Brazilian Securities Companhia Securitizadora Financial statements at December 31, 2012 and independent auditor's report

Transcription

1 (A free translation of the original in Portuguese) Brazilian Securities Companhia Securitizadora Financial statements at December 31, 2012 and independent auditor's report

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4 Balance sheet at December 31 All amounts in thousands of reais (A free translation of the original in Portuguese) Assets Note Current assets Cash and cash equivalents 3 2,210 9,580 Financial assets held for trading 74, ,509 Debt instruments 4 21,737 71,593 Real estate loan backed securities 5 52,323 83,455 Derivatives 9-17,461 Loans and receivables 106,066 38,953 Debt instruments 4 105,423 38,887 Other loans and receivables Tax credits 18,498 12,226 Current 18,498 12,226 Other assets Non-current assets Long-term receivables Financial assets held for trading 301, ,226 Debt instruments 4 199, ,266 Real estate loan backed securities 5 102,275 55,960 Loans and receivables 91,684 17,772 Debt instruments 4 74,356 1,850 Residual benefit in securitized transactions 28(d) 17,328 15,922 Tax credits 7,604 9,255 Deferred 13 7,604 9,255 Property and equipment Total assets 602, ,461 1 of 57

5 Balance sheet at December 31 All amounts in thousands of reais (continued) Liabilities and equity Note Current liabilities Financial liabilities held for trading 2,205 - Derivatives 9 2,205 - Other financial liabilities at fair value through profit or loss 4, ,169 Foreign borrowings 12 4, ,169 Financial liabilities at amortized cost 28,738 35,416 Liabilities from marketable securities 10 28,738 10,234 Domestic borrowings 11-25,182 Tax liabilities 18, Current 18, Other payables 14 22,957 59,847 Liabilities from acquisition of receivables 13,255 44,026 Sundry 9,702 15,821 Non-current liabilities Financial liabilities held for trading 1,118 - Derivatives 9 1,118 - Other financial liabilities at fair value through profit or loss 205,181 46,895 Foreign borrowings ,181 46,895 Financial liabilities at amortized cost 41,750 72,167 Liabilities from marketable securities 10 41,750 72,167 Tax liabilities 3,199 24,758 Deferred 13 3,199 24,758 Other payables 14 79,030 3,746 Liabilities from acquisition of receivables 79,030 1,308 Sundry - 2,438 Total liabilities 407, ,355 Equity , ,106 Share capital 100, ,229 Capital reserves 17,048 17,048 Revenue reserves 77,863 82,829 Total equity 195, ,106 Total liabilities and equity 602, ,461 The accompanying notes are an integral part of these financial statements. 2 of 57

6 Statement of operations Years ended December 31 (A free translation of the original in Portuguese) Note Interest and similar income 16 65, ,552 Interest and similar expenses 17 (31,058) (34,354) Net interest income 34,514 83,198 Residual benefit in securitized transactions 18 7,750 16,336 Revenues from services rendered 19 2,837 3,351 Gains (losses) on financial assets and liabilities, net 20 (1,522) 6,042 Exchange differences 21 (17,025) (19,049) Other operating income (expense), net 22 3,111 4,580 Total income 29,665 94,458 Administrative expenses (36,517) (38,461) Personnel 23 (16,094) (8,044) Other administrative expenses 24 (14,158) (24,342) Tax expenses (6,212) (6,027) Depreciation 8 (53) (48) Operating profit (loss) before taxation (6,852) 55,997 Current income tax and social contribution 13 (18,022) - Deferred income tax and social contribution 13 19,908 (19,762) Profit (loss) for the year (4,966) 36,235 Earnings (loss) per share (in reais) Basic and diluted Common shares ( ) The accompanying notes are an integral part of these financial statements. 3 of 57

7 Statement of comprehensive income Years ended December 31 All amounts in thousands of reais (A free translation of the original in Portuguese) Profit (loss) for the year (4,966) 36,235 Other comprehensive income Available-for-sale financial assets Adjustment to market value - - Total other comprehensive income - - Total comprehensive income (loss) for the year (4,966) 36,235 Attributable to Stockholders of the Company (4,966) 36,235 Non-controlling interests - - Total (4,966) 36,235 The accompanying notes are an integral part of these financial statements. 4 of 57

8 Statement of changes in equity Years ended December 31 (A free translation of the original in Portuguese) Revenue reserves Capital Expansion Retained Share capital reserves Legal reserve reserves earnings Total At December 31, ,229 17,048 5,649 77, ,106 Comprehensive income for the year Loss for the year (4,966) (4,966) Contributions by and distributions to stockholders Absorption of loss for the year (4,966) 4,966 - At December 31, ,229 17,048 5,649 72, ,140 At December 31, ,229 17,048 3,837 51, ,476 Comprehensive income for the year Profit for the year ,235 36,235 Contributions by and distributions to stockholders Minimum mandatory dividends (R$ per share) (8,605) (8,605) Reserves ,812 25,818 (27,630) - At December 31, ,229 17,048 5,649 77, ,106 The accompanying notes are an integral part of these financial statements. 5 of 57

9 Statement of cash flows Years ended December 31 All amounts in thousands of reais (A free translation of the original in Portuguese) Cash flows from operating activities Profit (loss) (4,966) 36,235 Depreciation Changes in assets and liabilities 10,696 (55,938) Decrease in loans and advances to financial institutions 89,775 Decrease (increase) in debt instruments (20,526) (252,353) Decrease (increase) in real estate related receivables (15,183) 189,133 Decrease (increase) in residual benefit in securitized transactions (1,406) (4,919) Decrease (increase) in other loans and receivables (577) 4,492 Decrease (increase) in derivative assets 17,461 (17,461) Decrease (increase) in tax assets (4,621) 72 Decrease (increase) in other assets 97 (79) Increase (decrease) in derivative liabilities 3,323 (12,519) Increase (decrease) in liabilities from marketable securities (11,913) 56,209 Increase (decrease) in tax liabilities (21,826) (6,779) Increase (decrease) in other liabilities 46,999 (112,300) Income tax and social contribution paid 18,868 10,791 Cash provided by (used in) operating activities 5,783 (19,655) Cash flows from investing activities Investments in property and equipment (22) (25) Cash used in investing activities (22) (25) Cash flows from financing activities Dividends paid (8,605) (8,875) New borrowing per loans, net of repayments (4,526) 34,504 Cash provided by (used in) financing activities (13,131) 25,629 Cash flows generated (used) in the year (7,370) 5,949 Cash and cash equivalents at the beginning of the year 9,580 3,631 Cash and cash equivalents at the end of the year 2,210 9,580 The accompanying notes are an integral part of these financial statements. 6 of 57

