Cost of Funds

Transcripción

Cost of Funds

Indice
Index
Carta del Chairman y del Presidente
A Word from the Chairman and the President
..................2
Introducción
Introduction
......................................................................7
Crecimiento Prudente
Prudent Growth
.....................................................................9
Calidad de Cartera
Portfolio Quality
.....................................................................12
Costo de Fondos
Cost of Funds
.....................................................................14
Ventas Cruzadas
Cross-selling
....................................................................17
Canales de Distribución y Costo Operativo
Distribution Channels and Operating Cost
Gobierno Corporativo
Corporate Governance
......................19
...................................................21
Estados Financieros Consolidados
Consolidated Financial Statements
................................22
Carlos Pellas
Presidente de la Junta Directiva
de BAC International Bank
Chairman of the Board of Directors
BAC International Bank
Ernesto Castegnaro
Presidente y CEO
de BAC International Bank
President & CEO
1
Annual Report 2006
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A WORD FROM THE CHAIRMAN AND THE PRESIDENT
Estimados Amigos:
Dear Friends:
Tal y como lo habíamos anticipado después de nuestra
alianza con GE Consumer Finance, el año 2006 se
caracterizó por ser uno en el que las instituciones
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Central para adquirir bancos que les permitieran gozar
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centroamericanos.
Just like we anticipated following our alliance with GE
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institutions turned their interest to Central America to
acquire banks that would allow them to improve their
presence in the Region, accelerating the consolidation
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1XQFD DQWHV OD 5HJLyQ &HQWURDPHULFDQD KDEtD H[SH
rimentado tanto cambio en el control accionario de sus
bancos, como el que tuvo durante el año 2006, producto
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estos lados del mundo.
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han venido dando los países centroamericanos en aras de
la democracia, de la sensatez, de la institucionalidad, de
la honestidad y del mercado libre.
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decirles que el 2006 fue otro año récord en la historia de
BAC I Credomatic Network.
Nuestros activos crecieron un 26% sobrepasando los
US $4.2 billones; nuestra cartera creció un 33% llegando
a los US $2.9 billones; nuestro patrimonio creció un
21% llegando a la suma de US $461 millones y nuestras
utilidades aumentaron más de un 32% para alcanzar los
US $ 122 millones en el año 2007.
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resultados, sobre todo considerando que se deben a un
proceso de crecimiento puramente orgánico.
Fue un año de revisión y establecimiento de nuevas
políticas, de rediseño de procesos y procedimientos y de
desarrollo de nuevos sistemas que nos permitirán ser
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de crecer vía adquisiciones; los resultados de algunos de
esos esfuerzos comenzarán a verse a partir del 2007.
Never before have we seen the degree of shareholder’s
equity control changes in Central American banks that we
saw during the year 2006, due to foreign investments that
today foresee opportunities in this side of the world.
Without a doubt this is a clear indicator that the
international community has seen with good eyes the
steps that Central American countries have taken in for
the sake of democracy, trustworthiness, institutionalism,
honesty, and free trade.
Within this context, we are pleased to announce that the
year 2006 was another record year in the history of BAC I
Credomatic Network.
Our assets grew 26% exceeding US $4.2 billion, our
portfolio grew 33% reaching US $2.9 billions, our equity
increased 21% reaching the sum of US $461 million and
our earnings increased more than 32% reaching US $122
millions in 2007.
Without a doubt we had excellent growth and excellent
results, specially considering that it is mainly attributable
to organic growth.
It was a year of reevaluation and establishment of new
policies, restructuring of processes and procedures, and
development of our new systems that will allow us to be
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It was the year in which we explored the possibility of
growing by some acquisitions; the results of some of these
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organization to successfully face the future and the
challenges that might come our way in a more competitive
2
Informe Anual 2006
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los retos que se nos avecinan en un escenario más
competitivo pero a su vez más rico en oportunidades.
Nos entusiasma este escenario en el que como
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absolutamente clara de que la satisfacción de las
necesidades de nuestros clientes es nuestra principal
prioridad.
environment that is full of opportunities.
We are pleased with this environment in which, as always
we will keep working with the absolutely clear philosophy
that the satisfaction of the needs of our clients is our main
priority.
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believe that we will be able to adequately satisfy all your
needs.
Con nuestro esfuerzo, con el apoyo de Ustedes y con la
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adecuadamente las necesidades de todos Ustedes.
Atentamente
Sincerely,
Carlos Pellas
Chairman of the Board
Ernesto Castegnaro
President & CEO
3
Annual Report 2006
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Informe Anual 2006
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5
Annual Report 2006
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6
Informe Anual 2006
Introducción
Introduction
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los US $4.2 billones, nuestra cartera de crédito creció 33%
y el patrimonio un 21%.
Our assets grew 26% during 2006, reaching US $4.2 billion,
our loan portfolio grew 33%, and our stockholders equity
increased 21%.
Activos | Assets
8600
Patrimonio | Equity
8600
7
Annual Report 2006
Una proporción importante del crecimiento fue posible
gracias los depósitos de nuestros clientes que alcanzaron
los US $2.8 billones al cierre del 2006, un 25% más que
en el 2005.
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customers deposits, which reached US $2.8 billion at year
end, 25% more than in 2005.
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año 2006, así, los ingresos por servicios pasaron de US
$78 millones en el 2005 a US $101 millones en el 2006.
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performed excellently in 2006; fee income increased from
US $78 million in 2005 to US $101 million in 2006.
Depósitos | Deposits
8600
Producto de todo lo anterior se alcanzó una sobresaliente
rentabilidad, la cual se evidencia con indicadores de
rendimiento sobre activos del 3.32% y de rendimiento
sobre patrimonio del 28.99%.
As a result of the above mentioned items, we achieved
outstanding earnings , as exhibited by a return on assets
of 3.32% and return on equity of 28.99%.
Utilidad Neta | Net Income
8600
El desempeño en combinación con una prudente
administración del riesgo nos ha permitido obtener una
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Our performance, combined with wise risk management,
has enabled us to obtain an investment grade rating of
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institutions with this rating in Latin America.
8
Informe Anual 2006
Crecimiento prudente
Prudent Growth
BAC mostró importantes niveles de crecimiento en todas
sus líneas de negocio.
En lo que respecta a cartera de crédito, se alcanzó en el
2006 un saldo de US $2.9 billones, superior en US $713
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El crédito presenta un sano balance entre negocios y
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más crecimiento relativo con respecto al año anterior.
A continuación se presenta la distribución del portafolio:
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Our credit portfolio reached a balance of US $2.9 billion,
US $713 million more than what was recorded at the end
of 2005.
There was a healthy balance in credits to businesses and
individuals, with loans to individuals registering higher
growth compared to the previous year.
The following chart shows the portfolio distribution:
Distribución Cartera de Crédito | Loan Portfolio Distribution
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teniendo una posición de privilegio en el negocio de
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emisores más grandes de la región centroamericana.
Through its Credomatic subsidiary, BAC continued to
maintain its lead in the credit card business and its
prominence as one of the largest issuers in Central
America.
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16% cada uno.
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Group registered an increase of US $220 million in credit
card receivables – 31% more than in 2005. The countries
contributing the most to this growth were Costa Rica (27%),
Mexico (17%) and, Honduras and Panama (16% each).
9
Annual Report 2006
6DOGR7DUMHWDVGH&UpGLWR_Credit Card Receivables
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en otras líneas de negocio, nos han permitido alcanzar un
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Although the BAC group has continued to be successful in
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our portfolio.
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un crecimiento combinado de US $311 millones que
representa 65% con respecto al año anterior.
Consumer and mortgage loans registered a combined
growth of US $311 million, 65% more than the previous
year.
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damente US $594 millones, los cuales han presentado
un ritmo de crecimiento promedio del 51% anual de
diciembre 2001 a diciembre 2006.
Mortgage loans represent approximately US $594 million,
growing at an average rate of 51% from December 2001 to
December 2006.
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damente US $241 millones, con un crecimiento promedio
anual del 48% y los préstamos personales representan
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promedio anual del 20%, de diciembre 2001 a diciembre
2006.
Auto loans account for nearly US $241 million, with 48%
average annual growth, while personal loans reached
approximately US $192 million, growing at an average
annual rate of 20%, from December 2001 to December
2006.
Crédito a Personas | Retail Loans
8600
10
Informe Anual 2006
Durante el año el Grupo alcanzó más de US $931 millones
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un ritmo de crecimiento promedio del 12% de diciembre
2001 a diciembre 2006.
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préstamos comerciales mantienen balances de menos de
US $3.0 millones y el 90% de los balances pendientes de
cobro están denominados en USD.
During the year the Group registered over US $931 million
in loans to businesses, which rose at an average rate of 12%
from December 2001 to December 2006.
Nearly 97% of our commercial loan portfolio has balances
of less than US $3.0 million, and 90% of outstanding
balances are in US dollars.
Créditos a Empresas | Loans to Businesses
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un aumento en los activos generadores promedio de
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alrededor de US $95.0 millones de ingresos por intereses.
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volumen de préstamos, incluyendo el crecimiento de los
préstamos personales de 69% y los préstamos garantizados
por bienes raíces de 64%.
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de crédito aumentaron en US $48 .4 millones o 26%, todo
producto del aumento en volumen.
El aumento en el volumen de los préstamos hipotecarios
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US $14.9 millones mientras que los cambios en las tasas de
interés generaron US $6.5 millones.
Nuestro crecimiento en préstamos comerciales, auto y
consumo aumentó los ingresos por interés por US $21.6
millones.
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por interés. El Grupo coloca fondos en inversiones líquidas
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11
Annual Report 2006
Net interest income rose by 28%, reaching US $291.8 million.
This was the result of an increase in average earning
assets of approximately US $643.8 million, generating
approximatly US $95 million in interest income.
Income from interest was favored by higher loan volume,
including a personal loan expansion of 69% and a 64%
increase in real estate-secured loans.
As a result of higher volume, credit card interest income for
this period increased by US $48.4 million, or 26%.
A greater volume of mortgage loans produced nearly
US $14.9 million in interest income, while changes in
interest rates yielded US $6.5 million.
Increments in commercial, auto and consumer loans drove
up income from interest by US $21.6 million.
Investment and deposit interest represent approximately
8.7% of all our interest income; the Group places funds in
low-risk liquid investments.
Calidad de la cartera
Portfolio Quality
El alto crecimiento mostrado se ha realizado con la mayor
responsabilidad y prudencia, de manera que la cartera
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del portafolio.
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1.51% de la cartera de crédito, mientras la mora a más de
90 días se ha reducido alcanzando un 0.79% del total de
la cartera al cierre del 2006.
Ourstronggrowthwasachievedwithupmost responsibility
and prudence; therefore, our credit portfolio exhibits
extremely high portfolio quality indicators.
At the close of 2006 our 30+ day delinquency rate was
1.51% of the credit portfolio, while the 90+ day delinquency
rate fell to 0.79%.
0RURVLGDGGHOD&DUWHUDGH&UpGLWR_Loan Delinquency
Al cierre del 2006 manteníamos reservas del 2.4% del
total de la cartera de crédito y que representaban una
cobertura de 2.29 veces sobre la cartera en mora a más de
30 días y 3.93 veces la cartera en mora a más de 90 días.
At the close of 2006 our loan reserve was 2.4% of the credit
portfolio covering the 30+ day delinquent portfolio by 2.29
times and the 90+ day delinquent portfolio by 3.93 times.
12
Informe Anual 2006
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dos años.
Esto ha sido posible gracias a las políticas de otorgamiento
y seguimiento de préstamos que permiten mantener en
un nivel adecuado el riesgo de la cartera de crédito.
BAC cuenta además, con una estructura para recuperación
de créditos, que se apoya en tecnología de avanzada y que
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13
Annual Report 2006
The Group had maintained an average non-accrual assets
ratio of less than 1.5% for the last three years, and average
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This was accomplished because of loan approval and
monitoringpolicies that allowus tomaintainanacceptable
risk level in the credit portfolio.
Moreover, BAC has a loan recovery structure supported by
state-of-the-art technology designed on the basis of several
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Costos de fondos
Cost of Funds
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período. Al 31 de diciembre del 2006, los depósitos a la
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los depósitos y mostraron un crecimiento del 32% con
respecto al año anterior.
Customer deposits continue to be our main source of
funds and grew approximately US $576.0 million (25%)
during the period. At December 31, 2006, demand deposits
represented about 56% of overall deposits, increasing by
32% from the previous year.
'pSRVLWRSRU0RQHGD_Deposits by Currency
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cionales, compañías regionales y compañías locales.
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VRQ FXHQWDV FRUULHQWHV $SUR[LPDGDPHQWH cuentas mantienen balances combinados de US $969
millones con saldos promedios de US $16,000 por cuenta.
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denominadas en USD, y el 97% de las cuentas mantienen
balances menores a US $1.0 millón.
Commercial demand deposits can be divided into three
segments: multinational, regional and local companies.
Approximately 84% of commercial deposits are current
accounts. Some 59,000 accounts maintain a combined
balance of US $969 million with average balances of US
$16,000 per account. Nearly 39% of commercial accounts
are denominated in US dollars, and 97% maintain balances
of under US $1.0 million.
14
Informe Anual 2006
Distribución de los Depositos | Deposits Distribution
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481,000 clientes activos con más de 619 ,000 cuentas que
mantienen balances combinados de US $635 millones.
Personal demand deposits account for more than 481,000
active customers with over 619,000 accounts and a
combined balance of US $635 million.
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denominan en USD, el 99 % de estas cuentas mantienen
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79 % representan cuentas de ahorro.
Almost 40% of personal accounts are denominated in
US dollars; 99% of these maintain balances of under US
$100,000 and around 79% are savings accounts.
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depósitos a plazo están denominados en USD, el 55%
mantienen balances de menos de US $500,000.
