annual report 2017 - bacflorida.com · during 2017, we successfully completed the ceo management...

Looking forward

ANNUALREPORT

2017

OF

PROTECTING, GROWING AND CARINGABOUT PEOPLE’S FINANCIAL FUTURE

CELEBRATING

2 2017 - BAC Florida Bank Annual Report

Table of ContentsMessage from our Chairmen

Message from our President and CEO

Our Vision, Mission and Values

Real Estate Financing

Private Banking and Wealth Management

BAC Florida Investments Corp.

Corporate and Institutional Banking

My eBanc

Celebrating our 45th Anniversary

Risk Management and Compliance

Technology and Business Solutions

BAC in the Community

Our Products and Services

Client Business Lines

Condensed Consolidated Financial Statements

Financial Highlights

Selected Financial Ratios

Executive Team

Board of Directors

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BAC Florida Bank Annual Report - 2017 3

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Message from our Chairmen

Dear Shareholders,Clients and Employees:BAC Florida Bank is celebrating its 45th anniversary since its establishment and 36 years since its acquisition by the Pellas Group. As we celebrate this anniversary milestone, it is gratifying for us to report that during 2017 the Bank delivered another year of solid performance.

BAC Florida’s balance sheet shows strong asset quality and liquidity and the Bank remains well capitalized. Our results present significant growth in our profits, higher return on equity and improved efficiency ratio, all while ensuring that sound and safe banking practices are maintained.

During this anniversary milestone we want to acknowledge our clients, colleagues and shareholders who have been part of the BAC Florida Bank family for so many years.

F. Alfredo Pellas Chairman

2017 - BAC Florida Bank Annual Report

Carlos F. Pellas Chairman

All of our client business divisions consistently contributed to our strong performance and delivered good growth.

During this anniversary milestone, we want to acknowledge our clients, colleagues, board members and shareholders who have been part of the BAC Florida Bank family for so many years. It is thanks to their support and trust, that we continue to grow and deliver strong results.

We are proud to serve and invest in the communities where we operate and contribute to the prosperity and welfare of our neighborhoods. We value and appreciate our partnership with the charitable organizations we work closely with to deliver on our corporate social responsibility.

As we start 2018, we look with optimism to the positive global economic trends, the rapid technological advancements and the considerable opportunities for our clients and the banking industry. We are confident that our robust business fundamentals, risk management culture and the expertise of our team, will enable us to continue to grow, protect and care for the financial future of our clients.

Regards,

Carlos F. Pellas and F. Alfredo Pellas


Julio Rojas President and CEO

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Message from our President and CEODear Shareholders,Clients and Colleagues:During 2017, we successfully completed the CEO management transition and aligned our strategy on four pillars; delivering sustainable growth, a culture of risk management, continuously innovating and achieving diversification by leveraging on our expertise.

We made great progress in delivering in all four strategic pillars and as a result, we had strong financial performance during 2017. Our net operating revenue reached $69.9 million and was up 11.8%, thanks to the solid performance from all our client business lines. Our after-tax profits of $ 17.3 million, representing a growth of 18% from 2016, were supported by strong risk management as evidenced by our robust asset quality and controls. Our focus on innovation, through the digital transformation of the organization, improved our clients’ experience, resulted in a higher return on equity for our shareholders and good efficiency ratio.

The Bank’s liquidity and funding sources remain strong and diversified. Our total capital ratio to risk weighted assets at 14.96% and our Tier One Capital growth at 9.85% are better than the average of our peer group of Banks.

Our commitment to giving back to the community and helping those in need was strong, supported by many colleagues who graciously volunteered their time and our partnerships with many civic charitable organizations.

I want to extend my appreciation to all our colleagues across the BAC Florida Bank family who contributed to the solid financial performance of 2017.


During 2017, we started a hurricane relief program to help low income families impacted by Hurricane Irma, addressing specifi c needs in our local community.

As we enter 2018, we recognize many opportunities to continue to support our clients. We have a proven expertise and track record in the area of Real Estate fi nancing, a sector which continues to attract foreign investment. Our Corporate and Institutional clients continue to benefi t from our trade fi nance and cash management solutions in a growing global economy. By protecting and growing our Private Banking clients’ wealth, we continue to earn their trust and build cross-generational relationships.

Our investment in the Bank’s digital transformation and new technologies such as, artifi cial intelligence and blockchain, will continue to improve our clients’ experience and the productivity of our Banking franchise.

In closing, I want to thank all our clients and colleagues, our Board of Directors and shareholders for their continued support and trust they have shown to BAC Florida Bank.

Regards,

Julio Rojas

BAC Florida Bankis proud to be awarded a 5-Star rating by Bauer Financial Inc., one of the leading bank rating and research fi rms in the United States.

Key success factors of our performance are our values-based culture and dedication to client service.

I want to extend my appreciation to all our colleagues across the BAC Florida Bank family who contributed to the solid fi nancial performance of 2017.


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TO PROTECT, GROW AND CARE ABOUT PEOPLE’S FINANCIAL FUTURE.

The Bank of choice for our clients in:

We have a personalized business approach providing solutions with operational

excellence, upholding the highest ethical principles and regulatory compliance.

• Real Estate Financing

• Corporate and Institutional Banking

• Private Banking and Wealth Management

• Personal, Digital and Commercial Banking

To be the preferred trusted advisor to our

clients for personalized fi nancial services.

