Credito Valtellinese Società Cooperativa a r.l. Registered offices in Piazza Quadrivio 8, Sondrio, Italy Tax Code and Sondrio Companies Register No.

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1 Credito Valtellinese Società Cooperativa a r.l. Registered offices in Piazza Quadrivio 8, Sondrio, Italy Tax Code and Sondrio Companies Register No Registered Bank No. 489 Parent Bank of the Credito Valtellinese Banking Group Registered Banking Group No Internet Address: creval@creval.it Information as of 31 March 2004: Share capital 176,028,405 fully paid-in Reserves 355,484,706 Member of the Interbank Guarantee Fund QUARTERLY REPORT as of 31 March 2004

2 Contents: GROUP STRUCTURE... THE SCOPE OF CONSOLIDATION... FINANCIAL AND ECONOMIC HIGHLIGHTS... CONSOLIDATED ACCOUNTING SCHEDULES AS OF 31 MARCH COMMENTS AND OBSERVATIONS OF THE DIRECTORS REGARDING THE OPERATING PERFORMANCE DURING THE FIRST QUARTER OF PERFORMANCE OF THE CREDITO VALTELLINESE STOCK... SIGNIFICANT EVENTS DURING THE QUARTER... The international economic situation... The evolution of the Group's operating structure... The commercial activities... PattiChiari Project... NOTES ACCOMPANYING THE ACCOUNTING SCHEDULES... THE MAIN CONSOLIDATED BALANCE SHEET AND INCOME STATEMENT AGGREGATES... Total deposits... Loans... Portfolio securities... Shareholders' equity... The economic trend of operations... SIGNIFICANT EVENTS AFTER THE END OF THE FIRST QUARTER OF ORDINARY AND EXTRAORDINARY SHAREHOLDERS' MEETING... SHARE CAPITAL INCREASE CLOSURE... EURO MEDIUM TERM NOTES... COLLABORATION AGREEMENT WITH BANCA POPOLARE DI CIVIDALE... OUTLOOK FOR THE WHOLE YEAR... EXPLANATORY NOTES... FORM AND CONTENT OF THE CONSOLIDATED QUARTERLY REPORT... CONSOLIDATION PRINCIPLES... ACCOUNTING PRINCIPLES... OTHER INFORMATION... 2

3 GROUP STRUCTURE Composition of the Credito Valtellinese Banking Group as of 31 March 2004 CREDITO VALTELLINESE Capogruppo 65,58% 15,50% 39,43% CREDITO ARTIGIANO 43,60% BANCA DELL ARTIGIANATO E DELL INDUSTRIA CREDITO SICILIANO 35,79% 24,44% 63,44% 11,50% 31,23% 100% RILENO APERTA FIDUCIARIA BANCAPERTA 100% CASSA SAN GIACOMO 37,39% 31,29% BANKADATI DELTAS STELLINE 80% 50% 80% 20% 50% 20% TERRITORIAL BANKS SPECIALIST BANKS AND COMPANIES PRODUCTION COMPANIES THE SCOPE OF CONSOLIDATION The main changes concerning the structure of the banking Group which took place during the first quarter of 2004 referred to the increase in Credito Valtellinese s equity investments in Credito Artigiano (+0.54%), as a result of the conversion of the fourth portion of the Credito Artigiano TV convertible subordinated bond, and in Banca dell Artigianato e dell Industria (2.2%), due to the conversion of the fourth portion of the B.A.I. TV convertible subordinated bond. The financial statements of the companies included in the flowchart above are consolidated together with those of the Parent Bank Credito Valtellinese on a lineby-line basis. The company Julius Baer Creval Private Banking S.p.A, is controlled jointly by Credito Valtellinese and by Julius Baer Holding S.A., and is therefore consolidated on a proportional basis. The following investments have been carried at equity: 3

4 - the equity investment in Ripoval S.p.A., concessionary agent for tax collection services in the province of Sondrio, with registered offices in Sondrio; Credito Valtellinese holds 50% of the share capital of this company which totals Euro 2,582,300; - the 40% interest held in the capital of Global Assistance S.p.A., a company operating in the insurance sector, with registered offices in Milan and share capital of Euro 2,583,000; - the equity investment in Global Assicurazioni S.p.A., a company operating in the insurance sector, with registered offices in Milan, in which Bancaperta holds a 40% interest in the share capital equating to Euro 120,000; - the investment Crypto S.p.A., with registered offices in Sondrio and share capital of Euro 120,000, owned via Bankadati S.I. (who holds a 20% interest) and Bancaperta S.p.A. (who holds a 20% interest); - the investment Istituto Centrale delle Banche Popolari Italiane S.p.A., with registered offices in Milan and share capital of Euro 33,148,239, in which Credito Valtellinese holds 22.5% of the voting rights which can be exercised at ordinary shareholders meetings; - the investment Aperta Gestioni S.A., with registered offices in Lugano (Switzerland), in which Bancaperta holds an equity investment of 49% in the share capital amounting to SWF 1,000,000. 4