El Banco tiene acceso a fuentes de fondos, el grado
inversión de Standard & Poors y el acceso a los mercados
internacionales ha hecho posible administrar el alza en
las tasas de interés con un impacto mínimo en el margen
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15
Annual Report 2006
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showed a combined balance of US $1.2 billion. Of these,
almost 61% are denominated in US dollars; 55% maintain
balances under US $500,000.
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&Poors’investmentgraderatingandaccesstointernational
markets have enabled it to manage higher market interest
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&RVWRGH)RQGRVYV/,%25D0HVHV_ Cost of Funds Trend vs LIBOR 3-Month
El gasto de interés aumentó US $41.6 millones o 33 %
durante el período. El aumento es atribuible al aumento
del 23% en el promedio de pasivos con costo y al
incremento de las tasas de interés del mercado.
Interest expenses grew US $41.6 million or 33 % for the
period; this increase is attributable to a 23% increment in
average interest bearing liabilities and to market interest
rates increments.
El aumento en el volumen de los pasivos con costo
DXPHQWyHOJDVWRGHLQWHUpVDSUR[LPDGDPHQWH86
millones, mientras que el cambio en las tasas de interés
lo aumentó por US $17 .3 millones.
The higher interest bearing liabilities volume increased
interest expenses by about US $24.3 million, while interest
rate changes raised them by US $17.3 million.
Composición del Gasto por Intereses | Interest Expense Composition
16
Informe Anual 2006
Ventas cruzadas
Cross-selling
Durante el 2006 hemos continuado con nuestra estrategia
de venta cruzada, la cual nos permite dar una atención
integral a nuestros clientes, a la vez que nos impulsa a
crecer tanto en volumen como en ingresos.
In 2006 we maintained our strategy of cross-selling,
enabling us to provide comprehensive customer service
while at the same time growing both our volume and
revenues.
(VWHHVIXHU]RKDVXUWLGREHQH¿FLRVTXHVHPDWHULDOL]DQHQ
ingresos por servicios, algunos de estos no tienen riesgo
GHFUpGLWR\TXHSRUORWDQWRPHMRUDQODUHODFLyQULHVJR
rendimiento del Grupo.
7KLVHêRUWSURYLGHGEHQH¿WVLQWKHIRUPRIUHYHQXHIURP
services; a portion of this revenue does not carry credit risk
and therefore improves the Group’s risk-to-yield ratio.
Ingresos | Revenues
17
Annual Report 2006
El total de comisiones, comisiones por servicios y otros
ingresos de comisiones, alcanzaron US $191 .3 millones, un
LQFUHPHQWRGHODOFRPSDUDUDOSHUtRGRDQWHULRU/RV
UHVXOWDGRVGHOUHÀHMDQDXPHQWRVHQODVFRPLVLR
QHV SRU DGHODQWRV GH HIHFWLYR GH DSUR[LPDGDPHQWH HO
42%, comisiones por cobertura de fraude 39%, y cargos
por servicios bancarios del 35%. Nuestras comisiones por
SURGXFWRV GH FUpGLWR DXPHQWDURQ DSUR[LPDGDPHQWH
9%.
Overall fees, fees for services and other commissions,
reached US $191.3 million, an increase of 26% compared
WR WKH SUHYLRXV SHULRG 7KH UHVXOWV UHÀHFW DQ
approximate increase of 42% in cash advance fees, 39% in
fraud coverage fees, and 35% in banking service charges.
Our fees for credit products went up by about 9%.
Ingresos por Comisiones | Fee Income
18
Informe Anual 2006
Canales de distribución y Costo Operativo
Distribution Channels and Operating Cost
&RQVFLHQWHVGHTXHHOp[LWRGHODRUJDQL]DFLyQGHSHQGH
de la preferencia de nuestros clientes, desarrollamos
estrategias para ofrecerles nuestros servicios a través de
una amplia gama de canales.
Una combinación de medios tradicionales, como las
sucursales y medios electrónicos, tales como la internet,
QRVSHUPLWHQDWHQGHUVHJ~QVXVQHFHVLGDGHVDPLOHVGH
personas y empresas en la región centroamericana.
Al 31 de diciembre de 2006 el Grupo contaba con 254
VXFXUVDOHVGLVWULEXLGRVJHRJUi¿FDPHQWHGHODVLJXLHQWH
manera:
$SUR[LPDGDPHQWH XQ GH ODV WUDQVDFFLRQHV
de nuestros clientes se realizan a través de medios
HOHFWUyQLFRV EDQFD SRU LQWHUQHW FDMHURV DXWRPiWLFRV
NLRVFRV\VXFXUVDOWHOHIyQLFD/RDQWHULRUSHUPLWHDWHQGHU
a nuestros clientes de una manera más conveniente, con
mayor cobertura, más disponibilidad de horarios y en
DOJXQRVGHHVRVPHGLRVVLQ¿ODV\GHVGHODFRPRGLGDGGH
su hogar o las instalaciones de la misma empresa.
19
Annual Report 2006
In aware that our organization’s success depends on our
customers’ preferences, we have developed strategies for
RêHULQJRXUVHUYLFHVWKURXJKDZLGHUDQJHRIFKDQQHOV
A combination of traditional channels, such as branches,
and electronic means, such as the Internet, enable us to
FDWHUWRWKRXVDQGVRISHRSOHDQGFRPSDQLHVVSHFL¿FQHHGV
in Central America.
At December 31, 2006 the Group had 254 branches
geographically distributed as follows:
As much as 88% of our customers’ transactions are made
thru electronic channels (Internet banking, automatic
tellers, kiosks, and telephone banking), allowing us to
attend to our customers more conveniently, with greater
coverage and longer hours, and in some cases without the
need for lines and in the comfort of their homes or the
company’s own facilities.
Adicionalmente los medios electrónicos, presentan
costos menores en comparación con los tradicionales, lo
FXDOIDYRUHFHODH¿FLHQFLDGHQXHVWUDRUJDQL]DFLyQ
Moreover, electronic channels, as compared to traditional
RQHV DUH OHVV FRVWO\ SURPRWLQJ JUHDWHU HçFLHQF\ LQ RXU
organization.
7RWDOGH7UDQVDFFLRQHV\3RUFHQWDMHGH3HQHWUDFLyQGHO&DQDO_Total Transactions and Percentage of Channel Penetration
1~PHURGH7UDQVDFFLRQHVHQ0LOHV_Number of Transactions in Thousands
/RV JDVWRV RSHUDWLYRV DXPHQWDURQ FRPSDUDGRV DO
año anterior, principalmente debido a un aumento del
HQORVVDODULRV\EHQH¿FLRVDHPSOHDGRV\XQHQ
gastos de mercadeo.
1XHVWUDUD]yQGHH¿FLHQFLDPHMRUyXQDYH]PiVGXUDQWHHO
DxRDSHVDUGHODVPHMRUDVFRQWLQXDVDQXHVWUDSODWDIRUPD
bancaria para mantener nuestro crecimiento.
Estamos implementando un proceso de productividad
TXHLQFOX\HHVWUDWHJLDVTXHLPSDFWDQHQODH¿FLHQFLDGH
nuestra organización.
Operating costs rose by 22% compared to the previous
year, mainly due to a 24% increase in wages and employee
EHQH¿WVDQGDULVHLQPDUNHWLQJH[SHQVHV
2XUHçFLHQF\UDWLRRQFHDJDLQLPSURYHGWKLV\HDUGHVSLWH
ongoing improvements to our banking platform in order
to maintain growth.
We are implementing a productivity process that includes
VWUDWHJLHVLPSDFWLQJWKHHçFLHQF\RIRXURUJDQL]DWLRQ
20
Informe Anual 2006
Gobierno Corporativo
Corporate Governance
+HPRV FUHDGR XQD ¿ORVRItD GH JRELHUQR FRUSRUDWLYR \
HVWLOR GH RSHUDFLyQ D WUDYpV GH OD UHJLyQ (VWD ¿ORVRItD
HVWi FHQWUDGD HQ DVHJXUDUQRV TXH H[LVWH XQ VLVWHPD
adecuado de control interno y administración de
riesgo independiente de la gerencia y asegurarnos del
seguimiento continuo y evaluación de las operaciones
por la Junta Directiva.
Nuestra estructura de Gobierno Corporativo incluye a la
-XQWD'LUHFWLYD\QXHVWURVFLQFRFRPLWpV/D-XQWDFXHQWD
con representantes de BAC y GE, nuestro socio estratégico.
/RVPLHPEURVGHOD-XQWDVRQWDPELpQPLHPEURVGHORV
Comités regionales.
(OSULQFLSDOREMHWLYRGHQXHVWUD-XQWD'LUHFWLYDHVVXSHU
visar el desempeño de la gerencia en servicio de nuestros
DFFLRQLVWDV\GHSRVLWDQWHV3DUDFXPSOLUFRQVXVREMHWLYRV
la Junta ha implementado principios de gobierno
FRUSRUDWLYR FRQ ¿Q GH GH¿QLU VXV UHVSRQVDELOLGDGHV
'XUDQWH HO SHUtRGR ¿VFDO OD -XQWD VH UHXQLy
mensualmente para discutir estrategia y desempeño.
El comité de auditoría está compuesto de cinco miembros
que supervisan nuestra estructura de control interno, se
UH~QHQFRQORVDXGLWRUHVH[WHUQRV\GDQVHJXLPLHQWRDO
SODQGHWUDEDMRGHDXGLWRUtDLQWHUQD
Nuestros comités de activos y pasivos, crédito,
FXPSOLPLHQWR\RSHUDFLRQHVWDPELpQVHUH~QHQUHJXODU
mente y sus miembros incluyen miembros de la Junta
Directiva.
21
Annual Report 2006
We have created a philosophy of corporate governance and
operating style throughout the region. This philosophy
is focused on ensuring an adequate system for internal
control and independent risk management, and on
ensuring ongoing monitoring and evaluation of operations
by the Board of Directors.
Our corporate governance structure includes the Board
RI 'LUHFWRUV DQG RXU ¿YH FRPPLWWHHV 7KH %RDUG KDV
representatives from BAC and GE, our strategic partner.
Board members are also members of the regional
committees.
Our Board of Directors’ primary goal is to oversee the work
of management in serving our shareholders and depositors.
To meet its goals the Board has implemented principles of
corporate governance in order to delineate responsibilities.
,Q¿VFDOWKH%RDUGPHWPRQWKO\WRGLVFXVVVWUDWHJ\
and performance.
7KHDXGLWFRPPLWWHHFRQVLVWVRI¿YHPHPEHUVZKRZDWFK
over our internal control structure, meet with external
auditors, and follow up on the internal audit work plan.
Our assets and liabilities, credit, compliance, and operating
committees also meet regularly, and their members include
Board members.
