Helgeland Sparebank, Provisional Financial Statements at the end of the 4th Quarter 2007

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2 Helgeland Sparebank, Provisional Financial Statements at the end of the 4th Quarter 2007 The Highlights of 2007 (comparative figures for full-year 2006) Pre-tax profit NOK 244 (159) million Net interest income 2.34 % (2.27 %) Return on equity 14.8 % (10.0 %) Result per PCC NOK 26.2 (17.0) Cost-income ratio 51.6 % (56.1 %) Losses on loans, guarantees, etc. NOK 9 (14) million 12-month increase in lending 11.4 % (6.8 %) 12-month increase in deposits 7.5 % (10.8 %) Deposit-to-loan ratio 62.6 % (64.3 %) Profit performance in 2007 The achieved historically high profits in The posted a pre-tax consolidated profit of NOK 244 million, which is NOK 85 million up on In addition to sound ordinary activities with increased net income from interest and credit commissions, the profit is also a result of a considerable capital gain on the sale of shares in the first quarter The s annualised return on equity increased from 10.0 % in 2006 to 14.8 % in Net income from interest and credit commissions (net interest income) Net interest income totalled NOK 313 million at 31 December 2007, which is an increase of NOK 27 million compared with Net interest income as a percentage of average total assets was 2.34 %, compared with 2.27 % at 31 December Despite tough competition and pressure on lending margins, the Bank maintained its high level of net interest income. Net interest income has been boosted by frequent increases in Norges Bank s key interest rate. A healthier portfolio with a reduction in bad debts and non-performing loans has also contributed to the increase in net interest income. Net income from credit commissions Net income from credit commissions has continued to rise and grew by NOK 8 million compared with Net commission income as a percentage of average total assets was 0.53 % compared with 0.50 % for The increase in income from banking services derives from the sale of non-life and life insurance, savings products and payment transmission services. The Bank does not sell complicated or loan-financed savings products in its product portfolio. Net change in value of financial instruments Income earned on financial instruments totalled NOK 30 million. Of this sum, NOK 29 million was a capital gain on the sale of shares in the first quarter Income from investments in associates Income from investments in associates totalled NOK 36 million, of which NOK 15 million was income from the sale of shares in associates in the first quarter Other operating income Other operating income was NOK 7 million, which is 0.05 % of average total assets. As there were fewer companies in the in 2007, other income has declined compared with Operating expenses Total operating expenses were reduced by NOK 2 million from 2006 and totalled NOK 204 million. The Bank saw an increase in IT and pension costs in 2007, while employer s national insurance contributions were down by approximately NOK 5 million, as the result of a cut in the rate of employer s NICs from 11.7 % in 2006 to 5.1 % in Total operating expenses as a percentage of income (excluding foreign exchange gains) was 51.6 %., while operating expenses as a percentage of average total assets was 1.52 %, compared with 1.64 % in Bad debts and non-performing loans Losses on loans and guarantees totalling NOK 9 million were charged as expense, which is NOK 5 million less than for There was a significant decrease in bad debts and non-performing loans, which have fallen by NOK 66 million since yearend 2006 and by NOK 50 million in the third quarter Net non-performing loans at 31 December 2007 totalled 0.8 % of gross lending. Balance sheet development Total assets at year-end 2007 amounted to NOK 14.3 billion. In the last 12 months, total assets have increased by NOK 1,616 million, or 12.8 %. Lending At the end of the year, gross lending totalled NOK 12.8 billion. In the past 12 months lending has risen by NOK 1,311 million, or 11.4 %. Of this, growth in lending to personal customers was 12.6 %, while lending to business customers grew by 9.5%. The share of lending to personal customers was NOK 8.1 billion or 63.5 % at year-end. At 31 December 2006, this share was 62.8 %. Guarantees Guarantees provided to customers decreased by NOK 29 million in 2007, and at 31 December 2007 totalled NOK 597 million. Certificates, bonds and shares available for sale The Bank maintains a cautious risk profile in its securities portfolio and has no exposure in products exposed to risk.