10 Statement of value added Years ended December 31 All amounts in thousands of reais (A free translation of the original in Portuguese) The accompanying notes are an integral part of these financial statements. 7 of 57 Revenue 26,554 89,878 Net interest income 34,514 83,198 Residual benefit in securitized transactions 7,750 16,336 Revenues from services rendered 2,837 3,351 Gains (losses) on financial assets and liabilities (net) (1,522) 6,042 Exchange differences (17,025) (19,049) Inputs acquired from third parties (10,112) (19,164) Materials, energy and other (977) (2,182) Third-party services (8,143) (11,614) Other (992) (5,368) Advertising, marketing and publications (544) (1,362) Financial system services (1,529) (4,939) Communications (392) (169) Other 1,473 1,102 Gross value added 16,442 70,714 Depreciation (53) (48) Net value added generated by the entity 16,389 70,666 Total value added to distribute 16,389 70,666 Distribution of value added 16,389 70,666 Personnel 13,692 6,740 Direct remuneration 11,665 5,657 Benefits 1, Government Severance Indemnity Fund for Employees (FGTS) Taxes and contributions 6,728 27,093 Federal 6,011 26,829 State 1 95 Municipal Remuneration of third party capital Rentals Other Remuneration of own capital (4,966) 36,235 Dividends - 8,605 Profits reinvested (absorbed loss) for the year (4,966) 27,630

11 (A free translation of the original in Portuguese) Brazilian Securities Companhia 1 Operations and presentation of the financial statements (a) Operations Brazilian Securities Companhia ("Company" or "BS"), a direct subsidiary of Brazilian Finance & Real Estate S.A. (BFRE), was formed on April 10, 2000, and its corporate objectives are the acquisition and securitization of mortgage and real estate loans, including the purchase, sale and provision of the relevant guarantees on mortgage and real estate loans, the issue and placement of Real Estate Loan Backed Securities (CRIs) in the financial market, the issue of other credit securities; and the rendering of services and other business activities related to transactions carried out in the secondary market of mortgages and real estate loans, in accordance with Law 9514, of November 20, The Company started its operations on December 1, When the Company issues CRIs backed by real estate related receivables with a fiduciary lien clause, these receivables are excluded from the Company's common equity, and become separate asset rights, the specific purpose of which is to guarantee the financial realization of the rights of the holders of the CRIs. However, in some issues of CRIs, the Company is responsible for any insufficiency of resources at their financial settlement ( and 2011 only series 95 and 96, disclosed in Note 5). A single integrated corporate structure provides support for business activities, including all of the technology, processing, operating, commercial, administrative, financial and legal controls necessary to perform the various activities in the real estate segment. On July 19, 2012, the stockholders of BFRE, the Company's direct parent company, in an Extraordinary General Meeting, approved the partial split-off of BFRE, including its investment in Brazilian Capital Companhia de Gestão de Investimentos ("Brazilian Capital"), with the merger of the split-off portion into BPMB IV Participações S.A. ("BPMB IV"). In addition, also on the same date and after the split-off mentioned above: (i) the indirect acquisition of 100% of the BFRE's share capital by Panamericano was concluded and, consequently, also the acquisition of the origination, financing and securitization assets developed by its subsidiaries: BM Sua Casa Promotora de Vendas Ltda., Brazilian Mortgages Companhia Hipotecária and Brazilian Securities Companhia ; and (ii) the indirect acquisition of 100% of Brazilian Capital's share capital by BTG Pactual was concluded. Brazilian Capital is engaged in investment management activities involving real estate assets and also in investment management/advisory services for real estate investment funds or partnerships. (b) Presentation of the financial statements The financial statements have been prepared in accordance with accounting practices adopted in Brazil, the Brazilian Corporation Law, and the pronouncements issued by the Accounting Pronouncements Committee ("CPC"). These financial statements were approved by the Company's Board of Directors on February 18, of 57

12 2 Accounting practices and calculation criteria The financial statements have been prepared using the historical cost method. Financial assets and liabilities held for trading (including derivative instruments) and other financial liabilities at fair value through profit or loss are recorded at fair value with a corresponding entry to profit (loss) for the year. Available-for-sale financial assets were measured at fair value against equity, under the "Carrying value adjustments" account. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates are used to determine the provision necessary for contingent liabilities, the provision for impairment of receivables, fair values, the recoverable values of assets and the recognition and evaluation of deferred taxes. Actual results may differ from these estimates. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 2(o). The accounting practices and calculation criteria used in the preparation of the financial statements were basically the following: (a) Transactions in foreign currency The financial statements are presented in the currency of the primary economic environment in which the entity operates (functional currency). Monetary assets and liabilities are translated using the spot exchange rate as at the end of the reporting period. (b) (i) Definition and classification of financial instruments Definitions "Financial instrument" is any contract that gives rise, simultaneously, to a financial asset for one entity and a financial liability or equity instrument for another entity. "Equity instrument" is any contract that evidences a residual interest in the assets of the issuing entity after deducting all of its liabilities. "Derivative" is any financial instrument that is settled at a future date and whose fair value changes in response to the change in one or more market variables (such as interest rate, exchange rate, financial instrument prices, a market index or credit rating) and that requires no initial investment or an initial investment that is smaller than that required for other non-derivative financial instruments that are expected to have a similar response to changes in the same market variables described above. (ii) Date of recognition All financial assets and liabilities are initially recognized on the trade date, that is, the date when the Company becomes an interested party in the contractual relationship of the instrument. 9 of 57