5 FINANCIAL AND ECONOMIC HIGHLIGHTS BALANCE SHEET (in thousands of Euro) 31/03/ /12/2003 % Change Loans to customers 7,559,100 7,432, % Securities 1,235,274 1,264, % Equity investments 67,649 67, % Total assets 10,489,967 10,240, % Direct deposits from customers (*) 8,993,671 8,699, % Indirect deposits from customers 9,517,622 9,426, % Total deposits 18,511,293 18,126, % Shareholders equity 472, , % (*)Includes the items: 20 Amounts due to customers"; 30 Securities issued"; 40 Public funds administered ; 110 Subordinated liabilities". ECONOMIC/FINANCIAL RATIOS 31/03/ /12/2003 Indirect deposits from customers/ Total deposits 51.4% 52.0% Direct deposits from customers / Total liabilities 85.7% 85.0% Customer loans / Direct deposits from customers 84.0% 85.4% Customer loans / Total assets 72.1% 72.6% LENDING RISK 31/03/ /12/2003 % Change Net non-performing loans (in thousands of Euro) 257, , % Problems loans and loans being restructured, net (in thousands of Euro) 121, , % Net non-performing loans / Loans to customers 3.4% 3.5% Problems loans and loans being restructured, net / Loans to customers 1.6% 1.9% INFORMATION ON EMPLOYEES 31/03/ /12/2003 (thousands of Euro, number of employees at period end) % Change Net interest and other banking income / Number of employees % Total assets / Number of employees 3,500 3, % Payroll and related costs / Number of employees % 5

6 OTHER INFORMATION 31/03/ /12/2003 % Change Number of employees 2,997 3, % Number of branches % Banc@perta users 160, , % INCOME STATEMENT 1st Quarter st Quarter 2003 % Change (in thousands of Euro) Interest margin 65,039 60, % Net interest and other banking income 115, , % Gross operating result 29,255 22, % Gross profit 20,581 13, % Profit for the period 5,893 5, % 6

7 CONSOLIDATED ACCOUNTING SCHEDULES AS OF 31 MARCH 2004 RECLASSIFIED CONSOLIDATED BALANCE SHEET ASSETS 31/03/ /12/2003 % Change Cash and deposits with central banks and post offices 113, , % Amounts due from banks 541, , % Loans to customers 7,559,100 7,432, % Dealing securities 1,189,450 1,216, % Fixed assets: - securities 45,824 47, % - equity investments 67,649 67, % - tangible and intangible assets 274, , % Goodwill arising on consolidation and application of the equity method 97, , % Other asset items 600, , % Total assets 10,489,967 10,240, % LIABILITIES 31/03/ /12/2003 % Change Due to banks 143, , % Direct deposits from customers 8,993,671 8,699, % - of which: subordinated liabilities 251, , % Other liability items 548, , % Provisions for specific allocation 185, , % Minority interests 146, , % Shareholders equity 472, , % Total liabilities 10,489,967 10,240, % GUARANTEES AND COMMITMENTS 31/03/ /12/2003 % Change Guarantees 746, , % Commitments 353, , % Total 1,099,384 1,073, % 7