Consolidated Financial Statements
22
Informe Anual 2006
BAC INTERNATIONAL BANK, INC. AND SUBSIDIARIES
(Panama, Republic of Panama)
Table of Contents
Independent Auditors’ Report
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Stockholder’s Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
23
Annual Report 2006
24
Informe Anual 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
3DQDPD5HSXEOLFRI3DQDPD
Consolidated Balance Sheets
December 31, 2006 and 2005
2006
Assets
Cash and due from banks (notes 4 and 5)
Interest-bearing deposits (notes 4 and 5)
Trading securities (note 6)
Securities available for sale (notes 4 and 7)
Securities held to maturity (note 8)
US$
Loans (notes 4 and 9)
Less:
Allowance for loan losses (note 10)
Unearned income and deferred loan fees and costs
Loans, net
2005
841,332,455
33,632,579
3,702,712
292,699,040
4,983,517
670,545,262
14,761,008
5,215,833
324,153,053
5,944,167
2,884,115,612
2,170,554,149
69,808,464
18,495,810
2,795,811,338
52,546,837
16,201,899
2,101,805,413
127,819,464
2,609,249
3,283,491
16,986,255
74,679,132
42,229,101
US$ 4,239,768,333
120,020,395
2,458,942
9,284,767
12,731,217
54,758,609
34,524,736
3,356,203,402
Liabilities and Stockholder’s Equity
Deposits (note 4):
Demand non-interest-bearing
Demand interest-bearing
Savings
Time deposits (note 14)
Total deposits
219,553,037
1,081,297,077
303,427,161
1,233,272,255
2,837,549,530
192,831,575
764,451,450
260,199,826
1,043,982,706
2,261,465,557
Securities sold under agreements to repurchase (note 15)
Borrowings (notes 4 and 16)
Other borrowed funds (note 17)
Acceptances outstanding
Accrued interest payable (note 4)
Other liabilities (notes 4 and 11)
Total liabilities
35,863,334
546,710,873
130,288,780
3,283,491
21,699,499
181,698,085
3,757,093,592
23,863,176
409,223,754
112,985,344
9,284,767
15,825,669
124,144,936
2,956,793,203
21,311,147
17,579,338
78,947,000
34,618,254
407,435,135
(59,636,795)
461,363,594
US$ 4,239,768,333
78,947,000
34,618,254
321,941,780
(53,676,173)
381,830,861
3,356,203,402
Property and equipment, net (note 12)
Investments in unconsolidated entities
Customers’ liability on acceptances
Accrued interest receivable (note 4)
Other accounts receivable (notes 4 and 7)
Other assets (notes 9 and 13)
Total assets
Minority interest
Stockholder’s equity:
Common stock, US$1,000 par value. Authorized 100,000 shares;
78,947 shares issued and outstanding
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss (note 20)
Total stockholder’s equity
Total liabilities and stockholder’s equity
6HHDFFRPSDQ\LQJQRWHVWRFRQVROLGDWHG¿QDQFLDOVWDWHPHQWV
25
Annual Report 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
Consolidated Statements of Income
<HDUVHQGHG'HFHPEHUDQG
2006
Interest income (note 4) :
Loans
Interest-bearing deposits
Trading securities
Securities available for sale
Securities held to maturity
Total interest income
US$
Interest expense (note 4):
Deposits
Securities sold under agreements to repurchase
Borrowings and other borrowed funds
Total interest expense
Net interest income before provision for loan losses
Provision for loan losses (note 10)
Net interest income after provision for loan losses
Other income (expenses) (note 4):
Service charges
Commissions and other fees, net of commission expenses
of US$74,959,573 and US$62,674,806, respectively
Credit card membership fees, net
Foreign currency gains, net
Net gain on trading securities (note 6)
Net gain on sale of securities available for sale (note 7)
Valuation allowance on retained interests on securitization (note 7)
Other income
Total other income
Operating expenses (note 4):
6DODULHVDQGHPSOR\HHEHQH¿WV
Depreciation and amortization
Administrative expenses
Occupancy and related expenses
Other operating expenses (note 18)
Total operating expenses
Income before income tax expense
and minority interest
Income tax expense (note 19)
Income before minority interest
Minority interest
Net income
US$
2005
393,580,923
14,341,824
263,478
22,416,197
507,475
431,109,897
295,938,001
9,754,834
143,189
19,389,506
598,293
325,823,823
92,766,185
3,822,213
42,769,994
139,358,392
291,751,505
53,738,816
238,012,689
64,305,424
2,255,161
31,175,415
97,736,000
228,087,823
34,831,247
193,256,576
100,692,601
77,726,580
85,685,595
4,875,396
20,857,905
149,838
6,636,455
0
18,211,564
237,109,354
70,146,894
3,955,133
17,901,887
141,792
1,849,243
(372,014)
13,042,411
184,391,926
22,333,749
17,532,109
18,391,148
132,376,866
317,222,990
19,659,574
12,363,115
14,721,841
111,358,940
260,139,334
157,899,053
117,509,168
30,419,779
127,479,274
15,654,513
101,854,655
5,410,919
122,068,355
9,646,558
92,208,097
26
Informe Anual 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
Consolidated Statements of Changes in Stockholder’s Equity
Additional
Paid-in
Capital
Common
Stock
Balance as of December 31, 2004
US$
Cash dividends
Capitalization due to acquisition of minority interest
Comprehensive income:
Net income
Other comprehensive income (loss) (note 20):
Foreign currency translation
Changes in unrealized gain (loss) on
securities available for sale, net
Comprehensive income
Cash dividends
Comprehensive income:
Net income
Other comprehensive income (loss) (note 20):
Changes in unrealized gain (loss) on
securities available for sale, net
Comprehensive income
US$
Annual Report 2006
Retained
Earnings
Total
Stockholder’s
Equity
78,947,000
0
0
13,160,541
0
21,457,713
247,033,683
(17,300,000)
0
(41,921,748)
0
0
297,219,476
(17,300,000)
21,457,713
0
0
92,208,097
0
92,208,097
0
0
0
(10,428,841)
(10,428,841)
0
0
0
(1,325,584)
78,947,000
0
34,618,254
0
321,941,780
(36,575,000)
(53,676,173)
0
(1,325,584)
80,453,672
381,830,861
(36,575,000)
0
0
122,068,355
0
122,068,355
0
0
0
(6,953,417)
(6,953,417)
0
0
0
992,795
78,947,000
34,618,254
407,435,135
(59,636,795)
992,795
116,107,733
461,363,594
27
Accumulated
Other
Comprehensive
Loss
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
Consolidated Statements of Cash Flows
2006
2005
&DVKÀRZVIURPRSHUDWLQJDFWLYLWLHV
Net income
US$
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses
Impairment loss on foreclosed assets
Provision for (reversal of) losses on off-balance sheet items
Provision for claims receivable for unreturned securities, net of reversals
Depreciation and amortization of property and equipment
Amortization of intangible assets
Net gain on trading securities
Net decrease (increase) in trading securities
Net gain on sale of securities available for sale
Valuation allowance on retained interests on securitization
Net gain on sale of property and equipment
Amortization of deferred loan fees and costs
Deferred taxes
Equity participation in unconsolidated entities
Minority interest
Increase in accrued interest receivable
Increase in other accounts receivable
(Increase) decrease in other assets
Increase in accrued interest payable
Increase in other liabilities
Net cash provided by operating activities
53,738,816
215,169
(141,949)
480,248
21,705,389
628,360
(149,838)
1,471,996
(6,636,455)
0
(796,525)
(9,505,876)
3,291,083
(463,157)
5,410,919
(4,532,386)
(16,362,505)
(11,796,765)
6,188,015
59,991,956
224,804,850
34,831,247
473,604
97,667
5,602,436
18,885,272
774,302
(141,792)
(5,215,833)
(1,849,243)
372,014
(25,057)
(5,133,253)
(4,245,228)
(550,211)
9,646,558
(2,757,387)
(14,473,776)
1,535,013
6,788,722
39,083,572
175,906,724
&DVKÀRZVIURPLQYHVWLQJDFWLYLWLHV
Net (Increase) decrease in deposits placed with original maturity over 90 days
Proceeds from sale of securities available for sale
Maturities, prepayment and calls of securities available for sale
Purchases of securities available for sal
Maturities, prepayment and calls of securities held to maturity
Purchases of securities held to maturity
Proceeds from sale of investment in subsidiary (note 3)
Proceeds from sale of investment in unconsolidated entity
Dividends received from unconsolidated entities, net of advances
Net increase in loans
Purchases of property and equipment
Proceeds from sale of property and equipment
Net cash used in investing activities
(14,804,202)
142,753,902
302,441,245
(409,216,391)
973,270
(35,465)
0
0
254,033
(779,818,110)
(34,957,196)
3,526,734
(788,882,180)
17,784,051
146,253,606
176,020,174
(358,118,526)
4,000,000
(1,161,945)
487,545
415,360
261,798
(569,408,420)
(45,820,682)
2,148,006
(627,139,033)
570,628,731
31,675,566
7,294,814
1,171,344,898
(1,150,099,291)
(2,417,876)
(17,300,000)
611,126,842
122,068,355
92,208,097
&DVKÀRZVIURP¿QDQFLQJDFWLYLWLHV
Net proceeds from deposits received
Net proceeds from other borrowed funds
Net increase in securities sold under agreements to repurchase
Proceeds from borrowings
Repayment of borrowings
Distributions to minority interest
Dividends paid
1HWFDVKSURYLGHGE\¿QDQFLQJDFWLYLWLHV
599,240,162
18,636,824
25,967,939
1,301,407,419
(1,156,452,708)
(20,222)
(36,575,000)
752,204,414
(IIHFWRIH[FKDQJHUDWHÀXFWXDWLRQVRQFDVKKHOG
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of year
US$
170,787,193
670,545,262
841,332,455
137,292,602
533,252,660
670,545,262
6XSSOHPHQWDOGLVFORVXUHVRIFDVKÀRZLQIRUPDWLRQ
Cash paid for interest during the year
Cash paid for income taxes during the year
US$
US$
133,484,562
24,596,335
6XSSOHPHQWDOGLVFORVXUHVRIQRQFDVKLQYHVWLQJDQG¿QDQFLQJDFWLYLWLHV
Change in unrealized gain (loss) on securities available for sale, net
Transfer of claims receivable for unreturned securities
Properties acquired in settlement of loans
Capitalization through acquisition of minority interest (note 1)
/HDVH¿QDQFLQJDUUDQJHPHQWHQWHUHGLQWRIRUDFTXLVLWLRQRIHTXLSPHQW
US$
US$
US$
US$
86
992,795
0
3,342,426
0
91,228,863
17,666,142
(1,325,584)
16,006,960
4,888,596
21,457,713
8,126,800
28
Informe Anual 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
Notes to Consolidated Financial Statements
December 31, 2006 and 2005
(1) Organization
BAC International Bank, Inc. was incorporated on August 25, 1995, in Panama City, Republic of
Panama, as a banking institution. BAC International Bank, Inc. is a 100% owned subsidiary of BAC
International Corporation (the “Parent Company”, which is an indirect subsidiary of BAC Credomatic
Holding Company, Ltd.) and provides, directly and through its wholly owned subsidiaries, BAC
International Bank (Grand Cayman) (“BAC Cayman”), BAC Bank, Inc., Credomatic International
Corporation (CIC), Premier Asset Management, Inc., Rudas Hill Financial, Inc., BAC Valores (Panama),
6$DQG%$&/HDVLQJ,QFFROOHFWLYHO\WKH³%DQN´DZLGHYDULHW\RI¿QDQFLDOVHUYLFHVWRLQGLYLGXDOV
and institutions, principally in Mexico, Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica and
Panama. Credit card operations are carried out through CIC and its subsidiaries.
As part of the sale of 49.99% ownership in the Bank by BAC Credomatic Holding Co., Ltd. (BACCOM, the Ultimate Parent Company) to GE Consumer Finance Central Holdings Co. (a subsidiary of
General Electric Company), BAC-COM conducted a reorganization of its subsidiaries and acquired
participations from minority interest in some countries, mainly in Central America, which were
subsequently contributed to its subsidiaries as capitalization. As part of that transaction, on
September 30, 2005, BAC International Bank, Inc. was capitalized by Parent Company for an amount
of US$21,457,713, which represents the carrying value of the minority interest acquired.
2Q0DUFK%$&&D\PDQVSXQRêLWVZKROO\RZQHGVXEVLGLDU\WR%$&&UHGRPDWLF+ROGLQJ
Company, Ltd.This transaction has been accounted for as a reorganization of entities under common
control, at the carrying value of the net assets transferred; consequently, no gain resulted from such
transaction.
The banking operations in Panama are subject to regulatory requirements of the Superintendency
of Banks of the Republic of Panama, pursuant to decree No.9 of February 26, 1998 and other
regulatory standards.
7KHVHFRQVROLGDWHG¿QDQFLDOVWDWHPHQWVDUHGHQRPLQDWHGLQ86GROODUV
6XPPDU\RI6LJQL¿FDQW$FFRXQWLQJ3ROLFLHs
The accounting policies of BAC International Bank, Inc. and its subsidiaries conform to US generally
accepted accounting principles (“US GAAP”) and to predominant practices within the banking
LQGXVWU\7KHIROORZLQJLVDGHVFULSWLRQRIVLJQL¿FDQWSROLFLHVDQGSUDFWLFHV
D3ULQFLSOHVRI&RQVROLGDWLRQ
7KHVHFRQVROLGDWHG¿QDQFLDOVWDWHPHQWVLQFOXGHWKHDFFRXQWVRI%$&,QWHUQDWLRQDO%DQN,QFDQG
all majority owned subsidiaries with operations in various Central American countries, Mexico and
)ORULGD8QLWHG6WDWHVRI$PHULFD$OOVLJQL¿FDQWLQWHUFRPSDQ\DFFRXQWVDQGWUDQVDFWLRQVKDYHEHHQ
eliminated in consolidation. Investments in companies in which the percentage of ownership is at
least 20%, but not more than 50%, are accounted for under the equity method and the pro rata
share of their income (loss) is included in other income. Investments in companies with less than
20% ownership are accounted for under the cost method; income is recognized when dividends are
received.
29
Annual Report 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
E8VHRI(VWLPDWHV
7KHSUHSDUDWLRQRIWKHFRQVROLGDWHG¿QDQFLDOVWDWHPHQWVLQFRQIRUPLW\ZLWK86JHQHUDOO\DFFHSWHG
DFFRXQWLQJSULQFLSOHVUHTXLUHVWKH%DQNWRPDNHHVWLPDWHVDQGDVVXPSWLRQVWKDWDêHFWWKHUHSRUWHG
amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of
the consolidated balance sheets and revenues and expenses for the period. Actual results could
GLêHU VLJQL¿FDQWO\ IURP WKRVH HVWLPDWHV 0DWHULDO HVWLPDWHV WKDW DUH SDUWLFXODUO\ VXVFHSWLEOH WR
VLJQL¿FDQWFKDQJHLQWKHIXWXUHUHODWHWRWKHGHWHUPLQDWLRQRIWKHDOORZDQFHVIRUORDQORVVHVDQG
ORVVHVRQRêEDODQFHVKHHWLWHPV
F&DVKDQG&DVK(TXLYDOHQWV
)RUWKHSXUSRVHVRIWKHFRQVROLGDWHGVWDWHPHQWVRIFDVKÀRZVFDVKDQGFDVKHTXLYDOHQWVUHSUHVHQW
those amounts that are included in cash and due from banks. Cash and due from banks include
cash, due from banks, certain securities, and term interest-bearing deposits with original maturities
of three months or less.
G6HFXULWLHV
6HFXULWLHV WKDW DUH KHOG SULQFLSDOO\ IRU UHVDOH LQ WKH QHDU WHUP DUH FODVVL¿HG DV WUDGLQJ VHFXULWLHV
and recorded at fair value with changes in fair value recorded in earnings. Debt securities that
PDQDJHPHQWKDVWKHSRVLWLYHLQWHQWDQGDELOLW\WRKROGWRPDWXULW\DUHFODVVL¿HGDVKHOGWRPDWXULW\
DQGUHFRUGHGDWDPRUWL]HGFRVW$OORWKHUVHFXULWLHVDUHFODVVL¿HGDVDYDLODEOHIRUVDOHDQGUHFRUGHG
DWIDLUYDOXH8QUHDOL]HGKROGLQJJDLQVDQGORVVHVQHWRIUHODWHGWD[HêHFWVLIDQ\RQDYDLODEOHIRU
sale securities are excluded from earnings and reported as a component of other comprehensive
income in stockholder’s equity until realized.
Realized gains and losses from the sale of securities are recorded on a trade-date basis and determined
RQDVSHFL¿FLGHQWL¿FDWLRQEDVLV
Purchase premiums and discounts are recognized in interest income over the term of the security
using a method that approximates the interest method. Interest income on securities is recognized
when earned.