VISION MISSION


TRUST: We believe in the attributes of honesty, integrity, reliability and loyalty. We apply them in our daily personal and professional endeavors. RESPECT: We value diff erent viewpoints and respect the opinions of others. Respect for our clients, colleagues, providers, environment and community ensures sustainable success. TEAMWORK: We collaborate to execute plans together, and behave in ways that bring out the strengths of each team member. We are committed to quality, competence and excellence in our execution. We are accountable for our actions and their results. BALANCE: We manage our time for both business and personal success. We are dedicated to developing the full potential of our team and business and giving back to our community. INNOVATION: We embrace change to deliver superior performance. We seek new ways to be more accessible, effi cient and to provide solutions to our clients.

VALUES

Trust Respect

TeamworkBalance

Innovation


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As experts in this investment segment, we consider it critical to remain abreast of current real estate market trends in order to offer our clients the best possible financing options based on their unique needs.

Over the course of the last 25 years, BAC Florida Bank has become synonymous with real estate mortgage lending to high-net-worth foreign nationals in Florida and established itself as one of the most knowledgeable real estate advisors in the state. We believe that assisting our clients in the development and management of a diversified asset portfolio through real estate investments is paramount to their ultimate financial success.

criteria accordingly to deal with potential market fluctuations. Despite these preemptive conservative alterations to its underwriting guidelines, BAC Florida Bank has experienced no slowdown in its growth streak - which has been consistent for the past 8 years – overcoming the downward trend of the residential market to see its real estate loan origination volume increase from *$265 million in 2016 to *$281 million by the end of 2017.

A primary contributing factor to the high residential lending volumes of 2017 was the bank’s expansion of loan originations to encompass the entire state of Florida and the wholesale residential mortgages in the metropolitan New York City area. This expansion began in 2016, when we accurately forecasted slower business growth in South Florida and have adjusted our course accordingly throughout 2017.

Whether intended for residential or commercial use, we are well-equipped to offer financing on a wide array of properties such as; houses, condominiums, office buildings, shopping centers, rental apartment buildings and more.

In 2016, the South Florida real estate market began to encounter a certain degree of stagnation that persisted throughout 2017. While total business volume was unaffected in 2017, market experts have projected a decrease in real estate sales in 2018, based in part on expected growth in the inventory of available residential properties, increased competition, and a fluctuating U.S. dollar.

While remaining optimistic about the long-term outlook of the market, as South Florida continues to attract foreign and domestic capital, we recognize how important it is to be prepared to deal with any market challenges and have adjusted our underwriting


The Bank’s distribution program, which was suspended during the real estate crisis and resumed in 2013, successfully continued in 2017, as we closed asset sales transactions for more than *$70 million. Our asset distribution channel is expected to continue to be a source of revenue in 2018.

We will meet any upcoming challenges and continue to employ a conservative approach to real estate lending risk, so that we can continue serving our clients with the real estate financing solutions they deserve, now and in the future.

*Internal numbers tracked, confirmed and reviewed by BAC Florida Bank using proprietary and third-party systems.

RESIDENTIAL AND COMMERCIAL REAL ESTATE LENDING

The success of this expansion has enabled the Bank to attain substantial geographical diversity in our real estate loan portfolio while reinforcing our position in a niche market like real estate lending to high-net-worth foreign nationals.

Historically, a cornerstone of BAC Florida Bank’s real estate strategy has been the distribution of originated assets. Across the industry, and especially in Florida, the Bank is held in high regard for our mortgage lending expertise. As a result, many financial institutions frequently seek our assistance with market intelligence and loan purchase opportunities. Asset distribution allows us to expand mortgage originations, enhance liquidity, improve earnings ratios, ensure portfolio asset quality and demonstrate proper loan pricing.


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Our Private Banking Division serves the private and commercial banking needs of our clients and integrates seamlessly with BAC Florida Investments Corp. and BAC Global Advisors Inc. to provide investment portfolio solutions as part of a holistic approach to wealth management.

The Private Banking and Wealth Management team of BAC Florida Bank is dedicated to protecting, growing and caring for our client’s fi nancial future.


Private Banking & Wealth ManagementThe division’s strategy is geared toward serving foreign nationals, most of them domiciled in Latin America. Throughout the years, the Wealth Management Division has refined a unique approach to working with and catering to individuals and their affiliated corporations. The combination of our personal service, vast knowledge of Latin American culture and market expertise, enables our executives to provide a unique banking experience earning BAC Florida Bank the reputation of being one of the most highly-regarded institutions in client satisfaction.

Our focus on excellence in building trust, accessibility, and recognized expertise in the management of relationships with foreign nationals has led to our success in creating a client centric culture.

In 2017, the Private Banking Division continued an eighteen-year streak of uninterrupted annual growth. These results have been achieved organically, as the Bank has not engaged in mergers nor in or the purchase of retail deposits.

The division has produced excellent results by providing personalized service through understanding our client’s needs. We have safe and sound banking practices with expertise in BSA/AML regulations applicable to non-resident aliens (NRAs).

We project that 2018 will be a year of continued growth, as many well-known global banking institutions are discontinuing relationships with some of their NRA clients due to the inability to properly manage and provide services to these particular client segments.

