City 41,335.23 September 30, 2012

Pili CU Bldg, Old San Roque, Pili, Camarines Sur 53,625.60 August 31, 2012

Polangui National Road, Ubaliw, Polangui, Albay 36,297.00 April 30, 2013

Virac 055 Quezon Ave., Brgy Salvacion, Virac, Catanduanes Rent Free January 31, 2016

PANAY AREA

De Leon ATM Bldg., Jalandoni Ledesma Sts., Iloilo City 84,672.00 June 30, 2014

Jaro #8 Lopez Jaena St., Jaro, Iloilo City 111,272.00 May 2, 2016

La Paz Inayan Bldg, Rizal St., Lapaz, Iloilo City 48,510.00 December 31, 2013

Miag-ao One TGN Building, Cor. Noble & Sto. Tomas Sts., Miagao., Iloilo 40,425.00 May 31, 2013

Passi F. Palmares St., Passi City 37,684.21 October 3, 2013

NORTHERN CEBU / BOHOL

Banilad Gov. M. Cuenco Ave., cor. Paseo Saturnino St., Banilad, Cebu City 104,517.00 February 28, 2015

Bogo Cor. R. Fernan & San Vicente Sts., Bogo City, Cebu 28,152.50 April 15, 2016

Centro Mandaue A. Del Rosario St., Centro, Mandaue City 100,000.00 February 28, 2012 (preterminated)

Fuente Osmeña BF Paray Bldg., Osmena Blvd., Cebu city 134,400.00 May 13, 2013

Island City Mall-

Tagbilaran

Upper Ground Floor 33-34, Island City Mall, Dampas District,

Tagbilaran City

55,048.50 July 31, 2016

Lahug Ground Floor Juanita Bldg., Ecario St. corner Gorordo Ave., Brgy. Camputhaw, Lahug, Cebu City

63,558.00 February 07, 2016

Mandaue JD Building, Lopez Jaena Street, Tipolo, Mandaue City, Cebu 6014 95,551.16 April 14, 2015

MEPZ 1st Avenuve, Mactan Eco Zone, Ibo, Lapulapu City, Cebu 12,435.00 July 19, 2019

Mactan Int'l. Airport

Extension Office

(MIAEO)

Lower Ground Floor, Waterfront Mactan Casino Hotel Bldg., Airport

Rd., Pusok, Lapulapu City, Cebu

57,002.77 December 1, 2011 (Renewal in Process)

M.J. Cuenco G/F Benedicto Building, M.J. Cuenco Avenue, Cebu City 51,861.60 September 30, 2012

Tabunok Paul Sy Bldg., National Highway, Tabunok, Talisay City, Cebu 77,840.00 January 16, 2016

Uptown Cebu Ground Floor, Jethouse Bldg., #36 Osmena Blvd., Cebu City 134,220.70 September 15, 2015

SAMAR/LEYTE

Baybay Magsaysay Avenue, Baybay City 10,000.00 May 17, 2017

Downtown Tacloban Washington Bldg., Rizal Ave., Tacloban City 112,179.41 October 22, 2016

Guiuan San Nicolas St., Guiuan, Eastern Samar 21,052.63 October 31, 2012

Palompon Ground Floor, Municipal Bldg., Rizal St., Palompon, Leyte 3,750.00 December 24, 2017

NEGROS

Bacolod 10th Lacson St., Bacolod City P99/ year 2068

Bais Rosa Dy-Teves Bldg, 828 Quezon St., Bais City 30,000.00 November 30, 2016

Guihulngan New Guihulngan Public Market, S. Villegas St., Guihulngan, Negros

Oriental

12,117.60 February 9, 2015

La Carlota Cor. La Paz and Rizal Sts., La Carlota City 33,693.83 May 31, 2016

NORTHERN MINDANAO

Carmen Premier Bldg., Elipe Park, R.M. Pelaez St. Cor. Agoho Drive, Brgy.

Carmen, Cagayan de Oro City, Misamis Oriental

41,983.20 September 02, 2012

Malaybalay Flores Bldg., cor. Rizal & Tabios Sts., Brgy. 5, Malaybalay City, Bukidnon

50,388.48 April 30, 2012

Mindanao State

University Extension Office

Right Wing, Dimaporo Gymnasium, MSU-Main Campus, Brgy.

Rapasun/Sikap, Marawi City, Lanao del Sur

Rent Free Indefinite

Pala-o G/F Iligan Day Inn Bldg., Benito S. Ong St., Pala-O, Iligan City, Lanao

del Norte

49,500.00 October 1, 2012

Valencia Tamay Lang Bldg., G. Lavina St., Poblacion, Valencia, Bukidnon 66,637.31 April 20, 2017

SOUTHERN MINDANAO

Agdao LA Bldg., Doors 5 & 6, Lapu-Lapu St., Davao City, Davao del Sur 72,800.00 December 31, 2015

Bajada G/F Quibod Bldg., J. P. Laurel St. Cor. A. Loyola St., Davao City, Davao del Sur

71,400.00 July 1, 2013

Bangoy G/F Amigleo Bldg., cor. Bonifacio & C. Bangoy Sts., Davao City,

Davao del Sur

60,000.00 March 31, 2013

Bankerohan Units 101-102, JLF Parkway Bldg., cor. Quirino & Magallanes Sts., Davao City, Davao del Sur

72,564.00 June 30, 2014

Matina BF Bldg., McArthur Highway cor. Aries St., Matina, Davao City, Davao

del Sur

66,500.00 July 31, 2016

Monteverde Mintrade Bldg., Monteverde St. cor. Sales St., Davao City,Davao del Sur

96,630.60 March 31, 2012

Panabo City G/F Gaisano Grand Mall of Panabo, Quezon St., Brgy. Sto. Niño,

Panabo City, Davao Del Norte

92,755.14 November 21, 2016

Sasa Pavino Bldg., Km. 9, National Highway, Davao City, Davao del Sur 42,200.00 June 30, 2015

Sta. Ana Davao Bonifacio Tan Bldg., Rosaemary cor. Bangoy Sts., Sta. Ana Dist.,

Davao City, Davao del Sur

61,200.00 April 30, 2013

Toril Anecita G. Uy Bldg., Saavedra St., Toril, Davao City, Davao del Sur 32,500.00 June 2, 2012

WESTERN MINDANAO

Climaco JNB Bldg., Buenavista St., Zamboanga City, Zamboanga del Sur 79,860.00 June 25, 2012

Liloy ( formerly IPIL ) Chan Bldg., Baybay, Liloy, Zamboanga del Norte 33,600.00 April 30, 2015

Yllana Bay Extension Office

Gaisano Capital Pagadian, Rizal Avenue, San Pedro District, Pagadian City

18,543.80 January 2, 2016

Sindangan Corner Rizal & Bonifacio Sts., Poblacion, Sindangan, Zamboanga del

Norte

8,640.00 August 11, 2022

Tetuan Adriano Bldg., Veterans Avenue, Zamboanga City, Zamboanga del Sur 112,312.78 May 15, 2012

SOUTH WESTERN MINDANAO

Dadiangas RD Realty Development Bldg., Santiago Blvd., General Santos City,

South Cotabato

61,742.00 February 28, 2013

Isulan Aristoza Bldg., National Highway, Isulan, Sultan Kudarat 32,000.00 May 31, 2012

Marbel ( KCC Mall of

Gensan )

Unit 018 Lower G/F KCC Mall of Gensan, Jose Catolico Sr. Ave.

General Santos City, South Cotabato

98,070.24 April 10, 2016

- 1 -

PART I - BUSINESS AND GENERAL INFORMATION Item 1. Business

Allied Banking Corporation (the Parent Company) is a publicly listed universal bank incorporated on April 11, 1977 and domiciled in the Philippines with registered office address at Allied Bank Center, 6754 Ayala Avenue, Makati City. Allied Banking Corporation is the ultimate parent company of the Group. The Parent Company and its subsidiaries (the Group) are engaged in all aspects of banking, life insurance, financing and leasing to personal, commercial corporate and institutional clients through a network of 324 local and international branches and offices. The Group’s products and services include deposit taking, lending and related services, domestic and foreign fund transfers, treasury, foreign exchange and trust services. In addition, the Parent Company engages in regular financial derivatives as a means of reducing and managing the Parent Company’s and its customers’ foreign exchange exposure. The Parent Company’s subsidiaries and associates which, financial and operating policies are controlled by the Parent Company, are as follows:

Effective Percentage

of Ownership Country of

Subsidiary/Associate 2010 2009 Incorporation Functional Currency Banking Allied Savings Bank (ASB) 100.00% 100.00% Philippines Philippine Peso

Allied Bank Philippines (UK) Plc (ABUK) 100.00 100.00 United Kingdom Great Britain Pound Allied Commercial Bank (ACB) 51.00 51.00

People’s Republic of China

United States Dollar

Allied Banking Corporation (Hong Kong) Limited (ABCHKL) 51.00 51.00 Hong Kong Hong Kong Dollar

Foreign Exchange Allied Forex Corporation (AFC) 100.00 100.00 Philippines Philippine Peso

Insurance PNB Life Insurance, Inc. (PLII), formerly

known as New York Life Insurance (Philippines), Inc. (Note 9) 75.00 75.00 Philippines Philippine Peso

Leasing Allied Leasing and Finance Corporation

(ALFC) 57.21 57.21 Philippines Philippine Peso Holding Company

Oceanic Holding (BVI) Ltd. (OHBVI) 27.78 27.78 United States of America United States Dollar

Subsidiaries are all entities over which the Parent Company has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Parent Company controls another entity. Subsidiaries and controlled associates are consolidated from the date on which control is transferred to the Parent Company and cease to be consolidated from the date on which control is transferred out of the Parent Company. Control is achieved where the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries and controlled associates acquired or disposed of during the year are included in the consolidated statement of income from the date of acquisition or up to the date of disposal, as appropriate.

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The Group accounts for its investments in OHBVI as a subsidiary although the Group holds less than 50% of the issued shares capital on the basis of the voting rights of 42.78% assigned by certain stockholders to the Parent Company. The Group has the ability to govern the financial and operating policies of OHBVI on the basis of the combined voting rights arising from its direct ownership and assigned voting rights of 70.56%. All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions are eliminated in full. In the separate or parent company financial statements, investments in subsidiaries are carried at cost, less accumulated impairment in value. Dividends earned on these investments are recognized in the Parent Company’s statement of income as declared by the respective BODs of the subsidiaries. Non-controlling Interests Non-controlling Interests represent the portion of net income or losses and the net assets not held by the Parent Company and are presented separately in the Consolidated statement of income, consolidated statement of comprehensive income and within the consolidated statement of financial position, separately from equity attributable to equity holders of the Parent Company. Acquisitions of non-controlling interests are accounted for as equity transactions. The average number of employees of the Group on December 31, 2011 and 2010 are as follows: 2011 2010 2009

Parent Company 3,830 3,863 3,868 Subsidiaries 531 539 511

The Group after considering personnel hiring, resignations and retirements expects to maintain in 2012 about the same number of personnel in its employ as in 2011. The Parent Company has an existing Collective Bargaining Agreement with its employees. The economic provisions of the CBA shall be effective for a period of three (3) years beginning 01 October 2011 up to 30 September 2014. For purposes of representation, it shall be for a period of five (5) years. All employees of the Parent Company belonging to above Job Level VI; Managerial and Supervisory personnel; all secretaries, regardless of job level classification, staff-members of the Human Resources Division; Information Technology Division; Legal Department and the Treasurer’s Office; and probationary, contractual and casual employees are excluded from the bargaining unit and scope of the Collective Bargaining Agreement (CBA). Likewise excluded are employee/staff of the Bank’s foreign branches, subsidiaries, affiliates and representative offices. The Bank is in full compliance with existing labor laws, rules and regulations and has in fact been permitted to conduct, together with its union, self-assessment in lieu of labor inspection. The bank likewise fully utilizes the LMC provision of the said CBA by undertaking discussions with its unions on matters of mutual interest particularly on labor management relations. As a result thereof, the Bank has enjoyed more than two decades of industrial peace. Finally the Parent Company is one of the representatives of the industry before the Banking Tripartite Committee of the Department of Labor and Employment.

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Subsidiaries and Affiliates

Allied Savings Bank (ASB) Allied Savings Bank (formerly First Allied Savings Bank), a wholly owned subsidiary of Allied Banking Corporation (the Parent Company), is a thrift bank registered as a domestic corporation with the Securities and Exchange Commission (SEC) which commenced commercial operations on February 11, 1974. The Bank is authorized by the Bangko Sentral ng Pilipinas (BSP) to engage in thrift banking business by offering deposit products, loans and trade finance. The Bank has 27 branches with its principal place of business at the 11th Floor, Allied Bank Center, 6754 Ayala Avenue, Makati City and is engaged in lending to the countryside development projects in the Cavite, Laguna, Batangas, Rizal (CALABARZON) area and neighboring provinces. On January 6, 1996, the Bank was granted a foreign currency deposit license by the Monetary Board of the BSP. Allied Bank Philippines (UK) PLC (ABUK) Allied Bank London Representative Office was formally opened for business in 1979, and was upgraded into a full service branch 25 August 1983. Allied Bank considered the event significant since it was the first Philippine private commercial bank in London granted the status of licensed deposit taker by the Bank of England under the Financial Services and Markets Act 2000. It was spun off as a wholly owned subsidiary on June 01, 1992. ABUK helps accelerate trade between the Philippines and the United Kingdom, services the banking requirements of the growing Filipino population of the United Kingdom and other European countries and promotes foreign investments to the Philippines.

Allied Commercial Bank (ACB) (formerly Xiamen Commercial Bank) Allied Commercial Bank started its operations in Xiamen, Fujian Province, People’s Bank of China in September 1993. Allied Commercial Bank Chongqing Branch was set up in October 2003. As approved by the People’s Republic of China, ACB may engage in foreign exchange transaction services to foreign-funded enterprises, China-based foreign institutions, Mainland-based representative offices established by investors from Hong Kong, Macao and Taiwan in China, foreigners and compatriots from Hong Kong, Macao and Taiwan, as well as to non-foreign-funded enterprises, taking in public savings; granting short-term, medium-term and long-term loans; handling the acceptance and discount of negotiable instruments; buying and selling government bonds and financial bonds, non-stock negotiable instruments denominated in foreign currency; providing L/C services and guaranties; handling domestic and overseas settlements; buying and selling foreign currencies for itself, on a commissioned basis; exchange of currencies; inter-bank funding; bank card business; safety- deposit box; providing credit-standing investigation and consultation services and other business approved. The Bank engages in foreign exchange transaction geared to non-foreign investment enterprises: deposits under foreign exchange credit, export / import settlement and remittance under credit In 2008, the Parent Company and Philippine National Bank (PNB), a sister company, requested approval from BSP to invest in ACB totaling Chinese Yuan (CNY) 591 million or its United

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States Dollar (US$) equivalent. Details of the approval are as follows:

1. Outward investment of the Parent Company of CNY153.98 million and of PNB of CNY394.10 million, or their US$ equivalent; and

2. Conversion of the CNY42.90 million share of the Parent Company in the undivided profits in ACB into equity.

On September 18, 2008, the Monetary Board of the BSP approved the equity investment of the Parent Company and PNB in ACB. On July 7, 2009, the China Banking Regulatory Commission approved ACB’s increase in its authorized capital stock from CNY397.52 million (P2.80 billion) to CNY1.00 billion (P7.05 billion). On August 13, 2009, the Bank outwardly remitted US$22.53 million to ACB. The additional cash investment of US$22.53 million (P1.08 billion) and the US$6.27 million (P303.45) share in the conversion of ACB’s surplus and undivided profit into equity has reduced ABC’s ownership in ACB from 78.78% to 51% after considering the 39.41% stake of PNB, which infused a total of US$57.58 million. The reduction in ownership of the Parent Company resulted to a gain on deemed disposal of P70.05 million (see note 22).

Allied Banking Corporation (Hong Kong) Limited (ABCHKL) (formerly Allied Capital

Resources, Limited)

Allied Banking Corporation (Hong Kong) Ltd. is a private limited company was incorporated in Hong Kong on 13 November 1978 and is licensed as a restricted license bank under the Hong Kong Banking Ordinance and was the Parent Company’s first majority owned overseas subsidiary. The address of the registered office and the principal place of business is 1402 World-Wide House, 19 Des Voeux Road Central, Hong Kong. Pursuant to an ordinary resolution passed on December 5, 2002, the authorized share capital of ABCHKL was increased from HK$190.00 million to HK$211.00 million by the creation of 2,100,000 5% non- cumulative and non-redeemable preferred shares of HK$10.00 per share. The Bank offers a wide range of merchant banking services including export/import financing, working capital financing, fixed assets financing such as property, plant and machinery loans, participation in loans syndications, deposit taking and foreign exchange services as well as personal loans, among others. Oceanic Holding (BVI), Ltd. (OHBVI)

Oceanic Holding (BVI), Ltd. wholly owns Oceanic Bank Holding, Inc., a bank holding company which conducts its primary business through its wholly owned subsidiary, Oceanic Bank. The Bank is chartered by the State of California and operates two branches in San Francisco, California and one branch in the Territory of Guam. The Bank offers the full range of commercial banking services. The company’s revenue consists primarily of interest income from its loans and securities portfolio.

In 2010, the Board of Directors (BOD) of the Bank has approved the sale of 5,000 shares, representing 27.78% interest in OHBVI, in view of the impending merger with PNB (sister company). The sale is expected to be completed in 2011. However, the sale remained subject of the approval of the United States Federal Reserve. On October 11, 2011, the Board of Directors (BOD) of ABC in its Special BOD Meeting, has approved the execution by the Oceanic Holding (BVI) Ltd. (the “BVI”), of a Voting trust

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Agreement (the “Agreement”), subject to the formal approval of the US Federal Reserve Board. The Agreement which will be signed among the BVI, PNB (as successor to Allied Bank upon merger) and Walter Mix III, as the nominated Trustee, will place all shares of the holding company that directly owns the Oceanic Bank in a trust, to be sold to third parties,

which will facilitate the merger of Allied Bank and Philippine National Bank. PFRS 5 requires assets and liabilities of OHBVI, together with the results of operations of a disposal group, to be classified separately from continuing operations. As a result, the Bank reclassified all the assets and liabilities to ‘Assets of disposal group classified as held-for-sale’ and ‘Liabilities of disposal group classified as held-for-sale’, respectively, in the statements of financial position. The net income of OHBVI was presented as ‘Net Income from Disposal Group’ in the statements of income.

Allied Forex Corporation (AFC)

The Company was registered with the Securities and Exchange Commission on February 8, 1996 and started commercial operations on June 26, 1997. AFC was organized primarily to engage in the buying and selling of foreign currencies for both domestic and international exchange traders. The Company is a wholly owned subsidiary of Allied Banking Corporation (the Parent Company). The Company’s principal place of business is at the 7th Floor, Allied Bank Center, 6754 Ayala Avenue, Makati City. On February 24, 2003, the stockholders and BOD approved the suspension of the AFC’s operations effective March 1, 2003. On January 28, 2009, the BOD of AFC approved the cessation of the operations. Accordingly, AFC has changed its basis of accounting for periods subsequent to January 28, 2009, from the going concern basis to the liquidation basis. Accordingly, the carrying values of the remaining assets and all liabilities as of December 31, 2010 are presented at estimated realizable values and at estimated settlement amounts.

The Company’s administrative and accounting functions are undertaken by the Parent Company at no cost to the Company.

Allied Leasing and Finance Corporation (ALFC) Allied Leasing and Finance Corporation is a domestic corporation registered with the Securities and Exchange Commission on December 10, 1978 and operates as a leasing entity which caters to direct leases, sale and lease back arrangements. The Company’s principal place of business is at the 5th Floor, Allied Bank Center, 6754 Ayala Avenue, Makati City. On April 30, 2008, the BOD approved and authorized the payment of the Bank’s unpaid subscription to ALFC in the amount of P=60.00 million which raised the Bank’s shareholdings in AFLC from 40% to 57.21%. Accordingly, on August 12, 2008, the Parent Company made an additional capital infusion of P=60.0 million into ALFC. PNB Life Insurance, Inc. (Formerly New York Life Insurance (Phils.), Inc. (NYLIP))

PNB Life Insurance, Inc. was incorporated in the Philippines and registered with the Philippine Securities and Exchange Commission on November 10, 1999 to carry on the business of life insurance. The Company received its Certificate of Authority from the Insurance Commission of the Philippines (IC) on July 1, 2000 and started commercial operations on August 1, 2001.

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On April 01, 2002, the Bank and New York Life Insurance Philippines, Inc (NYLIP) entered into a Marketing Agreement granting NYLIP with an exclusive right to market and sell its insurance products through the Bank’s branches and affiliated companies. Under the Marketing Agreement, the Bank shall invest in 25% of the outstanding shares of NYLIP which was approved by the BSP on September 12, 2002.

On January 28, 2004, the BOD of the Parent Company resolved to maintain its 25% equity in NYLIP by making an additional investment of P200 million to NYLIP between the period of 2004 to 2007. This was approved by the BSP on April 13, 2004. In relation to this, the Parent Company made an additional investment in NYLIP amounting to P56.25 million on June 29, 2004. On August 23, 2005, the BSP approved to increase the equity investment of the Parent Company in NYLIP. Accordingly, on October 11, 2005, the Parent Company infused additional investment in the amount of P43.75 million to maintain its 25% equity in NYLIP. On February 28, 2007, the BOD authorized the Parent Company to purchase the shares of stocks owned by New York Life Insurance, Inc. equivalent to 75% of the total outstanding and issued shares of PLII in the amount of P=175.00 million. The purchase was to be executed in two tranches of 50.00% and 25.00%, provided that the last tranche be completed not later than October 31, 2008. Upon full execution of the sale, the Parent Company was supposed to own 100.00% of PLII. As of December 31, 2010, the Philippine Securities and Exchange Commission has not yet approved such plan. On July 10, 2007, the Parent Company purchased 12,500 shares of PLII representing an additional 50.00% ownership, for P=117.70 million, increasing its equity holdings therein, from 25.00% to 75.00%. Subsequent to the Parent Company’s purchase, a number of the Group’s key shareholders purchased the remaining 25.00% of PLII.