The estimated fair value of a security is determined on current quotations, when available. When
current quotations are not available, the estimated fair value is determined based primarily on
GLVFRXQWHGIXWXUHFDVKÀRZVDQGWKHFUHGLWFDSDFLW\RIWKHLVVXHU
A decline in the fair value of any held-to-maturity or available-for-sale securities below cost that
is deemed other than temporary results in a reduction of the carrying amount to fair value. The
impairment is recorded as a realized loss and a new cost basis for the security is established.
H/RDQV+HOGIRU6DOH
Loans originated and intended for sale in the secondary market are carried at lower of cost or
estimated market value in the aggregate. Net unrealized losses, if any, are recognized through a
valuation allowance by charges to income.
I/RDQV
Loans are stated at their outstanding unpaid principal balances adjusted for unearned income,
deferred loan fees and costs and allowance for loan losses. Interest income on loans is recognized
as earned based upon the principal amounts outstanding. The Bank’s policy is to discontinue
accrual of interest either when reasonable doubt exists as to the full, timely collection of interest
or principal, or when a loan becomes contractually past due by 90 days or more with respect to
interest or principal, or in the case of credit card receivables when the account is assigned to legal
status, usually after 120 days. The accrued and unpaid interest is reversed against interest income
DQGWKHUHDIWHUWKHORDQLVDFFRXQWHGIRURQWKHFDVKPHWKRGXQWLOLWTXDOL¿HVIRUUHWXUQWRDFFUXDO
Loans are returned to accrual status when all principal and interest amounts contractually due are
30
Informe Anual 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
EURXJKWFXUUHQWDQGIXWXUHSD\PHQWVDUHUHDVRQDEO\DVVXUHG7KH%DQNFKDUJHVRêORDQVZKHQ
collectibility of principal is not probable.
5HVWUXFWXUHG ORDQV DUH ORDQV IRU ZKLFK WKH RULJLQDO FRQWUDFWXDO WHUPV KDYH EHHQ PRGL¿HG WR
provide for terms that are less than those the Bank would be willing to accept for new loans with
FRPSDUDEOHULVNEHFDXVHRIDGHWHULRUDWLRQLQWKHERUURZHU¶V¿QDQFLDOFRQGLWLRQ,QWHUHVWRQWKHVH
loans is accrued at the renegotiated rates.
(g) $OORZDQFHIRU/RDQ/RVVHV
The allowance for loan losses represents the amount, which, in management’s judgment, will be
adequate to absorb inherent losses of the existing loan portfolio. Additions to the allowance for
loan losses are based on several factors which include, but are not limited to, analytical review
of loan loss experience in relation to outstanding loans, a continuing review of problem or non
performing loans, overall portfolio quality and adequacy of collateral, results of regulatory
examinations, evaluation of independent appraisals, and management’s judgment with respect to
the impact of current economic conditions on the existing loan portfolio. Management believes
that the allowance for loan losses is adequate.
The allowance for the portfolio of smaller-balance, homogeneous loans is established based on
estimates of probable losses inherent in the portfolio, according to various statistical analyses. These
include migration analysis, in which historical delinquency and credit loss experience is applied to
WKHFXUUHQWDJLQJRIWKHSRUWIROLRWRJHWKHUZLWKDQDO\VLVWKDWUHÀHFWVFXUUHQWWUHQGVDQGFRQGLWLRQV
It is the Bank’s policy to fully reserve all credit card receivable balances over 150 days past due.
6SHFL¿FDOORZDQFHVDUHSURYLGHGLQWKHHYHQWWKDWWKHVSHFL¿FDQDO\VLVRQHDFKFODVVL¿HGORDQRWKHU
than those included in large groups of smaller-balance homogenous loans, indicates that the loan
is impaired as it is probable that the Bank will be unable to collect all amounts due, both principal
and interest, according to the contractual terms of the loan agreement. When a loan is considered
to be impaired, the amount of the impairment is measured based on the present value of expected
IXWXUHFDVKÀRZVGLVFRXQWHGDWWKHQRWH¶VHêHFWLYHLQWHUHVWUDWHRUWKHIDLUYDOXHRIWKHFROODWHUDORI
a collateral dependent loan. Collateral dependent loans are those loans for which the repayment
of the loan is to be provided solely by the underlying collateral. When the measure of the impaired
loan is less than the recorded investment in the loan, the impairment is recorded through a valuation
allowance. Impairment losses are included in the allowance for loan losses through a charge to the
provision for loan losses.
K)RUHFORVHG$VVHWV
Assets acquired through, or in lieu of, loans foreclosure are held for sale and are initially recorded
at the lower of the outstanding loan balance or net realizable value at the date of foreclosure,
establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by
management and the assets are carried at the lower of carrying amount or fair value less cost to
sell. Revenue and expenses from operations and changes in the valuation allowance are included
in other operating expenses.
L7UDQVIHURI)LQDQFLDO$VVHWV
7UDQVIHUV RI ¿QDQFLDO DVVHWV DUH DFFRXQWHG IRU DV VDOHV ZKHQ FRQWURO RYHU WKH DVVHWV KDV EHHQ
surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have
been isolated from the Bank, (2) the transferee obtains the right (free of conditions that constrain it
from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Bank
GRHVQRWPDLQWDLQHêHFWLYHFRQWURORYHUWKHWUDQVIHUUHGDVVHWVWKURXJKDQDJUHHPHQWWRUHSXUFKDVH
them before maturity.
When the Bank sells receivables in securitizations of loans, it might retain servicing rights, and in some
cases residual values and cash reserve accounts, all of which are retained interests in the securitized
31
Annual Report 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
loans. Gain or loss on sale of the loans depends in part on the previous carrying amount of the
¿QDQFLDODVVHWVLQYROYHGLQWKHWUDQVIHUDOORFDWHGEHWZHHQWKHDVVHWVVROGDQGWKHUHWDLQHGLQWHUHVWV
based on their relative fair value at the date of transfer. To obtain fair values, quoted market prices
are used, if available. However, quotes are generally not available for retained interests, so the Bank
JHQHUDOO\HVWLPDWHVIDLUYDOXHEDVHGRQWKHSUHVHQWYDOXHRIIXWXUHH[SHFWHGFDVKÀRZVGHWHUPLQHG
by using management’s best estimates of the key assumptions - credit losses, prepayment speeds,
forward yield curves, and discount rates commensurate with the risks involved.
( j) 3URSHUW\DQGHTXLSPHQW
Property and equipment are stated at cost less accumulated depreciation and amortization.
Depreciation is computed using the straight-line method over the estimated useful lives of the
respective assets as follows:
Buildings and improvements
Equipment and furniture
Computers
Vehicles
Years
20 – 50
5 –10
3–5
5
/HDVHKROGLPSURYHPHQWVDUHDPRUWL]HGLQWKUHHWR¿YH\HDUVRUWKHOHDVHWHUPZKLFKHYHULVORZHU
Expenditures for major renewals and improvements are capitalized. Repairs and maintenance
expenditures are charged to expense as incurred. The cost and accumulated depreciation relating to
premises and equipment retired or otherwise disposed of are eliminated from the accounts and any
resulting gains or losses are credited or charged to income.
N*RRGZLOODQG,QWDQJLEOH$VVHWV
*RRGZLOOLQFOXGLQJSUHYLRXVO\H[LVWLQJJRRGZLOODQGLQWDQJLEOHDVVHWVZLWKLQGH¿QLWHXVHIXOOLYHVDUH
not being amortized but rather tested for impairment at least annually. Intangible assets with a
GH¿QLWHXVHIXOOLIHFRQWLQXHWREHDPRUWL]HGWKURXJKWKHLUXVHIXOOLYHV
All recorded goodwill must be assigned to one or more reporting units of the entity and evaluated
for impairment at that level. Impairment testing requires that the fair value of each reporting unit
be compared to its carrying amount, including the goodwill.
Goodwill, representing the excess of purchase price over the fair value of net assets acquired, results
from purchase acquisitions made by the Bank.
O,PSDLUPHQWRU'LVSRVDORI/RQJ/LYHG$VVHWV
7KH %DQN HYDOXDWHV LWV ORQJOLYHG DVVHWV DQG FHUWDLQ LGHQWL¿DEOH DPRUWL]DEOH LQWDQJLEOHV IRU
impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability is measured by comparing the carrying amount of
WKHDVVHWWRHVWLPDWHGXQGLVFRXQWHGIXWXUHFDVKÀRZVH[SHFWHGWREHJHQHUDWHGE\WKHDVVHW,IWKH
FDUU\LQJDPRXQWH[FHHGVWKHHVWLPDWHGIXWXUHFDVKÀRZVDQLPSDLUPHQWFKDUJHLVUHFRJQL]HGIRU
the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to
be disposed of are reported at the lower of the carrying value or fair value less costs to sell.
P5HSXUFKDVH$JUHHPHQWV
The Bank sells securities under agreements to repurchase (“repurchase agreements”) substantially
identical securities. Repurchase agreements are accounted for as secured borrowing transactions.
The amounts borrowed under repurchase agreements are carried on the consolidated balance
sheets at the amount borrowed. Interest incurred on repurchase agreements is reported as interest
expense. Securities underlying the repurchase agreements remain on the asset accounts but under
32
Informe Anual 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
custody of a third party guaranteeing these transactions. The market value of securities subject to
repurchase agreements are regularly monitored to ensure appropriate collateral coverage of these
VHFXUHG¿QDQFLQJWUDQVDFWLRQV
Q/RDQ)HHV
Non refundable fees and related direct costs associated with the origination of loans are deferred
and netted against loan balances. The amortization of net deferred fees and costs is recognized in
interest income, generally by the interest method, based on the contractual live of the related loans.
Nonrefundable fees related to lending activities other than direct loan origination are recognized
as other revenues over the period in which the related service is provided. Other credit-related fees,
such as standby letter of credit fees, are recognized as other operating income over the period the
related service is performed.
(o) &UHGLW&DUG5HYHQXH
Credit card annual fees, net of direct lending costs, are deferred and amortized on a straight-line
basis over a one - year term. Merchant’s commission income is determined based on the amount
and type of purchase by the cardholder and is recognized at the time the charges are billed.
S'HULYDWLYH)LQDQFLDO,QVWUXPHQWV
7KH%DQNPDNHVXVHRIGHULYDWLYH¿QDQFLDOLQVWUXPHQWVSULPDULO\LQWHUHVWUDWHVZDSVDVSDUWRILWV
management of interest rate risks.
Interest rate swaps are contracts that represent an exchange of US dollar interest payment streams
EDVHGRQDQDJUHHGXSRQQRWLRQDOSULQFLSDODPRXQWZLWKRQHVWUHDPEDVHGRQDVSHFL¿HGÀRDWLQJ
UDWHRU¿[HGUDWH7KHVH¿QDQFLDOLQVWUXPHQWVDUHXVHGWRPDQDJHLQWHUHVWUDWHULVNWKURXJKWKH
exchange of interest payments based on a predetermined notional principal amount. The underlying
SULQFLSDO EDODQFHV DUH QRW DêHFWHG 1HW VHWWOHPHQW DPRXQWV DUH UHSRUWHG DV DGMXVWPHQWV WR
interest.
The Bank carries all derivatives in the consolidated balance sheets at fair value. The accounting for
changes in fair value (i.e. gains or losses) of a derivative depends on whether it has been designated
DQGTXDOL¿HVDVSDUWRIDKHGJLQJUHODWLRQVKLSDQGLIVRWKHW\SHRIKHGJH7KDWLVWKHGHULYDWLYH
is designated by the Bank as (1) a hedge of the fair value of a recognized asset or liability or of an
XQUHFRJQL]HG¿UPFRPPLWPHQW³IDLUYDOXH´KHGJHRUDKHGJHRIWKHYDULDELOLW\RIFDVKÀRZVRI
DIRUHFDVWHGWUDQVDFWLRQWREHUHFHLYHGRUSDLGUHODWHGWRDUHFRJQL]HGDVVHWRUOLDELOLW\³FDVKÀRZ´
hedge); or (3) as a freestanding.
&KDQJHV LQ WKH IDLU YDOXH RI D GHULYDWLYH WKDW KDV EHHQ GHVLJQDWHG DQG TXDOL¿HV DV D IDLU YDOXH
hedge, along with the changes in the fair value of the hedged asset or liability that are attributable
to the hedged risk, are included in other income (expense) and recorded as derivative and hedging
DFWLYLWLHV&KDQJHVLQWKHIDLUYDOXHRIDGHULYDWLYHWKDWKDVEHHQGHVLJQDWHGDQGTXDOL¿HVDVDFDVK
ÀRZKHGJHDUHUHFRUGHGLQRWKHUFRPSUHKHQVLYHLQFRPHORVVWRWKHH[WHQWRILWVHêHFWLYHQHVVXQWLO
HDUQLQJVDUHLPSDFWHGE\WKHYDULDELOLW\RIFDVKÀRZVIURPWKHKHGJHGLWHP&KDQJHVLQWKHIDLU
value of derivatives held for trading purposes or those that do not qualify as hedges (freestanding)
are included in other income (expense) and recorded as derivative and hedging activities.