13 (iii) Initial recognition of financial instruments The classification of financial instruments on initial recognition depends on their characteristics and the purpose for which the financial instruments were acquired by management. All financial instruments are initially recognized at fair value plus transaction cost, except when financial assets and liabilities are recognized at fair value through profit or loss. (iv) Classification of financial assets for measurement purposes Financial assets are included, for measurement purposes, in one of the following categories:. Financial assets held for trading (measured at fair value through profit or loss): this category includes those financial assets acquired for the purpose of generating profit in the short term from their trading, and the derivatives not designated as hedging instruments in hedge accounting structures.. Other financial assets at fair value through profit or loss: this category includes hybrid financial assets not classified as "held for trading" and measured, in their entirety, at fair value. Financial assets are also classified in this category with the purpose of providing more relevant information to users of the financial statements, either to eliminate or significantly reduce a measurement or recognition inconsistency (accounting mismatch) that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases, or because there is a group of financial assets or financial liabilities (or both) that is managed and whose performance is evaluated on a fair value basis (in accordance with a documented risk management or investment strategy).. Available-for-sale financial assets: this category includes financial assets not classified as "Held-tomaturity investments", "Loans and receivables" or "Financial assets at fair value through profit or loss" and equity instruments issued by other entities that are not subsidiaries, associates or jointlycontrolled entities. They are recognized at fair value, and any changes in the fair value are recognized in a separate "Carrying value adjustments" account in equity, net of tax effects, except any impairment losses and interest on these assets, which are recognized in profit or loss. When the investment is sold or there is any indication that it is impaired, the gain or loss previously recognized in the "Carrying value adjustments" account is reclassified to profit or loss. At December 31, 2012, the Company had no financial assets classified under this category.. Loans and receivables: this category includes loans, financing and other receivables with or without the characteristics of credit, according to their nature, regardless of the type of borrower and the manner in which the credit is granted. The main characteristic of this group of loans and receivables is the non-existence of an active market, such that these items are measured at amortized cost, less any impairment, and the income of this group is recognized based on the actual yield, using the effective interest rate.. Held-to-maturity investments: this category includes debt instruments with fixed maturity and fixed or determinable payments, which the Company has the intention and proven capacity to hold to maturity. These investments are measured at amortized cost less any impairment loss, and income is recognized based on the actual yield. At December 31, 2012, the Company had no financial assets classified under this category. 10 of 57

14 (v) Classification of financial assets for reporting purposes Financial assets are classified by nature in the following balance sheet accounts:. "Cash and cash equivalents": cash on hand and sight deposits.. "Debt instruments": securities that represent debt for the issuer, accrue yield and were issued in physical or book entry form.. "Equity instruments": financial instruments issued by other entities, such as shares and real estate investment fund quotas, with the nature of equity instruments for the issuer, except investments in subsidiaries, controlled entities or funds or associates.. "Real estate related receivables": include real estate loan portfolios and rental receivables acquired, which will be used to back future issuance of real estate loan backed securities.. "Derivatives": include the fair value in favor of the Company of derivatives not designated as hedge instruments in hedge accounting.. "Loans and advances to financial institutions": loans of any nature, including transactions carried out in the open market, on behalf of financial institutions and other entities which operate only with authorization from the Brazilian Central Bank.. "Residual benefit in securitized transactions": corresponds to the residual balance, net of any guarantees provided, of separate net assets in securitized transactions that, pursuant to Law 9514, of November 20, 1997, will be included again in the common equity of the securitization company upon the extinguishing of the respective fiduciary regime and the settlement of the related real estate loan backed securities.. "Other loans and receivables" and "Other assets": refer basically to balances receivable from Customers and entities not considered as Financial institutions. The analysis of the financial assets is as follows: 11 of 57 Financial investments at fair value Financial assets held for trading - debt instruments (Note 4) 221, ,859 Financial assets held for trading - real estate related receivables (Note 5) 154, ,415 Financial assets - derivatives (Note 9) - 17,461 Total 375, ,735 Loans and receivables Loans and receivables - debt instruments (Note 4) 179,779 40,737 Loans and receivables - other loans and receivables (Note 6) Loans and receivables - residual benefit in securitized transactions (Note 28(d - III)) 17,328 15,922 Total 197,750 56,725

15 (vi) Classification of financial liabilities for measurement purposes. Financial liabilities held for trading (at fair value through profit or loss): this category includes derivatives not designated as hedge instruments in hedge accounting.. Other financial liabilities at fair value through profit or loss: this category includes hybrid financial liabilities not classified as "held for trading" and measured, in their entirety, at fair value. Financial liabilities are also classified in this category for the purpose of providing more relevant information to users of the financial statements, either to eliminate or significantly reduce a measurement or recognition inconsistency (accounting mismatch) that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases, or because there is a group of financial assets or financial liabilities (or both) that is managed and whose performance is evaluated on a fair value basis (in accordance with a documented risk management or investment strategy).. Financial liabilities at amortized cost: financial liabilities, regardless of their form and maturity, not included in any of the categories previously mentioned and resulting from the Company's funding activities. (vii) Classification of financial liabilities for reporting purposes Financial liabilities are classified by nature in the following balance sheet accounts:. "Derivatives": include the fair value of the liability of Company, resulting from the derivatives that were not designated as hedge instruments in hedge accounting.. "Liabilities from marketable securities": include the amount of debts represented by negotiable securities, except subordinated liabilities.. "Domestic and foreign borrowings": include funding from domestic and foreign banks. The analysis of the financial liabilities is as follows: Other Financial liabilities held for trading - Derivatives (Note 9) 3,323 - Financial liabilities at amortized cost - Liabilities from marketable securities (Note 10) 70,488 82,401 Financial liabilities at amortized cost - Domestic borrowings (Note 11) - 25,182 Other financial liabilities at fair value though profit or loss - Foreign borrowings (Note 12) 209, ,064 Sundry liabilities (Note 14) 101,987 63,593 Total 385, , of 57