The BOD approved the change in principal place of business of the Company to 10th Floor, Allied Bank Center, 6754 Ayala Avenue, Makati City effective October 1, 2009.

Philippine Racing Club, Inc. (PRCI)

On January 28, 2004, the BOD of the Parent Company approved the conversion of ABC’s 30,331,203 acquired shares amounting to P142,582,110 from PRCI, booked under Other Properties Owned/Acquired, into non-allied equity investment given the significant developments and prospect in operation of PRCI and the resurgence of the Philippine Stock Market by posting a 33-month high. This was approved by the Monetary Board on October 7, 2004. Reclassification was made by ABC on November 10, 2004.

Alliedbankers Insurance Corporation (AIC)

On October 20, 2003, the BOD of the Parent Company approved the infusion of additional investment in AIC, a financial allied undertaking aggregating to P20 million, through the purchase of 200,000 shares equivalent to 5.797% of the capital stock of AIC on November 19, 2004. This was approved by the BSP on October 19, 2004. Representative Offices

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The Bank established representative office in Germany. Moreover, consultancy arrangements were made in Saudi Arabia, Kuwait, Qatar and United Arab Emirates. As can be gleaned from above, the Group continued to expand its network in keeping with its commitment to support the economic objectives of the government as well as to cope up with the growth of the global financial community.

Competition:

The Philippine economy posted positive growth performance, albeit at a slower pace, in the third quarter of 2011 compared to last year despite the ill effects of broad-based economic developments and an absence of sizeable government spending. The domestic economy got a boost from the Industry sector, with Construction activities resulting mostly in residential property development, and Mining & Quarrying activities as main drivers of the growth. The Services sector also registered increased growth from Public Administration & Defense and Financial Intermediation as primary sources. Meanwhile, the Agriculture, Hunting, Forestry and Fishing sector, continued to register positive, although weaker, growth as typhoons during the latter part of the quarter affected farm output. Notwithstanding the growth in key economic sectors during the period, the country is currently experiencinge lackluster demand for its exports. Major export destinations such as the United States, Japan and the Eurozone – all suffering economic setbacks – have dampened demand for Filipino goods especially electronics-related products. Government-related spending, though may not be as robust as last year, have also been picking up since the start of the second semester. Inflation for the period rose to 4.8% and is within the National Government’s (NG) target for the whole year. The slight elevation in commodity prices was traced as effects of higher prices of fruits and vegetables brought by reduced supply from recent weather disruptions in the Luzon and Visayas regions. The Monetary Board (MB) has kept its policy rates unchanged at 6.5% for its overnight lending and 4.5% for overnight borrowing. As of September 2011, the reserve requirement on deposits & deposit substitutes of banks remained at 21%. The MB has cited the manageable inflation environment for the current and succeeding periods as part of its assessment in maintaining its key rates. The Philippine banking system remains in a stable position as business activities expand and key performance indicators improve. Bank lending for production activities, as well as consumer loans accelerated during the period. Furthermore, banks have continued to match increased lending activities with proper risk management measures as the nonperforming loans (NPL) ratio remain low at 2.52% as of August 2011. Adequate capital was also maintained by banks relative to their risk assets as capital adequacy ratio (CAR) of the banking industry remain well above the BSP- prescribed 10%.

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Revenues Derived from Foreign Operations

Allied Bank Corporation and Subsidiaries (the Group) are engaged in all aspects of banking, life insurance, financing and leasing to personal, commercial, corporate and institutional clients. The Parent Company carved out a niche in the communities it served with its brand of personalized service through its extensive branch banking network comprising of s285 operational branches. The Group has a significant presence in the form of branches, representative office, remittance centers, subsidiaries and affiliates of 29 offices in the domestic front and 10 overseas offices located in the Asia Pacific, Middle East, United States of America, Germany and Europe, making the Group a major provider of remittances to OFWs. The geographical distribution of the Group’s income is shown below:

Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements

The Bank holds licenses over certain programs and operating systems relative to its day-to-day operations. A list of licenses held by it is attached herewith as Annex “E” of the Management Report. Research and Development

The research and development activities of the Bank are concentrated or directed towards economic and financial developments which may affect its lending activities or enhance its income generating capabilities. Financial Risk Management Policies and Objectives

The Parent Company manages risk through a framework of organizational structures and risk metrics and monitoring systems that capture all risks inherent in all its business activities. This is incorporated by reference to Note 4 of the Consolidated and Parent Company Audited Financial Statements, pages 34-67. Item 2. Property and Equipment Except for land, property and equipment is stated at cost, less accumulated depreciation and amortization and any impairment in value.

Land is carried at revalued amounts as determined by an independent firm of appraisers. The appraisal increase resulting from the revaluation was credited to ‘Revaluation increment in land - net’ shown as part of OCI in the statement of comprehensive income. The revaluation method is used by the Group in accordance with PFRS, which is different from prudential reporting to the BSP which prescribes the cost model. The initial cost of the Group’s property and equipment consists of its purchase price, including import duties, taxes and any directly attributable cost to bring the property and equipment to its

09/30/2011 2010 2009 2008

Philippines 79% 92% 92% 79% Asia 16% 4% 4% 6% United States 5% 4% 4% 12% United Kingdom -% -% - % 3%

Total 100% 100% 100% 100%

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working condition and location for its intended use. Expenditures incurred after the property and equipment have been put into operation, such as repairs and maintenance, are normally charged against current operations in the year the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property and equipment beyond its originally assessed standard of performance, the expenditures are capitalized as additional costs of property and equipment. Depreciation and amortization is calculated on a straight-line basis over the estimated useful life of the assets. Leasehold improvements are amortized over the shorter of the terms of the covering leases and the estimated useful lives of the improvements. The annual depreciation and amortization rates are as follows:

Buildings Furniture, fixtures and equipment Leasehold improvements

4% 20% - 33 1/3% 20% - 33 1/3% or over the period of tenancy, whichever is shorter

The depreciation rates and the depreciation and amortization method are reviewed periodically to ensure that the rates and method of depreciation and amortization are consistent with the expected pattern of economic benefits from items of property and equipment. The carrying values of property and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount (see Policy on Impairment of Assets of Non-Financial Assets). An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of income in the period the asset is de-recognized. The Parent Company wholly owns the premises occupied by its Head Office and seventy three (73) domestic offices as shown in Annex A. The Parent Company holds clean title/deed of absolute sale to these properties. The Parent Company leases the premises occupied by some of its branches including those of its subsidiaries for periods ranging from 2 – 20 years, renewable upon mutual agreement of the parties. Various lease contracts include escalation clauses, most of which bear an annual rent increase of 5% to 10%. Rent expense charged against current operations (included in ‘Occupancy and other equipment-related costs’ in the statement of income) amounted to P=181.44 million in September 2011, P=255.19 million in 2010, P=254.28 million in 2009 and P=250.81 million in 2008 for the Group, of which P=171.26 million in September 2011, P=218.62 million in 2010, P=220.67 million in 2009, P=183.06 million in 2008, was incurred by the Parent Company. As of December 31, 2011 and 2010, the Group had no lease arrangements with contingent provisions.

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Future minimum rentals payable under non-cancellable operating leases are as follows:

Consolidated Parent Company

2011 2010 2009 2011 2010 2009

(In Thousands) Within one year P=208,080 P=193,759 P=176,366 P=184,927 P=170,614 P=142,485Beyond one year but not more than five years 403,511 403,501 537,010 327,357 327,357 264,922Beyond five years 165,128 109,445 18,088 10,383 14,959 12,942

P=776,719 P=706,705 P=731,464 P=522,667 P=512,930 P=420,349

Future minimum rentals receivable under non-cancellable operating leases follow:

Consolidated Parent Company

2011 2010 2009 2011 2010 2009Within one year P=7,554 P=7,940 P=5,476 P=757 P=1,156 P=5,476Beyond one year but not more than five years 9,236 9,222 2,118

962 962 2,118 P=16,790 P=17,162 P=7,594 P=1,719 P=2,118 P=7,594

Annex B shows the list of two hundred fourteen (214) branches that are under lease as of December 31, 2011. The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. A reassessment is made after inception of the lease only if one of the following applies: (a) There is a change in contractual terms, other than a renewal or extension of the

arrangement; (b) A renewal option is exercised or extension granted, unless that term of the renewal

or extension was initially included in the lease term; (c) There is a change in the determination of whether fulfillment is dependent on a

specified asset; or (d) There is substantial change to the asset. Where a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to the reassessment for scenarios (a), (c) or (d) above, and at the date of renewal or extension period for scenario (b). Group as lessee

Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments and included in ‘Property and equipment’ account with the corresponding liability to the lessor included in ‘Other liabilities’ account. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to ‘Interest expense’.

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Capitalized leased assets are depreciated over the shorter of the estimated useful lives of the assets or the respective lease terms, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognized as an expense in the statement of income on a straight-line basis over the lease term. Group as lessor

Finance leases, where the Group transfers substantially all the risk and benefits incidental to ownership of the leased item to the lessee, are included in the statement of financial position under ‘Loans and receivables’ account. A lease receivable is recognized at an amount equivalent to the net investment (asset cost) in the lease. All income resulting from the receivable is included in ‘Interest income’ in the statement of income. Leases where the Group does not transfer substantially all the risk and benefits of ownership of the assets are classified as operating leases. Initial direct costs incurred in negotiating operating leases are added to the carrying amount of the leased asset and are recognized over the lease term on the same basis as the rental income. Contingent rents are recognized as revenue in the period in which they are earned.

Item3. Legal Proceedings The Bank is a party to various legal proceedings which arise in the ordinary course of its operations. None of such legal proceedings, either individually or in the aggregate, are expected to have a material adverse effect on the Bank or its consolidated financial condition. Sequestration of Shares of Stock in Allied Banking Corporation On 19 June 1986, the PCGG sequestered shares of stock in Allied Banking Corporation. Soon after, Allied Bank and concerned stockholders instituted a special civil action (G.R. No. 75643) before the Supreme Court praying for the nullification of the above writs. On 15 February 1990, the Supreme Court referred the above-mentioned special civil action (G.R. No. 75643), together with related parties, to the Sandiganbayan for appropriate disposition. In the Sandiganbayan, Allied Bank’s petition was docketed as Civil Case No. 0096. On 02 March 2006, the Sandiganbayan nullified the writs of sequestration of the shares of stocks. Its motion for reconsideration of the decision having been denied, PCGG appealed to the Supreme Court. The appeal bears docket G.R. No. 173553-56. On 07 December 2007, the Supreme Court promulgated a decision affirming the decision of the Sandiganbayan.

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On 26 December 2007, the PCGG filed a motion for reconsideration of the decision dated 07 December 2007. On 29 January 2008, the Supreme Court ruled with finality on the lifting of the sequestration order. In January 2009, the Office of the Solicitor General filed before the Sandiganbayan a petition for the issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction against the merger of Allied Bank and PNB. Said petition, however, was denied by the Sandiganbayan in March 2009. In January 2010, the Bank received the Notice of Resolution issued by the 5th Division of Sandiganbayan in the case of Republic of the Philippines versus Lucio C. Tan Case No. 0005, denying the Motion for Reconsideration filed by Office of the Solicitor General, on the Application for the Issuance of Temporary Restraining Order and/or Writ of Preliminary Injunction, seeking to enjoin the merger of Philippine National Bank and Allied Banking Corporation.

Item4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during the fourth quarter of the calendar year covered by this report.

PART II - OPERATIONAL AND FINANCIAL INFORMATION Item 5. Market Registrant’s Preferred Equity and Related Stockholder Matters

A. Market Information

The principal market of the Bank’s preferred shares is the Philippines Stock Exchange. The P50 million preferred shares were fully subscribed and paid by the two (2) shareholders. Thus, no trading was made on listed shares of stocks since 1982.

On January 29, 2003, the BOD approved the establishment of a sinking fund of P50 million, equal to the outstanding preferred shares redeemable at their maturity dates. As of September 30, 2011, December 31, 2010 and 2009, the fund is shown under Other Assets in the Statements of Financial Position.

B. Dividends

On April 30, 2008, the BOD of the Parent Company approved the declaration and payment of accumulated cash dividends in arrears on the preferred shares of P188.22 million as of December 31, 2007. The dividend was paid in September 2008 upon receipt of approval from BSP. Dividends in arrears on the preferred shares amounted to P22.50 million and P28.13 million as of December 31, 2010 and September 30, 2011, respectively.

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On December 16, 2011, the Board of Directors in a special meeting approved the declaration and payment of accumulated cash dividend on the Preferred Shares as of December 31, 2011 covering the period January 1, 2008 to December 31, 2011 at the rate of P=600.00 per Preferred Share, subject to the approval of the BSP and other appropriate regulatory agencies. C. Description of Registrant’s Securities

Capital stock as of September 30, 2011 and December 31, 2010 consists of (in thousands except for par value and number of shares): Preferred Authorized, issued and outstanding - 50,000 shares, P=1,000 par value - P=50.00 million Common Authorized- 11,450,000 shares, P=1,000 par value - P=11.45 billion Issued and outstanding - 3,252,495 shares, P=3.25 billion The Parent Company’s preferred shares have the following features: a. nonvoting, cumulative and entitled to guaranteed dividends of 15.00% per annum; b. convertible into common stock in case of nonpayment of dividends for three consecutive

years. The conversion value of the preferred stock is at the rate of peso for peso of its par value to prevailing book value of the common stock at the time of conversion; and

c. redeemable in whole or in part at the option of the Parent Company, upon 30-day notice at par value plus accrued dividends at the time of redemption.

PRE-EMPTIVE RIGHT OF HOLDERS OF COMMON STOCK – During the lifetime of the Bank, any holder of common stock who desires to sell his common shares must first give priority to present common stockholders by giving them thirty (30) days notice within which to buy. In the event a common stockholder decides to buy, the price will be the prevailing book value of the common shares as per the latest Financial Statement. Where the common shares have been pledged or offered as security for any obligation and default in such obligation results in the forced sale of such common shares whether judicially or extra judicially, or in any other case where such common shares are sold at a private or public auction by virtue of a legal process or writ, any common stockholder shall have the right, within thirty (30) days from formal notice given to the Corporate Secretary by the buyer in the forced sale or auction sale of his acquisition of such common shares, to repurchase such common shares from the said buyer at the actual bid price which in no case shall be higher than the prevailing book value of such common shares as per the latest Financial Statement of the corporation. The above procedural requirements which shall also bind the executor, administrator or legal representative of every common stockholder, shall be embodied in and written or stamped upon each certificate of common stock. Any sale, transfer and conveyance in violation of the above requirements shall be null and void and shall not be recorded or transferred in the books of the corporation. The preemptive right herein granted shall not extend to shares to be issued in compliance with laws requiring stock offerings or minimum stock ownership by the public. As of September 30, 2011, the Bank has a total of thirty one (31) Stockholders. Please refer to Annex “C” for list of stockholders.

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C. Book Value Per Share (Absolute amounts)

Book Value per share for the last three (3) fiscal years, are as follows:

09/30/11 2010 2009 2008

Book Value Per Share:

Preferred Stock 1,560.00 1,450.00 1,300.00 1,150.00

Common Stock 6,543.00 6,351.62 5,762.30 5,161.29

Cash Dividend Declared Per Share - - - 3,764.38

Income Per share- Note 33 274.72 359.71 344.07 146.28 (Attributable to Equity holder of the Parent Company)

D. Historical Information: (In Billions)

09/30/11 2010 2009 2008

Operating Revenues: 7,989 10,400 9,379 7,348

Net Interest Income 5,012 6,791 6,488 5,225

Other Income 2,977 3,609 2,891 2,123

Income from Continuing Operations 1,029 1,298 1,196 501

Long Term Obligations- Subordinated Debt 4,500 4,500 4,500 4,500

Redeemable Preferred Stocks 50 50 50 50 E. Capital Management

The primary objectives of the Group’s capital management are to ensure that it complies with externally imposed capital requirements and it maintains strong credit ratings and healthy capital ratios in order to support its business and to maximize shareholders’ value. The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of its activities. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividend payment to stockholders, return capital to stockholders, or issue capital securities. No changes were made in the objectives, policies and processes from the previous years. The Group and its individual regulatory operations have complied with all externally imposed capital requirements throughout the period. The Parent Company embarked on a comprehensive program to update existing products, policies and procedures manuals incorporating new bank policies, laws and regulations and BSP requirements to further strengthen the management and operations of the Parent Company including its branches, affiliates and subsidiaries. In addition, the Parent Company has been implementing continuous enhancements in the areas of risk management, internal controls, technology and strategic planning to streamline management oversight and performance monitoring of its head office, branches, affiliates and subsidiaries. This is in preparation for more competitive business environment and much tougher requirements of Basel II, the international banking standards adopted by BSP. The Bangko Sentral ng Pilipinas (BSP) issued Circular No. 639 dated January 15, 2009 Re: Internal Capital Adequacy Assessment Process (ICAAP) and Supervisory Review Process (SRP) setting out guidelines that universal banks and commercial banks, on a group-wide basis, should

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follow in the design and use of their banks’ Internal Capital Adequacy Assessment Process (ICAAP). The ICAAP supplements the BSP’s Risk Based Capital Adequacy Framework for the Philippine banking system conforming to Basel II recommendations as contained in Circular No. 538 issued in August 4, 2006. The Parent Company created an ICAAP Task Force consisting of Profit Center and Cost Center Heads. The ICAAP Task Force has developed the ABC ICAAP Model which is a consistent approach of the Group’s implementation of a robust process for the assessment of its capital adequacy in relation to its risk profiles as well as the Group’s overall business strategy and its capital levels. On February 23, 2011, the BOD approved the reconstitution of the ICAAP task Force into an ICAAP Management Committee. On December 1, 2010, the Bank in its stage 2 dialogue with BSP presented a detailed discussion of the risk and capital assessments used in the ICAAP, integration of the ICAAP Model and Enterprise Risk Management, comparison of the minimum capital regulatory requirements under Pillar 1 with the Bank’s internal capital requirements (Pillar 2) as well as communication channels, results of the independent review of ICAAP, and the established link among risk management processes and capital planning / management with strategic initiatives. On January 30, 2008, the BOD of the Parent Company approved the increase in the authorized capital stock of the Bank from P=500.00 million to P=20.00 billion and approved to present for stockholders’ approval on its annual stockholders meeting on March 12, 2008 the conversion of US$50.00 million worth of Upper Tier 2 subordinated debt to common stock. Subsequently, in a special stockholders’ meeting held on March 12, 2008, the stockholders owning at least two thirds (2/3) of the outstanding capital stock, which includes the majority members of the BOD, approved the increase in capital stock of the Parent Company from P=500.00 million to P=11.50 billion. Of the increase in authorized capital stock of the Bank, P=2.81 billion was subscribed and fully paid by way of conversion of the Notes amounting to US$50.00 million (equivalent to P=2.81 billion at P=56.00 spot rate). Accordingly, the Parent Company’s capital increased by P=2.90 billion due to the conversion of the Upper Tier 2 subordinated debt. Equity Adjustment from Conversion As a result of the conversion of US$50.00 million worth of Upper Tier 2 subordinated debt to capital stock, the Parent Company recognized an adjustment from conversion charged to equity amounting to P=592.15 million.

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Item 6. Management’s Discussion and Analysis or Plan of Operation The following are discussions on the Consolidated Financial Condition and Results of Operations of ABC and its Subsidiaries (The Group) based on the Audited Financial statements as of and for the years ended September 30, 2011, December 31, 2010 and 2009; 2011 vs. 2010

A. Statements of Condition

Allied Banking Corporation and Subsidiaries (the Group) posted total assets of P195.504 billion registering an P11.409 billion (+6.20%) growth compared to the P184.096 billion level attained in the same period last year. This is attributed mainly to the increases in the following: • Loans and receivables went up by P13.225 billion (+16.87%) from P78.401 billion in September 2011 to P91.626 billion this year due to new loan releases. • Cash on hand and in banks swelled by P4.585 billion (+16.53%) manifested in Due from BSP which surged by P5.315 billion (+37.49%). • Other assets perked up by P544.106 million (+16.80%) Increments cited above were trimmed down by the following: • Drop in interbank loans receivable traceable to P5.793 billion (-42.55%) matured placements. • Investment properties plunged by P624.496 million (-13.32%) driven by the Group’s intensive effort to sell foreclosed properties. • Assets of disposal group classified as held for sale dipped by P550.815 million (-6.60%). Compared to the December 31, 2010 audited figure of P190.113 billion, total assets posted an increment of P5.391 billion (+2.84%) as the P3.954 billion (+13.93%) expansion in cash on hand and in banks, P10.410 billion (+12.82%) growth in loans and receivables and P892.380 million (+30.88%) hike in other assets were tapered by the following: • Decrease in interbank loans receivable by P7.237 billion (-48.06%) • Assets of disposal group classified as held for sale fell by P537.885 million (-6.45%) • Investment properties slid by P473.946 (-10.45%). Total liabilities increased by P10.416 billion (+6.58%) from P158.417 billion to P168.833 billion traceable to the P2.781 billion (+329.93%) hike in bills payable which was augmented by marginal deposits that ballooned by P47.143 million (+102.37%), accrued taxes, interest and other expenses by P158.383 million (+13.64%) and other liabilities by P1.422 billion (+18.90%). Deposit liabilities grew by P6.876 billion (+5.03%) notably demand deposits by P6.319 billion (+17.05%) which was dampened by the P1.734 billion (-5.62%) decline in time deposits. Noted increases were tempered by the decrements in manager’s checks and demand drafts outstanding and liabilities of disposal group classified as held for sale by P280.874 million (-37.36%) and P597.871 million (-8.56%), respectively. As compared to December 2010, total liabilities went up by P4.638 million (+2.82%), driven by the hike in bills payable by P2.014 billion (+125.20%), increase in marginal deposits by P54.903 million (+143.93%), growth in manager’s checks and demand drafts outstanding by P52.816 million (+12.63%) coupled by the upswing in accrued taxes, interest and other expenses by P190.257 million (+16.85%) and other liabilities by

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P871.625 million (+10.80%). Increments were softened by the slide in time deposits by P2.118 billion (-6.78%) and slump in liabilities of disposal group classified has held for sale by P580.258 million (-8.33%). Total capital funds which comprised 10.92% of total assets rose by P1.144 billion (+5.66%) from P20.213 billion in September 2010 to P21.356 billion in 2011, attributable mainly to the P1.029 billion modest profit realized by the Group. The Group’s capital adequacy ratio (CAR) reported to BSP stood at 19.53% lower than the 19.58% ratio posted in the same period last year.