At the inception of each hedge, when applicable, the Bank documents the relationship between
hedging instruments and hedged items, as well as its risk management objective and strategy for
undertaking the hedge transactions. This process includes linking all derivatives that are designated
DVIDLUYDOXHRUFDVKÀRZKHGJHVWRVSHFL¿FDVVHWVDQGOLDELOLWLHVRQWKHFRQVROLGDWHGEDODQFHVKHHWV
RUWRVSHFL¿F¿UPFRPPLWPHQWVRUIRUHFDVWHGWUDQVDFWLRQV
33
Annual Report 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
T'HIHUUHG,QFRPH7D[
The Bank uses the asset and liability method of accounting for deferred income taxes. Under the
asset and liability method, deferred tax assets and liabilities are recognized for the estimated future
WD[FRQVHTXHQFHVDWWULEXWDEOHWRGLêHUHQFHVEHWZHHQWKH¿QDQFLDOVWDWHPHQWFDUU\LQJDPRXQWVRI
existing assets and liabilities and their respective tax bases and operating loss and tax carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to
WD[DEOHLQFRPHLQWKH\HDUVLQZKLFKWKRVHWHPSRUDU\GLêHUHQFHVDUHH[SHFWHGWREHUHFRYHUHGRU
VHWWOHG7KHHêHFWRQGHIHUUHG WD[DVVHWVDQGOLDELOLWLHVRIDFKDQJHLQ WD[UDWHVLVUHFRJQL]HGLQ
income in the enactment date period. A valuation allowance is recognized when it is more likely
than not that some portion or all of the deferred tax assets will not be realizable.
U)RUHLJQ&XUUHQF\
The Bank operates through a number of entities in various countries in Central America, Mexico and
the United States of America. The local currency of these countries is the functional currency of the
entities.
Foreign currency transactions are recorded at the exchange rate prevailing at the date of the
transaction. Assets and liabilities denominated in foreign currency are re-measured into the
functional currency at the exchange rate prevailing at balance sheet date. Resulting gains and losses
on foreign currency transactions are included within other income in the consolidated statements
of income.
7KH¿QDQFLDOVWDWHPHQWVRIVXEVLGLDULHVZKHUH WKHORFDOFXUUHQF\LVFRQVLGHUHGDV WKHIXQFWLRQDO
currency are translated to US dollars using (i) exchanges rates prevailing at balance sheet date
for assets and liabilities, and (ii) average exchange rates for the year for revenue and expenses.
$GMXVWPHQWVUHVXOWLQJIURPWKHWUDQVODWLRQRIWKHVH¿QDQFLDOVWDWHPHQWVLQWR86GROODUVDUHLQFOXGHG
as a component of other comprehensive income (loss) in stockholder’s equity.
V5HFODVVL¿FDWLRQV
&HUWDLQDPRXQWVLQWKHFRQVROLGDWHG¿QDQFLDOVWDWHPHQWVKDYHEHHQUHFODVVL¿HGWRFRQIRUPWR
WKHFRQVROLGDWHG¿QDQFLDOVWDWHPHQWSUHVHQWDWLRQ
5HRUJDQL]DWLRQ
The following table summarizes the carrying value of the assets and liabilities of subsidiaries sold to
Parent Company, as a result of the reorganization discussed in note 1:
Property and equipment, net
Other assets
Other liabilities
Cash received, net of cash paid
US$
US$
10,000)
127,366)
350,916)
(737)
487,545)
34
Informe Anual 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
5HODWHG3DUW\7UDQVDFWLRQV
The Bank in the normal course of business enters into transactions with related parties, including
SULQFLSDORçFHUVDQGGLUHFWRUV7KHIROORZLQJWDEOHVHWVIRUWKEDODQFHVDQGWUDQVDFWLRQVZLWKUHODWHG
parties as of December 31, 2006 and 2005 and for the years then ended:
2006
Assets:
Due from banks
Securities available for sale
Loans receivable
Accrued interest and other receivables
US$
Liabilities:
Demand deposits
Time deposits
Borrowings
Accrued interest and other liabilities
Net (liabilities) assets due from related parties US$
2005
40,962,777)
10,818,496)
11,822,217)
75,239,449)
591,656)
139,434,595)
44,132,050
11,807,489
19,717,879
84,013,441
721,717
160,392,576
49,985,692)
75,374,379)
9,977,242)
4,827,717)
140,165,030)
31,400,708
72,638,252
296,359
983,611
105,318,930
(730,435)
55,073,646
Interest and other operating income
US$
9,026,638
8,794,897
Interest and other operating expenses
US$
4,594,806
2,917,883
Securities available for sale are placed in mutual funds managed by the subsidiaries of the Bank.
&DVKDQG'XHIURP%DQNVDQG3OHGJHG,QWHUHVW%HDULQJ'HSRVLWV
At December 31, 2006 and 2005, cash and due from banks aggregating US $439,246,995 and US
$336,364,347, respectively, are placed at Central Banks in Central American countries to cover legal
liquidity reserve requirements.
At December 31, 2006 and 2005, interest-bearing deposits amounting to US $22,681,029 and
US$12,080,883, respectively, are placed as legal liquidity or to guarantee borrowings and other
credit facilities.
7UDGLQJ6HFXULWLHV
At December 31, 2006 and 2005, trading securities, consist of government bonds amounting to US
$3,702,712 and US $5,215,833, respectively.
Net gains on security trading activities included in earnings for the years ended December 31, 2006
and 2005 amount to US $149,838 and US$141,792, respectively, including unrealized holding gains
(losses) on trading securities for US $23,051 and (US $5,877), respectively.
35
Annual Report 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
6HFXULWLHV$YDLODEOHIRU6DOH
The amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of
securities available for sale as of December 31, 2006 and 2005 is as follows:
2006
Gross
Unrealized
Holding
Gains
Gross
Unrealized
Holding
Losses
US$ 106,869,255
25,177,471
29,104,397
1,327,576
74,032,430
25,112,381
261,623,510
11,124
40,029
209,477
336,841
1,122,308
1,497
1,721,276
(129,105) 106,751,274
(1,663) 25,215,837
(17,831) 29,296,043
(60,392)
1,604,025
(15,978) 75,138,760
(82,569) 25,031,309
(307,538) 263,037,248
2,001,590
97,553
1,000,000
2,000,000
5,099,143
610
2,375
0
0
2,985
Mortgage-backed securities – Costa Rica
5,798,988
216,524
Retained interests on securitization of mortgages
– Costa Rica
4,572,409
Amortized
Cost
Government bonds and agencies:
United States of America
Guatemala
El Salvador
Nicaragua
Costa Rica
Panama
Corporate debentures:
Costa Rica
Panama
France
Mutual funds:
Costa Rica
Panama
Other securities:
Costa Rica
0)
0)
(1,843)
(350,600)
(352,443)
Fair
Value
2,002,200
99,928
998,157
1,649,400
4,749,685
0
6,015,512
0
0)
4,572,409
2,471,963
2,027,110
10,000,000
14,499,073
0
19,730
0
19,730
0)
0)
(224,623)
(224,623)
2,471,963
2,046,840
9,775,377
14,294,180
19,397
US$ 291,612,520
10,609
1,971,124
0)
30,006
(884,604) 292,699,040
36
Informe Anual 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
2005
Amortized
Cost
Gross
Unrealized
Holding
Gains
Gross
Unrealized
Holding
Losses
Fair
Value
Government and agency securities:
109,271,010
12,803
(397,066)
108,886,747
Guatemala
US$
39,990,791
770,650
(233,489)
40,527,952
El Salvador
30,913,366
84,331
(78,519)
30,919,178
Nicaragua
27,573,747
257,844
(57,241)
27,774,350
Costa Rica
53,398,311
308,334
(146,289)
53,560,356
Panama
17,535,027
39,329
(36,115)
17,538,241
278,682,252
1,473,291
(948,719)
279,206,824
8,008,403
0
(30,995)
7,977,408
El Salvador
1,487,700
322
(13,880)
1,474,142
Costa Rica
257,233
0
0)
257,233
Panama
1,000,000
0
(10,000)
990,000
France
2,000,000
0
(396,000)
1,604,000
12,753,336
322
(450,875)
12,302,783
5,752,659
111,166
4,572,409
Mortgage-backed securities – Costa Rica
0
5,863,825
0
0)
4,572,409
2,559,332
0
0)
2,559,332
Costa Rica
10,018,881
0
(67,525)
9,951,356
Panama
10,000,000
0
(303,476)
9,696,524
22,578,213
0
(371,001)
22,207,212
324,338,869
1,584,779
(1,770,595)
324,153,053
Retained interests on securitization of mortgages
– Costa Rica
Mutual funds:
US$
37
Annual Report 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
A summary of securities available for sale as of December 31, 2006 and 2005, by contractual maturity,
LVSUHVHQWHGEHORZ([SHFWHGPDWXULWLHVZLOOGLêHUIURPFRQWUDFWXDOPDWXULWLHVEHFDXVHLVVXHUVPD\
have the right to call or prepay obligations with or without call or prepayment penalties.
2006
Amortized
Cost
2005
Fair
Value
Amortized
Cost
Fair
Value
Government and agency securities:
Due within one year
US$ 102,891,594 102,924,015
130,651,562
'XHDIWHURQH\HDUEXWZLWKLQ¿YH\HDUV
'XHDIWHU¿YH\HDUVEXWZLWKLQWHQ\HDUV
Due after ten years
130,641,281
11,869,824
12,002,070
9,245,194
9,288,304
261,623,510 263,037,248
278,682,252
279,206,824
Due within one year
1,045,502
1,043,811
7,105,423
7,065,745
5,099,143
4,749,685
12,753,336
12,302,783
5,798,988
6,015,512
5,752,659
5,863,825
4,572,409
4,572,409
4,572,409
4,572,409
14,499,073
14,294,180
22,578,213
22,207,212
19,397
30,006
0
0
US$ 291,612,520 292,699,040
324,338,869
324,153,053
Mortgage-backed securities:
Due after ten years
Retained interests on securitization of mortgages:
Due after ten years
Mutual funds, without maturity
Other:
Without maturity
At December 31, 2006 and 2005, securities with a carrying value of US $46,662,186 and US
$26,845,997, respectively, were pledged to secure borrowings and repurchase agreements.
During the year ended December 31, 2005, the Bank recognized an increase to the valuation
allowance on retained interests on securitization of mortgages for an amount of US $372,014.
38
Informe Anual 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
For the years ended December 31, 2006 and 2005, proceeds from sale of securities available for sale
amounted to US $142,753,902 and US $146,253,606, respectively. Gross realized gains amounted to
US $6,937,646 and US $2,482,869 for 2006 and 2005, respectively. Gross realized losses amounted
to US $301,191 and US $633,626 for 2006 and 2005, respectively.
Gross unrealized losses on securities available for sale and the fair value of the related securities,
aggregated by category and length of time the individual security has been in the continuous
unrealized loss position at December 31, 2006, were as follows:
2006
Less than 12 Months
Fair
Unrealized
Value
Losses
Government and agency securities
US$
Corporate debentures
Mutual funds
Total
US$
12 Months or more
Fair
Unrealized
Value
Losses
Fair
Value
Total
Unrealized
Losses
61,198,113
(130,568)
26,940,075
(176,970)
88,138,188
(307,538)
998,157
(1,843)
1,649,400
(350,600)
2,647,557
(352,443)
0
(0)
9,775,377
(224,623)
9,775,377
(224,623)
62,196,270
(132,411)
38,364,852
(752,193)
100,561,122
(884,604)
2005
Less than 12 Months
Fair
Unrealized
Value
Losses
Government and agency securities
Fair
Value
Total
Unrealized
Losses
87,466,483
(564,387)
39,536,311
(384,332)
127,002,794
(948,719)
Corporate debentures
4,365,805
(24,875)
2,574,000
(426,000)
6,939,805
(450,875)
Mutual funds
9,951,356
(67,525)
9,696,524
(303,476)
19,647,880
(371,001)
101,783,644
(656,787)
Total
US$
12 Months or more
Fair
Unrealized
Value
Losses
US$
51,806,835 (1,113,808)
153,590,479 (1,770,595)
The unrealized losses on investments are caused by interest rate increases. The decline in fair value is
mainly attributable to changes in interest rates and not credit quality, and the Bank has the intent
and ability to hold those investments until a market price recovery or maturity; therefore, these
investments are not considered other-than-temporarily impaired.
6HFXULWLHV+HOGWR0DWXULW\
The amortized cost and fair value of securities held to maturity as of December 31, 2006 and 2005
is a follows:
2006
Amortized
Cost
Government bonds:
Costa Rica
France
39
Annual Report 2006
2005
Fair
Value
Amortized
Cost
Fair
Value
US$
0
0
966,650
963,668
US$
4,983,517
4,983,517
4,294,800
4,294,800
4,977,517
5,944,167
4,193,300
5,156,968
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
As of December 31, 2006 and 2005 the gross unrealized losses amount to approximately US $688,717
and US $787,199, respectively; most of the securities have been on a continuous unrealized loss
position for more than 12 months. Management considers the unrealized losses to be attributable
to increases in interest rates and not due to decline in the credit quality of the issuers. Therefore,
these securities are not considered to be other-than-temporarily impaired.
A summary of securities held to maturity as of December 31, 2006 and 2005, by contractual maturity,
LVSUHVHQWHGEHORZ([SHFWHGPDWXULWLHVZRXOGGLêHUIURPFRQWUDFWXDOPDWXULWLHVEHFDXVHLVVXHUV
may have the right to call or prepay obligations with or without call or prepayment penalties.
2005
2006
Amortized
Cost
Government bonds:
Due within one year
US$
Fair
Value
Amortized
Cost
Fair
Value
0
0
0
0
377,095
966,650
374,113
963,668
4,983,517
US$
4,983,517
4,294,800
4,294,800
4,977,517
5,944,167
4,193,300
5,156,968
/RDQV
The composition of loans as December 31, 2006 and 2005 is as follows:
2006
&RPPHUFLDO¿QDQFLDODQGLQGXVWULDO
86 2005
Real estate – residential and for construction
593,683,304
361,224,437
Credit card
925,962,792
705,731,489
9HKLFOHV¿QDQFLQJ
Other personal
192,111,839
113,607,043
Cash collateralized (back to back)
119,274,319
159,987,767
Leasing
48,393,028
25,697,021
Overdrafts
16,455,056
13,791,877
US$ 2,884,115,612
2,170,554,149
At December 31, 2006 and 2005, the Bank had loans for US $122,138,194 and US $103,310,055,
respectively, pledged to secure borrowings and other credit facilities.