3 Customer deposits Customer deposits have increased in the past 12 months by NOK 552 million or 7.5 %. Personal customer deposits have grown by 9.3 %, and business customer deposits by 4.7 %. At year-end 2007, customer deposits as a whole totalled NOK 7.9 billion, of which NOK 4.9 billion, or 62.2 %, were deposits from personal customers. Customer deposits as a whole were 62.6 % of gross lending at year-end. Funding The credit crunch in the international financial markets in the past half-year has made refinancing the Bank s borrowings somewhat more expensive. Following a brief temporary decrease in the share of long-term funding at 31 December 2007, the Bank now has in place a little over 70 % of its long-term borrowings. Short- and long-term credit facilities of NOK 130 million and NOK 504 million respectively remained unutilised at year-end. The Bank's liquidity risk is considered satisfactory. Equity and capital adequacy The s equity totalled NOK 1,366 million at year-end New capital adequacy rules (Basel II) came into force on 1 January On the basis of the transitional rules, Helgeland Sparebank elected to apply the old capital adequacy rules in The s capital base, which is the basis for calculating capital adequacy, totalled NOK 1,360 million at year-end. The s capital adequacy ratio at 31 December 2007 was 13.8 %. The Bank has a relatively high tier 1 capital ratio, which is 12.8 % of the capital adequacy. Primary Capital Certificates (PCCs) - HELG The Bank s primary capital totalling NOK 202 million is spread over approximately 2,300 PCC holders. A specification of the 20 largest PCC holders is provided in Note 12 to the Parent Bank s financial statements. The price of the Bank s PCC at 31 December 2007 was NOK 180. Fourth quarter in isolation The achieved good results also for the fourth quarter, which was the second best quarter of The made a pre-tax profit of NOK 60 million compared with NOK 47 million for the fourth quarter Accounting policies Helgeland Sparebank prepares its consolidated accounts in compliance with International Financial Reporting Standards (IFRS). The same accounting policies are applied to the interim financial statements as to the annual financial statements. The Bank has also implemented IFRS in the Parent Bank s financial statements as of the second quarter 2007 inclusive. Accounting figures from prior periods have been restated using the current accounting policies. This also applies to notes to the accounts and to financial ratios. The effects of the transition to IFRS in the Parent Bank s accounts as of 1 January 2007 have been charged to equity. The implementation effect is shown in Note 10. The accounting policies applied to the Parent Bank s corporate accounts are mostly identical to the accounting policies applied to the consolidated accounts. The transition to IFRS in the Parent Bank s accounts does however involve the use of different policies for valuation of shares in subsidiaries and associates. The equity method is used in the IFRS-compliant consolidated accounts, while market value or cost price is used in the Parent Bank s accounts Effect, subsidiaries Parent Bank result, IFRS Effect, subsidiaries/associates IFRS adjustments, -1.7 result, IFRS Parent Bank allocation of net profit The basis for profit allocation in the Parent Bank is the net profit on ordinary activities after tax, which is NOK 163 million, and a change in the net unrealised gains reserve of NOK 3 million. Proposed allocation of net profit (NOK): Parent Bank profit, IFRS 163 million Transfer from net unreal. gains res. 3 million Profit for allocation 166 million Cash dividend 37 million Equalisation reserve 9 million Savings Bank s Fund 91 million Gift Fund-Helgeland Fund 29 million The dividend provision is NOK per PCC, -of which, NOK to cash dividend -and NOK 4.30 to the equalisation reserve Scrip dividend In distributing the dividend for the year, the Board will propose to the Board of Trustees that a scrip dividend be issued, giving the Bank s PCC holders the opportunity to subscribe for new PCCs in lieu of a cash dividend. The background for this proposal is that the Bank wishes to reduce the dilution in value for PCC holders, and maintain the Bank s share of primary capital. The price of the issue will be set prior to the start of the period of subscription. Outlook The mood among businesses and industry in the county of Nordland is optimistic. There has been considerable investment in the processing industry in Mosjøen and in Mo i Rana. The maritime sector has had another good year. Activity in the construction sector has been high, although not quite as high as in the most central areas in 2006