B. Result of Operation

The group realized a profit of P360.197 million, net of P205.856 million impairment provisions and income taxes, during the third quarter of 2011 down by P73.853 million (-17.01%) compared to the P434.050 million income recorded in the same period of 2010. This is attributed largely to the turn around in (a) foreign exchange from a gain of P87.039 million to a loss of P29.007 million and (b) acquisition of investment properties by P21.330 million (-155.06%) from an income P13.756 million to a loss of P7.574 million. These were compounded by the P260.069 million (-61.76%) dip in trading and securities gains. Total overhead grew by P347.879 million (+15.58%) attributed mainly by the increase in miscellaneous expense by P462.779 million (+56.88%), hike in taxes and licenses by P45.531 million (+33.48%), rise in compensation and fringe benefits by P36.975 million (+5.77%) and increment in occupancy and other equipment-related costs by P12.426 million (+5.93%). Decrements were partially tapered by net interest income which slightly grew by P62.666 million (+3.83%) on account of the favorable decline in bills payable and other borrowings by P61.146 million (-67.70%) and increase in interest on loans and receivables by P117.680 million (+8.58%) that were partially trimmed down by the reduction in interest on trading and investment securities by P84.451 million (-11.62%) and deposits with banks and interbank loans receivable by P16.534 million (-6.89%). Commissions and handling charges grew by P68.009 million (+39.20%) as miscellaneous income surged by P456.306 million (+92.40%) coupled by the favorable drop in provisions for impairment and credit losses by P208.525 million (-64.12%) and income taxes by P65.471 million (-42.33%). The Group posted an accumulated positive bottom-line of P1.029 billion, net of P692.994 million provisions during the third quarter of 2011, outperforming by P20.948 million (+2.08%) the P1.008 billion recorded in the same period last year. The profit was attributed mainly to the P70.320 million (+447.67%) boost in foreign exchange gains and P822.824 million (+64.66%) growth in miscellaneous income. Net interest margin inched up by P58.460 million (+1.18%) as a result of the favorable drop in interest expense by P158.065 million (-7.35%) particularly bills payable and other borrowings by P77.930 million (-27.04%) which was partially tapered by the decline in interest on trading and investment securities by P207.792 million (-9.25%) and deposits with banks and interbank loans receivables by P60.702 million (-8.82%). These were pulled down by the P221.418 million (-199.28%) loss on acquisition of investment properties and P199.114 million (-38.85%) slump in trading and securities gains. Total overhead grew by P628.961 million (+10.38%) manifested in taxes and licenses which swelled by P149.228 million (+36.26%), miscellaneous expense by P595.973 million (+28.14%), compensation and fringe benefits by P150.364 million (+7.74%) but these were softened by the drop in provision for impairment and credit losses by P283.526 million (-43.15%) and income taxes by P111.248 million (-25.83%).

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C. Key Performance Ratios

The five (5) key indicators of the financial performance of the Group follow: 1. Capital Adequacy

The Group and its individual regulatory operations have complied with all externally imposed capital requirements throughout the period.

The following table sets the regulatory capital as reported to BSP as at September 30, 2011 and 2010:

The risk-weighted assets of the Group as of September 30, 2011 are shown below:

Group Parent Company

Credit risk-weighted assets 114.205 93.682

Market risk-weighted assets 11.702 5.138

Operational risk-weighted assets 14.990 13.257

Risk-weighted assets 140.897 112.077

2. Profitability

3. Asset Quality

Non-performing loans (NPL) grew by P133.844 million (+3.06%), from P4.370 billion to P4.504 billion. The NPL ratio went down from 4.30% to 4.14%. The NPL profile as of September 30, 2011 and 2010 is shown below:

Group Parent

2011 2010 2011 2010 Secured 3.182 3.505 3.075 3.168 Unsecured 1.322 0.865 1.209 0.844 Total 4.504 4.370 4.284 4.012

Current banking regulations allow banks with no unbooked valuation reserves and capital adjustments to exclude from nonperforming classification those loans classified as loss in the latest examination of the BSP, which are fully covered by allowance for

Group Parent Company

2011 2010 2011 2010 Tier 1 22.122 20.295 13.590 12.021 Tier 2 5.392 5.114 2.626 2.369 27.514 25.409 16.216 14.390 Risk Weighted Assets 140.897 129.755 112.077 102.319 Tier 1 Capital Ratio 15.70% 15.64% 12.13% 11.75% Total Capital Ratio 19.53% 19.58% 14.47% 14.06%

2011 2010 Return on Assets 0.71% 0.72% Return on Equity 5.22% 5.40% Net Interest Margin 3.79% 2.06%

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credit losses, provided that interest on said loans shall not be accrued. As of September 30, 2011 and 2010, NPLs not fully covered by allowance for credit losses follow:

Group Parent

2011 2010 2011 2010 Total NPLs 4.504 4.370 4.284 4.012 Less: NPLs fully covered by Allowance for impairment Losses

0.647

0.708

0.624

0.624

Total 3.857 3.662 3.660 3.388 NPL Ratio 4.14% 4.30% 4.40% 4.44%

4. Liquidity

Liquid assets of P62.597 billion which comprised 32.02% of the total assets decreased by P1.659 billion (-2.58%) as compared to P64.256 billion in September 2010. This was due to the P5.793 billion (-42.55%) fall in interbank loans receivable.

5. Cost Efficiency

The ratio of total operating expenses to total income went up to 79.01% compared to the 72.32% registered in September 2010.

D. Known Trends

There are no known events, trends, and demands, commitments or uncertainties that might affect the Bank’s liquidity or cash flow within the next twelve (12) months. There are no trends, events or uncertainties known to Management that are reasonably expected to have material favorable or unfavorable impact on the net income or revenues from continuing operations of the banks.

E. Events that will trigger direct or contingent financial obligation:

In the normal course of business, the Group has various commitments and contingent liabilities that are not presented in the accompanying financial statements. These commitments and contingent liabilities include various guarantees, forward exchange contracts, commitments to extend credit and standby letters of credit. There are pending cases for and against the Parent Company and certain subsidiaries arising from normal business activities. Management believes that these actions are without merit or that the ultimate liability, if any, resulting from these cases will not adversely affect the financial position or results of operation of the Parent Company.

The Group does not anticipate material losses as a result of these commitments and contingent liabilities.

F. Significant Elements of Income or Loss

Significant elements of income or loss will come from continuing operations.

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G. Seasonal Aspects

There was no seasonal aspect that had a material effect on the Bank’s financial condition or results of operations.

H. Trading and Investment Securities

Reclassification of Financial Assets

The Parent Company reclassified financial assets held-for-trading and AFS investments to HTM investments effective July 1, 2008. The details of the reclassification follow: Reclassification from financial assets held-for-trading to HTM investments

The year 2008 was characterized by a substantial deterioration in global market conditions, including severe shortage of liquidity and credit availability. These conditions have led to a reduction in the level of market activity for many assets and the inability to sell other than at substantially lower prices. Following the amendments to PAS 39 and PFRS 7, and as a result of the contraction in the market for many classes of assets, the Parent Company undertook a review of assets that were classified as HFT, in order to determine whether this classification remained appropriate. Where it was determined that the market for an asset was no longer active, and that the Parent Company no longer intended to trade, management reviewed the instrument to determine whether it was appropriate to reclassify such financial assets to HTM investments. This reclassification was performed where the Parent Company, at the reclassification date, had the clear intention and ability to hold the financial asset until maturity. As a result of the determination made by the Parent Company arising from a rare circumstance, certain HFT financial assets were reclassified to HTM investments. The carrying value of HFT financial assets that were reclassified to HTM investment effective July 1, 2008, amounted to P916.13 million at the date of reclassification. The HTM investments reclassified from financial assets held-for-trading have the following balances as of September 30, 2011:

Face Value Original

Cost

Carrying

Value

Fair Value

Amortization Discount/ Premium

Government P=689,394 P=722,992 P=724,292 P=836,244 (P=1,300) Private 65,580 61,313 62,781 68,268 (1,467) P=754,974 P=784,305 P=787,073 P=904,512 (P=2,767)

As of July 1, 2008, market losses on held-for-trading investments reclassified amounted to P=86.18 million. Had these investment securities not been reclassified to HTM investments, market gain would have amounted to P=55.80 million as of September 30, 2011. Effective interest rates on the reclassified financial assets held-for-trading ranges from 6.41% to 10.06%. The Parent Company expected to recover 100% of the principal and interest in the amount of P=1.15 billion and no additional impairment loss was recognized for the period ended September 30, 2011 on the reclassified investment.

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Reclassification from AFS investments to HTM investments

As a result of the change of intention, the Parent Company reclassified certain AFS investments to HTM investments. The Parent Company established the positive intention and ability to hold these investments to maturity. The carrying value of AFS investments reclassified to HTM investments amounted to P9.28 billion at the date of reclassification. The HTM investments reclassified from AFS investments have the following balances as of September 30, 2011:

Face Value

Original

Cost

Carrying

Value

Fair Value

Net Unrealized Gain (Loss)

Amortization Discount/ Premium

Government P=1,490,081 P=1,400,398 P=1,431,523 P=1,530,317 (P=124,163) (P=83,462) Private 2,641,527 2,443,328 2,498,645 2,541,538 (165,225) (122,756) P=4,131,608 P=3,843,726 P=3,930,168 P=4,071,855 (P=289,388) (P=206,218)

As of July 1, 2008, market losses on AFS investments reclassified amounted to P=634.84 million. Had these investment securities not been reclassified to HTM investments, market loss would have amounted to P=140.66 million as of September 30, 2011. Among the reclassified securities, a total of face amount of US$95.31 million or P4,166.25 million matured/redeemed as of September 30, 2011. Effective interest rates on the reclassified financial assets at AFS investments range from 0.9180% to 21.30%. The parent Company expected to recover 100% of the principal and interest in the amount of P5.90 billion and no additional impairment loss was recognized for the period ended September 30, 2011. The foregoing reclassifications and the single chosen dates of the rare circumstances in the case of financial assets held for trading and the date of change of intention for reclassification of AFS investments to HTM investments were approved by the Parent Company’s Audit Committee on November 25, 2008. These reclassifications were compliant with the provision of BSP Circular 628 Guidelines on the Reclassification of Financial Assets between Categories.

I. Eligible Bonds Exchange for Benchmark Bonds categorized under the Held-to-

Maturity (HTM)

The Parent Company and its subsidiary, PNB Life Insurance, Inc., participated in the peso bond swap last July 19, 2011, details of which are shown below:

July 19, 2011 September 30, 2011

Carrying Value- Old

Carrying Value-New

Carrying

Value- Old

Carrying

Value- New

Government

251,696

259,321

251,635

255,023

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Had the Group accounted for the bond exchange under PFRS, the carrying value of the HTM investment portfolio that would have been reclassified to AFS shall be as follows:

July 19, 2011 September 30, 2011

Carrying Value Fair Value

Carrying

Value

Fair Value

Government

15,159,063

16,247,293

16,674,809

18,055,912

Private 5,360,526 5,820,568 4,718,339 4,897,488

20,519,589 22,067,861 21,393,148 22,953,400

As of September 30, 2011, had the Group accounted for the Bond Exchange under PFRS, total assets and total equity would have increased by P1.093,956 billion.

J. Disclosure Required per SEC Memorandum Circular No. 3 dated May 16, 2009, re:

Guidelines on the Implementation of PFRS 9 (Financial Statements: Recognition and

Measurement)

a. The Group formed a PFRS 9 Team in June 2011, comprised of Steering Committee (SC) and Project Working Team (PWT) to prepare for the adoption of the PFRS 9, Financial Instruments as approved by the Philippine Standards Council in December 2010.

The Group after consideration of the results of the potential impact of the early adoption

of PFRS 9 and the subsequent deferral of the implementation thereof in 2015 decided not to early adopt PFRS 9 (2010) for its 2011 financial reporting and therefore, the September 30, 2011 interim financial statements do not reflect the impact of the said standard;

b. The Group shall conduct in early 2012 another impact evaluation using the outstanding

balances of financial statements as of December 31, 2011; and

c. The Group’s decision whether to early adopt PFRS 9 (2010) for its 2012 financial reporting shall be disclosed in its interim financial statements as of March 31, 2012. Moreover, should the Group decide to early adopt the PFRS 9 (2010) standard for its 2012 financial reporting, the interim report as of March 31, 2012 will already reflect the application of the requirements under the said standard and will contain a qualitative and quantitative discussion of the Group’s impact evaluation.

2010 vs. 2009

A. Statement of Condition

The total assets of Allied Banking Corporation and Subsidiaries (the Group) stood at P190.113 billion posting a P2.010 billion (+1.07%) increment vis-à-vis the P188.103 billion level recorded last year. Increment was fuelled mainly by the growth in investment securities by P12.315 billion (+30.06%) as manifested in the hike in available-for-sale investments (AFS) by P3.363 billion (+19.62%) emanating from the P3.026 billion placements in government debt securities and held-to-maturity (HTM) investments by P1.626 billion (+8.42%) as the proceeds of the P1.590 billion matured private issues were placed in government securities increasing the 2009 level thereof by P2.860 billion augmented by the

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P8.336 billion Assets of Disposal Group classified as held for sale of OHBVI. Increase was trimmed down by the P5.943 billion (-17.32%) drop in cash on hand and in banks and P699.977 million (-13.37%) slump in investment properties. In 2010, the Board of Directors (BOD) of the Bank has approved the sale of 5,000 shares, representing 27.78% interest in OHBVI, in view of the impending merger with PNB (sister company). The sale is expected to be completed in 2011. However, the sale remained subject of the approval of the United States Federal Reserve. In compliance with PFRS 5, the total assets and liabilities of OHBVI, together with the results of operations of a disposal group, were classified separately from continuing operations. As a result, the Bank reclassified all the assets and liabilities to ‘Assets of disposal group classified as held for sale’ and ‘Liabilities of the disposal group classified as held for sale,’ respectively as shown in Statement of Financial Position and Statements of Income. This accounting treatment and presentation effected in 2010 accounted for the significant variances in the Statements of Financial Condition and Statements of Income of the Group as OHBVI was presented as a one liner item in 2010 compared to the line by line consolidation in 2009. The detailed financial statements of OHBVI are reflected in Note 13 of the Audited Financial Statement. Total liabilities that comprised 86.37% of the Bank’s total assets slightly increased by P192.583 million (+0.12%) to P164.195 billion on the back of the P1.786 billion (+28.41%) expansion in other liabilities, P3.469 billion (+9.04%) hike in demand deposits and P70.133 but was trimmed down by the P5.954 billion (-16.02%) decline in time deposits coupled by the contraction in bills payable by P2.511 billion (-60.95%) on the back of the sharp fall in bills payable BSP by P1.470 billion (-85.86%) and due to foreign banks by P1.090 billion (-45.68%), marginal deposits also dipped by P40.272 million (-51.26%) tapered by growth liabilities of disposal group by P8.071 billion. Total capital funds which comprised of 10.90% of the total assets rose by P1.922 billion (+10.22%) from P18.804 billion in December 2009 to P20.727 billion in 2010. The Group’s capital to risk assets ratio reported to BSP stood at 19.42% lower than the 19.52% ratio posted in the same period last year.

B. Results of Operation

The Group realized a net income after impairment provisions and income taxes of P1.298 billion, outperforming by P102.585 million (+8.58%) the P1.196 billion profit recorded in 2009. The modest profit resulted from the P768.008 million (+571.47%) hefty increase in trading and securities gains, P450.819 million (+130.39%) upswing in commissions and handling charges and P250.177 million (+15.04%) rise in miscellaneous income. Increments were significantly tempered by the P738.017 million (-95.98%) foreign exchange losses, P415.859 million (+50.12%) hike in impairment provision and income taxes, P327.572 million (+13.42%) growth in compensation and fringe benefits and P191.877 million (+8.72%) upswing in miscellaneous expense. Net interest income went up by P302.995 million (+4.67%) as the favorable decline in interest expense on deposits/borrowings of P355.604 million (-12.60%) was compounded by the P214.979 million (+7.63%) slope in interest on trading and investment securities while interest on deposits with banks and interbank loans receivable plunged by P242.493 million (-18.13%). Consequently, the Group recorded a return on equity of 10.80% and return on assets of 1.37% as of December 31, 2010.

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C. Reclassification of Financial Assets

The Parent Company reclassified financial assets held-for-trading and AFS investments to HTM investments effective July 1, 2008. The details of the reclassification follow:

Reclassification from financial assets held-for-trading to HTM investments

The year 2008 was characterized by a substantial deterioration in global market conditions, including severe shortage of liquidity and credit availability. These conditions have led to a reduction in the level of market activity for many assets and the inability to sell other than at substantially lower prices. Following the amendments to PAS 39 and PFRS 7, and as a result of the contraction in the market for many classes of assets, the Parent Company undertook a review of assets that were classified as held-for-trading, in order to determine whether this classification remained appropriate. Where it was determined that the market for an asset was no longer active, and that the Parent Company no longer intended to trade, management reviewed the instrument to determine whether it was appropriate to reclassify such financial assets to HTM investments. This reclassification was performed where the Parent Company, at the reclassification date, had the clear intention and ability to hold the financial asset until maturity. As a result of the determination made by the Parent Company arising from a rare circumstance, certain financial assets held-for-trading were reclassified to HTM investments. The carrying value of financial assets held-for-trading that were reclassified to HTM investments effective July 1, 2008, amounted to P=916.13 million at the date of reclassification. The HTM investments reclassified from financial assets held-for-trading, effective July 1, 2008, have the following balances as of December 31, 2010 and 2009:

2009

Face Value Original Cost Carrying

Value Fair Value

AmortizationDiscount/

(Premium)

Government P=737,158 P=772,085 772,735 P=855,827 (P=650)Private 168,600 147,968 155,325 103,368 7,357 P=905,758 P=920,053 P=928,060 P=959,195 P=6,707

As of July 1, 2008, market losses on held-for-trading investments reclassified amounted to P=86.18 million. Had these investment securities not been reclassified to HTM investments, market gains would have amounted to P=84.32 million and P=39.14 million in 2010 and 2009, respectively.

2010

Face Value Original Cost

Carrying

Value Fair Value

Amortization

Discount/

(Premium)

Government P=691,199 P=724,895 P=725,845 P=865,661 P=1,105

Private 65,760 61,481 62,586 69,620 950

P=756,959 P=786,376 P=788,431 P=935,281 P=2,055

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Effective interest rates on the reclassified financial assets on held-for-trading investments range from 6.41% to 10.06%. The Parent Company expects to recover 100.00% of the principal and interest in the amount of P=1.20 billion and no additional impairment loss was recognized for the period ended December 31, 2010 on the reclassified investment.

Reclassification from AFS investments to HTM investments

As a result of the change of intention, the Parent Company reclassified certain AFS investments to HTM investments. The Parent Company established the positive intention and ability to hold these investments to maturity.

The carrying value of AFS investments reclassified to HTM investments amounted to P=9.28 billion at the date of reclassification.

The HTM investments reclassified from AFS investments have the following balances as of December 31, 2010 and 2009:

2010

Face Value Original Cost

Carrying

Value Fair Value

Net

Unrealized

Loss

Amortization

Discount

Government P=1,625,063 P=1,524,916 P=1,556,070 P=1,744,149 P=140,470 P=78,511

Private 3,656,506 3,411,640 3,487,438 3,722,389 203,348 173,858

P=5,281,569 P=4,936,556 P=5,043,508 P=5,466,538 P=343,818 P=252,369

As As of July 1, 2008, market losses on AFS investments reclassified amounted to P=634.84 million. Had these investment securities not been reclassified to HTM investments, market losses would have amounted to P=92.34 million and P=575.19 million in 2010 and 2009, respectively. Among the reclassified securities, total face value amounting to $68.30 million, equivalent to P=2.99 billion matured or redeemed in 2010.

Effective interest rates on the reclassified financial assets on AFS investments range from 0.92% to 21.30%. The Parent Company expects to recover 100.00% of the principal and interest amounting to P=7.88 billion and no additional impairment loss was recognized for the year ended December 31, 2010. The foregoing reclassifications and the single chosen dates of the rare circumstances in the case of financial assets held-for-trading and the date of change of intention for reclassification of AFS investments to HTM investments were approved by the Parent Company’s Audit Committee on November 25, 2008. These reclassifications were compliant with the provision of BSP Circular No. 628 Guidelines on the Reclassification of Financial Assets between Categories.