At December 31, 2006 and 2005, the Bank’s non-accruing loans amounted to US $40,994,109 and
US $31,771,540. At December 31, 2006 and 2005, the Bank has no commitments to lend additional
IXQGVWRERUURZHUVZKRVHORDQVDUHFODVVL¿HGDVQRQDFFUXLQJ
Other real estate owned assets included in other assets amounted to US $7,479,433 and US $7,662,109
at December 31, 2006 and 2005, respectively.
40
Informe Anual 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
The following is a summary of information pertaining to impaired loans:
2006
2005
Impaired loans, all with a valuation allowance
US$
10,239,784
12,231,507
Valuation allowance
US$
4,910,335
4,211,062
Average recorded investment
US$
16,228,268
13,705,264
Interest income recognized on a cash basis
US$
1,345,966
1,415,748
The Bank has no commitments to lend additional funds to borrowers whose loans are impaired.
$OORZDQFHIRU/RDQ/RVVHV
The changes in the allowance for loan losses during the years ended December 31, 2006 and 2005
are presented below:
2006
2005
52,546,837
44,731,917
53,738,816
34,831,247
Charge-offs
(48,999,468)
(36,556,186)
Recoveries
13,051,538
9,986,392
(529,259)
(446,533)
69,808,464
52,546,837
Balance, beginning of year
US$
Provision for loan losses
Balance, end of year
US$
6HFXULWL]DWLRQRI0RUWJDJH/RDQV+HOGIRU6DOH
On August 2002, the Bank sold mortgage loans in a securitization transaction. The Bank retained
the servicing responsibilities and subordinated interests. The Bank receives annual servicing fees
DSSUR[LPDWLQJ RI WKH RXWVWDQGLQJ EDODQFH DQG ULJKWV WR IXWXUH FDVK ÀRZV DULVLQJ DIWHU WKH
investors in the securitization trust have received the return for which they contracted. No servicing
asset was recognized as the fee to be received is considered adequate compensation. The investors
and the securitization trust have no recourse to the Bank’s other assets for failure of debtors to
pay when due. The Bank’s retained interests are subordinated to investors’ interests. Their value is
VXEMHFWWRFUHGLWSUHSD\PHQWDQGLQWHUHVWUDWHULVNRQWKHWUDQVIHUUHG¿QDQFLDODVVHWV
The fair value of the retained interests at December 31, 2006 and 2005 amounted to US $4,572,409
(weighted average life of 1.07 years and 2.62 years, respectively). Such retained interests are included
as available for sale securities. Furthermore, the Bank holds a liability for US $4,987,756 relating to
the clean up option on the securitization of the mortgage loans.
Key assumptions used for mortgage loans during the year ended December 31, 2006, in measuring
the fair value of retained interests at the date of sale or securitization and at the end of the year
follows:
41
Annual Report 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
Date of Securitization
Prepayment speed (%)
3
Weighted - average life (in years)
6.48
Expected credit losses (US$)
0
5HVLGXDOFDVKÀRZVGLVFRXQWHGDW
Variable returns to transferees
3-month LIBOR plus a
spread of 0.95%
Year - end
5.25
4.53
0
3-month LIBOR plus a
spread of 0.95%
&DVKÀRZVUHFHLYHGIURPVHFXULWL]DWLRQWUXVWGXULQJWKH\HDUVHQGHG'HFHPEHUDQG
relating to servicing fees amounted US $165,562 and US $205,209, respectively.
3URSHUW\DQG(TXLSPHQW
Property and equipment as of December 31, 2006 and 2005 are detailed as follows:
Land
US$
Buildings and improvements
Equipment, furniture and vehicles
US$
2005
13,051,713)
7,535,951
52,419,868)
47,490,835)
153,278,501)
148,455,086)
1,497,325)
2,552,694)
220,247,407)
206,034,566)
Constructions in progress
Less: accumulated depreciation and amortization
2006
(92,427,943)
(86,014,171)
127,819,464)
120,020,395)
*RRGZLOODQG,QWDQJLEOH$VVHWV
At December 31, 2006 and 2005, a detail of goodwill allocation related to the Bank’s investments in
various countries and intangible assets, which are included in other assets, follows:
Goodwill:
Costa Rica
Nicaragua
El Salvador
US$
Core deposit intangible subject to amortization –
Costa Rica
US$
2006
2005
1,017,381
843,761
771,606
2,632,748
1,017,381
843,761
771,606
2,632,748
0
2,632,748
637,627
3,270,375
'HSRVLWV
As of December 31, 2006 and 2005, the Bank held US $1,014,318,975 and US $787,565,586 respectively,
of time deposits with principal balances of US $100,000 and over.
42
Informe Anual 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
Scheduled maturities of time deposits at December 31, 2006 are as follows:
Year ending December 31,
2007
US$
1,166,375,452
2008
38,934,457
2009
15,512,896
2010
6,450,102
2011
2,001,530
Thereafter
3,997,818
US$
1,233,272,255
6HFXULWLHV6ROGXQGHU$JUHHPHQWVWR5HSXUFKDVH
The following table summarizes certain information on securities sold under agreements to
repurchase at or for the years ended December 31, 2006 and 2005:
2006
2005
US$
35,863,334
23,863,176
Maximum amount outstanding at any month end US$
49,925,024
39,825,842
Average amount outstanding during the year
38,094,779
26,089,213
Weighted average interest rate for the year
7.76%
5.44%
Weighted average interest rate at end of year
6.59%
8.19%
Carrying amount at end of year
US$
%RUURZLQJV
Borrowings at December 31, 2006 and 2005 consist of the following:
2006
Maturity
Various Through
Carrying
Amount
Payable in U.S. dollars (United States of America):
of America):
Fixed rate
3.23% to 10.75%
Floating rate
3.25% to 13.50%
2025
2016
96,823,062
347,929,075
Payable in Mexican Pesos (Mexico):
Floating rate
7.84% to 8.88%
2007
53,256,534
Payable in Quetzals (Guatemala):
Floating rate
6.50% to 10.00%
2007
28,349,501
Payable in Lempiras (Honduras):
Floating rate
7.00% to 15.00%
2034
2,306,381
Payable in Cordobas (Nicaragua):
Fixed rate
5.00% to 6.53%
2019
973,690
Payable in Colones (Costa Rica):
Fixed rate
Floating rate
17.00%
9.00% to 15.25%
2007
2010
1,445,857
15,626,773
546,710,873
Interest
Rate
US$
US$
43
Annual Report 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
2005
Interest
Rate
Maturity
Various Through
Carrying
Amount
2.86% to 10.75%
2.75% to 12.62%
2025
2015
24,706,925
320,692,184
Payable in Mexican Pesos (Mexico):
Floating rate
9.20% to 11.51%
2006
15,505,700
Payable in Quetzals (Guatemala):
Floating rate
7.25% to 10.00%
2006
28,868,780
Payable in Lempiras (Honduras):
Fixed rate
Floating rate
7.50% to 18.00%
7.00% to 13.00%
2006
2034
21,542
2,237,637
Payable in Cordobas (Nicaragua):
Fixed rate
Floating rate
5.00% to 6.53%
9.17%
2010
2006
1,091,558
15,600
17.00%
12.20% to 16.36%
2006
2010
1,271,090
14,812,738
409,223,754
Payable in U. S. dollars (United States
of America)
Fixed rate
Floating rate
Payable in Colones (Costa Rica):
Fixed rate
Floating rate
US$
US$
On December 16, 2002, the Bank, through a consolidated special purpose entity, issued US
XQGHULWV86PLOOLRQ&,&ÀRDWLQJ±UDWHWUXVWFHUWL¿FDWHVVHULHV±$GXH-DQXDU\
8, 2010. On November 23, 2005 the Bank amended the original program and issue additional
FHUWL¿FDWHV IRU 86 PLOOLRQ ZKLFK LQFUHDVHV WKH WRWDO DPRXQW XQGHU WKH SURJUDP WR 86
million due December 31, 2012. As of December 31, 2006 and 2005, the amount outstanding under
WKLV SURJUDP DJJUHJDWHG 86 DQG 86 UHVSHFWLYHO\ 7KH FHUWL¿FDWHV DUH
LVVXHGDQGPDQDJHGE\&,&5HFHLYDEOHV0DVWHU7UXVWIRUWKHEHQH¿WRIWKHFHUWL¿FDWHKROGHUV7KH
0DVWHU7UXVWFXUUHQWO\KROGVDQµ$$$¶UDWLQJIURP6WDQGDUG3RRU¶V5DWLQJ6HUYLFHV6XFKFHUWL¿FDWHV
DUHVHFXUHGLQ¿UVWGHJUHHE\IXWXUHFDVKÀRZVRULJLQDWLQJLQ*XDWHPDOD+RQGXUDV(O6DOYDGRU
1LFDUDJXDDQG&RVWD5LFDIURPPHUFKDQWYRXFKHUVDQGE\¿QDQFLDOJXDUDQWHHLQVXUDQFHSROLFLHV
provided by Ambac Assurance Corp. and XL Capital Assurance, Inc. (both are insurance companies
KROGLQJDµ$$$¶¿QDQFLDOVWUHQJWKUDWLQJIURP6WDQGDUG3RRU¶VZKLFKJXDUDQWHHWLPHO\SD\PHQW
RIFHUWL¿FDWHLQWHUHVWDQGSULQFLSDOZKHQGXH7KHPHUFKDQWYRXFKHUVDUHWKRVHWREHJHQHUDWHG
E\KROGHUVRIFUHGLWFDUGVLVVXHGE\WKLUGSDUW\LQWHUQDWLRQDO¿QDQFLDOLQVWLWXWLRQVXQGHU9LVDDQG
0DVWHU&DUG&UHGLW&DUG3URJUDPVZKLFKDUHEHLQJVHUYLFHGE\WKH%DQN7KHFHUWL¿FDWHVSD\LQWHUHVW
TXDUWHUO\WKH¿IWKGD\RIHDFK-DQXDU\$SULO-XO\DQG2FWREHUDWDUDWHRIWKUHHPRQWK86GROODU
LIBOR plus a margin (7.38% and 6.59% at December 31, 2006 and 2005, respectively). In accordance
ZLWKWKHSURYLVLRQVRIWKHDPHQGPHQWSULQFLSDODPRUWL]DWLRQDPRXQWVZLOOEHSDLGWRFHUWL¿FDWH
KROGHUV EHJLQQLQJ RQ $SULO 7KH FHUWL¿FDWHV KDYH RULJLQDO GXUDWLRQ RI \HDUV 7KH
FHUWL¿FDWHVFXUUHQWO\KDYHDZHLJKWHGDYHUDJHGXUDWLRQRI\HDUVDVDPHQGHG
44
Informe Anual 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
At December 31, 2006 and 2005, secured borrowings amounted to US $225,499,721 and US
$226,167,336, respectively, including the amount outstanding under the CIC Receivables Master
Trust.
$VRI'HFHPEHUVHFXUHGERUURZLQJVLQFOXGHDOHDVH¿QDQFLQJDUUDQJHPHQWIRUDFTXLVLWLRQ
of an aircraft. The lease, with an aggregate outstanding balance of US $7,007,178, calls for monthly
advance installments of US $94,912, including interest, to be paid through January 1, 2015.
At December 31, 2006, the Bank had approximately US $644,001,256 available in unused lines of
credit that expire through 2012, including the unfunded portion of the CIC Receivables Master Trust
of US $325,495,188.
Scheduled maturities of borrowings at December 31, 2006, are as follows:
2007
US$
276,566,641
2008
106,912,359
2009
58,853,060
2010
28,878,496
2011
28,699,284
Thereafter
46,801,033
US$
546,710,873
2WKHU%RUURZHG)XQGV
&DUU\LQJDPRXQWRIRWKHUERUURZHGIXQGVDW'HFHPEHUDQGFRQVLVWRIFHUWL¿FDWHV
of indebtedness registered at and negotiable through the corresponding local stock exchanges in
*XDWHPDOD (O 6DOYDGRU DQG &RVWD 5LFD DW ¿[HG DQG YDULDEOH LQWHUHVW UDWHV DQG DUH GHWDLOHG DV
follows:
Payable in:
Interest Rate
2006
2005
US dollars
5.36% to 8.61%
Quetzals
Colones
US$
48,641,426
35,000,000
7.49% to 8.75%
52,036,150
42,924,886
13.50% to 18.32%
29,611,204
35,060,458
US$ 130,288,780 112,985,344
Scheduled maturities of other borrowed funds at December 31, 2006 are as follows:
2007
US$
60,249,420
2008
8,000,000
2009
12,715,512
2010
24,843,256
2011
8,500,000
Thereafter
15,980,592
US$
130,288,780
At December 31, 2006 and 2005, the Bank had loans receivable for US $59,285,100 and US $44,156,116,
respectively, pledged to secure these other borrowed funds.