8 RECLASSIFIED CONSOLIDATED INCOME STATEMENT 1st Quarter st Quarter 2003 % Change Interest income and similar revenues 101, , % Interest expense and similar charges -36,257-44, % Interest margin 65,039 60, % Profit from investments carried at equity and dividends 1,737 1, % Net commission 41,100 34, % Profits on financial transactions 4,398 3, % Other net income (1) 3,127 3, % Net interest and other banking income 115, , % Net administrative expenses -74,526-70, % a) payroll and related costs, net (2) -45,148-43, % b) other net administrative expenses (3) -29,378-26, % Value adjustments on tangible and intangible fixed assets -11,620-11, % Gross operating result 29,255 22, % Net value adjustments to loans and provisions -6,575-7, % Provisions for risks and charges -1, % Net adjustments on financial fixed assets % Profit on operating activities 21,238 14, % Extraordinary loss % Gross profit 20,581 13, % Income taxes for the period -11,920-8, % Change in the reserve for general banking risks -1, % Profit for the period pertaining to minority shareholders -1, % Profit for the period 5,893 5, % (1) Net of the recoveries of other administrative expenses, totalling Euro 4,390 thousand (Euro 3,606 in the 1st quarter of 2003) and of recoveries relating to the staff seconded to other companies, totalling Euro 12 thousand (zero in the 1st quarter of 2003). (2) Write-downs for the recovery of the costs relating to staff seconded to other companies, amounting to Euro 12 thousand (zero in the 1st quarter of 2003) and write-backs for the cost of staff seconded from other companies, amounting to Euro 362 thousand (Euro 48 in the 1st quarter of 2003). (3) Net of the recoveries of other administrative expenses, totalling Euro 4,390 thousand (Euro 3,606 in the 1st quarter of 2003) and the cost of staff seconded from other companies, amounting to Euro 362 thousand (Euro 48 in the 1st quarter of 2003). 8

9 COMMENTS AND OBSERVATIONS OF THE DIRECTORS REGARDING THE OPERATING PERFORMANCE DURING THE FIRST QUARTER OF 2004 PERFORMANCE OF THE CREDITO VALTELLINESE STOCK During the first quarter of 2004, the Credito Valtellinese stock remained between a maximum value of and a minimum value of struck, respectively, on 12 February and 22 March. As of 31 March 2004, the price came to An analysis of the stock s performance during the quarter highlights how it was affected by low volatility, confirming its acyclical nature. The following graphs concern the stock s performance and a comparison with the Comit banking index. Performance of the stock during the first quarter of 2004 Performance of the stock during the first quarter of /12/ /01/ /01/ /01/ /01/ /01/ /01/ /01/ /01/ /01/ /01/ /02/ /02/ /02/ /02/ /02/ /02/ /02/ /02/ /02/ /02/ /03/ /03/ /03/2004 Volume 09/03/ /03/ /03/2004 Prezzo Price 17/03/ /03/ /03/2004 9,2 9 8,8 8,6 8,4 8,2 8 7,8 7,6 25/03/ /03/ /03/2004 Source: Bloomberg, adjusted values 9

10 Performance of the Credito Valtellinese stock compared with the Comit banking index during the first three months of 2004 (base 31 December 2003 = 100) Comparison of Credito Valtellinese Vs. Comit Banking peformance Credito Valtellinese Comit Banking Index /12/ /01/ /01/ /01/ /01/ /01/ /01/ /01/ /01/ /02/ /02/ /02/ /02/ /02/ /02/ /02/ /03/ /03/ /03/ /03/ /03/ /03/ /03/ /03/200 Source: Bloomberg, adjusted values SIGNIFICANT EVENTS DURING THE QUARTER International economic situation The macroeconomic figures published in the last few months emphasise the steady performance of the world economy and confirm the optimism on global prospects. Nevertheless, a widening has been reported in the gap between the situation of the American economy and that of the economy concerning the Euro area and Italy in particular. In the United States, economic activities remain thriving within the framework of a still expansive monetary policy; the modest pick-up in inflation does not give rise to concern at present, while positive signs are starting to be received from the labour market as well. The Euro area remains in a state of relative weakness and the signs of recovery, which had appeared as from the second half of 2003 seem to have diminished. The 10