2009

Face Value Original Cost Carrying

Value Fair Value Net Unrealized

Loss Amortization

Discount Government P=1,775,208 P=1,664,240 P=1,684,008 P=1,779,591 P=175,675 P=49,299 Private 5,393,788 4,761,208 5,071,530 4,962,070 260,862 275,612 P=7,168,996 P=6,425,448 P=6,755,538 P=6,741,661 P=436,537 P=324,911

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D. Key Performance Ratios

The five (5) key indicators of the financial performance of the Group follow:

1. Capital Adequacy The Group and its individual regulatory operations have complied with all externally imposed capital requirements throughout the period.

Regulatory capital

The following table sets the regulatory capital as reported to BSP as at December 31, 2010 and 2009 (in millions):

Consolidated Parent Company

2010 2009Average Tier 1 P=12,701 P=10,976Average Tier 2 2,521 2,392Qualifying capital 15,222 13,368Risk weighted assets P= P=106,678 P=103,891

Tier 1 capital ratio 15.51% 15.55% 11.91% 10.56%Total capital ratio 19.42% 19.52% 14.27% 12.87%

The risk-weighted assets of the Group and Parent Company as of December 31, 2010 and 2009 are as follows (in millions):

Consolidated Parent Company 2010 2009 2010 2009

Credit risk-weighted assets 109,003 P=102,605 88,324 P=83,194Market risk-weighted assets 12,624 10,338 6,157 8,956Operational risk-weighted assets 13,941 13,640 12,197 11,741Risk-weighted assets 135,568 P=126,583 106,678 P=103,891

Under existing BSP regulations, the determination of the Parent Company’s compliance with regulatory requirements and ratios is based on the amount of the Parent Company’s “unimpaired capital” (regulatory net worth) as reported to the BSP, which is determined on the basis of regulatory accounting policies which differ from PFRS in some respects.

The regulatory qualifying capital of the Parent Company consists of Tier 1 capital, which is the sum of Core Tier 1 capital and allowable amount of Hybrid Tier 1 capital. Core Tier 1 capital consists of paid-up common stock, paid-up perpetual and non-cumulative preferred stock, surplus including current year profit, surplus reserves less required deductions such as unsecured credit accommodations to DOSRI, deferred income tax, and goodwill while Hybrid Tier 1 capital includes perpetual preferred stock and perpetual unsecured subordinated debt. Certain adjustments are made to PFRS - based results and reserves, as prescribed by the BSP. The other component of regulatory capital is Tier 2 (supplementary) capital, which includes unsecured subordinated debt and general loan loss provision. Specifically under existing BSP regulations, the risk-based capital adequacy ratio of a bank, expressed as a percentage of qualifying capital to risk-weighted assets, should not be less than 10.00% for both solo basis (head office and branches) and consolidated basis (Parent Company and subsidiaries engaged in financial allied undertakings but excluding insurance companies). Qualifying capital and risk-

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weighted assets are computed based on BSP regulations. Credit risk-weighted assets consist of total assets less cash on hand, due from BSP, loans covered by hold-out on or assignment of deposits, loans or acceptances under letters of credit to the extent covered by margin deposits and other non-risk items determined by the Monetary Board of the BSP.

Under BSP Circular No. 360, effective July 1, 2003, the capital-to-risk assets ratio (CAR) is to be inclusive of a market risk charge. In August 2006, the BSP issued Circular No. 538 which contains the implementing guidelines for the revised risk-based capital adequacy framework to conform to Basel II recommendations. Under the revised framework, capital requirements for operational risk, credit derivatives and securitization exposures are to be included in the calculation of the Parent Company’s capital adequacy. The revised framework also prescribes a more granular mapping of external credit ratings to the capital requirements and recognizes more types of financial collateral and guarantees as credit risk mitigants. Changes in the credit risk weights of various assets, such as foreign currency denominated exposures to the Philippine National Government, non-performing exposures and ROPA, were also made. Exposures shall be risk-weighted based on third party credit assessment of the individual exposure given by eligible external credit assessment institutions. Credit risk-weights range from 0.00% to 150.00% depending on the type of exposure and/or credit assessment of the obligor. The new guidelines took effect last July 1, 2007.

2. Profitability

The following basic ratios measure the financial performance of the Parent

Company: 2009 2008Where average equity and average asset

include revaluation increment Return on average equity (ROE) 6.19% 6.11% 2.50% Return on average assets (ROA) 0.66% 0.61% 0.25% Net interest margin (NIM) 5.44% 4.30% 3.83% Where average equity and average asset

exclude revaluation increment ROE 6.77% 6.76% 2.79% ROA 0.67% 0.62% 0.26% NIM 5.44% 4.30% 3.83%

The basis of calculation for earnings per share attributable to equity holders of the Parent Company follows:

2010

2009 (As restated -

Note 13)

2008 (As restated -

Note 13) (In Thousands, except number of shares and EPS)

TOTAL EARNINGS PER SHARE Net income attributable to equity holders of the Parent Company P=1,177,462 P=1,126,589 P=483,278

Less dividends to preferred shares 7,500 7,500 7,500 a. Net income applicable to common shares 1,169,962 1,119,089 475,778 Add dividends to preferred shares 7,500 7,500 7,500 b. Net income applicable to common and potential common shares P=1,177,462 P=1,126,589 P=483,278 c. Weighted average number of outstanding common shares 3,252,495 3,252,495 3,252,495 Add weighted average number of potential common shares (pertaining

to convertible preferred shares) (Note 22) 8,955 10,044 11,184 d. Weighted average number of outstanding and potential common shares 3,261,450 3,262,539 3,263,679 Basic EPS (a/c) P=359.71 P=344.07 P=146.28

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EARNINGS PER SHARE FROM CONTINUING OPERATIONS

Net income attributable to equity holders of the Parent Company P=1,167,714 P=1,120,586 P= 466,667 Less dividends to preferred shares 7,500 7,500 7,500a. Net income applicable to common shares 1,160,214 1,113,086 459,167 Add dividends to preferred shares 7,500 7,500 7,500b. Net income applicable to common and potential common shares P=1,167,714 P=1,120,586 P=466,667c. Weighted average number of outstanding common shares 3,252,495 3,252,495 3,252,495 Add weighted average number of potential common shares (pertaining

to convertible preferred shares) (Note 22) 8,955 10,044 11,184d. Weighted average number of outstanding and potential common shares 3,261,450 3,262,539 3,263,679

Basic EPS (a/c) P=356.72 P=342.23 P=141.17

The assumed conversion of preferred shares as a result of dividing b and d is anti-dilutive. Thus, diluted EPS is not presented. 3. Asset Quality

Non-performing loans (NPL) grew by P2.498 billion (+120.35%) from P2.076 billion to P4.574 billion as two accounts defaulted on their P2.200 billion loans in 2010. Consequently, the NPL ratio went up from 1.77% to 5.25%. As of December 31, 2010 and 2009, nonperforming loans (NPLs) follow:

Consolidated Parent Company 2010 2009 2010 2009Secured P=3,686,746 P=1,242,742 P=3,346,654 P=976,346Unsecured 887,620 833,217 867,481 742,401 P=4,574,366 P=2,075,959 P=4,214,135 P=1,718,747

Current banking regulations allow banks with no unbooked valuation reserves and

capital adjustments to exclude from nonperforming classification those loans classified as loss in the latest examination of the BSP, which are fully covered by allowance for credit losses, provided that interest on said loans shall not be accrued. As of December 31, 2010 and 2009, NPLs not fully covered by allowance for credit losses follow: Consolidated Parent Company 2010 2009 2010 2009 Total NPLs P=4,574,366 P=2,075,959 P=4,214,135 P=1,718,747 Less NPLs fully covered by

allowance for credit losses 686,496 699,747 624,036 624,036

P=3,887,870 P=1,376,212 P=3,590,099 P=1,094,711

NPL Ratio 5.25% 1.77% 5.56% 1.76% 4. Liquidity

Liquid assets of P56.700 billion comprised 34.91% of the total assets decreased by P315.146 million (-0.55%) as compared to P57.015 billion in December 2009. This was due to the P1.440 billion (-9.39%) drop in due from BSP and P494.175 million (-10.35%) fall in cash and other cash items. The net liquid asset to customer liabilities ratio of the Parent Company are as follows:

2010 2009 Average during the period 42.63% 43.78% Highest 45.23% 50.62% Lowest 33.05% 35.51%

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5. Cost Efficiency

The ratio of total operating expenses to total income went down to 69.71% compared to the 71.90% registered in December 2009.

E. Material off-balance transactions, arrangements or obligations

The following is a summary of commitments and contingent liabilities at their equivalent peso contractual amounts:

Consolidated Parent Company

2010 2009 2010 2009 Trust department accounts (Note 27) P=24,807,793 P=17,555,278 P=24,807,793 P=17,555,278 Unused credit card lines 17,013,472 9,888,999 17,013,472 9,888,999 Deficiency claims receivable 5,513,953 5,408,263 5,513,953 5,408,263 Unused commercial letters of credit 5,026,570 5,093,922 4,943,692 4,864,724 Inward bills for collection 961,198 828,504 934,635 807,733 Late deposits/payment received 486,181 510,943 475,053 496,541 Outward bills for collection 315,645 386,568 109,492 126,087 Outstanding guarantees issued 338,588 275,980 318,848 257,731 Confirmed export letters of credit 167,089 218,803 2,192 4,620 Others 245,772 971,053 245,767 160,329

F. Known Trends

There are no known events, trends, and demands, commitments or uncertainties that might affect the Bank’s liquidity or cash flow within the next twelve (12) months.

There are no trends, events or uncertainties known to Management that are reasonably expected to have material favorable or unfavorable impact on the net income or revenues from continuing operations of the Bank.

G. Events that will trigger direct or contingent financial obligation:

In the normal course of business, the Group has various commitments and contingent liabilities that are not presented in the accompanying financial statements. These commitments and contingent liabilities include various guarantees, forward exchange contracts, commitments to extend credit and standby letters of credit.

These are pending cases for and against the Parent Company and certain subsidiaries rising normal business activities. Management believes that these actions are without merit or that the ultimate liability, if any, resulting from these cases will not adversely affect the financial position or results of operation of the Parent Company. The Group does not anticipate material losses as a result of these commitments and contingent liabilities.

. H. Capital Expenditures

The Bank has commitments for capital expenditures. Among these are investments on IT-related projects, relocation and renovation of branch premises, acquisition and major repairs of furniture, fixtures and equipment needed to bring the Bank at par with competitors. Expected sources of funds will come from sale of foreclosed assets, excess cash inflows and income stream.

I. Significant Elements of Income or Loss

Significant elements of income or loss will come from continuing operations.

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J. Seasonal Aspects

There was no seasonal aspect that had a material effect on the Bank’s financial condition or results of operations.

K. Other Matters

On April 30, 2008 and subsequently on June 24, 2008, in a special meeting, the BOD and the stockholders owning at least two thirds (2/3) of the outstanding capital stock, respectively, of the Parent Company approved the following: a. Merger of the Parent Company and PNB under the following terms:

• Share swap of 140 common shares of PNB for each common share of the Parent Company

• Share swap of 30.73 common shares of PNB for each preferred shares of the Parent Company

• PNB will be the surviving entity b. Issue price of the new common shares at P55 per share subject to BOD approval

c. Issuance of 456,885,800 common shares from the PNB’s authorized but unissued capital stock d. Plan of Merger of the Parent Company and PNB e. Articles of Merger of the Parent Company and PNB

The effectivity of the Plan of Merger will be subject to the approval of BSP, SEC and PDIC, and will be further conditioned on the issuance of BIR of a ruling that the Plan of Merger qualifies as a tax-free merger under Section 40 (c) 2 of the NIRC of 1997.

2009 vs. 2008

A. Statements of Condition

The total assets of Allied Banking Corporation and Subsidiaries (the Group) stood at P188.103 billion registering a P13.051 billion (+7.46%) growth compared to the P175.052 billion level posted at the end of 2008. Increment is traceable to the hike in cash on hand and in banks by P1.686 billion (+5.17%) coupled by the increase in interbank loans receivable by P6.907 billion (+81.85%) due to the robust expansion in overnight placements with BSP and hefty hike in loans and receivables by P9.927 billion (+13.32%). Other assets inched up by P1.381 billion (+84.57%) mainly on account of the reclassification of P1.216 billion Prestige equities from SCR to miscellaneous assets account as recommended by BSP. Increase was trimmed down by the P6.774 billion (-14.19%) decline in investment securities. Total liabilities that comprised 87.19% of the Bank’s total assets went up by P8.512 billion (+5.47%) to P164.002 billion from year-end’s P155.491 billion. Deposit liabilities climbed up by P5.706 billion (+4.02%), from P141.873 billion to P147.579 billion on account of the issuance of P3.5 billion LTNCD in October 2009. Bills payable soared by P2.718 billion (+193.96%) with the increase in BSP rediscounting and bills payable foreign banks by P1.702 billion and 1.022 billion, respectively.

Total capital funds which comprised 10.00% of total assets grew by P4.539 billion (+23.21%), from a low of P16.842 billion in December 2008 to a high of P24.101 billion in 2009. This is traceable to minority interest and net income for 2009 that swelled by P2.77 billion (+94.74%) and P694 million (+138.70%), respectively, compounded by the P1.105 billion drop in net unrealized losses on AFS. The Group’s capital to risk assets ratio reported to BSP stood at 19.52% higher than the 17.12% ratio posted in the same period last year.

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Results of Operation

The Group recorded a modest profit of P1.196 billion after impairment provisions and income taxes of P1.446 billion, surpassing by P694.840 million (+138.70%) the P500.977 million profit recorded in 2008. This was triggered by net interest income which swelled by P1.263 billion (+24.17%) due to the hike in interest income on loans by P978.060 million (+21.42%) coupled by the increase in deposits with banks and interbank loans by P217.287 million (+19.40%). Increase was augmented by the growth in non-interest income notably foreign exchange gains that ballooned by P825.845 million (+1,451.04%); P592.574 million (+129.33%) turnaround in trading and investment securities from P458.182 million loss in 2008 to a gain of P134.392 million. Increase was trimmed down by the escalation in overhead by P1.165 billion (+17.98%) with the hike in provision for impairment and credit losses by P499.726 million (+129.81%), miscellaneous expenses by P344.716 million (+18.58%), compensation and fringe benefits by P180.023 million (+7.96%) and occupancy and other equipment-related costs by P87.489 million (+11.97%). Consequently, the Group’s return on equity and return on assets more than doubled at 5.87% and 0.66% as of December 31, 2009 from 2.94% and 0.31% in 2008.

C. Reclassification of Financial Assets

The Parent Company reclassified financial assets held-for-trading and AFS investments to HTM investments effective July 1, 2008. The details of the reclassification follow: Reclassification from financial assets held-for-trading to HTM investments

The year 2008 was characterized by a substantial deterioration in global market conditions, including severe shortage of liquidity and credit availability. These conditions have led to a reduction in the level of market activity for many assets and the inability to sell other than at substantially lower prices. Following the amendments to PAS 39 and PFRS 7, and as a result of the contraction in the market for many classes of assets, the Parent Company undertook a review of assets that were classified as held-for-trading, in order to determine whether this classification remained appropriate. Where it was determined that the market for an asset was no longer active, and that the Parent Company no longer intended to trade, management reviewed the instrument to determine whether it was appropriate to reclassify such financial assets to HTM investments. This reclassification was performed where the Parent Company, at the reclassification date, had the clear intention and ability to hold the financial asset until maturity. As a result of the determination made by the Parent Company arising from a rare circumstance, certain financial assets held-for-trading were reclassified to HTM investments. The carrying value of financial assets held-for-trading that were reclassified to HTM investments effective July 1, 2008, amounted to P=916.13 million at the date of reclassification.

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The HTM investments reclassified from financial assets held-for-trading, effective July 1, 2008, have the following balances as of December 31, 2009:

Face Value Original Cost Carrying

Value Fair Value

Amortization Discount/ Premium

Government P=737,158 P=772,085 P=772,735 P=855,827 (P=650) Private 168,600 147,968 155,325 103,368 7,357 P=905,758 P=920,053 P=928,060 P=959,195 P=6,707

As of July 1, 2008, market losses on held-for-trading investments reclassified amounted to P=86.18 million. Had these investment securities not been reclassified to HTM investments, market gains / (losses) would have amounted to P=39.14 million and (P=137.72 million) as of December 31, 2009 and 2008, respectively.

Effective interest rates on the reclassified financial assets at FVPL range from 6.41% to 12.33%. The Parent Company expects to recover 94.64% of the principal and interest in the amount of P=1.24 billion and accordingly, recognized an impairment loss of P=53.71 million in 2009.

Reclassification from AFS investments to HTM investments

As a result of the change of intention, the Parent Company reclassified certain AFS investments to HTM investments. The Parent Company established the positive intention and ability to hold these investments to maturity. The carrying value of AFS investments reclassified to HTM investments amounted to P=9.28 billion at the date of reclassification.

The HTM investments reclassified from AFS investments have the following balances as of December 31, 2009:

Face Value Original Cost Carrying Value Fair Value Net Unrealized

Loss Amortization

Discount

Government P=1,775,208 P=1,664,240 P=1,684,008 P=1,779,591 P=175,675 P=49,299

Private 5,393,788 4,761,208 5,071,530 4,962,070 260,862 275,612

P=7,168,996 P=6,425,448 P=6,755,538 P=6,741,661 P=436,537 P=324,911

As of July 1, 2008, market losses on AFS investments reclassified amounted to P=634.84 million. Had these investment securities not been reclassified to HTM investments, market losses would have amounted to P=575.19 million and P=2.50 billion as of December 31, 2009 and 2008, respectively. Among the reclassified securities, total face value amounted to USD36.77 million, equivalent to P=1.70 billion matured or redeemed in 2009. Effective interest rates on the reclassified financial assets at AFS investments range from 5.09% to 21.30%. The Parent Company expects to recover 94.75% of the principal and interest amounting to P=8.79 billion and accordingly, recognized an impairment loss of P=237.33 million in 2009.

The foregoing reclassifications and the single chosen dates of the rare circumstances in the case of financial assets held-for-trading and the date of change of intention for reclassification of AFS investments to HTM investments were approved by the Parent Company’s Audit

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Committee on November 25, 2008. These reclassifications were compliant with the provision of BSP Circular No. 628 Guidelines on the Reclassification of Financial Assets between Categories.

D. Key Performance Ratios

The five (5) key indicators of the financial performance of the Group follow: 1. Capital Adequacy

The Group and its individual regulatory operations have complied with all externally imposed capital requirements throughout the period. The following table sets the regulatory capital as reported to BSP as at December 31, 2009 and 2008 (in millions): Consolidated Parent Company

2009 2008

Tier 1 Capital P=19,686 P=16,486 P=10,976 P=11,077

Tier 2 Capital 5,025 5,066 2,392 2,972

Gross qualifying capital 24,711 21,552 13,368 14,049

Risk weighted assets P=126,583 P=125,912 P=103,891 P=99,553

Tier 1 capital ratio 15.55% 13.09% 10.56% 11.12%

Total capital ratio 19.52% 17.12% 12.87% 14.11%

The risk-weighted assets of the Group and Parent Company as of December 31, 2009 and 2008 are as follow (in millions): Consolidated Parent Company 2009 2008 2009 2008 Credit risk-weighted assets P=102,605 P=99,366 P=83,194 P=74,661 Market risk-weighted assets 10,338 12,990 8,956 12,888 Operational risk-weighted assets 13,640 13,556 11,741 12,004 Risk-weighted assets P=126,583 P=125,912 P=103,891 P=99,553

2. Profitability

The following basic ratios measure the financial performance of the Parent

Company:

2009 2008 2007 Where average equity and average asset

include revaluation increment Return on average equity (ROE) 6.11% 2.50% 10.52%

Return on average assets (ROA) 0.61 0.25 1.04 Net interest margin (NIM) 4.30 3.83 4.39

W W Where average equity and average asset

exclude revaluation increment ROE 6.76 2.79 11.80 ROA 0.62 0.26 1.05 NIM 4.30 3.83 4.39

Earnings Per Share

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The basis of calculation for earnings per share attributable to equity holders of the Parent Company follows: 2009 2008 2007 (In Thousands, except number of shares and EPS) Net income attributable to equity holders of the Parent Company P=1,126,589 P=483,278 P=1,683,907 Less dividends to preferred shares 7,500 7,500 7,500

Na. Net income applicable to common shares 1,119,089 475,778 1,676,407 Add dividends to preferred shares 7,500 7,500 7,500 bb.Net income applicable to common and potential common shares 1,126,589 P=483,278 P=1,683,907

cc. Weighted average number of outstanding common shares 3,252,495 3,252,495 445,295 Add: weighted average number of potential common shares (pertaining to convertible preferred shares) (Note 21) 10,044 11,184 1,746 dW d. Weighted average number of outstanding

and potential common shares 3,262,539 3,263,679 447,041 Basic EPS (a/c) P=344.07 P=146.28 P=3,764.71

The assumed conversion of preferred shares as a result of dividing b and d is anti-dilutive. Thus, diluted EPS is not presented.