As part of our commitment to international clients, the Private Banking Division acts as the driving force behind the bank-wide emphasis on technological transformation. Whether gradually digitizing all processes and services,

implementing mobile and communication applications, or introducing refined systems for the transfer of funds, the division has consistently worked to provide innovative financial solutions to our clients.

BAC Florida’s solid financial performance, robust balance sheet and strong U.S regulatory supervision provides an additional level of assurance for our clients. BAC Florida is an FDIC member bank and its deposits are covered under the FDIC Insurance.

Maria Cecilia Chamorro - VICE PRESIDENT - HEAD PRIVATE BANKING CLIENT RELATIONSHIPS


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This expertise guides our institutional and private wealth clientele towards achieving their goals. Our expertise focuses on our client’s objectives, maintenance of high standards of risk management and regulatory compliance, collectively ensure that the financial needs of our clients are being met.

As we enter 2018, we renew our commitment to serving our clients with high-quality personalized investment services.

BAC Florida Investments Corp.

In the United States, new policies on deregulation and the expectation of tax reform instilled optimism in businesses, consumers, investors, and the markets. Fixed income securities performed well, with most markets delivering strong returns, a result of tightening quality spreads and relatively stable U.S. Treasury rates.

This year, we expect the equity markets to perform well globally, amid better expectations for economic growth, positive effects from the recently enacted US tax reform, stellar corporate earnings, and a continuation of the themes that drove market performance in 2017. With more than 30 years’ experience in the financial industry serving our clients, BAC Florida Investments Corp. is committed to the continued delivery of high-quality investment advice and market intelligence to our valued clients. We offer clients a broad suite of products to facilitate proper asset allocation, including; mutual funds, equity products, structured and derivative securities, cash equivalent and fixed income products. Our fixed income team specializes in LATAM debt markets.

In 2017, we integrated our relationship management approach to our clients business, surpassed our goals, and successfully completed our management transition and strategy alignment under the direction of our new CEO.


Client commitment and a personalized approachto portfolio building is the cornerstone of our investments philosophy.

Ralph Tipple - HEAD, PRIVATE BANKING, WEALTH MANAGEMENT AND INVESTMENTS SERVICES


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Corporate and Institutional BankingThe Corporate and Institutional Banking Division (C&I) is a strategic client business line for BAC Florida Bank.

C&I reported a solid performance during 2017, contributing to the growth in revenues and profitability of the Bank. It was an eventful year for C&I, as our Latin American institutional banking footprint expanded to welcome new clients in the Dominican Republic, and we deepened our Corporate and Institutional relationships in our core market of Central America. During 2017, the Central American economies continued to show positive economic growth as well as most of the South American countries. BAC Florida’s trade finance, cash management and treasury services provided innovative solutions to support our clients allowing them to take advantage of this economic growth and increase their business volumes.

C&I’s emphasis on being the trusted client advisor, allowed us to successfully strengthen existing client relationships and lay the foundation for the development of new, mutually beneficial partnerships. An example of our customized banking approach was the creation of a new product for our institutional client, an interest-bearing Demand Deposit Account, which has contributed to improve clients’ balances while increasing operational efficiency.

Whether serving large corporations in Central America or financial institutions throughout Latin America, the C&I team’s collective experience and market knowledge, enable it to consistently meet the needs of our diverse client base.


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When our clients share their financial needs with us, we listen carefully offering innovative solutions and the personalized service they have come to expect from BAC Florida Bank over the years.”

2018 promises to be yet another exciting year for C&I, as we begin our expansion into the Southern Cone. We will selectively expand our Institutional relationships in Brazil, Chile and Argentina. These are growing and active international markets, where our products and expertise will deliver value to our clients and to the Bank. At the same time, we will continue to deepen our relationships in Central America and the Dominican Republic, leveraging our many years of experience, deep knowledge and long-standing roots in our markets, offering value and insight to our clients.

FELABAN 2017 Highlights

We are more than thankful that you attended BAC Florida Bank’s event at FELABAN We hope you enjoyed the experience.

Maggie Angulo - HEAD, CORPORATE AND INSTITUTIONAL BANKING

BAC Florida Bank Product Seminar Nicaragua 2017

(L to R) Julio Rojas, President and CEO, Maggie Angulo, Division Head C&I

and F. Alfredo Pellas, Chairman of BAC Florida Bank.

(L to R) Carlos Villamizar of BFI, Ana Laura Navarro and Paula Redondo of BAC San José and Antonio Fistonich

of BAC Panama.

(L to R) Hernán Hernández of Global Bank, Marcela Bernat and Giovanna Sinisterra of Banco Aliado, Mariela Arze of Banvivienda

and Luis Castillero of Global Bank.

(L to R) Victor Morillo of BanReservas, Bibiana Lever of BAC Florida Bank,

Maximo Vidal and Melvin Defchamps of BanReservas.(L to R) Maggie Angulo – Division Head C&I of BAC Florida Bank,

Ray Carter – Managing Director of GSTS LLC.Berverly Cubillo – C&I VP, German Merida - Operations Manager and Jorge F. Ramirez, C&I Senior Specialist of BAC Florida Bank


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*Internal numbers tracked, confi rmed and reviewed by BAC Florida Bank using proprietary and third-party systems.

These solutions, ranging from checking accounts to money market and time deposit accounts, empower our clients to prepare for what matters to them most, their fi nancial future.At My eBanc, we care deeply about the fi nancial well-being of our clients. In a display of recognition for our ongoing commitment to their fi nancial security and prosperity, clients have exhibited strong loyalty to our brand, as My eBanc concluded 2017 with a client retention rate of 80%.