45
Annual Report 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
2WKHU2SHUDWLQJ([SHQVHV
The following table sets forth the components of other operating expenses for the years ended
December 31, 2006 and 2005:
2006
Advertising and loyalty programs
US$ 33,610,141
Communications
11,815,940
2I¿FHVXSSOLHV
Maintenance
11,809,586
Credit card franchise and authorization fees
11,553,285
Taxes other than income tax
6,136,373
Processing fees
3,189,416
Deposit insurance
1,824,967
Security
3,062,816
Armored services
3,287,594
Travel expenses
4,174,314
Provision for claims receivable for unreturned securities 1,562,337
Other
33,567,189
US$ 132,376,866
2005
26,485,982
10,237,388
9,770,979
10,068,661
5,658,442
2,972,875
1,979,600
2,749,287
2,318,042
2,855,410
5,602,436
25,182,691
111,358,940
,QFRPH7D[HV
Income tax expense consists of:
2006
Current
US$
Deferred
26,803,912 19,899,741)
3,615,867
US$
2005
(4,245,228)
30,419,779 15,654,513)
Income tax expense was US $ 30,419,779 and US $ 15,654,513 for the years ended December 31, 2006
DQGUHVSHFWLYHO\DQGGLêHUHGIURPWKHDPRXQWVFRPSXWHGE\DSSO\LQJWKHVWDWXWRU\LQFRPH
tax rate to pretax consolidated earnings as a result of the following:
2006
Computed “expected” tax expense
US$
Increase (decrease) in income taxes resulting from:
Exempt and foreign source income
Tax incentives
Change in allowance
Nondeductible expenses
Foreign income taxes rate differential
Income tax expense
US$
2005
47,369,716) 35,252,750)
(21,493,414) (23,806,583)
(168,309)
321,231)
1,364,786) (3,564,206)
7,521,590) 8,336,213)
(4,174,590)
(884,892)
30,419,779) 15,654,513)
46
Informe Anual 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
7HPSRUDU\GLêHUHQFHVEHWZHHQ¿QDQFLDOVWDWHPHQWFDUU\LQJDPRXQWVDQGWD[EDVHVRIDVVHWVDQG
liabilities that give rise to the deferred tax assets and liabilities as of December 31, 2006 and 2005
are as follows:
2006
2005
Deferred tax assets:
Net operating tax loss carryforwards
US$ 1,770,566) 2,235,615)
Allowance for loan losses
6,299,913) 6,273,513)
Deferred loan origination fees and costs
51,926)
393,831)
Accrued expenses
1,521,442) 1,246,253)
Gross deferred tax assets
9,643,847) 10,149,212)
Less-valuation allowance
(4,526,207) (3,161,421)
Total deferred tax assets
5,117,640) 6,987,791)
Deferred tax liabilities:
Net premises and equipment depreciation difference
(3,137,483) (1,876,827)
Allowance for doubt accounts
(485,060)
0)
Unrealized gains on securities available for sale
(324,784)
0)
Total deferred tax liabilities
(3,947,327) (1,876,827)
Net deferred tax assets
US$ 1,170,313) 5,110,964)
The valuation allowance for deferred tax assets as of December 31, 2006 and 2005 was US $4,526,207
and US $3,161,421, respectively.
The net change in the total valuation allowance for the years ended December 31, 2006 and 2005
was an increase of US $1,364,786 and a decrease of US $3,564,206, respectively. In assessing the
realizability of deferred tax assets, management considers whether it is more likely than not that
some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred
tax assets is dependent upon the generation of future taxable income during the periods in which
WKRVHWHPSRUDU\GLêHUHQFHVEHFRPHGHGXFWLEOH
2WKHU&RPSUHKHQVLYH/RVV
At December 31, 2006, subsidiaries of the Bank have incurred in net operating tax loss carry forwards
RI86ZKLFKDUHDYDLODEOHWRRêVHWIXWXUHWD[DEOHLQFRPHRIWKHDSSOLFDEOHVXEVLGLDULHV
if any, through 2015.
The following table presents the components of and changes in accumulated other comprehensive
loss for the years ended December 31, 2006 and 2005:
Foreign
Currency
Translation
Balances as of December 31, 2004
Current year changes
Current year changes
47
Annual Report 2006
US$
(42,921,699)
(10,428,841)
(53,350,540)
(6,953,417)
US$ (60,303,957)
Unrealized
Net Gain
(Loss) on
Securities
999,951)
(1,325,584)
(325,633)
992,795)
667,162)
Accumulated
Other
Comprehensive
Loss
(41,921,748)
(11,754,425)
(53,676,173)
(5,960,622)
(59,636,795)
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
The following table presents details of other comprehensive income (loss) for the years ended
December 31, 2006 and 2005:
Foreign currency translation:
Adjustment for the year
Unrealized gain on securities:
Unrealized holding gains arising during
the year, net of income tax expense.
/HVVUHFODVVL¿FDWLRQDGMXVWPHQWVWRQHW
income for net gains realized
Change during year, net
Other comprehensive loss for the year
US$
US$
2006
2005
(6,953,417)
(10,428,841)
7,629,250)
523,659)
(6,636,455)
992,795)
(5,960,622)
(1,849,243)
(1,325,584)
(11,754,425)
2ê%DODQFH6KHHW)LQDQFLDO,QVWUXPHQWV
7KH%DQNLVDSDUW\ WR¿QDQFLDOLQVWUXPHQWVZLWKRêEDODQFHVKHHWULVNLQ WKHQRUPDOFRXUVHRI
EXVLQHVV WR PHHW WKH ¿QDQFLQJ QHHGV RI LWV FXVWRPHUV 7KHVH ¿QDQFLDO LQVWUXPHQWV LQFOXGH
SULQFLSDOO\FRPPLWPHQWVWRH[WHQGFUHGLW¿QDQFLDOJXDUDQWHHVDQGOHWWHUVRIFUHGLWWKHEDODQFHV
RIZKLFKDUHQRWUHÀHFWHGLQWKHDFFRPSDQ\LQJFRQVROLGDWHGEDODQFHVKHHWV
Letters of credit are conditional commitments issued by the Bank to guarantee performance of a
customer to a third party. Those letters of credit are primarily used to support trade transactions
and borrowing arrangements. Generally all letters of credit issued have expiration dates within one
year. The credit risk involved in issuing letters of credit is essentially the same as that involved in
extending loan facilities to customers.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation
RIDQ\FRQGLWLRQHVWDEOLVKHGLQWKHFRQWUDFW&RPPLWPHQWVJHQHUDOO\KDYH¿[HGH[SLUDWLRQGDWHV
or other termination clauses and may require payment of a fee. The commitments may expire
without being drawn upon. Therefore, the total commitment amounts do not necessarily represent
future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Bank,
is based on management’s credit evaluation of the customer. At December 31, 2006 and 2005, the
Bank had not entered into non-cancelable commitments to extend credit.
As of December 31, 2006 the Bank had outstanding revolving lines of credit available to its credit card
customers in each of the various countries of operation that ranged from approximately US$160
million to US $1,023 million (US $52 million to US $730 million in 2005). The unused portion of the
total amount available in each country, aggregated approximately from US $89 million to US $800
million (US $37 million to US$637 million in 2005). While these amounts represented the available
lines of credit to customers per country, the Bank has not experienced, and does not anticipate, that
all of its customers will exercise their entire available lines at any given point in time. The Bank
generally has the right to increase, reduce, cancel, alter or amend the terms of these available lines
of credit at any time.
Financial guarantees are used in various transactions to enhance the credit standing of the Bank’s
customers. They represent irrevocable assurances that the Bank will make payment in the event
WKDWWKHFXVWRPHUIDLOVWRIXO¿OOLWVREOLJDWLRQVWRWKLUGSDUWLHV
48
Informe Anual 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
The Bank uses the same credit policies in making commitments and conditional obligations as it
does for on-balance sheet instruments. At December 31, 2006 and 2005 outstanding letters of credit
DQG¿QDQFLDOJXDUDQWHHVDUHDVIROORZV
Letters of credit
Financial guarantees
US$
US$
2006
2005
59,018,876
104,075,325
163,094,201
43,332,600
56,887,944
100,220,544
The nature, terms and maximum potential amount of future payments the Bank could be required
to make under the letters of credit and guarantees as of December 31, 2006 and 2005, are detailed
as follows:
Up to 1 year
Over 1 year
US$
US$
2006
2005
147,089,973
16,004,228
163,094,201
86,105,767
14,114,777
100,220,544
Generally, the Bank has resources to recover from clients the amounts paid under these guarantees;
additionally, the Bank can hold cash or other collateral to cover for these guarantees. The assets
held as collateral, that the Bank can obtain and liquidate to recover totally or partially the amounts
paid under guarantees as of December 31, 2006 and 2005, amounted to US $12,485,962 and US
$19,422,029, respectively.
The fair value of the letters of credit and guarantees as of December 31, 2006 and 2005 are of US
$969,509 and US $569,954.
'HULYDWLYH)LQDQFLDO,QVWUXPHQWV
The Bank follows the Statement of Financial Accounting Standards No. 133 (SFAS 133) related to the
DFFRXQWLQJRI¿QDQFLDOLQVWUXPHQWVWKDWDUHFRQVLGHUHGWREHGHULYDWLYHVZKLFKUHTXLUHVWKDWWKHVH
¿QDQFLDOLQVWUXPHQWVEHUHFRUGHGRQWKHFRQVROLGDWHGEDODQFHVKHHWVDWWKHLUIDLUYDOXHLQFOXGHG
LQRWKHUOLDELOLWLHV)RUFRQWUROSXUSRVHVWKHVH¿QDQFLDOLQVWUXPHQWVDUHUHFRUGHGDWWKHLUQRPLQDO
amount (“notional amount”) on memoranda accounts.
In the normal course of business, the Bank uses interest rate derivatives primarily for hedging
purposes in its consolidated balance sheets management activities.
7\SHVRI'HULYDWLYH,QVWUXPHQWV
Derivative instruments negotiated by the Bank are executed mainly over-the-counter (OTC). These
FRQWUDFWV DUH H[HFXWHG EHWZHHQ WZR FRXQWHUSDUWLHV WKDW QHJRWLDWH VSHFL¿F DJUHHPHQW WHUPV
including notional amount, exercise price and maturity.
For purposes of asset/liability activities, the Bank uses the following instruments:
,QWHUHVW UDWH VZDSV DUH FRQWUDFWV LQ ZKLFK D VHULHV RI LQWHUHVW UDWH ÀRZV ZKLFK LQYROYH ¿[HG IRU
ÀRDWLQJLQWHUHVWSD\PHQWVRUYLFHYHUVD7KH%DQNKDVGHVLJQDWHGWKHVHGHULYDWLYHLQVWUXPHQWVDV
freestanding derivatives.
49
Annual Report 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
An interest rate cap is a contract that guarantees a maximum level of LIBOR. Caps are also known as
ceilings. In return for making this guarantee, the buyer pays a premium. Caps generally guarantee a
PD[LPXPOHYHORIHLWKHURUPRQWK/,%25RUZKDWHYHUWKHSUHYDLOLQJÀRDWLQJUDWHLQGH[LVLQWKH
particular market. The client’s maximum loss on a cap transaction is the premium.
7KH IROORZLQJ WDEOH SURYLGHV TXDQWLWDWLYH LQIRUPDWLRQ RQ GHULYDWLYH ¿QDQFLDO LQVWUXPHQWV
outstanding at December 31, 2006 and 2005:
2006
Notional
Amount
Freestanding:
Interest rate swaps
Interest rate cap
US$ 35,000,000
7,000,000
US$ 42,000,000
2005
Fair Value
Assets
Liability
0
30,345
30,345
540,873
0
540,873
Notional
Amount
Fair Value
Liability
7,000,000
0
7,000,000
102,620
0
102,620
&RQFHQWUDWLRQRI&UHGLW5LVN
Concentrations of credit risk arise when changes in economic, industry or geographic factors
VLPLODUO\DêHFWDJURXSRIFRXQWHUSDUWLHVZKRVHDJJUHJDWHFUHGLWH[SRVXUHLVPDWHULDOLQUHODWLRQWR
the Bank’s total credit exposure. The Bank’s loan portfolio is concentrated in the credit card business,
which at December 31, 2006 and 2005, accounts for approximately 32% and 33% of total loans,
respectively. Through the operation of subsidiary banks in Central American countries, however, the
Bank has widened its lending activities, diversifying into other consumer and commercial products.
7KHORDQERRNLVZHOOGLYHUVL¿HGE\HFRQRPLFVHFWRUDQGE\LQGLYLGXDOH[SRVXUHV%\FRXQWU\WKH
largest loan exposures are held in Costa Rica, Guatemala and El Salvador.
'LVFORVXUHVDERXW)DLU9DOXHRI)LQDQFLDO,QVWUXPHQWV
7KHIDLUYDOXHRID¿QDQFLDOLQVWUXPHQWLVWKHFXUUHQWDPRXQWWKDWZRXOGEHH[FKDQJHGEHWZHHQ
willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted
market prices. However, in many instances, there are no quoted market prices for the Bank’s various
¿QDQFLDOLQVWUXPHQWV,QFDVHVZKHUHTXRWHGPDUNHWSULFHVDUHQRWDYDLODEOHIDLUYDOXHVDUHEDVHG
RQHVWLPDWHVXVLQJSUHVHQWYDOXHRURWKHUYDOXDWLRQWHFKQLTXHV7KRVHWHFKQLTXHVDUHVLJQL¿FDQWO\
DêHFWHGE\WKHDVVXPSWLRQVXVHGLQFOXGLQJWKHGLVFRXQWUDWHVDQGHVWLPDWHVRIIXWXUHFDVKÀRZV
Accordingly, the fair value estimates may not be realized in an immediate settlement of the
instrument. Accordingly, the aggregate fair value amounts presented may not necessarily represent
WKHXQGHUO\LQJIDLUYDOXHRIWKH%DQN¶V¿QDQFLDOLQVWUXPHQWV
The following is a description of the methods and assumptions used to estimate fair value of the
PRVWVLJQL¿FDQW¿QDQFLDOLQVWUXPHQWVKHOGE\WKH%DQN
D)LQDQFLDO,QVWUXPHQWVZLWK&DUU\LQJ9DOXH$SSUR[LPDWLQJ)DLU9DOXH
7KHFDUU\LQJYDOXHRIFHUWDLQ¿QDQFLDODVVHWVLQFOXGLQJFDVKDQGGXHIURPEDQNVLQWHUHVWEHDULQJ
deposits with banks, accrued interest receivable and costumers’ liabilities under acceptances, as well
DVFHUWDLQ¿QDQFLDOOLDELOLWLHVLQFOXGLQJVHFXULWLHVVROGXQGHUDJUHHPHQWV WRUHSXUFKDVHDFFUXHG
interest payable, acceptances outstanding and other liabilities, approximate fair value due to the
short term nature of the instruments.