4 and Companies have had good results across the board, and employment is record-high. Against this background we expect to see a continuing good rate of growth in 2008, despite an intensification of competition from new banks establishing in Mo i Rana. The Bank s part-ownership of the insurance company Frende Forsikring will in the coming years gradually generate increased revenues, partly in the form of commission income and partly in the form of a share of the profits. Although the Bank has succeeded over time in maintaining a high level of net interest income, we expect to see this reduce as a result of increased competition and a slightly higher premium on the Bank s borrowing costs. The Bank s cautious policy as regards securities will be continued in Mo i Rana, Norway, 31 December 2007 Mo i Rana, 11 February 2008 Eivind Lunde Thore Michalsen Inger-Lise Pettersen Chairman of the Board Deputy Chairman Marianne Myrnes Steinrud Bjørn Johansen May Heimdal Employee Representative 3

5 Profit and loss account (Amounts in NOK million) q q Interest receivable and similar income Interest payable and similar costs Net interest- and credit commission income Commissions receivable and income from banking services Commissions payable and costs relating to banking services Net commission income Gains/losses on financial assets available for sale Gains/losses from associated companies Other operating income Operating costs Losses on loans, guarantees etc Result before tax Tax payable on ordinary result Result from ordinary operations after tax Profit and loss account items as a percentage of average assests q q Interest receivable and similar income 6,04 4,66 6,71 4,91 4,34 Interest payable and similar costs 3,70 2,39 4,29 2,54 1,83 Net interest- and credit commission income 2,34 2,27 2,42 2,37 2,51 Commissions receivable and income from banking services 0,64 0,61 0,60 0,62 0,61 Commissions payable and costs relating to banking services 0,11 0,11 0,11 0,10 0,14 Net commission income 0,53 0,50 0,49 0,52 0,47 Gains/losses on financial assets available for sale 0,23 0,05 0,00 0,06 0,45 Gains/losses from associated companies 0,27 0,11 0,28 0,41 Other operating income 0,05 0,08 0,04-0,03 0,11 Operating costs 1,52 1,64 1,50 1,83 1,93 Merger cost 0,51 Losses on loans, guarantees etc. 0,07 0,11 0,03 0,01 0,75 Result before tax 1,83 1,26 1,71 1,49 0,35 Tax payable on ordinary result 0,40 0,34 0,42 0,31 0,03 Result from ordinary operations after tax 1,43 0,92 1,29 1,18 0,32 4

6 Balance sheet (Amounts in NOK million) ASSETS Cash and claims on central banks Loans to and claims on credit institutions Loans to and claims on customers Certificates, bonds and shares available for sale Investments in associated companies Deferred tax benefit Other intangible assets Fixed assets, investment property and fixed assets held for sale Financial derivatives Other assets Total assets LIABILITIES AND EQUITY CAPITAL: Liabilities to credit institutions, with agreed maturity Deposits from customers and liabs. To customers Financial liabilities incurred through the issuance of securities Financial derivatives Other liabilities Subordinated loan capital Total liabilities Paid-in equity capital Accrued equity capital/retained earnings Profit after taxes Total equity capital Total liabilities and equity capital Cash flow statement Cash flow from lending operations (A) Cash flow from deposit operations (B) Cash flow from securities investments (C) 6 8 Cash flow from deposits with credit institutions (D) Remaining cash flow from current operations (E) Cash flow from operations (A+B+C+D+E=F) Cash flow from financing (G) Cash flow from investments in fixed assets (H) 1 2 Changes in liquid assets (F+G+H) Liquid assets at the start of the period Liquid assets at the end of the period Liquid assets consist of: Cash and claims on central banks Loans to and claims on credit institutions 0 3 Certificates and bonds with fixed yield