1200Clients

49States

$222MMIn Deposits

My eBanc, the digital division of BAC Florida Bank, services clients across the continental U.S., with approximately*1,200 clients in 49 states and over $222 million in deposits. Offering a suite of entirely digital products, My eBanc prides itself on consistently providing optimal online savings solutions to its clients.

*Internal numbers tracked, confi rmed and reviewed by BAC Florida Bank using proprietary and third-party systems.


My eBanc - Digital Division

As such, when our clients share their suggestions, we listen carefully and work diligently to integrate the features and capabilities that will ultimately allow My eBanc to meet and exceed our clients expectations.

My eBanc clients enjoy the fi nest aspects of digital and traditional banking services, provided freedom to manage their funds at their leisure with just the touch of a button, while maintaining easy access to the personalized service our team of experts adeptly provides.

This combination of competitive online products and exceptional service, creates a seamless intuitive banking experience for our customers, and through constant direct contact, enables our team to continually nurture their understanding of the ever-changing needs of our clients.

We refi ned our branding in 2017 and created a website that is more interactive and user friendly. Additionally, we implemented services such as the Money Management Tool, which allows clients to monitor all their accounts across multiple U.S. fi nancial institutions, as well as plan and track their budget. We also continued supporting our customers with services such as Online Check Deposit, Peer to Peer and Interbank Transfers among others.

My eBanc’s future appears bright and encouraging. Our aim is to expand our existing relationships even further in order to fulfi ll the fi nancial needs of our clients more comprehensively. We also plan on building new strategic relationships by partnering with external organizations that will enable us to offer a wide array of new fi nancial products and services in addition to those we currently offer. We will continue to innovate as we strive to accomplish our central goal of being the preferred trusted advisor to our clients.

Moving forward in 2018, My eBanc will join efforts with our domestic business creating a single division within BAC Florida Bank. This new division will be made up of three distinct lines of business – Personal, Digital and Commercial. These distinct businesses reporting to one division will allow us to proactively grow and serve our client base, both on-line throughout the U.S. and in our local community where we have a physical presence.

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CALL 305.789.7000 LIVE CHAT DOWNLOAD APP

www.myebanc.com

Confidentiality Note: This e-mail is intended only for the person or entity to which it is addressed and may contain information that is confidential or otherwise protected from disclosure. Dissemination, distribution or copying of this e-mail or the information herein by anyone other than the intended recipient, or by an employee or agent responsible for delivering the message to the intended recipient, is prohibited. If you have received this e-mail in error, please notify us immediately (telephone 305-789-8000 or e-mail [email protected]) and destroy the original message and all copies. Finally, please be advised that the confidentiality of electronic communications cannot be guaranteed. When communicating with us by electronic means, we ask that you do not include sensitive, private or confidential information, such as passwords, account numbers, social security and other identifying numbers,

instructions requiring authorization or similar information.

Disclosures: Investment products offered by BAC Florida Investments, a subsidiary of BAC Florida Bank ®, are not FDIC insured; these products are not a deposit or other obligation of or guaranteed by BAC Florida Bank ® or any federal government agency. These products are subject to investment risk and may lose value. BAC Florida Investments Corp. is a

registered broker-dealer, and member of FINRA and SIPC.

WWW.MYEBANC.COM • 169 MIRACLE MILE • CORAL GABLES, FL 33134 • 305.789.7000 TEL • 305.374.1402 FAX


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Celebrating our 45th Anniversary Our HistoryBAC Florida Bank was originally established by Popular Bankshares (a subsidiary of Popular Bank of Puerto Rico) as Popular Bank of Hialeah in October, 1973, later changing its name to Popular Bank of Florida in October, 1979. It remained a small local community institution, until Grupo Pellas and other Latin American investors bought all the outstanding shares in March, 1982. The Pellas Group, holdings at that time Included the BAC Credomatic Financial Network in Central America and Panamá, established in 1952.

The objective of the original investor group was to immediately expand and diversify the bank’s traditional lines of business, as well as to raise its profi le. In order to achieve the objectives, the bank soon moved its headquarters to Brickell Avenue to take advantage of its investors support by attracting and referring business, particularly deposits, from their vast network in Latin America. In 1986, a U.S. broker dealer was founded, named BAC Corp Securities (later renamed BAC Florida Investments) in order to provide all affi liates with the capability to offer investment products in the U.S.

In order to take the institution to a higher level of excellence, a niche strategic direction was set retrenching from local retail activities and refocus on serving the needs of affl uent International clients. To that end, in 1991, it expanded its cross-border trade fi nance and correspondent banking efforts, as well as building its International Private Banking services which included deposit gathering from Latin American nationals.

In 1992, a pioneering decision was made to start a program for the real estate mortgage fi nancing of properties in South Florida bought by high net worth foreign nationals and, in time, became the recognized leader in this activity. In 1999, the Bank formally changed its name to BAC Florida Bank, and aligned its branding strategy with BAC Credomatic Financial Network, until the controlling group partially sold the Central America fi nancial Network in 2005 and fi nished selling its interest in 2010.

“As we commemorate our 45th anniversary we honor our father and uncle for their vision and leadership in establishing BAC Florida Bank.”