E,QYHVWPHQW6HFXULWLHV
The fair value of investment securities (trading, available for sale and held to maturity) is estimated
EDVHG RQ ELG SULFHV SXEOLVKHG LQ ¿QDQFLDO QHZVSDSHUV RU ELG TXRWDWLRQV UHFHLYHG IURP VHFXULWLHV
dealers. If a quoted market price is not available, fair value is estimated using quoted market prices
for similar securities. Available for sale securities are carried at fair value. Refer to notes 6, 7 and 8
50
Informe Anual 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
for fair value information as of December 31, 2006 and 2005.
F/RDQV
7KHIDLUYDOXHLVHVWLPDWHGEDVHGRQSRUWIROLRVRIORDQVZLWKVLPLODU¿QDQFLDOFKDUDFWHULVWLFV/RDQV
are segregated by type such as commercial, commercial real estate, residential mortgage and
RWKHUFRQVXPHU(DFKORDQFDWHJRU\LVIXUWKHUVHJPHQWHGLQWR¿[HGDQGDGMXVWDEOHUDWHLQWHUHVW
terms, and by performing and non-performing categories. The fair value of performing loans,
H[FHSW UHVLGHQWLDO PRUWJDJH ORDQV LV FDOFXODWHG E\ GLVFRXQWLQJ VFKHGXOHG FDVK ÀRZV WKURXJK
WKHHVWLPDWHGPDWXULW\RIWKHORDQVXVLQJHVWLPDWHGPDUNHWGLVFRXQWUDWHVWKDWUHÀHFWWKHFUHGLW
and interest rate risk inherent in the loan. For performing residential mortgage loans, fair value
is estimated by segmenting loans into homogeneous categories and by reference to quotations
DYDLODEOHLQPDUNHWVZKHUHWKHVHORDQVZHUHWUDGHG)DLUYDOXHIRUVLJQL¿FDQWQRQSHUIRUPLQJORDQV
LVEDVHGRQHVWLPDWHGFDVKÀRZVGLVFRXQWHGXVLQJDUDWHFRPPHQVXUDWHZLWKWKHULVNDVVRFLDWHG
ZLWKWKHHVWLPDWHGFDVKÀRZV$VVXPSWLRQVUHJDUGLQJFUHGLWULVNFDVKÀRZVDQGGLVFRXQWUDWHVDUH
MXGJPHQWDOO\GHWHUPLQHGXVLQJDYDLODEOHPDUNHWLQIRUPDWLRQDQGVSHFL¿FERUURZHULQIRUPDWLRQ
The fair value of loans at December 31, 2006 and 2005 was approximately US $2,794,634,551 and US
$2,103,296,978 (carrying value was of US $2,795,811,338 and US $2,101,805,413), respectively.
G'HSRVLWV
The fair value of deposits with no stated maturity, such as demand, savings, and money market
deposits, is equal to the amount payable on demand as of December 31, 2006 and 2005. The fair
YDOXHRIWLPHGHSRVLWVLVFDOFXODWHGEDVHGRQWKHGLVFRXQWHGYDOXHRIFRQWUDFWXDOFDVKÀRZV7KH
GLVFRXQWUDWHXVHGUHSUHVHQWVWKHLQWHUHVWUDWHVFXUUHQWO\RêHUHGIRUWLPHGHSRVLWVRIVLPLODUUHPDLQLQJ
maturities. The fair value of time deposits at December 31, 2006 and 2005 was approximately US
$1,234,750,876 and US $1,043,536,735 (carrying value of US $1,233,272,255 and US $1,043,982,706),
respectively.
H%RUURZLQJV
The fair value of borrowings was calculated based on the discounted value of contractual cash
ÀRZV 7KH GLVFRXQW UDWH XVHG UHSUHVHQWV WKH LQWHUHVW UDWHV FXUUHQWO\ RêHUHG IRU VLPLODU W\SHV RI
borrowings and remaining maturities. The fair value of borrowings at December 31, 2006 and 2005
was approximately US $543,663,691 and US $406,200,091 (carrying value of US $546,710,873 and
US $409,223,754), respectively.
I2WKHUERUURZHGIXQGV
The fair value of other borrowed funds was calculated based on the discounted value of contractual
FDVKÀRZV7KHGLVFRXQWUDWHXVHGUHSUHVHQWVWKHLQWHUHVWUDWHVFXUUHQWO\RêHUHGIRUVLPLODUW\SHV
of other borrowed funds and remaining maturities. The fair value of other borrowed funds at
December 31, 2006 and 2005 was approximately US $131,588,669 and US $113,055,281 (carrying
value of US $130,288,780 and US $112,985,344), respectively.
J2êEDODQFHVKHHWLQVWUXPHQWV
7KH IDLU YDOXHV IRU RêEDODQFHVKHHW FUHGLWUHODWHG ¿QDQFLDO LQVWUXPHQWV DUH EDVHG RQ IHHV
currently charged to enter into similar agreements, taking into account the remaining terms of the
DJUHHPHQWVDQGWKHFRXQWHUSDUWLHV¶FUHGLWVWDQGLQJ7KHIDLUYDOXHRIWKHVH¿QDQFLDOLQVWUXPHQWVLV
QRWVLJQL¿FDQW
$GPLQLVWUDWLRQRI7UXVW&RQWUDFWVDQG$VVHW0DQDJHPHQW
As of December 31, 2006 and 2005, several of the Bank’s subsidiaries administer and are custodian
of assets which amounted to approximately US $338,345,000 and US $310,049,000, respectively.
&RQWLQJHQFLHV
During2004,TaxAuthoritiesof theRepublicofGuatemalaassessedcertainof theBank’sGuatemalan
51
Annual Report 2006
%$&,17(51$7,21$/%$1.,1&$1'68%6,',$5,(6
subsidiaries an aggregate amount of approximately US $3,300,000 in taxes, not including penalties
DQGLQWHUHVW0DQDJHPHQWRIWKRVHVXEVLGLDULHV¿OHGDSSHDOVZLWKWKH7D[$XWKRULWLHV7KURXJK
the date of this report, the Tax Authorities have revised their assessment to approximately US
$1,204,000, not including penalties and interest. Based on the opinions of tax and legal counsel,
Management believes that the subsidiary companies’ position will prevail with no material adverse
HêHFWRQWKH%DQN¶VFRQVROLGDWHG¿QDQFLDOSRVLWLRQRUFRQVROLGDWHGUHVXOWVRIRSHUDWLRQV
On October 17, 2005, Refco, Inc. (hereafter “Refco”) and many of its subsidiaries, including Refco
&DSLWDO0DUNHWV/WGKHUHDIWHU³5&0´¿OHGIRUSURWHFWLRQXQGHU&KDSWHURIWKH86%DQNUXSWF\
Code in the U.S. Bankruptcy Court for the Southern District of New York. BAC International Bank,
Inc. and one of its subsidiaries have custody accounts at RCM which, at the times referenced above,
held securities with a carrying value of approximately US $16 million. On November 18, 2005, the
%DQN ¿OHG FODLPV DJDLQVW 5&0 LQ WKH 1HZ <RUN %DQNUXSWF\ &RXUW WR UHFRYHU LWV VHFXULWLHV RU LWV
equivalent value. At December 31, 2006, the RCM claims are included in other accounts receivable,
net of reserves, and amount to approximately US $10.7 million.
/LWLJDWLRQ
To the best knowledge of management, the Bank is not engaged in any litigation, which is likely to
KDYHDPDWHULDODGYHUVHHêHFWRQLWVEXVLQHVVFRQVROLGDWHG¿QDQFLDOSRVLWLRQRUFRQVROLGDWHGUHVXOWV
of operations.
5HJXODWRU\0DWWHUV
The banking operations of the Bank are subject to various regulatory requirements administered by
governmental agencies in the countries they operate. Failure to meet these regulatory requirements
can initiate certain mandatory, and possibly additional discretionary, actions by the regulators that,
LIXQGHUWDNHQFRXOGKDYHDPDWHULDOHêHFWRQWKH%DQN¶VFRQVROLGDWHG¿QDQFLDOVWDWHPHQWV,QWKH
opinion of management, at December 31, 2006 and 2005 the Bank’s banking operations were in
compliance with such regulatory requirements.
$VVHUWLRQRQ,QWHUQDO&RQWURO2YHU)LQDQFLDO5HSRUWLQJ
The Public Company Accounting Oversight Board Auditing Standard No.2, An Audit of Internal
Control Over Financial Reporting Performed in Conjunction with an Audit of Financial Statements,
UHTXLUHV WKDW PDQDJHPHQW RI D SXEOLF HQWLW\ PXVW DVVHVV DQG UHSRUW RQ WKH HêHFWLYHQHVV RI LWV
LQWHUQDOFRQWURORYHU¿QDQFLDOUHSRUWLQJ7KH%DQNLVQRWDSXEOLFHQWLW\DQGFRQVHTXHQWO\%DQN¶V
PDQDJHPHQW LV QRW UHTXLUHG WR LVVXH DQ DVVHUWLRQ UHJDUGLQJ LWV LQWHUQDO FRQWURO RYHU ¿QDQFLDO
reporting.
52
Informe Anual 2006
3$1$0$
Calle 43 y Aquilino de la Guardia. Edificio BAC Credomatic
3DQDPi5HS~EOLFDGH3DQDPi
7HO)D[
*HUHQWH*HQHUDO5RGROIR7DEDVK(
$SWGR(O'RUDGR3DQDPi5HSGH3DQDPi
HPDLOFDOOFHQWHU#EDFEDQNFRP
Web: www.bac.net
BAC San José Pensiones
Operadora de Planes de Pensiones Complementarias, S.A.
$YHDHQWUH&DOOH\(GLILFLR/DFKQHU&RVWDGR1RUWHGH
5DGLRJUiILFD6DQ-RVp&RVWD5LFD
7HO)D[
Gerente General: Javier Sancho Guevara
$SWGR6DQ-RVp&RVWD5LFD
Web: www.bac.net
BAC Valores
Calle 43 y Aquilino de la Guardia. Edificio BAC Credomatic
3DQDPi5HS~EOLFDGH3DQDPi
7HORR)D[
Gerente: Antonio Fistonich
BAC San José Sociedad de Fondos de Inversión S.A.
(GLILFLR2PQL3LVR6DQ-RVp&RVWD5LFD
7HO)D[
*HUHQWH$OODQ0DUtQ
Web: www.bac.net
Credomatic de Panamá
3ODQWD%DMD(GLILFLR9DOODULQR&DOOH\$YH(OYLUD0HQGH]
7HO)D[
*HUHQWH*HQHUDO$OHMDQGUR&KDPRUUR
$SWGR3DLWLOOD3DQDPi5HS~EOLFDGH3DQDPi
:HEZZZFUHGRPDWLFFRPSDQDPD
BAC San José Leasing S.A.
&DOOH&HQWUDO$YHQLGDV\6DQ-RVp&RVWD5LFD
7HO)D[
Gerente General: Javier Sancho
Web: www.bac.net
1,&$5$*8$
BAC Nicaragua Centro BAC
.P&DUUHWHUDD0DVD\D0DQDJXD1LFDUDJXD
7HO)D[
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$SWGR0DQDJXD1LFDUDJXD
&RQWDFWRUDIDHOUD#FUHGRPDWLFFRP
Web: www.bac.net
BAC San José Puesto de Bolsa
Avenida 1 era, Calles 3 y .5 Edificio Omni, Piso 7
6DQ-RVp&RVWD5LFD
7HO)D[
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Web: www.bac.net
BAC Valores Puesto de Bolsa
Centro BAC
7HO)D[
*HUHQWH-RUJH5LJXHUR5HFDOGH
Credomatic de Nicaragua
Centro BAC
7HO)D[
Gerente General: Edgar Ahlers Pasos
$SWGR0DQDJXD1LFDUDJXD
Web: www.credomatic.com
&$<0$1,6/$1'6
&DOHGRQLDQ%DQNDQG7UXVW/WG
&DOHGRQLDQ+RXVH'U5R\'ULYH32%R[*HRUJHWRZQ
Grand Cayman, Cayman Islands BWI
7HO)D[
&267$5,&$
BAC San Jose
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Gerente General: Gerardo Corrales
Web: www.bac.net
Credomatic de Costa Rica
Calle Central, Avenidas 3 y 5 Edificio BAC San José
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53
Annual Report 2006
BAC Bahamas Bank Ltd.
1RUIRON+RXVH)UHGHULFN6WUHHW
32%[1DVVDX%DKDPDV
7HO)D[
Gerente: Dave Smith
+21'85$6
BAC Honduras
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$SWGR7HJXFLJDOSD+RQGXUDV
Web: www.bac.net
Credomatic de Honduras
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7HJXFLJDOSD+RQGXUDV
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(/6$/9$'25
Banco de América Central
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7HOO)D[
*HUHQWH*HQHUDO*HUDUGR$5XL]0XQJXtD
$SWGR6DQ6DOYDGRU(O6DOYDGRU
Web: www.bac.net
Credomatic de El Salvador
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7HO)D[
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Inversiones Bursátiles Credomatic
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Banco de América Central
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Guatemala, Guatemala
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BAC Valores, Puesto de Bolsa
$YH=RQD(GLILFLR(O5REOH1LYHO2ILFLQD
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Credomatic de Guatemala
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BAC Florida Bank
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Credomatic of Florida
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BAC Florida Investments
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BAC Global Advisors
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Coral Gables, Florida 33134
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BAC Financial Services, Inc.
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Credomatic de Mexico, S.A. de CV
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Cost of Funds

Transcripción

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