16 (c) Measurement of financial assets and liabilities and recognition of changes in fair value Generally, financial assets and liabilities are initially recognized at fair value, which is considered to be equivalent to the transaction price. Financial instruments not measured at fair value through profit or loss are adjusted by the transaction costs. Financial assets and liabilities are subsequently measured, at the end of each year, as follows: (i) Measurement of financial assets Financial assets are measured at fair value, without deducting estimated transaction costs that would be eventually incurred upon their sale, except those held to maturity, equity instruments (for which the fair value cannot be estimated in a sufficiently objective manner), and financial derivatives which have underlying equity instruments of this type and that are settled by means of the delivery of these instruments. The "fair value" of a financial instrument on a certain date is interpreted as the amount for which it could be purchased or sold on that date by two knowledgeable and willing parties in an arm's length transaction. The most objective and common reference for the fair value of a financial instrument is the price in an active, transparent and significant market (the "quoted price" or "market price"). If there is no market price for a certain financial instrument, its fair value is estimated based on valuation techniques normally adopted by the financial community, taking into consideration specific characteristics of the instrument to be measured, and mainly the various types of risk to which it is exposed. All derivatives are recognized in the balance sheet at their fair value from the transaction date. When the fair value is positive, they are recognized as assets; when negative, as liabilities. The fair value at the transaction date is equivalent to the transaction price. The changes in the fair value of derivatives since the trade date are recognized as "Gains (losses) on financial assets and liabilities" in the statement of operations. "Loans and receivables" are measured at amortized cost using the effective interest rate method. The "amortized cost" is considered equivalent to the acquisition cost of a financial asset or liability, plus (or less, as applicable) payments of principal and the accumulated amortization (included in the statement of operations) of the difference between the initial cost and the amount on maturity. In the case of financial assets, the amortized cost includes also any losses due to impairment or uncollectibility. In the case of hedged loans and receivables in fair value hedges, the changes in the fair values of assets related to the hedged risk are recognized. The "effective interest rate" is the discount rate that corresponds exactly to the initial value of the financial instrument in relation to the estimated total cash flow, of all types, over their remaining useful lives. In the case of financial instruments with fixed rates, the effective interest rate coincides with the contractual interest rate defined as the contracting rate plus, as applicable, commission and transaction costs that, due to their nature, are part of their financial return. In the case of financial instruments with variable rates, the effective interest rate coincides with the return rate in effect for all commitments up to the following interest renewal reference date. 13 of 57

17 The amounts at which financial assets are recognized represent, in all material aspects, the Company's maximum exposure to credit risk on these assets as at the date of the financial statements. (ii) Measurement of financial liabilities In general, financial liabilities are measured at amortized cost, as previously defined, except those included in "Financial liabilities held for trading" and "Other financial liabilities at fair value through profit or loss", which are measured at fair value. (iii) Valuation techniques The table below shows a summary of the fair values of financial assets and liabilities in the years ended December 31, 2012 and 2011, classified based on the different measurement methods adopted by the Company to calculate their fair value: Published price quotations in active markets (Level I ) Internal models (Level II) Total Published price quotations in active markets (Level I) Internal models (Level II) Total Financial assets held for trading - 375, , , ,274 Financial assets held for trading (derivatives) ,461 17,461 Other financial liabilities at fair value through profit or loss - 209, , , ,064 Financial liabilities held for trading (derivatives) - 3,323 3, The methods adopted by the Company to calculate the fair value of financial instruments follow three different levels, as follows:. Level I: the Company uses as references public quotations and prices available in an active market.. Level II: in the absence of public quotations, management, through internal models, makes its best estimate of the price that would be set for the market. For such, it uses data based on observable market parameters (prices quoted in non-active markets or for similar instruments). This level mainly includes investments in mortgage backed securities, real estate receivables, foreign loan obligations and swap (derivative) transactions and related hedged items. The financial assets and related measurement criteria are presented in the following table.. Level III: if there is no available data based on observable market parameters, management uses information and models to make the best estimate of the fair value of financial assets and liabilities. At December 31, 2012 and 2011, there were no financial instruments classified at this level. 14 of 57

18 The financial instruments stated at fair value for which measurement was based on internal models (Level II) are as follows: Fair values calculated using internal models Valuation techniques Main assumptions Assets Financial assets held for trading Debt instruments 221,343 Present value method Recent transactions carried out (similar characteristics and risks). Mortgage backed securities 154,598 Present value method Recent transactions carried out (similar characteristics and risks). Total 375,941 Liabilities Financial liabilities held for trading Derivatives 3,323 Present value method Swap transaction where the position in the curve is calculated as from the valuation of the notional value according to the conditions established with the counterparty. The MTM position is calculated considering the flow of payment at future value by the contracted condition, bringing it to present value using Coupon, CDI and DI x IGPM curves disclosed by BM&FBOVESPA. Other financial liabilities at fair value through profit or loss Foreign borrowings 209,720 Present value method Loan transaction where the position in the curve is calculated as from the valuation of the principal in US dollar according to the conditions contractually established, translated in Reais at the selling PTAX rate. Total 213,043 (iv) Recognition of changes in the fair value In general, the changes in the carrying amounts of financial assets and liabilities held for trading are recognized in the statement of operations, in their respective accounts. (v) Hedging transactions Brazilian Securities uses financial derivatives for the following purposes: (i) foreign exchange economic hedge to protect against fluctuations in the US dollar exchange rate (liability with the Inter-American 15 of 57

19 Development Bank (IDB)), (ii) economic hedge for securitized transactions, and (iii) possibility of sale of Real Estate Loan Backed Securities (CRIs) to domestic investors. Although the Company uses derivatives for protection, it does not apply hedge accounting, and the fair value option is adopted. (d) Derecognition of financial assets and liabilities The accounting treatment of transfers of financial assets depends on the extent to which risks and rewards related to the assets are transferred to third parties: (i) (ii) (a) (b) (iii) (a) (b) If the Company transfers substantially all the risks and rewards to third parties - unconditional sale of financial assets, sale of financial assets based on an agreement that provides for their repurchase at fair value on the repurchase date, securitization of assets in which the transferor does not retain a subordinated debt or grant a credit improvement to new holders, and other similar events - the financial asset transferred is derecognized and any rights or obligations retained or created upon the transfer are simultaneously recognized. If the Company retains substantially all the risks and rewards associated with the financial asset transferred - sale of financial assets based on an agreement that provides for their repurchase at a fixed price or at sales price plus interest, a securities loan agreement whereby the borrower undertakes to return the same assets or similar assets, and other similar events - the financial asset transferred is not derecognized and continues to be measured under the same criteria used before the transfer. However, the following items are recognized: A corresponding financial liability, for an amount equal to the consideration received, which is subsequently measured at amortized cost. The income from the financial asset is retained, together with any expenses incurred on the new financial liability. If the Company does not transfer and does not retain substantially all the risks and rewards associated with the financial asset transferred - sale of financial assets with a purchased call option or a written put option that is not significantly out of the money, securitization of assets in which the assignor retains a subordinated debt or other type of credit improvement in regard to the part of the asset transferred, and other similar events - the following distinction is made: If the assignor does not retain control over the financial asset transferred, the asset is derecognized and any rights or obligations retained or created upon the transfer are recognized. If the assignor retains control, it continues to recognize the financial asset transferred at an amount equivalent to its exposure to changes in value and recognizes a financial liability in relation to the financial asset transferred. The net carrying amount of the asset transferred and the related liability is the amortized cost of the rights and obligations retained, if the asset transferred is measured at amortized cost, or at the fair value of the rights and obligations retained, if the asset transferred is measured at its fair value. Therefore, financial assets are derecognized only when the rights to the cash flow generated by them have been extinguished or when substantially all the inherent risks and rewards have been transferred to third parties. Similarly, financial liabilities are derecognized only when the obligations generated by them have been extinguished or when they are acquired for the purpose of being canceled or resold. 16 of 57