3. Asset Quality

Non-performing loans (NPL) decreased by P150 million (-6.75%) from P2.226 billion to P2.076 billion. Consequently, the NPL ratio went down from 2.30% to 1.77%. The NPL profile as of December 31, 2009 and 2008, nonperforming loans (NPLs) is shown below: Consolidated Parent Company

2009 2008 2009 2008

Secured P=1,242,742 P=1,057,650 P=976,346 P=1,091,588

Unsecured 833,217 1,168,696 742,401 553,256

P=2,075,959 P=2,226,346 P=1,718,747 P=1,644,844

Current banking regulations allow banks with no unbooked valuation reserves and

capital adjustments to exclude from nonperforming classification those loans classified as loss in the latest examination of the BSP, which are fully covered by allowance for credit losses, provided that interest on said loans shall not be accrued. As of December 31, 2009 and 2008, NPLs not fully covered by allowance for credit losses follow:

Consolidated Parent Company 2009 2008 2009 2008

Total NPLs P=2,075,959 P=2,226,346 P=1,718,747 P=1,644,844 Less: NPLs fully covered

by allowance for credit losses 699,747 707,899 624,036 624,036

P=1,376,212 P=1,518,447 P=1,094,711 P=1,020,808

NPL Ratio 1.77% 2.30% 1.76% 2.01%

4. Liquidity Liquid assets of P57.015 billion which comprised 35.82% of the total assets decreased by P2.390 billion (-4.02%) as compared to P59.405 billion in December 2008. This was due to the P1.164 billion (-4.92%) drop in cash and due from other banks and P8.129 billion (-30.08%) drop in investment securities.

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The liquidity ratios of the Parent Company are as follows:

2009 2008

Average during the period 43.78% 44.65%

Highest 50.62% 50.03%

Lowest 35.51% 33.93%

5. Cost Efficiency

The ratio of total operating expenses to total income went down to 72.46% compared to the 82.44% registered in December 2008.

E. Material off-balance transactions, arrangements or obligations

The following is a summary of the Parent Company and certain subsidiaries’ commitments

and contingent liabilities at their equivalent peso contractual amounts:

Consolidated Parent Company

2009 2008 2009 2008

Trust department accounts (Note 26) P=17,555,278 P=13,563,158 P=17,555,278 13,563,158

Unused credit card lines 9,888,999 6,921,221 9,888,999 6,921,221 Deficiency claims receivable 5,408,263 5,383,659 5,408,263 5,383,659 Unused commercial letters of credit 5,093,922 3,734,657 4,864,724 3,447,655 Inward bills for collection 828,504 2,124,762 807,733 2,120,320 Late deposits/payment received 510,943 225,105 496,541 217,573 Outward bills for collection 386,568 422,847 126,087 112,531 Outstanding guarantees issued 275,980 338,009 257,731 338,009 Confirmed export letters of credit 218,803 914,717 4,620 4,752 Others 971,053 280,075 160,329 82,294

Item 7. Financial Statements

The Consolidated and Parent Company audited financial statements and the schedules listed in the accompanying Index to Supplementary Schedules are filed as part of the Form SEC 17-Q as of September 30, 2011 and Form SEC 17–A for the year ended December 31, 2010.

The complete mailing address of the Parent Company and its External Auditor and name of certifying partner of Sycip, Gorres, Velayo & Co., is embodied in the accompanying Report of Independent Auditors.

Item 8. Information on Independent Accountant and Changes in/and Disagreement with

Accountants on Accounting and Financial Disclosure

A. Independent Public Accountants

The auditing firm of SGV & Co. has been the external auditor of the Bank since 1977 and is the incumbent external auditor of the Bank and its domestic subsidiaries for the calendar year 2011.

In compliance with SRC Rule 68 (3) (b) (IV), on the Rotation of External Auditors, Management appointed the audit partner-in-charge, Ms. Janeth T. Nunez starting 2010 in lieu of Mr. Aris C. Malantic. There is no need at this time to change the audit partner of the Bank.

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The representatives of the said firm who are expected to be present at the shareholders’ meeting will have the opportunity to make a statement if they so desire and are expected to be available to respond to appropriate questions. Management presents proposals on possible external auditors to be engaged together with their respective proposed audit fees to the Audit Committee for proper consideration. The Audit Committee evaluates and thereafter, upon its recommendation, the appointment of the external auditor is presented to the Board of Directors and/or stockholders for confirmation. However, financial statements duly approved by the Audit Committee are still subject to confirmation of the Board of Directors prior to submission to the respective government regulatory agencies. The Audit Committee is composed of the following directors: Messrs. James Ang Yiok Teck (Chairman), Patrick L. Go and Michael G. Tan. B. Changes in Accounting Policies/Disagreements with Accountants

The statements as of September 30, 2011 have been prepared in accordance with accounting principles generally accepted in the Philippines for banks (Philippine GAAP for Banks) with the participation of the Parent Company and its subsidiary, PNB Life Insurance, Inc., in the Bond Exchange Issue for the Republic of the Philippines (ROP) last July 19, 2011 which was exempted from the tainting rule under Philippine Accounting Standard (PAS) No. 9 – Recognition and Measurement of Financial Instruments by the SEC and IC. This differs from the accounting treatment on investment securities portfolio previously reported by the Group during the first semester of 2011, December 31, 2010 and prior periods under the Philippine Financial Reporting Standards (PFRS) . The Group had no disagreement with its auditors on any matter of accounting principles or practices, financial statements disclosure or audit scope and procedures.

PART III - CONTROL AND COMPENSATION INFORMATION

Item 9. Directors and Executive Officers of the Registrant

The following are the members of the Board of Directors and Senior Officers of the Bank: Domingo T. Chua, 70 years old, obtained his Bachelor of Science degree in Chemical Engineering from Mapua Institute of Technology. Mr. Chua was elected as the Chairman and a Director of the Bank last December 23, 2008. He is Managing Director of Himmel Industries Inc. and is a member of the Board of Directors of various private firms, which include Asia Brewery, Inc., Pan Asia Securities Corporation, AlliedBankers Insurance Corporation, Foremost Farms, Inc., Maranaw Hotel & Resort Corporation, Eurotiles Industrial Corporation, PNB General Insurers Co. Inc., PNB Corporation Guam, Eton Properties Phils. Inc. and PNB Life Insurance Inc.. He is the President of Allied Leasing and Finance Corporation, Manufacturing Services and Trade Corporation and Lucky Travel Corporation. He is currently the Chairman of Air Phils. Corp. and PNB Securities, Inc.. He was also a former Director of Pacific Banking Corporation and Philippine National Bank. He is the Director and Treasurer of Tanduay Distillers, Inc. and Tanduay Holdings, Inc.

Willy S. Co, 79 years old, holds a Bachelor of Science degree in Commerce from the University of the East. He has been the Vice-Chairman since 15August 2001. He is also the Chairman of Board of Allied Bank Phils. (UK) PLC, Oceanic Bank and Oceanic Bank Holding Inc. and the

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Deputy Chairman of Allied Banking Corporation (HK), Ltd. Mr. Co is the Vice Chairman of Allied Bankers Insurance Corporation, Allied Leasing and Finance Corporation and Allied Commercial Bank. He is a Director of Bancasia Finance and Investment Corporation. He is also the President of Central Textile Mills, Inc., Universal Synthetic Manufacturing Corp. and Oceanic Holding (BVI) Ltd. Anthony Q. Chua, 60 years old, holds a Bachelor of Science in Business Administration degree major in Accounting (Cum Laude) from De La Salle University in 1973 and became a Certified Public Accountant in 1974. He earned his Masters in Business Administration (MBA) and Doctorate degree in Finance from Michigan State University in 1981. He was appointed Senior Executive Vice President/ Chief Operating Officer (COO) of Allied Bank in March 2009 and eventually assumed the position of President when he was elected after the Stockholder’s meeting in 21 May of the same year. He is concurrently a Director and the President of the Bank since 21 May 2009. He was also appointed as Chairman/ Director of Allied Savings Bank, a subsidiary bank of Allied Bank on 10 June 2009. Previous positions of Mr. Chua are: Philippine National Bank, Executive Vice President/ Head of Global Operations Sector (8/1/2002-3/8/2009); SGV & Company as Partner/Director (3/16-1999-7/31/2002); Philippine Bank of Communications as President (9/21/1995-12/31/1998) and Citibank N.A. as Vice President (1981-9/20/1995). Manuel T. Gonzales, 74 years old, holds a Bachelor of Science in Commerce degree from De La Salle University. He has been a Director since June 1977 and the Senior Executive Vice President of the Bank since 01 May 1997. Mr. Gonzales is also a Director of Allied Bank (UK) PLC, Allied Leasing & Finance Corporation, Allied Bankers Insurance Corp. and Young Hardware Co., Inc.

Harry C. Tan, 65 years old, holds a Bachelor of Science degree in Chemical Engineering from Mapua Institute of Technology. He has been a Director since 26 November 1999. He is also Managing Director of the Charterhouse and is a member of the Board of Directors of various private firms which include Philippine Airlines Inc., Asia Brewery, Inc., Abacus Distribution Systems Phils. Inc., Allied Commercial Bank, Oceanic Holdings (BVI), Ltd., Foremost Farms, Inc., Grandspan Dev’t. Corp., Himmel Industries Inc., Manufacturing Services and Trade Corp., Progressive Farms, Inc., Shareholdings, Inc., PMFTC, Inc. and Basic Holdings Corporation. He is the President of Century Park Hotel, HARRTAN Realty Corp., Colour Holdings & Equities, Inc. and Dynamic Machinery & Dev’t. Corp. Michael G. Tan, 45 years old, obtained his Bachelor of Applied Science in Civil Engineering, Major in Structural Engineering at University of British Columbia, Canada. He is a director of the Bank since January 2008. He is currently the Chief Operating Officer of Asia Brewery, Inc. and a member of the Board of Directors of various private firms, which include AlliedBankers Insurance Corporation, Tanduay Holdings, Inc., Air Philippines Corporation, Philippine Airlines, Inc., PAL Holdings, Inc., Grandway Konstruct, Inc., Lucky Travel Corporation, Victorias Milling Company, Inc., and Eton Properties Philippines, Inc.. He is a Director and President of Tanduay Holdings, Inc.

Reynaldo A. Maclang, 74 years old, holds a Bachelor of Laws degree from the Ateneo de Manila University. He is a Director of the Bank since 15 August 2001. He is also a Director of Allied Leasing and Finance Corporation and Eton Properties Philippines, Inc.. He has been with the Bank since 1977. Previous to that, he had been connected with other commercial banks and practiced law

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James Ang Yiok Teck, 77 years old, holds a Bachelor of Science in Engineering degree from the Phila Textile Institute. He has been a Director since 01 July 2002. He is the Chairman of Cosmopolitan Investment Co., Inc.

Patrick L. Go, 53 years old, holds a Bachelor of Science in Economics degree from Wharton School, University of Pennsylvania and Master’s degree from Darden School, University of Virginia. He has been a Director since 22 December 2004. He is the Chief Executive Officer of Paramount Life and General Insurance Corporation and is an Independent Director of various private firms, including Fastech Synergy Ltd., Del Monte Pacific Ltd. and Alliance Tuna Industrial Inc.

Ma. Cecilia L. Pesayco, 59 years old, holds a Bachelor of Arts degree major in Political Science from the University of Sto. Tomas and a post graduate Bachelor of Laws degree from the University of the Philippines. She was appointed Corporate Secretary on 23 September 2002. She is also the Corporate Secretary of Allied Savings Bank, Tanduay Holdings, Inc., Air Phils. Corporation, Eton Properties Philippines, Inc., PAL Holdings Inc., Flor de Cana Shipping Lines, Inc.. She is the Assistant Corporate Secretary of Tanduay Distillers, Inc. She was Chief Legal Counsel and Senior Vice President of Philippine National Bank from 2000 up to the last quarter of 2002. Christopher C. Dobles, 68 years old, holds a Bachelor of Arts degree from University of Sto. Tomas and took up units in Masters in Business degree from Ateneo Graduate School. He is also a commissioned Major in the Philippine Constabulary Reserve Force. He was appointed Executive Vice President on 01 March 2009 and Acting Bank Security Officer since March 2003 and concurrent Bank Security Officer of Allied Savings Bank. Zacarias E. Gallardo, Jr., 62 years old, holds a Bachelor of Science degree in Commerce (Summa Cum Laude) from Far Eastern University and a Master in Business degree from La Salle College, Bacolod City. He was appointed First Senior Vice President on 01 September 2008 and Controller since 2002. He has been with Allied Bank since 1996 and has had 38 years of banking experience, 24 years of which had been devoted as examiner of the BSP. He is a Certified Public Accountant and had also been a member of the FEU faculty. Yolanda M. Albano, 60 years old, holds a Bachelor of Arts in Economics degree from the University of the Philippines. She was appointed First Senior Vice President of Corporate Banking Division on 01 July 2008. She has been with the Bank since 1977. She is a Director and past President of the Bank Marketing Association of the Philippines and a member of Financial Executive Institute of the Philippines.

Alberto E. Bienvenida, 59 years old, holds a Bachelor of Science in Industrial Engineering degree from the University of Santo Tomas and National University and a Masters degree in Business Administration at De La Salle University. He was appointed First Senior Vice President of Merchant Banking Division on 01 July 2009. He joined the Bank in 2001. Mr. Bienvenida had also been the President and Director of PhilBancor Venture Capital Corporation. Rafael Z. Sison, Jr., 56 years old, holds a Bachelor of Science in Business Administration major in Management degree from the Ateneo de Davao University. He was hired by the Bank last February 8, 2010 as First Senior Vice President. Mr. Sison was a seasoned banker having had his previous employers as Citytrust Banking Corporation, Solidbank Corporation, United Overseas Bank, Rizal Commercial Banking Corporation, Chinatrust Commercial Bank and Philippine National Bank and had handled different bank positions in the past from Branch

- 39 -

Manager, Region Head, Head of Retail and Branch Banking. Mr. Sison was formerly connected with Philippine National Bank as Sector Head of Retail Banking.

Danilo N. Lorenzo, 53 years old, holds a Bachelor of Science degree in Business Economics (Cum Laude) from the University of the Philippines. He was elected Treasurer of the Bank on 21 May 2009. He is head of the Treasury Division and was appointed Senior Vice President on 01 September 2008. Mr. Lorenzo has been with the Bank since 1982.

Socorro D. Corpus, 60 years old, holds the degree AB Psychology from the Assumption College. She was appointed Senior Vice President of Human Resources Division on 01 June 2005. She has been with the Bank since 1977. She is the Vice President of Banker’s Council for Personnel Management and Organization Development Professionals Network and a member of Personnel Management Association of the Philippines.

Aida T. Yu, 67 years old, holds a Bachelor of Science degree in Business Administration major in Accounting from the College of the Holy Spirit. She is head of the Greenhills Business Center and was appointed Senior Vice President on 16 November 2008. Ms. Yu is a Certified Public Accountant and has been with the Bank since 1978.

Norma B. Tan, 68 years old, holds a Bachelor of Science degree in Business Administration major in Accounting from the College of the Holy Spirit. She is head of the Caloocan Business Center and was appointed Senior Vice President on 16 November 2008. Ms. Tan has been with the Bank since 1977.

Lee Eng Y. So, 53 years old, holds a Bachelor of Science degree in Business Administration major in Management (Summa Cum Laude) from the College of the Holy Spirit. She is head of the Binondo Business Center and was appointed Senior Vice President on 16 November 2008. Ms. So has been with the Bank since 1979.

Roy A. Caparas, 62 years old, holds a Bachelor of Science degree in Business Administration major in Accounting from the University of Sto. Tomas. He is head of the Head Office Business Center and was appointed Senior Vice President on 16 November 2008. Mr. Caparas is a Certified Public Accountant and has been with the Bank since 1977.

Fulgencio C. Rana, Jr., 45 years old, holds a Bachelor of Science in Commerce major in Management degree from the San Beda College and a Masters degree in Business Administration at Asian Institute of Management. He was appointed Senior Vice President of Credit Card Department on 01 July 2009. He joined the Bank in 2007. Cesar P. Buhay, 54 years old, holds a Bachelor of Science in Agriculture degree from Araneta University Foundation and Bachelor of Science major in Industrial Engineering degree from Adamson University. He was appointed Senior Vice President of Information Technology Division on 01 July 2009. Mr. Buhay was formerly connected with the Philippine National Bank.

Loreto M. Arenas, 44 years old, holds a Bachelor of Science in Business Administration major in Accounting degree from the University of the Philippines and a Masters degree in Business Management from the Asian Institute of Management. Mr. Arenas was appointed Senior Vice President and Head of Operations Group on 16 September 2009. He was formerly connected with the Philippine National Bank as head of the International Transactions Processing Group.

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Erwin C. Go, 40 years old, holds a AB Economics degree from the University of Santo Tomas and Bachelor of Law from the San Beda College of Law. He was appointed Senior Vice President of the Bank’s Legal and Collection Department on 16 October 2010. Atty. Go was formerly connected with ZEBRA Holdings as Chief Legal Counsel. Independent Directors:

Messrs. James Ang Yiok Teck and Patrick L. Go are independent directors.

Term of Office: The number of directors shall be nine (9). The directors must be registered stockholders of record and shall hold office until the next annual meeting of shareholders and until their successors shall have been elected and qualified.

Any vacancy occurring in the Board of Directors may be filled by the affirmative vote of majority of the remaining directors, if still constituting a quorum of the board of directors. A director elected to fill a vacancy shall be elected for the un-expired term of his predecessor in office. Any directorship to be filled by reason of an increase should be reduced to less than a quorum shall be filled by election at an annual meeting or at a special meeting of shareholders called for that purpose. The principal officers of the Bank to be elected by the Board of Directors shall serve as such for a period of one (1) year and until their successors shall have been duly elected and qualified. Any officer or agent elected or appointed by the Board of Directors may be removed from office by the Board of Directors whenever in its judgment, the best interest of the Bank would be served thereby. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term.

Family Relationship

Messrs. Harry C. Tan and Manual T. Gonzales are related by consanguinity to their nephew, Mr. Michael G. Tan. Mr. Domingo T. Chua is the brother-in-law of Mr. Harry C. Tan, Director.

Identity of Significant Employees There is no person who is not an executive officer who is expected to make a significant contribution to the business. Involvement in Certain Legal Proceedings

Neither the Directors nor any of the Executive Officers of the Bank have, for a period covering the past five (5) years, reported: 1. Any petition for bankruptcy filed by or against a business with which they are related as a

general partner or executive officer; 2. Any criminal conviction by final judgment or being subject to a pending criminal

proceeding, domestic or foreign;

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3. Being subject to any order, judgment or decree, of a competent court of domestic or foreign, permanently or temporarily enjoining, barring, suspending or limiting involvement in any type of business, securities, commodities or banking activities; and

4. Being found by a domestic or foreign court of competent jurisdiction (in a civil action), the Commission or comparable foreign body, or a domestic or foreign Exchange or other organized trading market or self-regulatory organization to have violated a securities or commodities law or regulation, and the judgment has not been reversed, suspended or vacated.

Information required is incorporated herein by reference to Note 32 of the Consolidated and Parent Company Financial Statements, page 129.

Item10.Security Ownership of Certain Beneficial Owners and Management

Information is embodied in Annex “D”.

There are no holders of voting trust or similar agreement.

Item 11. Certain Relationships and Related Transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subjected to common control or common significant influence. Related parties may be individuals or corporate entities. Transactions between related parties are based on terms similar to those offered to non-related parties.

• consanguinity or affinity of a director, officer or stockholder of the Group; • Partnership of which a director, officer or stockholder of the Group or a general partner.

The following table shows information relating to the loans, other credit accommodations and guarantees classified as DOSRI accounts under regulations existing prior to the said circular, and new DOSRI loans, other credit accommodations granted under said circular:

09/30/2011 2010 2009Total outstanding non-risk DOSRI transactions P=0.90 billion P=1.35 billion P=4.95 billion Percent of outstanding DOSRI transactions

subject to aggregate ceiling test

3.04% 4.36% 4.80%

Total outstanding unsecured DOSRI transactions

P=0.00 billion P=0.09 billion P=0.25 billion

Percent of outstanding unsecured DOSRI transactions to 15.00% of total loan portfolio

0.03% 0.89% 2.65%

On January 31, 2007, BSP Circular No. 560 was issued providing the rules and regulations that govern loans, other credit accommodations and guarantees granted to subsidiaries and affiliates of banks and quasi-banks. Under the said circular, the total outstanding exposures to each of the bank's subsidiaries and affiliates shall not exceed 10.00% of bank's net worth, the unsecured portion of which shall not exceed 5.00% of such net worth. Further, the total outstanding exposures to subsidiaries and affiliates shall not exceed 20.00% of the net worth of the lending bank. BSP Circular No. 560 is effective February 15, 2007.

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As of September 30, 2011 and December 31, 2010, the Group was in compliance the rules and regulations on DOSRI. As of December 31, 2011, DOSRI loans amounting to P=0.90 billion are secured by government securities and DOSRI loans aggregating to P=0.20 billion and P=1.15 billion are secured by hold-out on deposits and government securities, respectively, as of December 31, 2010. These loans are therefore considered as non-risk assets. Non-risk DOSRI loans are not covered by the ceiling on DOSRI prescribed by the BSP. The significant intercompany transactions and outstanding balances of the Group were eliminated in consolidation. Other significant DOSRI disclosures are incorporated by reference to Note 30 pages 126 – 128 of the AFS as of December 31, 2010.

PART IV - EXHIBITS AND SCHEDULES

Item 14.Exhibits

Exhibit 18. Subsidiaries of the Registrant, Schedules A to I and Annexes A to D are filed as a separate section of this report.

SEC Form 17-C filed in September 30, 2011 and December 31, 2010 are incorporated by reference to the attached SEC Form 17Q and SEC Form 17A, as of September 30, 2011 and December 31, 2010, respectively, filed together with this Management Report.