Testimony to BAC Florida’s real estate expertise and conservative underwriting standards, is the satisfactory manner the Bank managed the 2008 real estate crisis, remaining profi table throughout this national economic decline. Thanks to the quality of its borrowers, the ample loan to value ratios and management’s expertise, the bank weather well this historic real estate crisis.

Since 2002, BAC Florida Bank has been located in its present headquarters in the City of Coral Gables and continues to focus on serving its clients for its international and domestic banking needs. The latest strategic initiatives undertaken by BAC Florida Bank have been geared to redouble efforts to digitize all processes, introduce the most advanced systems, and provide additional value added through much improved points of contact with clients. One of these initiatives was the bold decision to create a virtual or direct banking division, Myebanc, for domestic clients from all the different states of the nation, which has allowed the Bank to leapfrog and avoid the traditional avenues for growth and diversifi cation through expensive investments in physical branches.

ALBERTO CHAMORRO1927 - 2017

“As we commemorate our 45th anniversary we honor our father and uncle for their vision and leadership in establishing BAC Florida Bank.”

ALFREDO PELLAS, SR.1918 - 2015

Carlos F. Pellas and F. Alfredo Pellas - Chairmen of BAC Florida Bank

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We are proud to celebrate our 45 years of supporting and caring for our clients, helping our communities and enabling the personal growth and professional development of our colleagues.

PROTECTING, GROWING AND CARINGABOUT PEOPLE’S FINANCIAL FUTURE

YEARSYEARS


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The Bank’s Risk Management protocols are designed to seamlessly fit into every aspect of the Bank’s products, services and culture with the primary objective of safe guarding our clients as well as our clients’ trust. David Hernandez - CHIEF RISK OFFICER


Risk Management and Compliance

prior to an adverse condition or event that can cause harm to the Bank or its clients. These indicators are analytical tools that are critical to the understanding of risk and the protection of our clients’ assets.

Risk Management uses historical information, identifies current exposures and analyzes environmental factors to determine potential risk or financial detriment. The Bank’s risk management program aligns itself with the various business lines and operational managers to modify protocols, procedures and practices in order to enhance internal controls on an ongoing basis. The risk management governance protocols require oversight from the Board of Directors and a series of board committees assessing risk, modifying Bank policy and ensuring a strong regime of internal controls.

Accordingly, the Bank’s Risk Management program uses guidance from U.S. banking regulators, a deep understanding of the products, services and geographies we serve, and a culture of risk clarity to ensure the continued successful implementation of risk management strategies and the safety and security of our clients.

Safety and security used to be demonstrated by large impregnable vaults located at every Bank branch that can be seen from the street. Today, a Bank maintains the security of its clients by what is often not seen. At BAC Florida Bank, we understand the trust that our clients place in us, and we take that trust very seriously by emphasizing Risk Management in all business offerings, products, services, and most importantly, our culture.

Risk Management is transparent to our clients; however, it is part of every touch point, document and transaction.

The Risk Management function encompasses different areas of expertise through an enterprise-wide approach. From Cyber & Information Security and Regulatory Compliance to a strong Credit Risk Management culture and a well-established Anti Money Laundering (AML) regime, the Bank is considered to be a “specialist” in the geographies we serve. This specialty provides our clients with access to the U.S. financial system, while also ensuring we protect the system’s integrity and strength.

We are committed to upholding the highest of standards of Regulatory Compliance, maintaining an open and collaborative communication with our regulators and setting robust policies and controls supported by continuous training for our staff and clients. Through well-established independent testing programs, we reinforce our standards and continually improve. The Risk Management program is forward-looking and integrated into all business and support functions, as is a strong culture of governance and compliance.Using “key risk indicators,” the Risk Management team looks to identify risk


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the freedom to manage their finances with ease, whether categorizing their transactions across linked accounts or even maintaining a budget based on their personal financial goals. Elsewhere, the Bank also considerably revamped the remote check deposit system, making it even easier for our clients to securely deposit checks from their mobile devices.

Looking to the future, we are engaged in several projects in the areas of artificial intelligence and blockchain technology that will bring innovative solutions in the areas of security, payments, smart contracts, and transfers. In 2018, we are focusing on payments and client identification. We believe that the combination of blockchain technology and artificial intelligence will expedite transaction settlement and equip our clients with competitive advantages due to the heightened efficiency and cost-effectiveness with which we can deliver payment solutions.

The future is bright, and the possibilities are endless. As we continue to work diligently to improve our efficiency, our focus remains on delivering innovation and best-in-class solutions that empower our clients to access their Bank anytime, anywhere, for all of their financial needs.

TECHNOLOGY AND BUSINESS SOLUTIONS

BAC Florida Bank has a strong tradition of excellence in customer service, and our approach to technology and innovation builds and expands upon this enduring legacy. We empower our clients by enabling them to access comprehensive online solutions through desktop and mobile applications, striving to constantly enhance their experience by optimizing existing features and working tirelessly to introduce helpful new financial tools.

In early 2016 and with a concentration on the mobile sphere, the Bank embarked on a project to completely overhaul its internet banking offerings. The outcome of this initiative was the implementation of a robust platform that allowed our clients to engage with products and services more effectively than ever before. As a result, the BAC Florida banking interface now consistently provides clients with the flexibility and ease of use they demand from their online banking service, no matter the channel.