7 Profit and loss account (Amounts in NOK million) q q Interest receivable and similar income Interest payable and similar costs Net interest- and credit commission income Commissions receivable and income from banking services Commissions payable and costs relating to banking services Net commission income Gains/losses on financial assets available for sale Gains/losses from associated companies Other operating income Operating costs Losses on loans, guarantees etc Result after credit losses and write-downs Tax payable on ordinary result After-tax result from ordinary operations Donations fund Dividends on primary capital certificates Allocated to the dividend equalisation fund 9 Fund for Evaluation differences Allocated to the bank's reserve fund Total allocations for the year Profit and loss account items as a percentage of average assets q q Losses on loans, guarantees etc. 6,04 4,64 6,70 5,05 4,35 Write-downs and gains/losses on sec. class. as fixed assets 3,69 2,37 4,27 2,70 1,81 Net interest- and credit commission income 2,35 2,27 2,43 2,35 2,54 0,64 0,61 0,61 0,63 0,60 Commissions receivable and income from banking services 0,11 0,11 0,11 0,10 0,14 Commissions payable and costs relating to banking services 0,53 0,50 0,50 0,53 0,46 Net commission income 0,23 0,04 0,00 0,00 0,32 Gains/losses on financial assets available for sale 0,04 0,02 0,04 0,06 0,03 Gains/losses from associated companies 0,03 0,02 0,01 0,03 0,02 Other operating income 1,49 1,56 1,43 1,65 1,73 Operating costs 0,00 0,00 0,00 0,00 0,45 Losses on loans, guarantees etc. 0,09 0,08 0,03 +0,08 0,73 Result after credit losses and write-downs Total operating 1,60 1,21 1,52 1,40 0,46 Tax payable on ordinary result 0,38 0,34 0,38 0,50 0,06 After-tax result from ordinary operations 1,22 0,87 1,14 0,90 0,40 6

8 Balance sheet (Amounts in NOK million) ASSETS Cash and balances at central banks Loans to and claims on credit institutions Loans to and claims on customers Certificates, bonds, and shares with fixed yield Investments in associated companies Investments in subsidiaries Deferred tax benefit Other intangible assets Fixed assets Financial derivatives Other assets Total assets LIABILITIES AND EQUITY CAPITAL Liabilities to credit institutions, without agreed maturity Deposits from customers and liabilities to customers Borrowings through the issuance of securities Financial derivatives Other liabilities Subordinated loan capital Total liabilities Paid-in equity capital Accrued equity capital/retained earnings Profit after taxes Total equity capital Total liabilities and equity capital CASH FLOW STATEMENT Cash flow from lending operations (A) Cash flow from deposit operations ( B) Cash flow from securities investments (C) Cash flow from deposits with credit institutions ( D) Remaining cash flow from current operations ( E) Cash flow from operations (A+B+C+D+E=F) Cash flow from financing ( G ) Cash flow from investments in fixed assets ( H ) 1 2 Change in liquid assets (F+G+H) Liquid assets at the start of the period Liquid assets at the end of the period Liquid assets consist of: Cash and claims on central banks Loans to and claims on credit institutions 0 3 7

9 Notes review Note 1. Note 2. Note 3. Note 4. Note 5. Note 6. Note 7. Note 8. Note 9. Note 10. Note 11. Note 12. Note 13. Accounting principles Specification of total operating costs Losses on loans, guarantees etc. Bad and doubtful loans, guarantees, etc. Commitment and losses split by sector/industry Risk classification Gross lending and Guarantees Contingent off balance sheet commitments Deposits from customers split by sector/industry Capital adequacy Change in equity capital Profit per primary certificate Connection between profit IFRS parent bank and IFRS Financial derivatives Note 14. Quarterly profit development Key figures 8

10 NOTE 1. ACCOUNTING PRINCIPLES The accounts have otherwise been prepared using the same accounting policies as the Bank s annual financial statements and in accordance with the NRS 11 standard for interim reporting. The consolidated accounts have been prepared according to IFRS; see otherwise comments with respect to IFRS in the annual report NOTE 2. SPECIFICATION OF TOTAL OPERATING COSTS Specification of total operating costs: q.07 4.q Wages, salaries and social costs General administration costs Depreciation etc of fixed- and intangible assets Other operating costs Total operating costs NOTE 3. LOSSES ON LOANS GUARANTEES, ETC. Losses on loans, guarantees etc. +/- Period s change in individual write-downs Period s change in collective write-downs Period s conf. Losses against which ind. write-downs were made in prev. years Period s confirmed losses against which no individual write-downs were made in previous years - Period's change in amortised cost +2 - Period s recoveries from previous periods confirmed losses 6 3 Total losses on loans, guarantees etc NOTE 4. BAD AND DOUBTFUL LOANS, GUARANTEES ETC Loans, guarantees etc. in default Loss provisions for loans, guarantees etc. in default Total net loans, guarantees etc. in default Other bad and doubtful loans and guars., not in default Loss provisions for other bad and doubtful loans, guarantees etc., not in default Total net bad and doubtful comms., not in default Amortised cost written down commitments as at Net amortised intrest on written-down commit. included in the profit and loss acc Net amortised loss on written-down commit. included in the profit and loss acc Amortised cost written-down commitment as at