20 Real estate related receivables that back securitization transactions without co-obligation clauses, are derecognized when the related Real Estate Loan Backed Securities (CRIs) are issued. Any residual benefits are recognized on an accrual basis, and recorded as "Residual benefit in securitized transactions", in non-current assets, net of any provision for guarantees. (e) (i) Impaired financial assets Definition A financial asset is considered impaired and, therefore its carrying amount is adjusted to reflect the effect of impairment, when there is objective evidence of events that:. In the case of debt instruments, cause an adverse impact on estimated future cash flows at the transaction date.. In the case of equity instruments, imply that their carrying amount may not be fully recovered. Generally, the carrying amounts of impaired financial instruments are adjusted for expenses in the statement of operations related to the period in which the impairment becomes evident, and the reversal, if any, of impairment losses previously recorded is recognized in the statement of operations for the period in which the impairment is reversed or reduced. When the recovery of any recognized amount is considered improbable, the amount is derecognized, not affecting any actions that may be taken by entities to perform the collection until their contractual rights are extinguished. The Company performs an analysis of the recoverability of the amounts recorded as financial assets, in order to record any impairment losses, when applicable. As a result of this assessment, the Company concluded that these assets are not recorded at amounts higher than their probable recoverable amounts, and it was not necessary to make any adjustments. (ii) Loans and receivables at amortized cost The amount of impairment loss incurred on loans and receivables measured at amortized cost is equal to the difference between their carrying amount and the present value of their estimated future cash flow, and is presented as a reduction of the adjusted asset balance. In estimating future cash flow, the following factors are taken into consideration:. All amounts that are expected to be obtained during the remaining life of the asset, including, when applicable, those that may result from the repossession of the collateral provided for the instrument (less the cost of obtaining and subsequently selling the collateral). The impairment loss takes into consideration the probability of collection of accrued interest receivable.. The various types of risks to which each asset is subject.. The circumstances in which collections are expected to be made. 17 of 57

21 Specifically regarding impairment losses arising from the materialization of the risk of default by counterparties (credit risk), an asset becomes impaired when there is evidence of deterioration of a counterparty's ability to pay, either due to default or for other reasons. The contracts for real estate related receivables have a fiduciary lien clause on the property. Management believes that this guarantee is sufficient to cover probable losses arising from defaults by borrowers. No additional provision has therefore been recorded. (iii) Equity instruments measured at acquisition cost Impairment losses on equity instruments measured at their acquisition cost corresponds to the difference between the carrying amount and the present value of the expected future cash flow, discounted at the market return rate for similar securities. Impairment losses are recognized in the statement of operations for the period in which they were originated, as a direct reduction of the cost of the instrument. These losses can only be reversed subsequently if the related assets are sold. (f) Repurchase agreements Purchases of financial assets based on a non-optional resale agreement at fixed prices are recognized in the balance sheet as financing granted, based on the nature of the debtor, under "Loans and advances to financial institutions". Differences between the purchase and sale prices are recognized as interest over the agreement period. (g) Property and equipment Property and equipment includes facilities, furniture and equipment, IT equipment and other fixtures and are stated at acquisition cost less accumulated depreciation and any impairment losses. The depreciation is calculated using the straight-line method and recognized in the statement of operations, basically using the following depreciation rates (based on the average years of estimated useful life of the different asset classes): 18 of 57 Annual rate Facilities 10% Furniture and equipment 10% IT equipment 20% Other fixtures 10% At December 31, 2012, management reviewed the useful lives of property and equipment items and concluded that they remained adequate. The Company assesses, at the end of each reporting period, if there is any indication that an asset may be impaired (that is, its carrying amount exceeds its recoverable amount). If this is the case, the carrying amount of the asset is reduced to its recoverable amount, and future depreciation expenses are adjusted in proportion to the revised carrying amount and the new remaining useful life.

22 As a result of this assessment, the Company concluded that these assets are not recorded at amounts higher than their probable recoverable amounts, and thus that it was not necessary to make any adjustments. (h) Provisions and contingent assets and liabilities Management, in preparing its financial statements, makes a distinction between:. Provisions: credit balances that cover present (legal or constructive) obligations at the end of the reporting period as a result of past events that could give rise to a loss or disbursement for the entity, whose occurrence is considered probable and whose nature is certain, but whose amount and/or timing is uncertain.. Contingent liabilities: possible obligations that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more future events not wholly within the control of the entity. This includes the entity's present obligations, if it is not probable that an outflow of resources in the form of economic benefits will be required for their settlement.. Contingent assets: assets that could arise from past events and whose existence will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company. They are not recognized in the balance sheet or in the statement of operations, but are disclosed in the, except when it is probable that these assets will generate economic benefits. The Company's financial statements include all substantial provisions in relation to which there is a more likely than not chance that the obligation has to be settled (probable loss). In accordance with financial reporting standards, contingent liabilities for possible losses are not recognized in the financial statements, but instead disclosed in the Notes thereto. Additionally, the Company records provisions for payment of management compensation and employee profit sharing, since they are constructive obligations as defined in CPC 33 - "Employee Benefits". (i) Recognition of income and expenses Income and expenses are recorded on an accruals basis. Income from services rendered is recognized only when the outcome of the transaction(s) can be reliably estimated, in the proportion of the services rendered up to the date of the financial statements. Interest income and expenses for all interest-bearing financial instruments, except those held for trading or designated at fair value through profit or loss, are recognized within "Interest and similar income" and "Interest and similar expenses" in the statement of operations using the effective interest method. The effective interest method is the method used to calculate the amortized cost of the financial asset or liability and allocate the interest income or expenses over the relevant period. The effective interest rate is the discount rate applied to all future payments and receipts, estimated over the expected life of the financial instrument or, if appropriate, a shorter period, that results in the net carrying amount of the financial asset or liability. In calculating the effective interest rate, the Company estimates cash flow considering all contractual terms of the financial instrument, but does not consider future credit losses. 19 of 57