In 2017, BAC Florida Bank continued to innovate in order to offer clients valuable financial solutions. A new personal finance management tool was made available to all clients at no additional cost, granting them access to a consolidated view of accounts held at BAC Florida Bank and any other US-based financial institutions. Clients now have


In today’s fast-paced world, it is important that we provide our clients with the ability to Bank at anytime and from anywhere.

Adilson Araujo - CHIEF INFORMATION OFFICER


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Brittany Perets - SENIOR COMMUNITY DEVELOPMENT MANAGER, AMERICAN CANCER SOCIETY

I extend my sincerest gratitude to BAC Florida Bank as a sponsor and top fundraising team. We would also like to thank its dedicated employees for their impassioned support of the Making Strides Against Cancer Event in Miami! We are truly grateful that BAC Florida Bank has embraced this event and our cause so strongly, helping our community to raise more than $412,000, just in 2017 locally, to help the American Cancer Society save lives from breast cancer.

Community involvement is a commitment deeply rooted in our heritage and is an important and fundamental principle of BAC Florida Bank.

We are privileged to serve some of the most diverse, vibrant, urban communities in the country. Through our relationships with affordable housing organizations, economic revitalization groups and local and national nonprofits, we are designing solutions that help enrich and further grow the communities in which we operate.

BAC in the community

We are proud of our past accomplishments and will continue to strive to improve the lives of the residents in our communities. We are committed to creating meaningful social change through our philanthropic work and provide the individuals in our communities affordable housing, equal education, affordable health care, economic development resources and opportunities to revitalize/stabilize our neighborhoods.

In 2017 alone, various colleagues and Directors of the Bank undertook leadership roles with 39 charitable and civic organizations throughout the communities we serve. Our dynamic colleagues donated their time, skills and expertise concerning business strategies, financial management, human resources, internet technology, legal and marketing consulting.

In the aftermath of Hurricane Irma, BAC Florida Bank set up a relief program to address the needs of the low-moderate income individuals in the hurricane affected areas of Miami-Dade and Broward Counties. This led us to design a Hurricane Relief Loan Program; a temporary 24-month, zero percent (0%) interest


(L to R) Curt Schaeffer- Chairman Global Advisory Council of APROQUENJimmy Rosales - Patient Ambassador, Vivian Pellas - Founder and

President of APROQUEN, Karen Hoyos - Guest Speaker,Dr. Statfford Broumand - Global Advisory Council Member of APROQUEN,

Marc Stanley - Global Advisory Council Member of APROQUEN

Natalia Wong - EXECUTIVE DIRECTOR, THE WOW CENTER

BAC Florida Bank has been a WOW community champion for 10 years. Their generosity has expanded from sponsoring our Fashion Show events annually to monthly contributions to our Good Samaritan program. The annual Fashion Show sponsorship has led to WOW’s expansion efforts of opening a new facility to provide programming for an additional 100 individuals. The Good Samaritan donations allowed The WOW Center’s Aktion Club to purchase pantry items in order for over 200 individuals at WOW to make over 3,000 meals for the homeless. After so many years of continuous support, we are definitely WOW because of YOU!

Our 45 years of success are directly connected to the success of our valued clients, esteemed colleagues and the communities we serve.

unsecured loan program, to meet the needs of individuals in our community who experienced financial stress and unexpected expenses due to this catastrophic storm. The Bank partnered with Catalyst Miami’s Prosperity Division to help identify the individuals and families in dire need of these funds and provide support to manage this relief loan program.

For the benefit of burned children and to raise awareness of this health problem, the Association Pro Niños Quemados de Nicaragua (Aproquen), a non-profit organization, held its first fund raising event in the United States on February 9th, 2017. BAC Florida Bank sponsored Aproquen’s U.S. debut which was attended by several guest donors from Washington, New York, California, Florida and Maryland.

On December 2nd, 2017 the American Nicaraguan Foundation (“ANF”) held its 25th anniversary gala for the first time in Nicaragua. The Gala raised funds to benefit the fight against poverty in the neediest sectors of Nicaragua. BAC Florida Bank was a contributor to this worthy cause. ANF is a non-profit organization founded in 1992 whose mission is to promote opportunities, self-sufficiency and self-worth to the underprivileged in Nicaragua.

Anne Lehner-Garcia - VICE PRESIDENT, MANAGER REAL ESTATE LENDING AND CRA OFFICER

VIOLETA FIALLOS OF BAC FLORIDA BANK WITH ANF IN 2017

2017 LAUNCH EVENT OF APROQUEN ASSOCIATION IN MIAMI


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Our Core Engagement Initiatives

1 3

2

4

Empowering People Through Education

BAC Florida Bank is a strong champion of educational initiatives and has positioned itself to partner with organizations that empower at-risk students in our communities through programs which improve the quality of education and enhance the students’ opportunities for access, advancement, achievement and personal development. Our Education-based alliances include Breakthrough Miami, City Year Miami, The Education Fund, Miami Dade College Foundation, the STEM Education Coalition and Step Up for Students.

New Alliances

In 2017 we forged three new pertinent relationships with organizations that provide charitable services to our underserved low-moderated income communities; Catalyst Miami, People Acting for Community Together (PACT) and La Casita Foundation. In 2018 we will have the privilege of working with these three new community champions to further our philanthropic efforts.