11 Individual- and collective write-downs of loans and guarantees Individual write-downs to cover losses on loans and guarantees as at Period s conf. losses, against which indi. Write-down was previously made Period s increased individual write-downs, against which write-down was 2 21 previously made + New individual write-downs during the period Period's change in amortised loans and credit 2 - Reversal of individual write-downs during the period = Total individual write-downs on loans * Of which individual write-downs on loans accounted for * Of which ind. write-downs on guars. accounted for 2 5 Collective write-downs: Collective write-downs to cover losses on loans at /- Period s change in collective write-downs Total collective write-downs NOTE 5. COMMITMENT AND LOSSES SPLIT BY SECTOR/INDUSTRY Gross loans %-stake Loss prov. Defaults Gross loans %-stake Loss prov. Defaults Municipalities and municipal enterp. 4 0, Agriculture and forestry 817 6,4 4 1, ,6 4 3 Fisheries and aquaculture 607 4,7 2 0, , Mining and industry 231 1,8 5 0, ,9 5 1 Building and construction 240 1,9 3 0, ,1 3 1 Trade, hotel, restaurants ,4 10 2, , Property, property development ,4 28 2, , Transport and services 622 4,9 8 6, ,0 4-5 Retail market ,5 12 3, , Total Collective write downs -8-3 Total

12 NOTE 6. RISK CLASSIFICATION Corporate market (regional model) Gross lending Guarantees Low risk % % Medium risk % % High risk % % Total corporate market % % Retail banking market (behavioural score) Low risk % % Medium risk % % 3 5 High risk % % 0 0 Total retail banking market % % Grand total Loss provisions Total net loans NOTE 7. CONTINGENT OFF BALANCE SHEET COMMITMENTS Guarantee obligations NOTE 8. DEPOSITS FROM CUSTOMERS SPLIT BY SECTOR/INDUSTRY % % Financial institutions 98 1,2 61 0,8 Municipalities and municipal enterp , ,1 Agriculture and forestry 235 3, ,9 Fisheries and aquaculture 109 1, ,1 Mining and industry 398 5, ,4 Building and construction 172 2, ,9 Trade, hotel, restaurants , ,6 Property, property development 504 6, ,2 Transport and services 489 6, ,8 Retail market , ,2 Total

13 NOTE 9. CAPITAL ADEQUACY ( NGAAP) PCC-capital Premium Fund Own PCCs -1-1 Total paid-in capital Savings Bank s Fund Reserve for valuation variances 59 Donations fund Dividend equalisation reserve 9 Cash dividend 37 Other equity capital 27 Total accrued equity capital/retained earnings Additional: Non-amortised variance in accounting estimates retuned to zero 20 Deduction: Over-funded pension liabilities 0-8 Not realized profits -59 Cash dividend -37 Intangible assets Total core capital Supplementary capital: subordinated loan capital Net not realized profits 28 Deductions for capital in other financial institutions 0 0 Total net supplementary capital Total net equity and related capital Weighted asset calculation basis Capital adequacy ratio 13,75 % 15,09 % Of which core capital accounted for 12,76 % 13,50 % NOTE 10. CHANGE IN EQUITY CAPITAL Change in equity capital Equity capital at Value change equity capital 4 4 Dividend 9 13 Dividend equalisation fund 9 Donations fund Change Savings Bank s Fund Fund for unrealized profit -3-2 Other changes in equity capital 22 9 Equity capital with the end of the per

14 Change in equity capital during the quarter review: PCCcapital Premium Fund Own PCCs Res. for valuation variances Savings Bank s Fund Donat. Fund Divid. Equal Res. Divid end Other equity capital Equity capital as at Value changes equity 4 4 Paid Profit after taxes Equity capital pr Tot. NOTE 11. PROFIT PER PRIMARY CERTIFICATE Profit per primary certificate Profit after taxes PCC percentage 27,7 % 29,4 % Yield per primary certificate (NOK) 26,2 17,0 NOTE 12. CONNECTION BETWEEN PROFIT IFRS PARENT BANK AND IFRS GROUP Profit IFRS parent bank and IFRS Profit parent bank Effect subsidiaries/assoc. companies IFRS changes group -2-5 Profit IFRS NOTE 13. FINANCIAL DERIVATIVES AND GUARANTEES Nominal value Market Nominal value value Market value Interest rate swaps certificates and bonds ,5 Interest rate swaps bank deposits with share yield 8 21 Interest rate swaps fixed interest rate loans ,1 Currency swaps Syndicated loans Total financial derivatives ,4 13