11 state of the economic cycle is reflected in the Euro area in general and in Italy more strongly in a deterioration in the national accounts and in the emergence of the risk of exceeding the 3% threshold of the deficit/gdp ratio anticipated by the Maastricht Treaty. The monetary policy conditions, which were more firmly expected to be relaxed even further, remained unchanged. Japan continued to send out signs of liveliness and good intonation of the manufacturing activities, sustained mainly by demand deriving from China and the rest of Asia whose growth rate has remained at fairly high levels but also by the acceleration in investments and by the gradual recovery in private consumption, encouraged by a slight improvement on the labour market. In Latin America, the Argentine economy continued to grow at a steady pace, despite the current uncertainty with regards to the negotiations concerning the external debt of the country. In conclusion, even the Central-Eastern European countries maintained an elevated rate of growth during the first few months of 2004, having joined the European Union as of 1 May. The evolution of the Group s operating structure As of 31 March 2004, Credito Valtellinese had a total of 312 branches. The new openings during the first quarter of 2004 concerned, for the Parent Bank Credito Valtellinese, the agency in Lonate Bozzolo (VARESE) and agency No. 3 in Lecco. The subsidiary Credito Artigiano enhanced its territorial coverage in the metropolitan areas where it is present by means of the opening of two branches, located respectively in Milan (agency No. 21) and in Rome (agency No. 13). As of 31 March 2004, the Group s workforce numbered 2,997 employees, essentially unchanged with respect to the situation at the end of December The commercial activities New products The first quarter of the current year saw the launch of the new product Credito Lombard. Conceived for all those who hold an asset management product of the PERSONAL FUND PLUS line with one of the Group Banks, Credito Lombard reconciles the need for obtaining the professional management and effectiveness of one s savings with that of being able to avail at any given moment, without having to divest one s Managed Assets, of a loan proportionate to the capital held. This form of financing which can be used for a set amount once repaid, may once again be utilized without further formalities. The new product sets out to increase the content of the investment solutions proposed by the Group banks, interpreting the customers needs completely and with a high degree of flexibility. 11

12 During the quarter, the activities for the progressive streamlining and enhancing of the bank on-line initiatives continued within the service. In first place among the new implementations, mention should be made of the activation of the functions associated with the share capital increase transaction authorized by the extraordinary shareholders meeting of Credito Valtellinese on 15 November 2003, which permitted the customers to carry out calculation simulations and to participate via Internet in the capital increase itself. Mention should also be made of the participation of the Parent Bank and the subsidiary Credito Artigiano in the organized TLX market, aimed at increasing the operating potential of the customers interested in carrying out on-line transactions on financial instruments, as well as the further development of the functions of the CBI (Corporate Banking Interbancario) product. Activities in the business sector The traditional vocation of the Group concerning the Small and Medium-sized Businesses world, expressed itself during the quarter in the on-going advisory and assistance activities targeted at creating synergies between the ordinary and easy terms financial instruments. This commitment was taken in the direction of the strengthening of the competitiveness of the SMEs in the areas where the Group is present, by means of supporting businesses which are by now consolidated and the promotion of new business development projects. Activities for the drawing up in legal form of new agreements with trade associations also continued at Group level, with a view to acquiring new business relationships to the charge of the associate companies and supporting professional growth in the production segments involved. New operating processes During the quarter, the W2-PEM (Electronic Marketing Procedure) was released, a new applications component created on the WEB which sets out to support the process for the commercial handling of the customers, rationalizing the dealings with the customer and increasing the value of the products portfolio of the Group. The process for the organizational overhaul of the handling of the Marketing commitments was also started up. The new systems of regulation, organized by means of the aid of a new computerized on-line procedure, besides permitting the handling of the more rational sponsoring initiatives, will allow the maximization of the results of the initiatives supported in terms of image return, as well as the historicization of the events and a considerable reduction of the paper-based archives. Bank Insurance By way of completion of the bank insurance strategy continued with success over the last few years, the Credito Valtellinese Group implemented the scheduled introduction of the accident business segment during the first quarter of the year. Via the company in which an investment is held, Global Assicurazioni S.p.A., in fact a new insurance formula entitled Famiglia Sicura was activated. This is an integrated and unit-based product for important insurance coverage, which responds to the primary security requirements of every-day life (home, civil liability, work related and non-work related accidents, health, legal protection, assistance for individuals and vehicles), made available in three different solutions, created in collaboration with leading insurance companies. The proposal avails itself of four formulas (Basic, Silver, Gold and Platinum) which differ essentially due to the entity 12