ALLIED BANKING CORPORATION AND SUBSIDIARIES / AFFILIATES

INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES

Consolidated and Parent Company Financial Statements FORM 17-A, Item 7

Statement of Management’s Responsibility for Financial Statements Report of Independent Auditors /Reconciliation of Retained Earnings for Dividend Declaration Report of Independent Auditors Statements of Condition as of December 31, 2010 and 2009 Statements of Income for the Years Ended December 31, 2010, 2009 and 2008 Statements of Comprehensive Income for the Years Ended December 31, 2010, 2009 and 2008 Statements of Changes in Equity as of December 31, 2010, 2009 and 2008 Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008 Notes to Financial Statements

Consolidated and Parent Company Financial Statements FORM 17-Q

Statements of Financial Position as at September 30, 2011 and December 31, 2010 Statements of Income for the Quarter/Period Ended September 30, 2011/ 2010 Statements of Comprehensive Income for the Period Ended Sept. 30, 2011/ 2010 Statement of Changes in Equity as of Sept. 30, 2011/ 2010 Statements of Cash Flows for Period ended September 30, 2011/2010 Summary of Significant Accounting Policies and Explanatory Notes

- 43 -

EXHIBIT 18 SUBSIDIARIES / AFFILIATES OF THE REGISTRANT

The Parent company has eight (8) consolidated subsidiaries and affiliates, as follows:

Company Address

Domestic Subsidiaries/Affiliates:

ALLIED SAVINGS BANK 11th Floor Allied Bank Center

6754 Ayala Avenue, corner Legaspi St. Makati City, Philippines ALLIED FOREX CORPORATION 7th Floor Allied Bank Center

6754 Ayala Avenue, corner Legaspi St. Makati City, Philippines ALLIED LEASING AND FINANCE CORPORATION 5th Floor Allied Bank Center

6754 Ayala Avenue, corner Legaspi St. Makati City, Philippines PNB LIFE INSURANCE, INC (formerly 10th Floor Allied Bank Center New York Life Insurance (Phils) Inc. (NYLIP) 6794 Ayala Avenue, corner Herrera St. Makati City, Philippines

Foreign Subsidiaries_1/ ALLIED BANK PHILS. (UK) PLC 114 Rochester Row, London SWIP 1JQ, England ALLIED COMMERCIAL BANK 3rd Floor The Bank Center 189 Xiahe Road, Xiamen, Fujian Province People’s Republic of China OCEANIC HOLDING (BVI) LIMITED P.O. Box 91, Road Town Tortola, British Virgin Islands ALLIED BANKING CORPORATION (HK), LTD. 1402 World–Wide House 19 Des Voeux Road, Central Hong Kong

_1/ Copy of the audited financial statements included as required in item 10.b of Rule 68.1, as amended

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SCHEDULE A

ALLIED BANKING CORPORATION TREASURY DIVISION

December 31, 2011

MARKETABLE SECURITIES - (CURRENT MARKETABLE EQUITY SECURITIES AND OTHER SHORT-TERM

CASH INVESTMENTS)

NAME OF ISSUING ENTITY AND ASSOCIATION OF EACH ISSUE (1)

NO. OF SHARES OR PRINCIPAL AMOUNT OF BONDS AND

NOTES

AMOUNT SHOWN IN THE

BALANCE SHEET (2)

VALUED BASED ON MARKET

QUOTATION AT BALANCE SHEET

DATE (3)

INCOME RECEIVED AND

ACCRUED

A. PRIVATE

EMPIRE EAST LAND HOLDINGS 108,100 PHP 64,860.00 64,860.00

FILINVEST DEV'T CORP. 1,885,562 6,316,632.70 6,316,632.70

FILINVEST LAND INC. 2,519,468 2,519,468.00 2,519,468.00

GLOBAL-ESTATE RESORTS, INC. 631,800 1,339,416.00 1,339,416.00

METRO PACIFIC CORP. 34,860 127,587.60 127,587.60

PETRON CORP. 3,062,426 38,954,058.72 38,954,058.72

PILTEL 348,100 1,566,450.00 1,566,450.00

UNIVERSAL RIGHTFIELD PROP. 2,883,000 69,192.00 69,192.00

50,957,665.02 50,957,665.02 -

B. GOVERNMENT

TREASURY BILLS - BTR 122,596,000.00 122,116,175.46 122,116,175.46

FIXED RATE TREASURY NOTES-BTR 3,056,227,024.00 3,083,712,809.23 3,083,712,809.23 61,777,231.16

HOME INSURANCE GUARANTY CORP. 3,356,605.69 3,356,605.69 3,356,605.69 99,570.15

3,182,179,629.69 3,209,185,590.38 3,209,185,590.38 61,876,801.31

PHP 3,260,143,255.40 3,260,143,255.40 61,876,801.31

FCDU

A. PRIVATE

OBRASCON HUARTE LAIN SA EUR 1,000,000.00 EUR 982,746.25 982,746.25 38934.43

USD 1294300 USD 1271968.471 1,271,968.47 50392.83275

SM INVESTMENTS USD 110,000.00 110,308.00 110,308.00 1310.83

ENERGY DEVELOPMENT CORP 300,000.00 308,316.00 308,316.00 8,720.83

ATF BANK 2,000,000.00 2,005,123.17 2,005,123.17 40,597.22

MOBILE TELESYSTEM 2,000,000.00 2,000,218.90 2,000,218.90 68,000.00

AROMATICS THAILAND 1,000,000.00 1,016,880.00 1,016,880.00 24,597.22

CNOOC FINANCE LTD 3,100,000.00 3,124,459.00 3,124,459.00 62,032.30

USD 9,804,300.00 USD 9,837,273.54 9,837,273.54 255,651.23

PHP 431,266,071.99 431,266,071.99 11,207,749.92

B. GOVERNMENT

DEVELOPMENT BANK OF THE PHILS USD 295,000.00 303,740.85 303,740.85 4,326.66 POWER SECTOR ASSETS & LIABILITIES MGT 42,000.00 51,005.22 51,005.22 250.03

REPUBLIC OF THE PHILIPPINES 1,907,000.00 2,091,459.15 2,091,459.15 38,348.60

USD 2,244,000.00 USD 2,446,205.22 2,446,205.22 42,925.29

PHP 107,241,636.84 107,241,636.84 1,881,844.71

TOTAL PHP 538,507,708.83 538,507,708.83 13,089,594.63

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SCHEDULE B

AMOUNTS RECEIVABLE FROM DIRECTORS, OFFICERS

EMPLOYEES, RELATED PARTIES AND PRINCIPAL STOCKHOLDERS (OTHER THAN AFFILIATES)

FOR THE YEAR ENDED DECEMBER 31, 2010

(In Thousand Pesos)

Type Beginning Amount Amount Non Ending

Name* of Loan Balance Additions Collected Written-

Off Current Current Balance

Fortune Tobacco Corp. ACL 1,657,500

1,657,500 - -

Asia Brewery, Inc. T-Loan 1,750,000 400,000

1,350,000

1,350,000

Philippine Airlines Inc. R-Loan 2,394,500 31,912

2,362,588

2,362,588

Air Philippines Corp. T-Loan 275,000 275,000 - -

Foremost Farms, Inc. ACL 710,000 - 415,000 295,000

295,000

Himmel Industries, Inc. T-Loan 400,000 400,000 - -

Progressive Farms ACL 210,000 210,000 - -

Tanduay Distillers T-Loan 198,571 198,571 - -

Asian Alcohol Corp. ACL 200,000 200,000 - -

Maranaw Hotel & Resort Corp. T-Loan - 139,500 139,500

139,500

4,147,088

4,147,088

*Related Interest

- 46 -

SCHEDULE C

ALLIED BANKING CORPORATION TREASURY DIVISION

December 31, 2011

NON - CURRENT MARKETABLE EQUITY SECURITIES, OTHER LONG-TERM INVESTMENTS IN STOCK AND OTHER INVESTMENTS

NAME OF ISSUING ENTITY AND DESCRIPTIONOF

INVESTMENT (1)

NUMBER OF SHARES OR PRINCIPAL

AMOUNT OF BONDS AND

NOTES (2)

AMOUNT IN

PESOS

EQUITY IN EARNINGS (LOSSES)OF INVESTEES

FOR THE PERIOD (3)

OTHER (4)

DISTRIBUTION OF EARNINGS BY INVESTEES

(5)

OTHER (6)

NUMBER OF

SHARES OR

PRINCIPAL AMOUNTS OF BONDS & NOTES

(2)

AMOUNT IN PESOS

(7)

DIVIDENDS RECEIVED

FROM INVTS NOT

ACCOUNTED FOR BY THE

EQUITY METHOD

A. PRIVATE

OLD ALAY PHP

189,450.40

PLDT

3,165,298.00

RETELCO

4,500.00

NORTHERN TEL. CO.

18,000.00

PILTEL

9,000.00

GLOBAL STEEL & ISPAT HOLDINGS

10,086,054.91

10,086,054.91

PHP 10,086,054.91 PHP

13,472,303.31

B. GOVERNMENT

FIXED RATE TREASURY

NOTES - BTR PHP 12,745,395,993.00 PHP

13,425,607,840.34

HOME INS.GUAR'TY CORP. 5,903,351.81

5,903,351.81

NATIONAL DEVELOPMENT CORP.

467,090,000.00

467,090,000.00

SPECIAL PURPOSE TREAS.BONDS

2,500,000,000.00

2,500,000,000.00

HOME DEVELOPMENT CORP. 2,900,000,000.00

2,900,000,000.00

NATIONAL FOOD AUTHORITY

256,880,000.00

256,861,959.13

HOME GUARANTY CORP. 40,000,000.00

37,101,888.58

PHP 18,915,269,344.81 PHP

19,592,565,039.86

FCDU

A. GOVERNMENT SECURITIES

REPUBLIC OF THE PHILS EUR 14,323,000.00 PHP 784,605,375.65

CITY OF BUCHAREST 3,000,000.00 154,766,345.55

EUR 17,323,000.00 PHP 939,371,721.20

BANGKO SENTRAL NG PILIPINAS

USD 1,346,719.15 PHP 59,078,709.03

DEV'T. BANK OF THE PHILS 13,205,000.00 596,060,220.34

ISLAMIC REPUBLIC OF PAKISTAN

1,500,000.00 57,029,486.71

POWER SECTOR ASSETS & LIABILITIES

10,200,000.00 478,095,691.25

PROVINCE OF MANITOBA 1,000,000.00 50,754,006.40

REPUBLIC OF INDONESIA 17,500,000.00 745,350,936.19

REPUBLIC OF THE PHILIPPINES

89,584,700.00 4,198,709,660.43

REPUBLIC OF VENEZUELA 5,301,000.00 235,996,698.90

UKRAINE GOVERNMENT 600,000.00 26,130,638.67

USD 140,237,419.15 PHP 6,447,206,047.92

TOTAL - GOVERNMENT

SECURITIES PHP 7,386,577,769.12

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SCHEDULE C

ALLIED BANKING CORPORATION TREASURY DIVISION

December 31, 2011

NON - CURRENT MARKETABLE EQUITY SECURITIES, OTHER LONG-TERM INVESTMENTS IN STOCK AND OTHER INVESTMENTS

NAME OF ISSUING ENTITY AND DESCRIPTIONOF INVESTMENT

(1)

NUMBER OF SHARES OR PRINCIPAL

AMOUNT OF BONDS AND

NOTES (2)

AMOUNT IN

PESOS

EQUITY IN EARNINGS (LOSSES)OF INVESTEES

FOR THE PERIOD (3)

OTHER (4)

DISTRIBUTION OF EARNINGS BY INVESTEES

(5)

OTHER (6)

NUMBER OF SHARES

OR PRINCIPAL AMOUNTS OF BONDS & NOTES

(2)

AMOUNT IN PESOS

(7)

DIVIDENDS RECEIVED

FROM INVTS NOT

ACCOUNTED FOR BY THE

EQUITY METHOD

B. PRIVATE SECURITIES

CIF EUROMORTGAGE EUR 3,000,000.00 PHP 159,439,743.92

CREDIT AGRICOLE 3,000,000.00 112,699,621.31

GAZPRUM 1,000,000.00 60,210,410.58

HUTCHISON WHAMPOA 1,500,000.00 78,697,877.58

PEMEX PROJECT 4,000,000.00 199,718,336.39

EUR 12,500,000.00 PHP 610,765,989.78

EUROPEAN INVESTMENT BANK

JPY 50,000,000.00 PHP 29,319,406.83

JPY 50,000,000.00 PHP 29,319,406.83

BANK OF AMERICA USD 4,100,000.00 PHP 184,461,302.37

BEAR STEARNS CO INC 7,000,000.00 281,289,307.05

CENTERCREDIT 4,000,000.00 180,850,105.12

CIT GROUP INC 1,500,000.00 63,314,739.83

CITIGROUP INC 2,659,053.00 115,873,859.10

CMHI FINANCE 5,000,000.00 221,873,288.67

COSAN SA INDUSTRIA 3,000,000.00 127,759,607.34

DELL INC 750,000.00 32,324,797.96

ENERGY DEVT 1,000,000.00 43,369,356.56

GAZPRUM 8,950,000.00 403,244,440.96

GAZSTREAM 1,000,000.00 45,158,503.34

GOLDMAN SACHS 615,535.00 27,394,147.80

GS CALTEX CORP 3,000,000.00 128,411,687.88

HANA FUNDING LTD 4,000,000.00 160,219,747.28

HSBC FINANCE CORP 1,000,000.00 45,933,533.17

HUTCHISON WHAMPOA 2,000,000.00 86,169,970.66

INTERNATIONAL CONTAINER TSI

972,000.00 44,585,011.70

JG SUMMIT PHILIPPINES 13,825,000.00 626,974,548.72

JP MORGAN CHASE & CO 2,120,000.00 95,719,729.92

KAZKOMMERTS 2,000,000.00 92,831,200.00

KOREA DEVELOPMENT BANK 7,540,000.00 297,419,020.68

LI & FUNG 2,000,000.00 87,965,805.24

MERRILL LYNCH & CO 2,000,000.00 84,084,286.60

MORGAN STANLEY 3,000,000.00 129,270,435.01

MOSCOW BANK R & D 3,000,000.00 125,609,322.85

NAFTOGAZ 2,000,000.00 82,259,677.20

PCCW-HKT CAPITAL 900,000.00 39,456,000.00

PLDT 2,000,000.00 72,530,927.55

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SCHEDULE C

ALLIED BANKING CORPORATION TREASURY DIVISION

December 31, 2011

NON - CURRENT MARKETABLE EQUITY SECURITIES, OTHER LONG-TERM INVESTMENTS IN STOCK AND OTHER INVESTMENTS

NAME OF ISSUING ENTITY AND DESCRIPTIONOF INVESTMENT

(1)

NUMBER OF SHARES OR PRINCIPAL

AMOUNT OF BONDS AND

NOTES (2)

AMOUNT IN

PESOS

EQUITY IN EARNINGS (LOSSES)OF INVESTEES

FOR THE PERIOD (3)

OTHER (4)

DISTRIBUTION OF EARNINGS BY INVESTEES

(5)

OTHER (6)

NUMBER OF SHARES

OR PRINCIPAL AMOUNTS OF BONDS & NOTES

(2)

AMOUNT IN PESOS

(7)

DIVIDENDS RECEIVED

FROM INVTS NOT

ACCOUNTED FOR BY THE

EQUITY METHOD

RIZAL COMML BANK 4,300,000.00 188,342,045.47

SEVERSTAL 2,550,000.00 119,530,435.57

SM INVESTMENT 1,000,000.00 44,614,194.67

TENGIZCHEVROIL 14,380,000.00 632,184,373.76

THAI OIL CO LTD 519,200.00 23,215,824.47

THAI OLEFINS CO LTD 7,500,000.00 318,970,311.81

TRANSNEFT 4,000,000.00 173,181,902.10

1,000,000.00 42,708,639.53

USD 126,180,788.00 PHP 5,469,102,087.95

TOTAL - PRIVATE

SECURITIES

PHP 6,109,187,484.55

RBU

A. GOVERNMENT SECURITIES

REPUBLIC OF THE PHILIPPINES

USD 6,332,000.00 PHP 291,493,562.88

B. PRIVATE SECURITIES

ING BANK USD 22,500,000.00 PHP 986,164,272.32

FCDU TOTAL PHP 14,773,423,088.87

- 49 -

ANNEX A

ALLIED BANKING CORPORATION

LIST OF BANK OWNED PROPERTIES

AS OF DECEMBER 31, 2011

BRANCH ADDRESS

METRO MANILA

ANGONO Quezon Ave., E. dela Paz St., Angono, Rizal

ARRANQUE Soler Citiriser Building, 1427 Soler St., Sta. Cruz, Manila

BAYANAN-MUNTINLUPA National Road, Bayanan, Muntinlupa City

BETTER LIVING ABC Bldg., Doña soledad Ave., Better Living Subd., Parañaque City

BUENDIA 56 Gil Puyat Ave., (Buendia), Makati City

CALOOCAN 1716 Rizal Ave. Ext., cor. L. Bustamante St., Caloocan City

DAPITAN Dapitan St. cor. M. dela Fuente St., Metro Manila

DIVISORIA (STO. CRISTO) Sto. Cristo cor. M. delos Santos Sts., Divisoria, Metro Manila

EARNSHAW Earnshaw corner Jhocson Sts., Sampaloc, Manila

HEAD OFFICE (MAIN BRANCH) G/F Allied Bank Center, 6754 Ayala Ave. cor. Legazpi St., Makati City

J. ABAD SANTOS Unit B, Dynasty Towers, J. Abad Santos corner Bambang Sts., Manila

KAMUNING 118 Kamuning Road, Quezon City

MAKATI - C. PALANCA G/F Unit G1 and G2, BSA Suites 103 C. Palanca St., Makati City

MALABON 701 Rizal Ave., cor. Magsaysay St., Malabon, Metro Manila

MANILA DOWNTOWN OFFICE Alliance Bldg., 410 Quintin Paredes St., Binondo, Manila MARIKINA – MAIN Mayor Gil Fernando Ave. (Angel Tuason Ave.), cor. Chestnut St. San Roque,

Marikina City

NAVOTAS 865 M. Naval St., Navotas, Metro Manila

NEW MANILA 322 E. Rodriguez, Sr. Blvd., New Manila, Quezon City

NOVALICHES Quirino Hi-way cor. Sarmiento St., Novaliches, Quezon City

P. TUAZON 279 P. Tuazon Blvd., Cubao, Quezon City

PACO Pedro Gil cor. Pasaje-Rosario Sts., Paco, Metro Manila

PAMPLONA, LAS PINAS G/F Ever Gotesco Building, Alabang Zapote Road, Pamplona, Las Pinas City

PASIG-SHAW Jade Center Condominium, 105 Shaw Blvd., Pasig City

PLAZA DEL CONDE San Fernando Towers, Plaza del Conde. Binondo Manila

PROJECT 3 - AURORA BLVD. 1003 Aurora Blvd., cor. Lauan St., Quirino Dist., Quezon City

QUADRANGLE Unit I Paramount Condominium, EDSA corner West Ave., Quezon City

VALENZUELA 101 McArthur Hi-way, Bo. Marulas, Valenzuela City

WACK-WACK Summit One Tower, Shaw Blvd., Wack-Wack, Mandaluyong City

WEST TRIANGLE 1396 Quezon Ave., Quezon City

LUZON

BANGUED Cor. Taft & Magallanes Sts., Bangued, Abra

CANDON National Hi-way, Candon, Ilocos Sur

DARAGA Baylon Compound, Market Site, Rizal St. Daraga, Albay

- 50 -

ANNEX A

ALLIED BANKING CORPORATION

LIST OF BANK OWNED PROPERTIES

AS OF DECEMBER 31, 2011

BRANCH ADDRESS

GAPAN Tinio Street, Poblacion, Gapan, Nueva Ecija

KAWIT Allied Bank Bldg., Gen. Tirona Highway, Binakayan, Kawit, Cavite

PUERTO PRINCESA, PALAWAN Rizal Ave., Mangahan, Puerto Princesa, Palawan

SAN FERNANDO - LA UNION 612 Quezon Ave., San Fernando, La Union

SOLANO Maharlika National Highway, Solano, Nueva Vizcaya

TAGAYTAY E. Aguinaldo Hi-way, Tagaytay City, Cavite

VISAYAS

BACOLOD-LOCSIN Barcel's Bldg., Locsin St., Bacolod City, Negros Occ.

BACOLOD-MAIN Araneta Ave., near cor. Luzuriaga St., Bacolod City, Negros Occidental

BAYBAY 148 R. Magsaysay Ave., Baybay, Leyte

BORACAY Branch - Bgy. Balabag, Boracay Island, Malay, Aklan

CATBALOGAN Del Rosario St. cor. Allen Ave., Catbalogan, Samar

CEBU – DANAO Beatriz VIII & Juan Luna ST., Cebu City

CEBU – JAKOSALEM D. Jakosalem cor. Legaspi Sts., Cebu City

DUMAGUETE 33 Dr. V. Locsin St., Dumaguete City, Negros Oriental

ILOILO – POTOTAN Guanco St., Pototan, Iloilo

ILOILO-LEDESMA Ledesma cor. Quezon Sts., Iloilo City

KABANKALAN Guanzon corner Lirasan Sts., Kabankalan, Negros Occidental

LARENA, SIQUIJOR Roxas St., Larena, Siquijor

MAASIN Tomen Oppus St. Tunga-tunga, Maasin City, Southern Leyte

ROXAS CITY Roxas Ave., Roxas City, Capiz

TACLOBAN Zamors St, Tacloban City, Leyte

TANJAY Magallanes cor. E. Romero Sts (formerly Lopez Jaena), Tanjay City, Negros Or.

MINDANAO

BASILAN Roxas Ave., Sta. Cruz, Isabela, Basilan

BUTUAN Montilla Blvd. Cor. Burgos St, Butuan City

BUUG National Highway, Poblacion, Buug, Zamboanga, Sibugay

CAGAYAN DE ORO-COGON JP Borja cor. V. Rosa Sts., CDO City, Misamis Oriental

CAGAYAN DE ORO -DIVISORIA Tiano Brothers cor., Cruz Taal Sts., CDO City

CAGAYAN DE ORO-LAPASAN Lim Ket Kai Development Center, CDO City, Misamis Oriental COTABATO Alejandro Dorotheo St. (formerly Jose Lim Sr.) cor. Corcuera St., Cotabato City,

North Cotabato

DAVAO-CM RECTO G/F Imperial Hotel, CM Recto St., Davao City, Davao

DAVAO-SAN PEDRO San Pedro St., Davao City

IPIL National Hi-way, Poblacion, Ipil, Zamboanga Sibugay

- 51 -

ANNEX A

ALLIED BANKING CORPORATION

LIST OF BANK OWNED PROPERTIES

AS OF DECEMBER 31, 2011

BRANCH ADDRESS

JOLO Serrates St., Jolo, Sulu

KORONADAL Gen. Santos Drive Zone, Poblacion, Koronadal, South Cotabato

MARANDING Maranding, Lala, Lanao del Norte PAGADIAN F.S. Pajares St., cor Cabrera Sts., San Francisco District, Pagadian City, Zamboanga

Del Sur

S. K. PENDATUN near corner S. K. Pendatun St. & Quezon Ave., Cotabato City

TACURONG Alunan Drive, Poblacion, Tacurong, Sultan Kudarat

TAWI-TAWI Datu-Halun St., Bongao, Tawi-Tawi

ZAMBO DEL SUR – MOLAVE Mabini St., Molave, Zamboanga del Sur

ZAMBO DEL SUR - SUCABON Mayor MS Jaldon St., Zamboanga City, Zamboanga del Sur

- 52 -

ANNEX B

ALLIED BANKING CORPORATION

LIST OF BRANCHES UNDER LEASE

AS OF DECEMBER 31, 2011

BRANCH ADDRESS

PRESENT

MONTHL

Y

RENT

EXPIRATIO

N

OF LEASE

METRO MANILA

A. BONIFACIO Bonifacio Towers, A. Bonifacio cor. Galino Sts., Quezon City 85,065.99 14-May-14

EDSA ETON CYBERPOD CENTRIS (formerly A. BONIFACIO-BALINTAWAK)

One Cyberpod Centris, G/F Eton Centris, EDSA cor. Quezon Avenue, Quezon City, MM 88,790.00 25-Feb-15

ADRIATICO G/F Pearl Garden Hotel, 1700 M. Adriatico cor. Malvar Sts., Malate, Manila 166,196.17 30-Jun-14

AGUILAR - LAS PIÑAS G/F Las Pinas Doctors' Hospital, Aguilar Ave., Citadella Subd., Las Pinas City 117,897.38 14-Mar-11

AGUIRRE G/F RICOGEN Bldg., 112 Aguirre St., Legaspi Village, Makati City 102,919.35 25-Sep-14

ALABANG - LAS PINAS Goodyear High Performance Center Bldg., Alabang-Zapote Road, Almanza, Las Pinas City 147,684.01 30-Jun-11

AMORSOLO Don Pablo Building, 114 Amorsolo St., Legaspi Village, Makati City 160,133.40 31-Jul-12

ANNAPOLIS Annapolis Tower, 43 Annapolis St., Greenhills, San Juan, Metro Manila 106,501.50 31-Oct-12

ANTIPOLO Circumferential Road, Quezon Ave., Antipolo, Rizal 8,000.00 21-Apr-16

168 MALL Unit 3S-04, 3rd Floor, 168 Shopping Mall, Sta. Elena,

Soller Sts., Binondo, Manila 35,000.00 15-Nov-12

BACLARAN 119-A Quirino Ave., Baclaran, Paranaque City 70,000.00 15-Mar-15 BALIC-BALIC AGB Bldg., 1816 G. Tuason cor. Prudencio Sts.,

Balic-Balic, Sampaloc, Manila 67,760.00 31-Mar-13 BAMBANG-MASANGKAY G/F ST Condominium, 1480 G. Masangkay St., Sta.

Cruz, Manila 121,563.89 28-Feb-16 BANAWE Banawe Fortune Center, Banawe cor. Quezon.

Avenue, Quezon City 45,943.55 31-Dec-13 BANAWE-N. ROXAS Prosperity Bldg. 395 Banawe cor. N. Roxas Street,

Quezon City 162,030.46 31-Dec-14

BELLEVUE - FILINVEST (formerly Muntinlupa City)

North Bridgeway, Filinvest Corporate City, Alabang, Muntinlupa City(effective Aug 14, 2009) 158,373.08 31-Jul-14

BF HOMES 43 President's Ave., BF Homes, Paranaque City 77,175.00 31-Dec-13 BLUMENTRITT 2229-2231 Rizal Avenue (between Batangas &

Laguna Sts.), Blumentritt, Sta. Cruz, Manila 76,269.54 31-Dec-12

BONI AVENUE 654 Boni Ave., Mandaluyong City 146,632.50 30-Sep-12

CAINTA G/F Arellano Bldg., Felix Ave., cor. Village East Ave., Cainta, Rizal 42,213.02 15-Feb-12

- 53 -

ANNEX B

LIST OF BRANCHES UNDER LEASE

AS OF DECEMBER 31, 2011

BRANCH ADDRESS

PRESENT

MONTHLY

RENT

EXPIRATION

OF LEASE

C. PALANCA C. Palanca cor Quezon Boulevard, Quiapo Manila 104,737.50 30-Nov-13 CENTURY PARK G/F Century Park Hotel, P. Ocampo (Vito Cruz

Ext.) cor. M. Adriatico Sts., Malate, Manila 183,387.22 28-Feb-14

VISAYAS-CONGRESSIONAL RTS Building, #22 Congressional Ave., near corner

Visayas Avenue, Quezon City 89,255.52 19-Apr-12

CONGRESSIONAL 149 Congressional Ave., Project 8, Quezon City 93,495.58 19-Jul-12 CUBAO SRMC Bldg. 901 Aurora Blvd. Cor Harvard &

Stanford Sts., Cubao, Quezon City 100,000.00 30-Sep-13 DEL MONTE Relocated to 116 Del Monte Ave., QC (Old Site

131 Del Monte Ave., cor. D. Tuazon St., Quezon City) 109,356.67 31-Jul-11

DIVISORIA MARKET Unit 14 & 15, New Divisoria Mall, Calle Commercio & Tabora Sts., Divisoria, Metro Manila 20,886.24 28-Feb-15

DOMESTIC AIRPORT G/F PAL Data Center, Domestic Road, Pasay City 21,272.70 31-Dec-11 DON ANTONIO HEIGHTS G/F Puno Foundation Bldg., Holy Spirit Drive, Don

Antonio Heights, Quezon City 62,286.79 30-Nov-11

E. RODRIGUEZ 1706 E. Rodriguez Ave., Cubao, QC 80,707.00 31-May-16

E. RODRIGUEZ-G. ARANETA 599 Araneta Ave. cor. E. Rodriguez Ave.,Quezon City 35,000.00 31-Aug-12

EDSA EXTENSION 235 EDSA Extension corner Loring St., Pasay City 101,755.24 28-May-14

EDSA-BALINTAWAK 337 - 339 EDSA Cor. Don Vicente Ang St., Caloocan City 79,860.00 10-Jun-14

EDSA-CALOOCAN Insular Life Bldg., EDSA B. Serrano St., Caloocan City 64,837.50 31-Jul-14

ELCANO 706-708 Elcano St, Manila 94,500.00 30-Nov-12

ERMITA Physician's Tower, 533 U.N. Avenue, cor. San Carlos Sts., Ermita, Manila 131,540.11 31-Jan-13

ESPAÑA Dona Natividad Bldg., Espana-Quezon Blvd., Rotonda, Quezon city 59,082.66 28-Feb-13

FAIRVIEW 70 Commonwealth Ave., Fairview Park Subd., Fairview, Quezon City 72,000.00 31-Mar-13

FRISCO 972 Del Monte Ave., corner San Pedro St., SFDM, Quezon City 59,535.00 23-Jan-13

G. ARANETA 1-B G. Araneta Ave., Quezon City 89,250.00 10-May-14

GEN. T. DE LEON General T. de Leon Street,

Valenzuela City (Opening Date: 09-05-11) 62,720.00 31-Jul-16

GOV. PASCUAL 19 Gov. Pascual St., Acacia, Malabon City 35,177.51 15-Jun-13

GRACE PARK 322 Rizal Ave. Ext. near cor. 7th Ave., Grace Park, Caloocan City 73,872.68 15-Jan-12

GRACE PARK -3rd AVENUE 126 Rizal Avenue, Between 2nd and 3rd Avenue,

Grace Park, Caloocan City 80,000.00 31-Oct-16 GRACE VILLAGE G/F TSPS Condominium Bldg., Christian cor. Hope

Sts., Grace Village, QC 88,731.96 31-Dec-11

- 54 -

ANNEX B

LIST OF BRANCHES UNDER LEASE

AS OF DECEMBER 31, 2011

BRANCH ADDRESS

PRESENT

MONTHL

Y

RENT

EXPIRATIO

N

OF LEASE

GRANADA Xavier Hill Tower 1, Granada cor. N. Domingo Sts., Quezon City 110,539.55 28-Feb-15

GREENBELT G/ F PAL Building II, Legaspi Village., Makati City 79,947.00 30-Sep-13

GREENHILLS G/F Limketkai Bldg., Ortigas Ave., Greenhills, San Juan, MM 258,674.72 18-Jun-13

INTRAMUROS 707 Aduana cor Cabildo Shipping Center Condominium, Intramuros, Manila 83,398.80 30-Nov-14

J. P. LAUREL G/F Gama Bldg., J. P. Laurel cor. Minerva Sts., San Miguel, Manila 126,000.00 28-Feb-11

JUAN LUNA CK Bldg., 750 Juan Luna St., Binondo Manila 118,433.89 31-Mar-12

KAMIAS Topaz Building, 99-101 Kamias Road, Kamias, Quezon City 81,846.11 31-May-14

KATIPUNAN 160 Katipunan Ave.,St. Ignatius Village., Quezon City 120,000.00 05-Mar-12

LAGRO Quirino Ave., Lagro, Quezon City 82,958.28 30-Jun-14 LAS PIÑAS Consolidated Asiatic Proj., Inc. Bldg., Alabang-

Zapote Road, Bgy. Almanza, Las Pinas City 136,491.43 31-Mar-12 ACROPOLIS 90 TriQuetra Bldg., E. Rodriguez Jr., Ave., Bagumbayan,

Quezon City, MM 140,475.00 31-Oct-15

MALINTA Moira's Building, 407 Mc Arthur Highway, Malinta,

Valenzuela City, Metro Manila 73,100.00 31-Aug-15 MANDALUYONG-SHAW 2 Acacia Lane corner Shaw Boulevard and

Pinagtipunan Sts, Mandaluyong City (effective 07/24/2009) 99,750.00 15-Jun-14

MARIKINA - CONCEPCION Bayan-bayanan Ave. cor. Eustaquio St., Concepcion, Marikina, Metro Manila 177,962.27 30-Jun-12

MARIKINA - STA. ELENA 314 J. P. Rizal St., Bgy. Sta. Elena, Marikina City 66,150.00 31-Jul-13

MASANGKAY 916 Masangkay St. Binondo Manila 121,000.00 30-Nov-13

MASINAG 241 Sumulong Highway, Mayamot, Masinag, Antipolo City 72,930.38 28-Feb-15

MATALINO Tempus I Bldg., Matalino St., Diliman, Quezon City 78,705.54 30-Jun-12 MONTALBAN E. Rodriguez Highway corner Midtown Subdivision

Barangay Rosario, Rodriguez, Montalban, Rizal 60,000.00 31-May-16

MORAYTA Consuelo Building, 929 N. Reyes St., (Formerly Morayta), Sampaloc, Manila 124,155.28 31-Jul-12

NAIA I - MANILA INT'L AIRPORT Departure Area, NAIA Terminal Bldg., Imelda Ave., Paranaque, Metro Manila 33,917.57 30-Nov-11

NAIA II - TERMINAL II NAIA Centennial Terminal II Northwing Level Departure Intl.,Bldg., Pasay City 21,400.00 05-Aug-11

NORTH BAY 511 Honorio Lopez Blvd., Balut, Tondo, Manila 30,094.06 31-Oct-15

ONGPIN 917 Prestige Tower Condominium, Ongpin St., Sta Cruz, Manila 121,557.98 18-Apr-14

ORTIGAS CENTER Unit 104, Taipan Place, Emerald Avenue, Ortigas Center, Pasig City 105,378.61 15-Oct-12

- 55 -

ANNEX B

LIST OF BRANCHES UNDER LEASE

AS OF DECEMBER 31, 2011

BRANCH ADDRESS

PRESENT

MONTHL

Y

RENT

EXPIRATIO

N

OF LEASE

OYSTER PLAZA Unit D1, Oyster Plaza Bldg., Ninoy Aquino Ave., Metro Manila 60,000.00 31-Oct-15

PADRE FAURA PAL Learning Center Bldg., 540 Padre Faura cor. Adriatico Sts., Ermita, Manila 89,081.42 30-Jun-11

PADRE RADA RCS Bldg., Padre Rada St., Tondo, Manila 104,804.15 31-Oct-14

PARANG MARIKINA 105 BG Molino St., Parang, Marikina 78,750.00 30-Jun-14

PASAY 2480 Taft Avenue, Pasay City 150,333.32 31-Jan-13

CHINO ROCES AVE. EXTENSION G & A Building, 2303 Don Chino Roces Ave. Ext.

(formerly Pasong Tamo Ext.), Makati City 85,725.25 15-May-16

PASAY-EDSA 765 EDSA, Malibay, Pasay City 98,456.01 14-Sep-11

PASAY-LIBERTAD P. Villanueva St., Libertad, Pasay City 80,850.00 31-Dec-12

PASIG Ortigas Ave., Rosario, Pasig City 89,996.35 31-Aug-13

PASIG-RIVERSIDE CTIP Compound, Ortigas Avenue Extension, Rosario, Pasig City 80,000.00 30-Jun-15

PASO DE BLAS 292 Paso de Blas, Valenzuela, Metro Manila 86,515.00 31-May-14

PASONG TAMO 2233 Pasong Tamo Ave., Makati City 102,500.00 30-Jun-12

METROPOLITAN AVENUE Unit 102, BUMA Bldg.,1012 Metropolitan Avenue, San Antonio Village, Makati City 127,050.00 30-Sep-15

QUIAPO 516 Evangelista near Ronquillo St., Quiapo, Metro Manila 126,181.13 15-Feb-12

QUIRINO AVENUE FSR BLDG., Quirino Ave., cor. San Bartolome St., Metro Manila 61,551.00 15-Aug-14

REMEDIOS Unit G07 Ground Floor, Royal Plaza Twin Towers, 648 Remedios cor. Ma. Orosa Sts., Malate, Manila 90,393.15 31-Aug-15

RETIRO 174 D. Tuason St. (near cor retiro) Quezon Avenue 92,610.00 30-Sep-12

ROCES AVENUE 54 Alejandro Roces Ave., Quezon City 35,000.00 31-Aug-12

ROOSEVELT 256 Roosevelt Ave., San Francisco del Monte, Quezon City 115,500.00 30-Apr-14

SALCEDO VILLAGE Classica Towers, 114 HV dela Costa St., Salcedo Village, Makati City 52,500.00 30-Sep-14

SAM SON ROAD (formerly UE Caloocan)

149 Samson Road corner P. Bonifacio St. Caloocan City 63,000.00 31-Jan-14

SAN ANDRES Linao Street, San Andres, Metro Manila 102,876.48 31-Jul-14

JADE-ORTIGAS Antel Global Corporate Center, Julia Vargas Avenue,

Ortigas Center,Pasig City 60,775.31 29-Feb-16

SAN LORENZO VILLAGE GF Power Realty Bldg., 1012 A. Arnaiz Avenue, Makati City 70,000.00 30-Jun-12

SAN MATEO 19 Gen. Luna St., Banaba, San Mateo, Rizal 41,368.76 31-Oct-16

SAN NICOLAS Gedisco Tower, 534 Asuncion St., San Nicolas, Manila City 135,025.38 31-Mar-14

SHAW BLVD. (MANUELA) Starmall Shaw Blvd., EDSA, Mandaluyong City under nego 31-Jul-10

- 56 -

ANNEX B

ALLIED BANKING CORPORATION

LIST OF BRANCHES UNDER LEASE

AS OF DECEMBER 31, 2011

BRANCH ADDRESS

PRESENT

MONTHLY

RENT

EXPIRATION

OF LEASE

SUCAT AC Raftel Center, 8193 Dr. A. Santos Ave., Sucat, P'que City 136,500.00 30-May-14

T. ALONZO T. Alonzo cor. Ongpin Sts., Sta. Cruz, Manila 162,750.00 31-Mar-15

REINA REGENTE 1067 Felipe II St., Binondo, Manila (near 168 Mall) relocated 23 June 06 60,000.00 31-May-15

TAFT AVENUE G/F One Archers' Place, Taft Avenue, Malate, Manila (new site effective 01/10/2011) 89,747.00 31-Jan-16

MINDANAO AVENUE Yrreverre Square Building, 888 Mindanao Ave., Brgy. Talipapa, Novaliches, QC /// 73,880.82 30-Jun-16

TONDO 1941-43 Juan Luna St., Tondo, Manila 98,398.13 31-Oct-12

TUTUBAN G/F & Podium Level, Prime Block Mall, Tutuban Center, Divisoria, Manila 78,295.14 14-Jun-14

U. E. RECTO G/F Dalupan Bldg., Unversity of the East Campus, Claro M. Recto Ave., Manila 61,528.50 31-Mar-13

UNITED PARAÑAQUE 2110 Iba St., East Service Road, Bgy. San Martin de Porres, United Pque., Pque. City 109,804.78 22-Apr-12

VITO CRUZ 550 Pablo Ocampo St.(formerly Vito Cruz Ext.), Malate, Manila 87,000.00 31-Aug-12

ZABARTE - QUIRINO HIWAY 1131 Quirino Hi-way, Bgy. Kaligayahan, Novaliches, Quezon City 66,852.84 31-Jul-11

ZAPOTE 59 Alabang-Zapote Road, Las Piñas City 66,000.00 14-Aug-15

LUZON

AGOO T. Asper St., San Nicolas Norte, Agoo, La Union 6,000.00 01-Jun-15

ANGELES McArthur Hi-way, Bgy. Salapungan, Angeles City, Pampanga 70,000.00 31-Jul-15

BACOOR CMC Bldg., Km 16, Emilio Aguinaldo Hi-way, Bgy. Panapaan, Bacoor, Cavite 97,657.30 15-Apr-12

BAGUIO G/F Baguio Center Mall, Magsaysay Ave., Baguio City 50,000.00 30-Jun-13

BATANGAS Diego Silang St., Batangas City 88,981.14 15-Jul-12

BATANGAS-KUMINTANG JPA AMA Bldg., Kumintang Ilaya, Batangas City, Batangas 60,167.56 28-Feb-15

BIÑAN G/F University Center Bldg., National Hi-way, Bgy. San Antonio, Binan, Laguna 65,000.00 31-Aug-15

BOCAUE McArthur Hi-way, Lolomboy, Bocaue, Bulacan 60,036.28 07-Oct-12

BULAN R. Magsaysay cor. MH del Pilar Sts., Bulan, Sorsogon ( LOT LEASE ) 9,765.63 31-Jul-12

- 57 -

ANNEX B

ALLIED BANKING CORPORATION

LIST OF BRANCHES UNDER LEASE

AS OF DECEMBER 31, 2011

BRANCH ADDRESS

PRESENT

MONTHLY

RENT

EXPIRATION

OF LEASE

CABANATUAN Paco Roman St., Cabanatuan City, Nueva Ecija 33,075.00 29-Apr-14

CABUYAO Asia Brewery Complex, National Hi-way, Bgy. Sala, Cabuyao, Laguna 36,931.93 31-Mar-13

CALAMBA G/F Sta. Cecilia Business Center, Nat'l Hi-way, Bgy. Parian, Calamba, Laguna 26,000.00 15-Oct-11

CAMILING Rizal St., Camiling, Tarlac ( LOT LEASE ) 15,258.79 15-Mar-16

CANDELARIA Bustamante St., Poblacion, Candelaria, Quezon 37,372.08 31-Oct-11 CAPAS Capas Comm'l Complex, Concepcion Junction, Bo.

Sto. Domingo, Capas, Tarlac 53,709.57 15-Oct-11 CAUAYAN Disston Lumber and Electrical Supply, National

Road, San Fermin, Cauayan City, Isabela (effective 04/01/2009) 63,000.00 31-Mar-14

CAVITE CITY 485 P. Burgos St., Bgy. Caridad, Cavite City 62,053.13 31-Aug-11

DAET Pimentel Ave., cor. Dasmarinas St., Daet, Camarines Norte 65,000.00 16-Mar-15

DAGUPAN A. B. Fernandez Ave., cor. Noble St., Dagupan City 70,000.00 31-Dec-14 DAGUPAN-PEREZ BLVD Orient Pacific Building Perez Blvd. cor. Rizal St.

Dagupan City (former Abrabar Building Perez Blvd Dagupan City.) 67,142.25 31-Mar-12

DASMARIÑAS G/F, Amada-Felix Bldg., Aguinaldo Hi-way, Burol Main, Dasmarinas, Cavite 77,566.40 31-Oct-11

DOLORES Relocation: McArthur Hiway, San Agustin, San Fernando, Pampanga (Old SiteGopiao Bldg., McArthur Hi-way, Dolores, San Fernando, Pampanga) 69,000.00 31-May-12

GUMACA Andres Bonifacio St., Poblacion, Gumaca, Quezon ( LOT LEASE ) 14,280.50 29-Nov-15

IMUS Sayoc-Abella Blsg., E. Aguinaldo Hi-way, Imus, Cavite 78,750.00 31-Aug-14

LA TRINIDAD Km. 14, La Trinidad Road, La Trinidad, Benguet 66,000.00 20-Dec-11

LAOAG F.R. Castro Ave. (formerly A. Bonifacio St.), Laoag City, Ilocos Norte 94,500.00 31-Mar-13

LEGAZPI 35 F. Imperial St., Legaspi, Albay ( LOT LEASE ) 57,881.25 31-May-12

LIPA CITY K-Pointe Plaza, Ayala Hi-way, Lipa City, Batangas 46,000.00 31-Oct-15

LUBAO Olongapo Rd., Sta. Cruz, Lubao, Pampanga 38,000.00 31-Dec-15

LUCENA Quezon Ave., cor. Leon Guinto St., Lucena City, Quezon 99,000.00 30-Jun-12

MABALACAT McArthur Highway, Bgy., Mabiga, Mabalacat, Pampanga 33,880.00 31-Jan-15

MALOLOS McArthur Hiway, Sumapang Matanda, Malolos City, Bulacan 76,576.89 31-Dec-11

MANGALDAN G/F Abad Biascan Bldg., 5 Rizal Ave., Poblacion, Mangaldan, Pang. 40,728.19 28-Feb-12

MEYCAUAYAN

G/F Stall 8 & 9 Esperanza Mall, McArthur Highway

Brgy. Calvario, Meycauayan, Bulacan 71,401.00 04-Nov-11

- 58 -

ANNEX B

ALLIED BANKING CORPORATION

LIST OF BRANCHES UNDER LEASE

AS OF DECEMBER 31, 2011

BRANCH ADDRESS

PRESENT

MONTHLY

RENT

EXPIRATION

OF LEASE

MOLINO I.K. Commercial Building, Molino III, Paliparan Highway, Bacoor, Cavite 57,000.00 31-May-15

NAGA MAGSAYSAY (formerly Naga Extension)

G-Square Building Magsaysay Avenue cor Catmon II St., Balatas, Naga City 67,200.00 14-Apr-14

NAGA MAIN Panganiban Ave., cor. Balintawak Sts., Naga city, Camarines Sur 100,000.00 31-Aug-15

NAGUILIAN ROAD - BAGUIO G/F High Country Inn, Naguilian Road, Baguio City 83,687.12 31-Oct-11

NASUGBU JP Rizal St. cor F. Alix St., Nasugbu Batanagas (effective 06/01/2009) 72,240.00 31-May-14

OLONGAPO 1981 Rizal Ave., West Bajac Bajac, Olongapo City 165,375.00 31-Jan-13

PACITA COMPLEX

JRJ Building, Old National Highway, Barangay Nueva, San

Pedro, Laguna 48,620.25 31-May-11

PLARIDEL Cagayan Valley Road, Bonga, Plaridel, Bulacan ( LOT LEASE ) 15,944.05 30-Jul-17

SAN CARLOS Plaza Jaycee St., San Carlos City, Pangasinan 54,463.50 14-Aug-14 SAN FERNANDO, PAMP. LNG Bldg., Mc Arthur Highway Dolores Junction,

San Fernando, Pampanga 58,198.44 27-Sep-13

SAN PABLO Gomburza St., San Pablo City, Laguna 84,506.63 15-Aug-12

SAN PEDRO Alex Bldg., National Hi-way, Bgy.Poblacion, San Pedro, Laguna 63,112.61 30-Sep-11

SAN RAFAEL Cagayan Valley Road, Bo. Cruz na Daan, San Rafael, Bulacan 54,812.38 31-Dec-11

SANTIAGO, ISABELA Municipal Integrated Bldg., Panganiban cor. Barrera St., Santiago, Is. 5,023.50 28-Aug-15

SORSOGON - SORSOGON Chiang Kai Chek School, R. Magsaysay Ave., Sorsogon, Sorsogon 38,584.60 13-Mar-13

STA. CRUZ Regidor St., Poblacion, Sta. Cruz, Laguna 73,500.00 21-Feb-14

STA. ROSA, LAGUNA G/F Don F. Tan Gana Bldg., National hi-way, Balibago, Sta. Rosa, Laguna 80,000.00 30-Sep-15

STA. ROSA, NE G/F, JNB Bldg., Bgy. Cojuangco, Cagayan Valley Road, Sta. Rosa, NE 29,363.77 30-Sep-11

TANZA G/F Annie's Plaza, A. Soriano Highway, Daang Amaya, Tanza Cavite 42,000.00 15-Oct-15

TARLAC #6 Zamora St. Tarlac City 65,290.05 31-Oct-12 TUGUEGARAO

G/F Brickstone Mall, Km. 482, Maharlika Highway, Pengue Ruyu, Tuguegarao City, Cagayan (new site effective Dec 20, 2010) 59,400.00 15-Nov-15

VIGAN 36 Quezon Ave., Vigan, Ilocos Sur ( LOT LEASE ) 49,612.50 30-Apr-13

VISAYAS

BACOLOD-LIBERTAD Libertad St., near Poinsetia St., Bacolod City, Negros Occidental 42,542.72 03-Nov-11

BAYAWAN G/F Trias Bldg., Magsaysay St., Bayawan, Negros Oriental 35,369.20 15-Feb-08

CEBU - A. CORTES AC Cortes Ave., Mandaue City, Cebu 96,032.77 28-Feb-11

- 59 -

ANNEX B

ALLIED BANKING CORPORATION

LIST OF BRANCHES UNDER LEASE

AS OF DECEMBER 31, 2011

BRANCH ADDRESS

PRESENT

MONTHLY

RENT

EXPIRATION

OF LEASE

CEBU - BANILAD AS Fortuna St., Banilad, Mandaue City, Cebu ( LOT LEASE ) 31,721.69 23-Mar-15

CEBU - BANTAYAN Escario St., Bantayan Island, Cebu 52,497.87 23-Oct-14

CEBU - CARBON 41-43 Plaridel St., Carbon district, Cebu City, Cebu 94,500.00 31-Oct-14

CEBU - CARCAR Jose Rizal St., Poblacion 1, Rotonda, Carcar, Cebu 60,500.00 21-Feb-11

CEBU - COLON G/F J. Avila Bldg., Collonade Mall Oriente, Colon St., Cebu City 141,015.00 31-Dec-14

CEBU - CONSOLACION Cansaga (Poblacion), Consolacion, Cebu 42,542.72 15-Nov-11

CEBU - FUENTE OSMENA C. A. O. Mercado Bldg., Osmeña Blvd., Cebu City 109,122.27 31-May-13

CEBU - GORORDO 30 Machay Bldg., Gorordo Ave., Lahug, Cebu City 61,000.00 15-Aug-11

CEBU - LAPU-LAPU Mangubat cor. Rizal Sts., Lapu-Lapu City, Cebu under nego 19-May-10

CEBU - MAMBALING 2 F. Llmas St., Basak, Cebu City 66,885.00 30-Sep-14

CEBU - MANDAUE KRC Bldg., National Highway, Subangdaku, Mandaue City, Cebu 213,389.03 15-Aug-11

CEBU - MINGLANILLA National Highway, Poblacion, Minglanilla Cebu 49,603.71 15-Jan-12

CEBU - PUSOK Highway, Pusok, Lapu-Lapu City ( LOT LEASE ) 23,579.48 28-Feb-11

CEBU - TABUNOK Viva Lumber Bldg., Talisay, Tabunok, Cebu 46,585.00 17-Jun-14

CEBU - TALAMBAN DCR Bldg., National Highway, Talamban, Cebu City 52,417.98 14-Aug-13

ILOILO - JARO Simon Ledesma St., Jaro, Iloilo 49,244.84 28-Feb-12

ILOILO - STA. BARBARA Bga. Dama, Brgy Bolong Oeste, Sta. Barbara, Iloilo City 45,025.46 31-Oct-13

ILOILO-ALDEGUER Lope Locsin Bldg., Aldeguer St., Iloilo City 80,000.00 30-Nov-15

ILOILO-GEN. LUNA Sarabia Manor Bldg., 101 Gen. Luna St., Iloilo City 57,750.00 17-Dec-12 KALIBO

Martelino St., Kalibo, Aklan (beside Jolibee - near corner Arch. Gabriel Reyes Street) ( LOT LEASE ) 35,890.70 30-Nov-15

ORMOC Reat St., Ormoc City., Leyte 50,000.00 30-Sep-16

SAN JOSE, ANTIQUE San Isidro St., San Jose de Buenavista, Antique 51,000.00 11-Jun-15 TAGBILARAN

GIE Garden Hotel, cor. CP Garcia Ave. & MH del Pilar St., Tagbilaran, Bohol 70,000.00 31-Jul-12

MINDANAO

BAYUGAN 358 Narra Ave., Bayugan, Agusan del Sur 18,863.58 31-May-11

DAVAO-AGDAO Lapu-Lapu St., Agdao, Davao City 71,400.00 30-Nov-14

DAVAO-DIGOS Gen. Luna St. (near Katipunan), Digos, Davao del Sur 36,602.50 30-Sep-15

DAVAO-LANANG ABI Compound, Km. 7, Lanang, Davao City, Davao 28,660.81 24-Jul-11

DAVAO-MONTEVERDE Monteverde cor. Banguy Sts., Davao City 87,846.00 13-Mar-15

- 60 -

ANNEX B

ALLIED BANKING CORPORATION

LIST OF BRANCHES UNDER LEASE

AS OF DECEMBER 31, 2011

BRANCH ADDRESS

PRESENT

MONTHLY

RENT

EXPIRATION

OF LEASE

DAVAO-STA. ANA R. Magsaysay Ave., cor. Lizada St., Davao City, Davao 93,079.69 24-May-11

DAVAO-TAGUM Pioneer St., Tagum, Davao del Norte 34,000.00 30-Sep-15 DAVAO-TORIL 80 Gen. Mac Arthur Highway, Matina Crossing,

Davao City (formerly Saavedra St., Toril, Davao City) 40,000.00 15-Sep-15

GENERAL SANTOS Pedro Acharon Blvd., General Santos City, South Cotabato ( LOT LEASE ) under nego 31-Jul-10

ILIGAN Juan Luna St., Iligan City, Lanao del Norte 9,726.53 26-Apr-11 KIDAPAWAN Unit I, Yaoto Bldg., National Hi-way cor. Dayao St.

Kidapawan, North Cotabato 62,500.00 26-Apr-13

MALAYBALAY Fortich corner Kapitan Juan Melendez Sts., Malaybalay, Bukidnon 38,500.00 31-Mar-18

OZAMIS Gomez cor. Burgos Sts., Ozamis City, Misamis Occidental 45,000.00 30-Sep-13

SURIGAO San Nicolas St., Washington, Surigao City, Surigao del Norte 85,962.50 31-Mar-12

VALENCIA Lavina Bldg., Mabini Street, Valencia, Bukidnon 46,875.00 28-Feb-21

ZAMBO DEL NORTE - DIPOLOG Rizal Ave., cor. Osmena St., Dipolog City, Zamboanga del Norte 84,743.94 16-Apr-12

ZAMBO DEL SUR - SAN JOSE (Climaco) San Jose Road, Zamboanga City, Zamboanga del Sur 30,000.00 22-Apr-14 ZAMBO DEL SUR - VETERANS AVENUE

Zamboanga Doctors' Hospital, G/F Annex Bldg., Veterans Ave., Zamboanga City, Zamboanga del Sur 79,674.78 15-May-12

ZAMBOANGA - CANELAR G/F, Blue Shark Hotel, Mayor Jaldon St., Canelar, Zamboanga City 43,923.00 31-Aug-22

ZAMBOANGA - GUIWAN National Hi-way, Guiwan Zamboanga City 14,400.00 28-Feb-17

ZAMBOANGA - NUÑEZ EXT (Gov. Alvarez)

Ciudad Medical Zamboanga, Nuñez Ext., Zamboanga City 44,289.03 31-May-13

FOREIGN BAHRAIN OFFSHORE BRANCH 11th Floor Bahrain Tower, Government Avenue,

Manama State of Bahrain 1,936.34* 31-Dec-12 GUAM BRANCH Unit 1 Bejess Comm. Bldg., Marine Drive,

Tamuning Guam 1,600.00* 30-Nov-11

* In US Dollar

- 61 -

ANNEX C

ALLIED BANKING CORPORATION

LIST OF STOCKHOLDERS

As of December 31, 2011

Percent to

Total

Name of Stockholders

Type of

Shares

No. of Shares

Subscribed

No. of

Shares

1 Key Landmark Investments, Ltd. Common 729,872 22.10%

2 True Success Profits Ltd. Common 449,152 13.60

3 Caravan Holdings Corp. Common 449,152 13.60

4 Solar Holdings Corp. Common 449,152 13.60

5 Prima Equities & Investments Corp. Common 393,008 11.90

6 Infinity Equities, Inc. Common 336,864 10.20

7 Lucio C. Tan Common 99,285 3.00

8 Jewel Holdings Inc. Common 77,005 2.33

9 Virgo Holdings and Dev. Corp. Common 52,617 1.59

10 Virgo Holdings and Dev. Corp. Preferred 25,000 0.76

11 Iris Holdings & Dev. Corp. Common 46,937 1.42

12 Iris Holdings & Dev. Corp. Preferred 25,000 0.76

13 Ignacio B. Gimenez Common 44,089 1.34

14 Willy S. Co Common 38,768 1.17

15 Kings Investment & Dev't. Corp. Common 29,571 0.90

16 Mariano Tanenglian Common 17,635 0.53

17 Ramon Lee Common 17,635 0.53

18 Luz L. Siy Common 8,759 0.27

19 Nelly S. Sy Common 8,716 0.26

20 Domingo T. Chua Common 3,511 0.11

21 Mariano Khoo Common 440 0.01

22 Ramon L. Siy Common 150 0.00

23 Mariano G. Ordonez Common 142 0.00

24 James Ang Yiok Teck Common 10 0.00

25 Manuel T. Gonzales Common 10 0.00

26 P.O. Domingo Common 10 0.00

27 Michael G. Tan Common 1 0.00

28 Reynaldo A. Maclang Common 1 0.00

29 Harry C. Tan Common 1 0.00

30 Patrick L. Go Common 1 0.00

31 Anthony Q. Chua Common 1 0.00

3,302,495 100.00%

- 62 -

ANNEX D

Item 11 - Ownership of Certain Record and Beneficial Owners and

Management

Security Ownership of Certain Beneficial Owners

Owners holding more than 5% of voting securities

Relationship Shares

Title of Class Name and Address _2/ Nature w/ Issuer Citizenship Owned Percentage

Common Key Landmark Investments, Ltd. of record Stockholder British 729,872 22.10

P.O. Box 957, Offshore Incorporations

Centre, Road Town, Tortola, British Virgin Islands

Common True Success Profits Ltd. of record Stockholder British 449,152 13.60

P.O. Box 957, Offshore Incorporations

Centre, Road Town, Tortola, British Virgin Islands

Common Caravan Holdings Corporation of record Stockholder Filipino 449,152 13.60

No. 2 Azucena St., Brgy. Fortune, Marikina City

Common Solar Holdings Corporation of record Stockholder Filipino 449,152 13.60

West Capitol Drive cor. Fairlane, Pasig City

Common Prima Equities & Investments Corp. of record Stockholder Filipino 393,008 11.90

10 Quezon Avenue, Quezon City

Common Infinity Equities, Inc. of record Stockholder Filipino 336,864 10.20

2,807,200 85.00

Shares

Title of Class Name of Beneficial Owner Nature Amount Citizenship Owned Percentage

Common Domingo T. Chua - Chairman on record 3,511,000 Filipino 3,511 0.11

Common Willy S. Co - Vice Chairman on record 38,768,000 Filipino 38,768 1.17

Common Anthony Q. Chua - President on record 1,000 Filipino 1 0

Common Manuel T. Gonzales - Director on record 10,000 Filipino 10 0

Common James Ang Yiok Teck - Director on record 10,000 Filipino 10 0

Common Reynaldo A. Maclang - Director on record 1,000 Filipino 1 0

Common Michael G. Tan - Director on record 1,000 Filipino 1 0

Common Harry C. Tan - Director on record 1,000 Filipino 1 0

Common Patrick L. Go - Director on record 1,000 Filipino 1 0

Directors and Executive Officers as a group 42,304,000 42,304 1.28

_1/ The Bank does not offer stock options and warrants. Preferred Shares are convertible into common

Stock, in case of non-payment of dividends for three consecutive years. The conversion value of the

preferred stock is at the rate of peso for peso of its par value to prevailing book value of the

common stock at the time of conversion.

_2/ Natural person to direct the voting or disposition of shares held by:

Key Landmark Investments, Ltd. Mr. Wan Shek Hong - Sole Director

True Success Profits Ltd. Mr. Mok Pui Hong - Sole Director

Caravan Holdings Corp. Mr. Tan Thian Koan - President

Solar Holdings Corp. Mr. Peter Y. Ong - President

Prima Equities & Investments Corp. Mr. Florencio Nua - President

Infinity Equities, Inc. Mr. Henry Sitosta - Treasurer

- 63 -

ANNEX E

ALLIED BANKING CORPORATION

LIST OF SOFTWARE ACQUIRED

AS OF December 31, 2011

Software Date Acquired Description

BIM Edit / VSE 1992 Program library editor

Systematics Banking System 1996

System acquired to process the deposits, loan and general ledger of the Bank, both online and batch. The bank has a perpetual license to use the software with maintenance agreement until July 25, 2011

Tandem/Base 24 ATM System Aug. 2004 24x7 ATM system of the Bank running on HP nonstop system

RMS VSE 1990 Bundling/segmentation of mainframe reports Connect Direct Dec. 2007 PC/mainframe file transfer solution

PC Acronis Dec. 2007 / 2010 Back up software for servers and desktop RMS Desktop for PC 1990 Viewing of reports by branches ALCHEMY 1990 Documents management system Winzip April 2008 Data compression Bright store/Arc serv 2006 Disk to tape back up software Lotus Domino 1997 Email messaging and application server CA-CM / VSE 1997-2007 PC/mainframe file transfer Novell Netware 1998 PC Print and file server CT Tellering 1997 Branch delivery system Internet Banking 2007 Provides support for internet banking

Kamakura Risk Manager 2005 Risk management solution for Market Risk and Asset-Liability Mangement

Informatics ETL 2005 Extract-transform-load tool

HP Replication Solution Manager 2006 Management of SAN disks replication groups

HP Continuous Access 2006 Replication of Data Stored in SAN at Allied Bank Head Office to DR site PAL

VMWare Virtual Infrastructure 2007 Deployment and management of Vmware servers Redwood vision Treasury System 1999 Front office for treasury system Thomson Reuters 1995 Information for world market Bloomberg 1996 Financial service provider

PDEX 2005 Domestic securities and local currency trading platform

ASSCEND-ATOS Origin 2007 Credit card system Trade Innovation System 2003 Trade process system

Giftsweb and Enhanced Due Diligence 2006 AMLA-Anti-Money Laundering System

Checkpoint Firewall June 2004/Aug. 2007 Corporate Firewall / DR Firewall

Checkpoint Smart Defense June 2004 IPS subscription Checkpoint Connectra Dec. 2006 SSL / VPN Websense Enterprise June 2004 URL Filtering Global Server ID Feb. 2006 Verisign for the bank webserver ISS Internet Scanner June 2006 Vulnerability Assessment Tool MS Office 2003/2007 2006-2008 / 2010 Word / Excel / Powerpoint RSA Authentication Manager Nov. 2006 Two-factor authentication for AAF NetIQ Web Trends June 2004 Firewall reporter MS Windows 2003 Server June 2004 Security Management Servers OS MS Windows XP Professional 2005 Desktop OS Info Banker Trust System (UITF) Feb. 2005 Trust System Pro Curve Manager Apr. 2008 Network Monitoring Tool Winframe 1998 Thin Client software METAFRAME 2001 Thin Client software VSE / ESA 2005 Mainframe operating system

- 64 -

Annex E

ALLIED BANKING CORPORATION

LIST OF SOFTWARE ACQUIRED

AS OF December 31, 2011

Software Date Acquired Description

TCP / IP for VSE 2006

Provides a complete solution for connecting the mainframe to any other platforms. Transfer file from VSE (Mainframe) to any other platforms running under Windows, HP-Tandem OS/2, AS/400, UNIX, AIX, HP/UX, SUN/OS, etc. & vice versa.

CA-Easytrieve plus Report Generator

CA-Sort Organize data into a defined sequence to efficiently sort, merge and copy files.

CA-Panvalet Program Source Library CA-Dynam/D Disk Management CA-Dynam/FI

2006

File Independence ASG-ZACK 2006 Console Management ASG-ZEKE Job Scheduler ASG-TMON for CICS 2005 2005 CICS monitoring tool SOPHOS Enterprise Solution 2010 Anti-Virus System Microsoft Visual Studio 2009 Project development Microsoft Project 2009 Project development MS Office Enterprise 2009 Project development MS Office Professional 2009 Project development MS Office Small Business 2009 Project development Macromedia 2009 Project development GFI Languard 2009 Vulnerability Assessment Tool Websphere MG Series 2003 Interphase between PC and Mainframe Oracle 2003 Data plus software