23 (j) Income tax and social contribution The provision for income tax, when applicable, is calculated based on taxable income at the rate of 15%, plus an additional 10% of taxable income over a specific amount, and the social contribution on net income at the rate of 9%, in accordance with current legislation. Deferred tax assets, basically arising from temporary differences, are recognized. According to Provisional Measure 449/08, converted into Law 11941/09, the changes in the criteria for recognition of income, costs and expenses computed for purposes of profit for the year, introduced by Law 11638/07 and articles 36 and 37 of the abovementioned Provisional Measure, will not affect the calculation of taxable income of the legal entity choosing the Transitional Tax System (RTT). Therefore it is necessary to consider, for tax purposes, the accounting criteria and methods effective at December 31, For accounting purposes, the tax effects of adopting Law 11638/07 are recorded in the corresponding deferred tax assets and liabilities. Deferred taxes are calculated on income tax and social contribution losses and the temporary differences between the tax calculation bases of assets and liabilities and the respective book values in the financial statements. Deferred tax assets are recognized to the extent that it is probable that sufficient future taxable income will be available to offset temporary differences and/or tax losses, considering the projections for future income based on internal assumptions and future economic scenarios which may, therefore, suffer changes. (k) Statement of cash flows The terms below are used in the statements of cash flow with the following meanings:. Cash flows: inflows and outflows of cash and cash equivalents, which are short-term, highly liquid investments which are subject to an insignificant risk of changes in value.. Operating activities: the principal revenue-producing activities of the Company and other activities that are not investing or financing activities.. Investing activities: the acquisition and disposal of long-term assets and other investments not included in cash equivalents.. Financing activities: activities that result in changes in the size and composition of the contributed equity and borrowings of the Company. In preparing the statement of cash flows, short-term, highly liquid investments which are subject to an insignificant risk of changes in value were classified as "Cash and cash equivalents". (l) Management compensation and employee profit sharing Management bonuses and employee profit sharing are accrued over the course of each year and approved annually by the Board of Directors and Executive Officers, respectively. This provision is recognized because it is a constructive obligations, as defined in CPC 33 - "Employee Benefits". 20 of 57

24 (m) Earnings (loss) per share Earnings (loss) per share are calculated by dividing the Company's profit (loss) for the year by the weighted average number of shares in circulation during the year. There is no difference between basic earnings per share and diluted earnings per share. (n) Segment reporting The Company operates solely in the segment of securitization of real estate related receivables, meaning that the segment reporting requirement of CPC 22 is not applicable. (o) Critical accounting estimates and judgments The Company makes accounting estimates and judgments, based on assumptions, which in the future may not equal the related actual results. Estimates and judgments that, in management's opinion, may be considered more relevant, and could be subject to variation in the future, resulting in an eventual impact on the Company's assets and liabilities, are disclosed below: (i) (ii) (iii) Fair value of financial instruments: the fair values of financial instruments that do not have quotations available on the market, for example, through the stock exchange, are measured using valuation techniques, and the methods and assumptions used are based mainly on market conditions and on information available as at the date of the financial statements. The accounting policies disclosed in Notes 2(b) and 2(c) present, respectively, detailed information on the "Definition and classification of financial instruments" and "Measurement of financial assets and liabilities and recognition of changes in the fair value". Recording of deferred tax assets: According to information disclosed in Note 2(j), the Company recognized deferred taxes on temporary differences and, also, on income tax and social contribution losses. Such recognition occurs only to the extent that it is probable that future taxable profits will be available to offset these tax assets, considering the projections of future results based on internal assumptions and future economic scenarios. Note 13 presents detailed information on deferred taxes, as well as the expected periods for their realization. Derecognition of financial assets: according to information disclosed in Note 2(d), Real estate related receivables that back securitization transactions without co-obligation clauses are derecognized when the related Real Estate Loan Backed Securities (CRIs) are issued, and any residual benefits are recognized on an accrual basis. Note 28(d) discloses detailed information for each series of CRIs. 3 Cash and cash equivalents Bank deposits 2,210 9,580 2,210 9, of 57

25 4 Debt instruments The analysis of the "Debt instruments" balance, by classification and type, is as follows: Classification Financial assets held for trading 221, ,859 Loans and receivables 179,779 40,737 Total 401, ,596 Type Real Estate Loan Backed Securities (CRIs) Unrestricted 221, ,859 Bank Deposit Certificates (CDB) Unrestricted 82,942 11,060 Bank Deposit Certificates (CDB) (a) Restricted 90,981 24,169 Fixed-income Investment Fund (b) Restricted 5,856 5,508 Total 401, ,596 (a) In 2012, includes R$ 2,539 ( R$ 2,363) pledged as security upon acquisition of receivables; R$ 3,690 ( R$ 3,586) referring to funds from financial investments restricted to securitizations of receivables with a coverage clause for net capital deficiency; R$ 11,590 ( R$ 17,617) linked to the payment of acquired portfolios of receivables and default coverage, R$ 71,898 ( R$ 603) restricted to the credit line agreement with IDB, and R$ 1,264 related to a deposit of amounts to be transferred, arising from the termination of Series 210 and 211. (b) In 2012 and 2011, this balance corresponds to a linked balance for possible coverage of default, by the credit assignor, of Series 212. Debt instruments and 2011 have the following final maturities and yield rates: Description Rate Final maturity Rate Final maturity Real Estate Loan Backed Securities (CRIs) 8.00% p.a. to 46.40% p.a. + IGPM; 11.00% p.a. + TR, 7.50% p.a. + IPCA, 11.50% p.a. to 12.50%, with no index 11/20/ % to 51.11% p.a. IGPM, 3.07% p.a. to 11.00% p.a. + TR, 11.50% p.a. to 40.61% p.a. with no index 12/20/41 Bank Deposit Certificates (CDB) 70.00% to % of CDI 11/11/ % to % of CDI 11/11/2027 Fixed-income Investment Funds 96.00% of CDI Not applicable 96.00% of CDI Not applicable IGPM - General Market Price Index IPCA - The Amplified Consumer Price Index TR - Referential Rate Credit quality: the bank deposit certificates and fixed-income investment fund quotas are contracted with highly rated Brazilian banks. The Real Estate Loan Backed Securities are considered low credit risk, since they are backed by real estate loans and, therefore, have high repayment capacity, considering their characteristics and collateral. 22 of 57