15 NOTE 14. KEY FINANCIAL FIGURES FOR THE GROUP Quarterly profit development 4.q. 3.q. 2.q. 1.q. 4. q. 3. q. 2. q. 1. q. 4.q Net int. and credit com.inc Net commission income Net gains/losses on securities classi. as current assts Other operating income Total operating costs Merger cost 8 Result before credit losses and write-downs Losses Result after credit losses and write-downs Other key figures Development in the last 12 months -Total assets 12,8 2,2 -Gross lending 11,4 6,8 - Deposits 7,5 10,8 Deposit coverage ratio (deposits as a percentage of gross lending) 62,6 64,3 Lending to retail customers 63,5 62,8 Capital adequacy ratio as percentage ( N-GAAP ) 13,7 15,1 Core capital ratio as percentage ( N-GAAP ) 12,8 13,5 Equity capital ratio 9,6 9,6 Rate of return on equity capital 14,8 10,0 Return on assets 1,4 0,9 Costs as a percentage of income adjusted for trading gains 51,6 56,1 Cost in percentage of average total assets 1,5 1,6 Average assets Gross loans Individual write-downs Period's change in collective write downs Individual write-downs on guarantees -2-5 Result per PCC, in Norwegian currency 26,2 17,0 Diluted result per PCC, in Norwegian currency 26,2 17,0 Specified loan provision in % of gross default on loan 60,7 50,5 As a percentage of gross lending Gross defaults over 90 days 1,0 1,8 Net defaults over 90 days 0,8 1,3 Total loan loss provision 0,9 1,4 Losses on lending 0,1 0,1 14

16 Notes survey parent bank Note 1. Note 2. Note 3. Note 4. Note 5. Note 6. Note 7. Accounting principles Specification of total operating costs Losses on loans, guarantees etc. Bad and doubtful loans, guarantees, etc. Commitment and losses split by sector/industry Risk classification gross lending and guarantees Guarantee Note 8. Subsidiaries Note 9. Note 10. Note 11. Note 12. Note 13. Note 14. Note 15. Note 16. Deposits from customers split by sector/industry Capital adequacy Change in equity capital The 20 largest primary capital certificate holders and Profit per primary certificate Profit per primary certificate Dividend per primary certificate Financial derivatives Quarterly profit development Key financial figures 15

17 NOTE 1. ACCOUNTING PRINCIPLES The accounts have otherwise been prepared using the same accounting policies as the Bank s annual financial statements and in accordance with the NRS 11 standard for interim reporting. The consolidated accounts have been prepared according to IFRS; see otherwise comments with respect to IFRS in the annual report 2006 NOTE 2. SPECIFICATION OF TOTAL OPERATING COSTS Specification of total operating costs: kv.07 4.kv Wages, salaries and social costs General administration costs Depreciation etc of fixed- and intangible assets Other operating costs Total operating costs NOTE 3. LOSSES ON LOANS, GUARANTEES etc. Losses on loans, guarantees etc. +/- Period s change in individual write-downs Period s change in collective write-downs Period s confirmed losses against which individual write-downs were made in previous years + Period s confirmed losses against which no individual write-downs were made in previous years - Period's change in amortised losses on loans and credits +2 - Period s recoveries from previous periods confirmed losses 6 3 Total losses on loans, guarantees etc NOTE 4. BAD AND DOUBTFUL LOANS, GUARANTEES ETC Loans, guarantees etc. in default Loss provisions for loans, guarantees etc. in default Total net loans, guarantees etc. in default Other bad and doubtful loans and guars., not in default Loss provisions for other bad and doubtful loans, guarantees etc., not in default Total net bad and doubtful comms., not in default Amortised cost written down commitments as at Net amortised intrest on written-down commit. included in the profit and loss acc Net amortised loss on written-down commit. included in the profit and loss acc Amortised cost written-down commitment as at