13 of the maximum insurable amounts. By way of completion of the new insurance range, a new line of financing has been launched, entitled Fidocontinuo Assicurativo, offered by the Group to its customers. The financing, with a duration of one year and with repayment in twelve monthly instalments, is established in relation to the amount of the premium of the formula chosen and makes it possible to split up the related charge over the year of extension of the coverage. The launch of Famiglia Sicura was preceded, again during the first quarter of the year, by the parallel introduction of individual products to cover the risks associated with individuals and assets owned, including Global Attiva, Global Casa and Global Omnia. On the life bank insurance front, the launch of a new index-linked policy was witnessed: Global Orizzonti 4. This product combines the safety of the capital paid in and a minimum guaranteed return with the possibility of benefiting from higher returns in the presence of positive financial market performances. The minimum guaranteed return anticipated equates to 6.50%, paid on maturity, while the additional revaluation is linked to the performance of three primary international stockmarket indices. Managed savings PFP Line The period of the year under review also saw measures from the redefinition of the image and the advertising material relating to the Personal Fund Plus portfolio management instruments, accompanied by intense communication activities concerning the product. Communication activities The third edition of Pleiadi was published, the Quarterly Publication of the Credito Valtellinese Banking Group which sets itself the objective of providing a complete overview of corporate life, in accordance with criteria of maximum transparency and illustrative clarity, as well as of further increasing the areas and the external communication instruments. Pleiadi presented itself to its readers with new graphics and with the usual columns dedicated to the shareholders, to the economic detail, to the illustration of new products and to the description of the cultural, social and charitable initiatives carried out by the Group throughout the territory. PattiChiari Project In its capacity as participant in the Patti Chiari system project furthered by the Italian Banking Association in order to improve relations between the banking sector and Italian society, during the first quarter of 2004 the Credito Valtellinese Group completed the programme of initiatives anticipated within the established timescale. Therefore, the following initiatives were duly launched in consecutive chronological order: Current accounts compared, Standard banking service, Average response times of lending to small businesses, Definite timescales for the availability of sums paid in by cheque. 13

14 NOTES ACCOMPANYING THE ACCOUNTING SCHEDULES In pursuance of the Consob Regulations relating to the drawing up of the quarterly report, the balance sheet information as of 31 March 2004 has been presented on a comparative basis with the respective balances as of 31 December The items and the income statement aggregates relating to the 1st Quarter of 2004 have been presented on a comparative basis with the same period in THE MAIN CONSOLIDATED BALANCE SHEET AND INCOME STATEMENT AGGREGATES Total deposits As of 31 March 2004, direct deposits 1 amounted to Euro 8,993.7 million, compared with Euro 8,699.8 million at the end of 2003, disclosing growth of 3.4%. Indirect deposits from customers, at the end of March 2004, totalled Euro 9,517.6 million, up 1% when compared with the figure of Euro 9,426.3 million at the end of December An analysis of the aggregate of indirect deposits reveals that administered savings amounted to Euro 4,619.5 million (down -0.6% when compared with the Euro 4,648 million reported as of 31 December 2003). Managed savings, comprising mutual investment funds and managed customer assets, came to Euro 4,017.4 million (+ 2.7% compared with the figure at the end of December 2003), while insurancerelated savings reached the Euro million mark, up 1.7% when compared with the balance of Euro million at the end of December At the end of the first quarter of 2004, total deposits amounted to Euro 18,511.3 million as against Euro 18,126.1 million at the end of 2003, disclosing growth of 2.1%. Loans As of 31 March 2004, the total of cash loans granted to customers came to Euro 7,559.1 million, involving an increase of 1.7% when compared with the balance of Euro 7,432.6 million as of 31 December Net non-performing loans as of 31 March 2004 amounted to Euro million, down with respect to the Euro million at the end of The ratio between net non-performing loans and total loans to customers (net of write-downs and write-backs) came to 3.4%, down with respect to 3.5% reported as of 31 December Portfolio securities The aggregate of the securities portfolio as of 31 March 2004 came to Euro 1,235.3 million as against Euro 1,264.4 million at the end of December 2003 (-2.3%). The portfolio is almost entirely represented by dealing securities for Euro 1,189.5 million (more than 96% of the total) and by Euro 45.8 million in investment securities. 1 Includes the items: 20 Amounts due to customers ; 30 Securities issued ; 40 Public funds administered ; 110 Subordinated liabilities. 14