26 5 Real estate related receivables (a) Analysis Real estate related receivables include real estate loan portfolios and rental receivables acquired by Brazilian Securities, which will be used to back the future issue of Real Estate Loan Backed Securities. The analysis of the "Real estate related receivables" balance, by classification and type, is as follows: Classification Financial assets held for trading 154, ,415 Type Real estate related receivables of Brazilian companies 154, ,415 (b) Details Final maturity Index Interest % p.a. Tranches 95 and 96 (a)(b) 8/30/2027 TR ,523 18,785 Bank Credit Note (CCI) - BS (b) 2/28/2041 INCC, IGPM or TR 0.00 to , ,630 Total 154, ,415 INCC - National Civil Construction Index (INCC) (a) These tranches are still recorded in the balance sheet, even though they were securitized; the risks and benefits were not fully transferred (Note 10(b)). (b) In 2012, installments of real estate related loans overdue for more than 90 days totaled R$ 3,146 ( R$ 1,868). (c) Credit quality The contracts for real estate related receivables have a fiduciary lien clause on the property. Management believes that this guarantee is sufficient to cover probable losses arising from defaults by borrowers. No additional provision has therefore been recorded. The real estate related receivables are considered high-quality assets, since they are purchased only if they present characteristics, guarantees and payment history that indicate a high probability of realization, in order for them to be subject to securitization. 6 Other loans and receivables The analysis of the "Other loans and receivables" balance is as follows: Transactions pending settlement Total of 57

27 7 Other assets The analysis of the "Other assets" balance is as follows: Advances for salaries and vacation pay Advances for sundry expenses Assets not for own use (*) Other Total (*) Non-depreciable assets received by the Company in full settlement of financial assets, representing receivables from third parties, held for sale for up to one year, measured at cost and reduced to the realizable value with the constitution of a provision for adjustments to the recoverable value of the assets, as applicable. 8 Property and equipment The Company's property and equipment refer to property and equipment for its own use. The Company does not have property and equipment leased under operating lease agreements. The Company was not party to any finance lease agreement during the years 2012 and The details of the property and equipment items, by category of assets, are as follows: Cost Accumulated depreciation Net balance Facilities, furniture and equipment in use 181 (136) 45 Data processing system 257 (257) - Other As 483 (393) 90 Facilities, furniture and equipment in use 181 (118) 63 Data processing system 235 (222) 13 Other As at December 31, (340) 121 The changes in "Property and equipment" were as follows: 24 of 57 Cost Balance at the beginning of the year Additions/disposals (net) Balance at the end of the year Accumulated depreciation Balance at the beginning of the year (340) (292) Depreciation (53) (48) Balance at the end of the year (393) (340 ) Property and equipment, net

28 Depreciation expenses were recorded under "Depreciation and amortization" in the statement of operations. 9 Derivative financial instruments The Company acquired derivative financial instruments, specifically swap contracts, from financial institutions on the over-the-counter market. Such swaps were substantially acquired for the purpose of hedging the Company's transactions. The analysis of the trading derivatives held by the Company is as follows: 2012 Notional (amount) Amounts received (paid ) Amounts receivable (payable) - curve Fair value Trading derivatives Foreign currency risk Swaps IDB (a) 202,011 19,261 (2,976) (3,323) Total 202,011 19,261 (2,976) (3,323) Trading derivatives - separate equity Interest rate risk Interest rate swap (b) 80,496 (1,418) (13,865) (25,107) Total 80,496 (1,418 ) (13,865) (25,107) (a) Contracts acquired as foreign exchange economic hedges (IDB funding - Note 12(a)). (b) Contracts acquired as economic hedges for securitized transactions (Swaps of series 80 to 84 and 101 to 103), belonging to separate equity of the related CRIs - Note 28(d) Notional (amount) Amounts received (paid ) Amounts receivable (payable) - curve Fair value Trading derivatives Foreign currency risk Swaps IDB (a) 171,040 (23,809) 15,525 17,461 Interest rate risk Interest rate swap (b) - (128) - - Total 171,040 (23,937 ) 15,525 17,461 Trading derivatives - separate equity Interest rate risk Interest rate swap (c) 125,180 1,172 (9,530) 5,953 Total 125,180 1,172 (9,530 ) 5,953 (a) Contracts acquired as foreign exchange economic hedges (IDB funding - Note 12(a)). 25 of 57

29 (b) In specific cases, the Company engaged exceptionally in transactions involving derivatives, as approved by its Executive Board, which enabled the sale of CRIs to a local investor, with a view to developing this market domestically. (c) Contracts acquired as economic hedges for securitized transactions (Swaps of series 80 to 84 and 101 to 103), belonging to separate equity of the related CRIs - Note 28(d). The analysis of notional and/or contractual amounts of trading derivatives, by maturity, is as follows: Up to 3 months 3 to 12 months Over 12 months Total Total Swaps , , , ,220 The notional and/or contractual amounts of the agreements do not reflect the actual risk assumed by the Company, since the net position of these financial instruments arises from their offsetting and/or combination. This net position is used by the Company mainly to hedge the interest or foreign exchange risk. The results of these financial instruments are recognized in "Gains (losses) on financial assets and liabilities (net)" in the statement of operations and increase or offset, as applicable, the results of the hedged investment. All swap transactions in the Company's portfolio were traded on the over-the-counter market with private financial institutions as counterparties, and are registered at the Clearing House for the Custody and Financial Settlement of Securities (CETIP) without margin as guarantees. The calculation of the market value (fair value) by BS was made with the direct participation of the Market Risk area, which adopted as one of its main assumptions the use of rates and indices disclosed by the Futures and Commodities Exchange (BM&F), the National Association of Open Market Institutions (ANBIMA), the Central Bank of Brazil (BACEN) and the Getúlio Vargas Foundation (FGV), as applicable. The maximum exposure to credit risk arising from transactions involving derivative financial instruments corresponds to the fair value of these instruments. 10 Liabilities from marketable securities The analysis of the "Liabilities from marketable securities" balance, by classification and type, is as follows: Classification Financial liabilities at amortized cost 70,488 82,401 70,488 82,401 Type Debentures (a) 53,691 60,299 Real Estate Loan Backed Securities (CRIs) (b) 16,797 22,102 Total 70,488 82,401 (a) In 2012 and 2011, the debentures are restated at the Interbank Deposit Certificates (CDI) and interest rates of 2.00% p.a., with maturities up to October 20, of 57