18 Individual- and collective write-downs of loans and guarantees: Individual write-downs Individual write-downs to cover losses on loans and guarantees as at Period s confirmed losses, against which ind. write-down was previously made Period s increased ind. Write-downs, against which write-down was 2 17 prev.made + New individual write-downs during the period Period's change in amortised loans and credits 2 - Reversal of individual write-downs during the period = Total individual write-downs on loans * Of which individual write-downs on loans accounted for * Of which ind. write-downs on guarantee accounted for 2 5 Collective write-downs: Collective write-downs to cover losses on loans at /- Period s change in collective write-downs -8-3 Total collective write-downs NOTE 5. COMMITMENT AND LOSSES SPLIT BY SECTOR/INDUSTRY Gross loans %-stake Loss prov. Defaults Gross loans %-stake Loss prov. Defaults Municipalities and municipal enterp. 4 0, ,0 0 0 Agriculture and forestry 817 6, ,5 4 3 Fisheries and aquaculture 607 4, , Mining and industry 231 1, ,9 5 1 Building and construction 240 1, ,0 3 1 Trade, hotel, restaurants , , Property, property development , , Transport and services 622 4, ,0 4-5 Retail market , , Total Change in collective write-downs -8-3 Total

19 NOTE 6. RISK CLASSIFICATION Corporate market (regional model) Gross lending Guarantees Low risk % % Medium risk % % High risk % % Total corporate market % % Retail banking market (behavioural score) Low risk % % Medium risk % % 3 5 High risk % % 0 0 Total retail banking market % % Grand total Loss provisions Total net loans NOTE 7 CONTINGENT OFF BALANCE SHEET COMMITMENTS Guarantee obligations NOTE 8. SUBSIDIARIES The Parent Bank s accounts have been presented and prepared in accordance with the requirements laid down by law and regulation governing savings banks in Norway. Subsidiaries where the ownership stake is more than 50 % are consolidated and substantial ownership interests have been included in the accounts using the equity method. Investment in subsidiaries Subsidiaries Share capital Number of shares Equity stake Nominal value Cost price Market value Book value Ans Bankbygg Mo 97% 45 AS Sparebankbygg % ,1 Helgeland Sp. Eiendomsselskap 100 % 0,4 Helgeland Utviklingsselskap AS % Norestgruppen AS * % Denbygget AS * % Ultra Invest AS * % Book value as at The shares in Norest Gruppen AS are included in Helgeland Utviklingsselskap AS. The shares in Denbygget AS and Ultra Invest AS are included in Norest Gruppen AS. Share capital Number of shares 18 Equity stake Nominal value Cost price Market Value ROI AS ,0 % Eiendomsmiding Helgeland AS 0, ,0 % Helgeland Vekst AS 73 38,9 % Storgt. 73 AS 0,1 42,9 % Total investment in AC 112

20 NOTE 9. DEPOSITS FROM CUSTOMERS SPLIT BY SECTOR/INDUSTRY % % Financial institutions 98 1,2 61 0,8 Municipalities and municipal enterp , ,1 Agriculture and forestry 235 3, ,9 Fisheries and aquaculture 109 1, ,0 Mining and industry 398 5, ,4 Building and construction 172 2, ,9 Trade, hotel, restaurants , ,6 Property, property development 536 6, ,6 Transport and services 489 6, ,8 Retail market , ,9 Total NOTE 10. CAPITAL ADEQUACY PCC-capital Premium Fund Own PCCs -1-1 Total paid-in capital Savings Bank s Fund Reserve for valuation variances 64 Donations funds Dividend equalisation reserve 9 Cash dividend 37 Total accrued equity capital/retained earnings Additional: Non-amortised variance in accounting estimates returned to zero 20 Deduction: Over-funded pension liabilities 0-8 Not realized profits -64 Cash dividend -37 Intangible assets Total core capital Supplementary capital: subordinated loan capital Net not realized profits 28 Deductions for capital in other financial institutions 0 0 Total net supplementary capital Total net equity and related capital Weighted asset calculation basis Capital adequacy ratio 13,48 % % Of which core capital accounted for 12,49 % 12,99 % 19