15 Shareholders equity At the end of March 2004, the consolidated shareholders equity of the Group amounted to Euro million, disclosing an increase of 4.4% when compared with Euro million as of 31 December The economic trend of operations The interest margin during the first quarter of the year came to Euro 65 million, up 6.9% compared with the balance of Euro 60.8 million reported in the same period last year. The margin from services, comprising net commission and other net income, amounted during the first three months of 2004 to Euro 44.2 million, involving an increase of 16.8% when compared with the consolidated figure in the same period in In particular, the sum total of net commission came to Euro 41.1 million, up during the first three months of the year by 19.6%. Other net income totalled Euro 3.1 million (- 10.3% when compared with the first three months of 2003). Profits on financial transactions during the three-month period under review amounted to Euro 4.4 million, up 31.6% when compared with the figure Euro 3.3 million during the same period in Net interest and other banking income, the sum total of the interest margin and the margin from services, the profits of companies carried at equity and dividends (Euro 1.7 million) and profits on financial transactions, amounted during the first quarter of 2004 to Euro million, disclosing an increase of 11.4% when compared with the balance of Euro million in the same period a year earlier. During the first quarter of 2004, administrative expenses increased, on the first quarter of 2003, by 6.2%, to Euro 74.5 million. In detail, payroll and related costs disclosed a rise of 4.3%, totalling Euro 45.1 million, while other administrative expenses increased 9.1% to Euro 29.4 million. Value adjustments on tangible and intangible fixed assets amounted to Euro 11.6 million as against Euro 11 million in the first quarter of 2003 (+ 5.3%). The gross operating result during the quarter came to Euro 29.3 million, disclosing an increase of 30.9% when compared with Euro 22.4 million in the same quarter in With the aim of pursuing the prudent policy of containing and covering risks, during the first quarter of 2004 adequate provisions and prudent adjustments were made. In particular, the components relating to the write-downs on loans net of writebacks and to provisions for risks and charges amounted in total to Euro 6.6 million (-13.8% when compared with the same period in 2003). Profit from operating activities during the quarter came to Euro 21.2 million, up 49.7% when compared with Euro 14.2 million during the first quarter of Extraordinary activities (- Euro 0.7 million compared with Euro 0.6 million in the first quarter of 20032) contributed towards determining a gross profit of Euro 20.6 million (+ 51% compared with the same period in 2003). Profit for the period, having deducted current taxation, the change in the reserve for general banking risks and the profit pertaining to minority shareholders, amounted during the period to Euro 5.9 million, disclosing an increase of 8.8% when compared with the same period in

16 SIGNIFICANT EVENTS AFTER THE END OF THE FIRST QUARTER OF 2004 ORDINARY AND EXTRAORDINARY SHAREHOLDERS MEETING On 17 April 2004, the ordinary and extraordinary shareholders meeting of the Parent Bank Credito Valtellinese was held. In extraordinary session, the meeting authorized a project for the amendment of the Articles of Association targeted at up-dating or improving the content matter of certain articles of the Bank s Articles of Association, on a consistent basis with the current legislative framework and with its possible evolution. In ordinary session, in addition to approving the financial statements as of 31 December 2003, the shareholders resolved: - the renewal of the authorization granted to the Board of Directors so that it may proceed, if considered necessary and within the sphere of normal brokerage activities aimed at encouraging the circulation of the stock, with the purchase or the reimbursement of its own shares, as well as the re-allocation or cancellation of the same; - the acceptance of the proposal concerning the application for admittance of the convertible bonds deriving from the Credito Valtellinese 2.8% convertible loan for trading purposes; - the determination of the fee for the members of the Board of Statutory Auditors for the three-year period ; - the re-determination from 12 to 14 of the Board members and the appointment to the office of Messrs. Salvatore Vitali, Angelo Palma, Franco Moro, Maurizio Quadrio, Alberto Ribolla, Marco Santi; - the appointment as members of the Board of Statutory Auditors for the threeyear period of Messrs. Roberto Campidori (Chairman), Angelo Garavaglia and Alfonso Rapella (acting Auditors), Aldo Cottica and Fabiano Garbellini (alternate Auditors). SHARE CAPITAL INCREASE CLOSURE Shareholders are reminded that the extraordinary shareholders meeting of the Parent Bank authorized a transaction on 15 November 2003 in order to enhance the equity; the transaction was divided up into a share capital increase and the issue of a Credito Valtellinese 2.8% convertible bond. In this connection, shareholders are informed that as of 4 May 2004, the transaction was concluded with the integral subscription of the 7,334,516 ordinary shares deriving from the share capital increase and of the 293,380 bonds linked to the convertible loan, for a total equivalent value of Euro 343,988, The new share capital of Credito Valtellinese scarl therefore came to Euro 198,031,953, represented by 66,010,651 ordinary shares with a par value of Euro 3 each. 16