Cultivating Community Development and Affordable Housing

BAC Florida Bank has created partnerships and supported organizations that target economic growth and make affordable housing available in low - moderate income neighborhoods. Our Community Development partners include Broward Alliance for Neighborhood Development, Community Reinvestment Group LC, Neighborhood Lending Partners, New Equity Partners, Inc. and Rebuilding Together Miami-Dade.

Social Change and Philanthropic Endeavors

BAC Florida Bank recognizes the importance of working together with nonprofit organizations in collaborative ways to address social issues that include; developmental disabilities, child abuse, healthcare, arts and culture, and economic development. We have forged community bonds for positive change with Actors Playhouse Children’s Theater, American Cancer Society, Americans for Immigrant Justice, Center for Autism & Related Disabilities, Coral Gables Chamber of Commerce, Corpus Christi Social Service Center, Greater Miami Chamber of Commerce, Juvenile Diabetes Research Foundation, Kristi House, Liga Contra El Cancer, Saint John Bosco Clinic, the Toys for Tots Foundation and The WOW Center.


Jennifer S. Pena - CHIEF ADMINISTRATIVE OFFICER, KRISTI HOUSE, INC.

“BAC Florida Bank has been a valued corporate partner of Kristi House’s Children’s Advocacy Center for over a decade.BAC Florida Bank is our longest standing and most committed sponsor of our annual Breaking the Silence event. We are incredibly proud to call BAC Florida Bank our partner and friend in serving Miami’s most vulnerable children.”

Berta Cabrera - MS, EXECUTIVE DIRECTOR, ST. JOHN BOSCO CLINIC

“St. John Bosco Clinic congratulates BAC Florida Bank on it’s 45th anniversary. We are grateful for the many years of partnership in caring for our Miami-Dade community. With your support and commitment, you help ensure that St. John Bosco Clinic continues to be a presence providing access to health care for the uninsured and underserved.“

Keith Fletcher - EXECUTIVE DIRECTOR, CITY YEAR MIAMI

“The BAC Florida family has been a tremendous partner that has accelerated the growth and the impact of City Year Miami. Moving beyond “checkbook philanthropy”- an expression of their true belief in community partnership- working with BAC Florida is true engagement. Beyond their financial investment, BAC Florida Bank conducts supply drives to benefit some of the most fragile families across the full geography of the county, volunteers their sweat equity for community transformation projects and provides in-depth leadership and professional trainings to our corps members and staff. It is clear to me that BAC Florida Bank values the fundamental belief that magic happens through selfless partnership and production.”

ACTORS’ PLAYHOUSE APPRECIATION AWARD(L to R) William Castano, Branch Manager

Barbara S. Stein, Executive Producing DirectorDr. Lawrence E. Stein, Founder and Chairmanof Actors’ Playhouse and receiving the award,

Rod Petrey, Board Director of BAC Florida Bank.Photo courtesy of Actors’ Playhouse.

2017 Community Highlight

BAC FLORIDA BANK UNIFORM GIVEAWAY Laura C. Saunders Elementary School in Homestead

STEP UP FOR STUDENTS RAISING STARS AWARDS Anne Lehner-Garcia, BAC Florida Bank’s CRA officer presenting the 2017 award.

AMERICAN NICARAGUAN FOUNDATION (ANF) BAC Florida Bank Executive Team

at the 2017 ANF Gala.


32


Residential Mortgages Commercial Mortgages

Our Products and ServicesWe specialize in an array of financial products and services for all your banking needs.

Deposit Accounts and Services

Checking and Savings Accounts Money Market Accounts Interest Bearing Accounts Time Deposits Multi Currency

Denominated Accounts Debit Cards

Treasury Services

Cash Management Domestic and International

Wire Transfers Foreign Exchange Remote Deposit Capture Bill Payment Services Positive Pay Services Automated Clearing House

(ACH) Transactions


*Investments Products

Fixed Income Products Equity Products Alternative Investments Structured and Derivative Products Cash Equivalents

Online Banking

“AmeriTransfer” Statements and Transactions “Wires on Line” Electronic Bill Payment Mobile Banking with Check Deposit “WiresDirect” Money Manager Tool

Trade Finance

Commercial Letters of Credit Standby Letters of Credit Import and Export Financing Structured Trade Finance

/Export Credit Agencies Documentary Collections

Credit Products

Institutional and Corporate Lines of Credit Cash Collateral Loans Syndicated Loans Working Capital Loans Ex-Im Bank Facilities Credit Cards

* Investment Products offered by BAC Florida Investments, a subsidiary of BAC Florida Bank, are not FDIC insured and are not a deposit or other obligation of or guaranteed by BAC Florida Bank or any federal government agency. These products are subject to investment risk and may lose value.