21 NOTE 11. CHANGE IN EQUITY CAPITAL Change in equity capital Equity capital at IFRS changes Value change against equity capital 4 Dividend Dividend equalisation fund 9 Savings Bank s Fund Donations fund Fund for valuation variances -3 Equity capital with the end of the per Change in equity capital during the year: PCCcapital Premiu m Fund Own PCCs Res. For valuation variances Savings Bank s Fund Donat. Fund Divid. Equal. Fund Divid Total Equity capital as at IFRS Value change 4 4 Paid Profit after taxes Equity capital pr NOTE 12. PRIMARY CAPITAL CERTIFICATE HELG The 20 largest primary capital certificate holders at : % % Nr. stake Nr. stake Sparebank 1 Nord-Norge ,0 Nervik, Steffen ,3 Romern AS ,7 Tromstrygd ,2 Sparebanken Øst ,7 DnB NOR bank ASA investeringsdivisj ,0 MP Pensjon ,6 Hartviksen, Harald Paul ,9 Terra utbytte VPF ,5 BBS ansatte fond ,9 Haslum Industri AS ,7 Sivesind, Johan ,7 Sparebankstiftelsen DnB NOR ,6 ROI Invest AS ,6 Helgelandskraft AS ,6 The Northern Trust C ,6 Hifo Invest AS ,2 Instituttet for sammenlig. kulturforskning ,6 Warrenwicklund ,4 Sparebank 1 Nord Norge Pensjonskasse ,4 10 largest PCC holders ,0 20 largest PCC holders ,2 20

22 Note 13. PROFIT PER PRIMARY CERTIFICATE Profit per primary certificate Profit after taxes PCC percentage 27,7 % 29,4 % Yield per primary certificate (NOK) 22,3 15,4 NOTE 14. DIVIDEND Dividend per Primary Capital Certificate (PCC): PCC capital Share premium reserve Total Total equity capital PCC holders share of equity capital 27,7 % 29,4 % Calculation of dividend Profit 2007(adjusted for IFRS implementation) / Dividend per Primary Capital Certificate 22,80 15,6 * Dividend in cash 18,50 13,8 * Dividend to equalisation fund 4,30 NOTE 15. FINANCIAL DERIVATIVES AND GUARANTEES Nominal value Market Nominal value value Market value Interest rate swaps certificates and bonds ,5 Interest rate swaps bank deposits with share yield 8 21 Interest rate swaps fixed interest rate loans ,1 Currency swaps Syndicated loans Total financial derivatives ,4 NOTE 16. KEY FINANCIAL FIGURES Quarterly profit development 4.kv 3.q. 2.q. 1.q. 4.q. 3.q. 2.q. 1. q. 4. q Net int. and credit com.inc Net commission income Gains/losses on financial assets Net other income Operating expenses Merger expenses Pre tax oper. Before losses Losses on loans Pre tax operating profit

23 Parent Bank Other key figures Development in the last 12 months. -Total assets 12,9 2,2 -Gross lending 11,1 6,3 - Deposits 7,5 10,8 Deposit coverage ratio (deposits as a percentage of gross lending) 62,1 64,3 Lending to retail customers 63,3 62,5 Capital adequacy ratio as percentage 13,5 14,6 Core capital ratio as percentage 12,5 13,0 Equity capital ratio 9,4 9,3 Rate of return on equity capital 12,7 9,4 Return on assets 1,2 0,9 Costs as a percentage of income adjusted for trading gains 50,0 54,6 Cost in percentage of average total assets 1,5 1,6 Average assets Gross loans Individual write-downs Period's change in collective write downs Individual write-downs on guarantees -2-5 Result per PCC, in Norwegian currency 22,3 15,4 Diluted result per PCC, in Norwegian currency 22,3 15,4 Dividend 22,7 15,6 PCC price quoted on the Oslo Stock Exchange Book equity per PCC 163,9 159,7 P/E (price as at divided by profit per PCC) 8,1 13,0 P/B (price as at divided by book value of equity capital per PCC) 1,1 1,3 Number of man-years Specified loan provision inkl. Gurantees in % of gross default on loan 73,4 56,2 As a percentage of gross lending Gross defaults over 90 days 1,0 1,8 Net defaults over 90 days 0,8 1,3 Total loan loss provision (excl. write-downs on guarantees) 1,1 1,5 Losses on lending 0,1 0,1 22