17 EURO MEDIUM TERM NOTES Shareholders are reminded that, in January 2003 the activities were concluded for the realization of the Euro Medium Term Notes (EMTN) issue programme, directed at making a financing policy based on efficient and flexible criteria possible at Group level and aimed at ensuring suitable conditions of equilibrium in the structure of the assets and the liabilities. Credito Valtellinese s, Credito Artigiano s and Bancaperta s participation in the Euro Medium Term Notes Programme made it possible during 2003 to issue two bonds in the name of the Parent Bank on the Euromarket for a total amount of Euro 400 million. Bancaperta, in its role as the sole entity specialized in financial matters for the Group and assisted by partners of elevated international standing, accomplished all the co-ordination, organization and pricing tasks for the two afore-mentioned issues. The afore-mentioned subsidiary, facilitated by the Programme, was therefore able to structure the bonds in question in a considerably simplified manner, involving minor realization timescales and significant savings in terms of interest rates thanks to the satisfactory creditworthiness which Credito Valtellinese enjoys. During the first few days of May 2004, the necessary matters for the review of the Programme in question were finalized, a programme which will permit the issue during 2004 of bonds on the Euromarket for an amount of up to Euro 1 billion. COLLABORATION AGREEMENT WITH BANCA POPOLARE DI CIVIDALE Shareholders are informed that, further to the letter of intention signed in 16 December 2003, on 5 May 2004 the drawing up in legal form of the agreement between Credito Valtellinese and Banca Popolare di Cividale took place; the aim of the agreement involves the development of a far-reaching strategic project between the groups heading up the two banks. Therefore, as of that date the following was carried out: - the subscription and full paying in by Credito Valtellinese of the share capital increase resolved by the shareholders meeting held on 26 April last of Banca di Cividale SpA (a subsidiary bank of Popolare di Cividale heading up the entire sales network of the group), with the consequent undertaking of a shareholding of approximately 22.2% in said bank; - the signing between Credito Valtellinese and Banca Popolare di Cividale of the shareholders agreement intended at regulating the governance structures of Banca di Cividale SpA; - the acquisition by Popolare di Cividale of warrants and convertible bonds deriving from the convertible bond loan of our subsidiary BAI - Banca dell Artigianato e dell Industria, capable of allowing the partner to undertake a shareholding of 17

18 around 4.6% in our subsidiary once the integral exercise of the warrants maturing in May 2004 has taken place; - the signing between the parties of the outline agreement and the shareholders agreements relating to the growth of BAI, within the framework of the project aimed at extending the territorial coverage of said bank in the North East area. The partnership which has been launched will allow our Group to extend its commercial range into geographic areas previously not served, as well as increase the non-captive customer base to which it intends to offer the qualified services provided by the complementary companies of the Group under outsourcing arrangements. OUTLOOK FOR THE WHOLE YEAR Despite the not particularly favourable economic scenario, the first quarter of 2004 closed with results which were entirely in keeping with the budget forecasts. Therefore we believe that the activities of the Group may proceed during the remaining part of the year with positive results, both in terms of operating volumes and economic margins, in line with the forecasts made at the time of annual planning. 18

19 EXPLANATORY NOTES FORM AND CONTENT OF THE CONSOLIDATED QUARTERLY REPORT The consolidated quarterly report as of 31 March 2004 has been drawn up in compliance with the provisions of the Regulations approved by the Consob by means of resolution No dated 14 May The report includes Credito Valtellinese (the Parent Bank) and the companies operating in the lending and finance sector or those which perform, predominantly, activities which are complementary to those of the Parent Bank, companies in which the latter directly holds the majority of the share capital or avails of votes sufficient for exercising a dominant influence during ordinary shareholders meetings. Certain elements of the income statement, whose balances have been stated at the bottom of the accounting schedules, have been reclassified. CONSOLIDATION PRINCIPLES The consolidation principles adopted are those laid down by Legislative Decree No. 87/1992, by the circular of Banca d Italia No. 166 dated 30 July 1992 and subsequent amendments, as well as the accounting principles established by the Italian Accounting Profession in force in Italy. The consolidated quarterly report has been drawn up on the basis of accounting schedules prepared for this purpose by the companies included in the scope of consolidation referring to the date of 31 March ACCOUNTING PRINCIPLES The accounting principles are consistent with those used for the previous year s annual financial statements. Reference should therefore be made to said document for detailed disclosures. Steps were not taken to reinstate the non-liquid portfolio items by settlement value date to the pertinent balance sheet accounts. OTHER INFORMATION The breakdown of the turnover by category of activities and by geographic area is not significant. THE BOARD OF DIRECTORS Sondrio, Italy, Tuesday 11 May