"Best practices" was the byword in the recent 58th national convention of the Rural Bankers Association of the Philippines at the SMX Convention Center on May 25 to 26 to echo the call in the banking community—be it the regulators or the financial institutions themselves—for a stronger sector to weather external shocks such as the recent global financial turmoil. At the event, a lineup of rural bank executives gave testimonies on the value of sound banking practices as an assurance to long-term success. An impressive case was presented by Rural Bank of Hindang (Leyte) Inc. president Anacleta Dayola-Aboyme on the bank which maintained a CAMELS rating of 4 which is above par for a small community bank, meaning that bank's capital is adequate to support its risk profile as the bank was able to maintain asset quality despite the rapid increase of its loan portfolio. The formula of Rural Bank of Hindang was to keep its non-performing loans and non-performing assets to a minimum. Key to keeping the exemplary reputation of the bank was its board and senior management's grasp of risk exposures to set up policies to manage risks that reflects on the positive results in the bank's operations. The bank, for instance, strictly adheres to the authority for loan approvals in which loans of up to P20,000 are handled by branch operations managers; up to P100,000, the bank's CEO; up to P200,000, the Credit Committee for borrowing; and higher than P200,000, the bank's board. The success of the bank led to its growth to three branches and one extension office in Leyte and Southern Leyte aside from its head office at Rizal St. Poblacion 1 Hindang. The bank has its offices in Inopacan, Bato and Hilongos and in Sogod, Southern Leyte. The bank is now on its 33rd year of committed service in the countryside. A different but nonetheless equally exemplary case was that of the Unlad Rural Bank of Noveleta Inc. in Cavite which recently was cleared of the prompt corrective action by the Bangko Sentral ng Pilipinas. By 2004, as a result of slow movements in the sale of assets and funds outflow to consolidate ROPA, the bank's capital account showed a negative balance that prompted notice from the BSP that consequently resulted in more pressure and workload for the bank's management. The monumental turn-around of the bank was achieved through the offering of lending products that eased liquidity problems and at the same time increase its operating income. Included in such loan products were microfinancing and salary loans with monthly amortizations. The bank also proceeded with the consolidation of its ROPA to speed up sale of properties and provide additional liquidity. It expanded its network of selling agents and undertook creative and innovative approaches in the sale of its real estate inventories to liquidate its assets. Its ROPA to total resources ratio was reduced from 54 percent in 2005 to 15 percent in 2010. The bank's bottom line experienced a complete turnaround from a loss in 2005 to a profit last year. The return to healthy profitability prompted the BSP to remove the bank from the PCA status on February 14 indicating that it is again in its normal operating path. The Unlad Rural Bank's experience again showed that best practices is the sure-fire way for a bank to be on the road to progressively growing profits. In the coming column pieces, more instances of success among rural banks will be highlighted along with the kind of able guidance being provided by regulatory and state financial institutions on strengthening the industry. Watch out for it.