Client Business LinesReal Estate Financing

Corporate and Institutional Banking

Private Banking, and Wealth Management

Personal, Digital and Commercial Banking


34

CondensedConsolidatedFinancialStatements


ASSETS 2017 2016

Cash and Due from Banks $286,770 $316,908

Securities $115,043 $72,021Total Loans $1,643,352 $1,522,348 Allowance for Loan Losses $16,641 $19,054

Other Assets $62,464 $62,188

TOTAL ASSETS $2,090,988 $1,954,411

LIABILITIES AND STOCKHOLDERS’ EQUITY

Total Deposits $1,709,466 $1,568,257

Federal Home Loan Bank Advances and Other Borrowed Funds $186,655 $205,099

Other Liabilities $15,009 $17,144

TOTAL LIABILITIES $1,911,130 $1,790,500

Total Equity $179,858 $163,911

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $2,090,988 $1,954,411

Condensed Consolidated Statement of Financial ConditionAs of December 31

Figures in thousands


36

Condensed Consolidated Statement of Income

2017 2016

Interest and Dividend Income $73,378 $64,674

Interest Expense $16,457 $15,468

Net Interest Income $56,921 $49,206

Non-Interest Income $13,068 $13,382

Net Operating Revenue $69,989 $62,588

Provision for Loan Losses $1,570 $3,371

Personnel and Management Expenses $21,520 $21,278

Occupancy and Equipment Expenses $2,613 $2,704

Other Operating Expenses $12,306 $12,006

Non-Interest Expense $36,439 $35,988

Total Expenses $38,009 $39,359

Income Before Non-Controlling Interest and Taxes $31,980 $23,229

Income Tax Expense $14,618 $8,552

Net Income $17,362 $14,677

Less: Net Income Attributable to Non-Controlling Interest $7 $1

Net Income Attributable to BAC Florida Bank $17,355 $14,676

For the period ended December 31

Figures in thousands


Financial HighlightsAs of December 31 or for the year then ended

2013

$1,4

24

$1,6

11

$1,7

73

$1,9

54

$2,0

91

2015

2014

2016

2017

2013

$122

$134

$147

$164

$180

2015

2014

2016

2017

2013

$1,11

5

$1,2

67

$1,3

87

$1,5

22

$1,6

43

2015

2014

2016

2017

2013

$1,0

93

$1,2

76

$1,4

22

$1,5

68

$1,7

09

2015

2014

2016

2017

2013

$7,8

21

$10,

777

$12,

701

$14,

676

$17,

355

2015

2014

2016

2017

ASSETS(In millions)

CAPITAL(In millions)

LOANS(In millions)

DEPOSITS(In millions)

NET INCOME(In thousands)


38

68239n7116841n671212+5+4n

5030164nFederal Home Loan Bank Advances

Overnight Corporate

Repurchase Agreements

Securities Sold Under Agreements

to Repurchase

Financial Highlights

Saving, NOW and Money

Market Accounts 4%

Other Deposits

Non-Interest Bearing Demand Deposit Accounts

DEPOSITSLOANS

5%

67%12%

Collateral Mortgage Obligations

U.S. Treasury and Agencies

Mortgage Backed

Securities

Corporate Bonds

INVESTMENTS OTHER BORROWED FUNDS

As of December 31, 2017

Institutional Banking

Residential Real Estate

Corporate Banking

Commercial Real Estate

1%

Other Loans

Time Deposits

16%

30%

50%

12%

68%

23%

9%

71%

16%

8%4%

Other Securities

4%


Net Income to Average Assets

(ROAA) (%)

Net Income to Average Equity

(ROAE) (%)

Non Current Loans + OREO to Loans +

OREO (%)

Source: Federal Financial Institutions Examination Council (FFIEC): Uniform Bank Performance Report, December 31, 2017 (as published on 02/20/18)*Peers: State of Florida average for Banks with assets greater than $1 billion and less than $3 billion, as of December 31, 2017

BAC

10.0

7

7.42

PEER

S*

BAC

0.68 1.1

0PE

ERS*

Efficiency Ratio

(%)

Total Capitalto Risk Weighted

Assets (%)

Tier One Capital Growth

(%)

BAC

14.9

6

14.6

2PE

ERS*

BAC

9.85

8.59

PEER

S*

BAC

52.6

4

67.2

8PE

ERS*

BAC

0.87

0.70

PEER

S*

SelectedFinancial RatiosAs of December 31, 2017 or for the year then ended

KEY HIGHLIGHTS1. Solid Returns2. Superior use of resources3. Strong asset quality4. Satisfactory capital levels


40

Executive Team

JULIO ROJAS President and CEO

LINA ACUÑA Chief Financial Offi cerand Treasurer

MAGGIE ANGULOHead Corporate and Institutional Banking

ADILSON ARAUJOChief Information Offi cer

ANA MARIA GARCIAHead Human Resources

JEFF GROSSHead Real Estate Finance

DAVID HERNANDEZChief Risk Offi cer

GONZALO A. ACEVEDOHead Personal, Digital and Commercial Banking

ANNA M. PANNELLAGeneral Counsel

RALPH TIPPLEHead Private Banking,Wealth Management and BFI

GERMAN MERIDAChief Operations Offi cer


Board of Directors

CARLOS F. PELLASDirector and Chairman

F. ALFREDO PELLAS Director and Chairman

FRANK D. ROBLETODirector

AGUSTIN J. ABALODirector

OSCAR BUSTILLODirector

R. BRUCE CUTHBERTSONDirector

RUBEN DIAZDirector

LUIS PARAJONDirector

RODERICK N. PETREYDirector

FERNANDO A. TAMAYODirector

JULIO ROJAS Director

SUSAN AMATDirector


Success in the marketplace starts with success in the workplace; it is because of our talented colleagues and diverse culture that our future looks bright.

Ana Maria Garcia- HEAD, HUMAN RESOURCES

BAC Florida Bank169 Miracle MileCoral Gables, FL USA

+ 01-305-789-7000info@bacfl orida.comwww.bacfl orida.com

Thank you.

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