30 (b) The Real Estate Loan Backed Securities (CRIs) have the following characteristics: Final maturity Index Interest % p.a. Senior Interest % p.a. Junior Series 95 and 96 5/1/2023 TR ,797 22,102 Total 16,797 22, Domestic borrowings The analysis of the "Domestic borrowing" balance is as follows: Banco Safra (a) - 15,072 Banco Bradesco (b) - 10,110 Total - 25,182 (a) This refers to Bank Credit Notes, subject to CDI plus 1.9% p.a., of which R$ 10 million was settled on August 15, 2012 and R$ 5 million on August 1, (b) This refers to an overdraft account, subject to CDI plus 2.23% p.a.; the amount of R$ 10 million was settled on July 20, Foreign borrowings The analysis of the "Foreign borrowing" balance is as follows: Classification Other financial liabilities at fair value through profit or loss 209, ,064 Total 209, ,064 Of which: IDB (*) 209, ,064 Total 209, ,064 (*) In 2006, BS entered into a credit line with the Inter-American Development Bank (IDB), with an amount of US$ 75 million and interest rate of London Interbank Offered Rate (LIBOR) plus 2.375% p.a. It is intended to finance the acquisition of mortgage instruments (residential and commercial) and commercial rental instruments, for subsequent issue and placement of Real Estate Loan Securities (CRIs) backed by these instruments and their placement in the market. In 2010, with the same purpose, BS entered into a new credit line amounting to US$ 25 million and interest rate of LIBOR plus 3.8% p.a. 27 of 57

31 On November 12, 2012, BS and IDB agreed, with an amendment to the agreement, that the maturity of both lines would become May 15, 2015 and that the payment of the related principal would be made in two equal installments, the first of which falling due on November 15, 2014 and the second on May 15, At December 31, 2012, R$ 71,898 ( R$ 603) from the obtained amount (Note 4(a)) was recorded in a restricted account. This funding was classified as "other financial liabilities at fair value through profit or loss" because they are hedged by derivative transactions (swaps - Note 9), which are also measured at fair value through profit or loss. Therefore, this transaction is intended to eliminate any recognition and measurement inconsistencies related to the fair value of both transactions - swap (hedge instrument) and IDB funding (hedged item). 13 Income tax and social contribution (a) Analysis of income tax and social contribution tax bases The total charges for the year may be reconciled to the accounting profit (loss) as follows: Profit (loss) before taxation and after profit sharing (6,852) 55,997 Additions Temporary additions - swaps 4,993 - Mark-to-market for borrowings 3,849 - Mark-to-market for swaps 2,283 - Mark-to-market for CRIs 46,749 - Settlement of swaps - previously excluded 16,998 - Other temporary additions Permanent additions 2,107 2,400 Exclusions Temporary exclusions- swaps - (67) Mark-to-market for swaps - (605) Mark-to-market for CRIs - (49,636) Settlement of swaps - previously added - (25,101) Reversal of provision for goodwill on merger - (885) Other temporary exclusions (730) - Income tax and social contribution losses offset (16,927) - Tax basis (income tax and social contribution) 53,075 (16,927) Income tax 13,245 - Social contribution 4,777 - Total 18, of 57

32 (b) Calculation of effective tax rates The effective tax rates are as follows: Profit (loss) before taxation and after profit sharing (6,852) 55,997 Permanent additions 2,107 2,400 Calculation basis after permanent adjustments (4,745) 58,397 Income tax and social contribution rates 34% 34% Calculation basis of the effective rate (1,613) 19,855 Effective rate 0.00% 35.46% (c) Deferred taxes The "Deferred tax assets" and "Deferred tax liabilities" balances are as follows: Deferred tax assets 7,604 9,255 Of which: Tax losses - 5,755 Temporary differences 7,604 3,500 Mark-to-market 1, Swaps 5,711 3,240 Other Deferred tax liabilities 3,199 24,758 Of which: Temporary differences 3,199 24,758 Mark-to-market 3,199 19,752 Swaps - 5,006 Changes in "Deferred tax assets" and "Deferred tax liabilities" in the last two years were as follows: At December 31, 2011 (Charge) credit to profit (Charge) credit to equity At December 31, 2012 Deferred tax assets 9,255 (1,651) - 7,604 Deferred tax liabilities (24,758) 21,559 - (3,199) Total (15,503 ) 19,908-4,405 At December 31, 2010 (Charge) credit to profit (Charge) credit to equity At December 31, 2011 Deferred tax assets 6,948 2,307-9,255 Deferred tax liabilities (2,689) (22,069) - (24,758) Total 4,259 (19,762) - (15,503) 29 of 57

33 The expected realization periods are: Deferred tax assets Recoverable in up to 1 year 1,583 6,015 Recoverable between 1 and 5 years 5,067 3,240 Recoverable after 5 years Total 7,604 9,255 Deferred tax liabilities Payable in up to 1 year 3,199 24,758 Payable between 1 and 5 years - - Total 3,199 24, Other liabilities The analysis of the "Other liabilities" balance is as follows: Liabilities from the acquisition of receivables (a) 92,285 45,334 Dividends payable (Note 15) - 8,605 Amounts to be transferred (b) 3,092 5,168 Premiums payable (c) 4,159 2,103 Liabilities with suppliers 1,013 1,174 Provision for contingencies (d) Transactions pending settlement Other 948 1,068 Total 101,987 63,593 (a) