Progress through Sound Banking

When MABS started working with Cantilan Bank in 1999, developing a strategic roadmap and boosting organizational commitment were important objectives to get the bank to focus on expanding access to its services. Before working with MABS, the bank did little or no marketing, so many potential clients did not know the services it offered or thought it was not interested in low-income households and microentrepreneurs.

Soon after the partnership with MABS began, William Hotchkiss III took over leadership of this bank, which his father had helped incorporate in 1980. After 37 years in the Philippine Air Force, he had retired to run the bank. He was convinced of the value of sound bank management and providing financial access to microentrepreneurs. He also appreciated the step-by-step approach MABS took to working with rural banks. MABS’ guidance and Gen. Hotchkiss’ strong commitment marked the beginning of the bank’s transformation.

The partnership began with capacity building. Following the MABS Approach, initial training focused on conducting market research; developing client-responsive products, proper credit and background investigation, and cash flow analysis; and collecting loan payments on time. The first research the bank undertook revealed strengths and weaknesses and a low awareness of its products and services by the local population. The survey also informed bank managers about the types of products and services the bank should focus on, the size of the untapped market of low-income households, and the large micro- and small enterprise sector.

Technical assistance and training provided by MABS to bank staff helped the bank improve its approach to microfinance services, especially credit underwriting, loan collection discipline, and a new focus on savings mobilization. The changes in policies and practices were incorporated at all levels of the bank and resulted in a significant growth in its loan portfolio, deposits, number of employees, branches, and outlets. With MABS’ support, Cantilan Bank developed and offered loans and deposit services for the microfinance sector and developed microagricultural loan services, a housing microfinance product, and microinsurance for low-income clients. With MABS’ support, the bank also implemented information and communications changes that assisted it in broadening its outreach. It became the first rural bank to offer an ATM/debit card with an integrated SMS alert service and was one of the first banks to use GCASH mobile money services to expand outreach to rural clients.

The bank’s impact in the town of Cantilan is evident. As bank grew, so did its tax payments to the community. As the largest taxpayer in Cantilan, the bank is now paying more than 25 times in taxes what it paid in 1999 and accounts for more than half of the municipality’s revenue. Bank profits and business, generated largely from the bank’s ability to mobilize deposits — which were in turn invested in local businesses — helped propel Cantilan from a 5th class to a 2nd class municipality.[3]

“RBAP-MABS is the perfect partner for Cantilan Bank in its mission of countryside development,” said Gen. Hotchkiss. “RBAP-MABS has been key to our transformation as a community bank.”

From 1999 to 2012, the bank’s loan portfolio grew from 80 million ($2 million) to 900 million PHP ($21.4 million), deposits grew from 100 million PHP ($2.5 million) to 704 million PHP ($16.8 million), assets rose from 100 million PHP ($2.5 million) to 1.2 billion PHP ($28.6 million), bank employees rose from 37 to 258, and the branch network increased from 3 to 38.[4]

[3] A municipality is considered a 2nd class municipality when its average income for the latest three calendar years reaches 40 million to 50 million PHP ($1 million-$1.2 million).

[4] You may review the video of Cantilan Bank in the attached DVD under the title “Small Wonders” or online at:

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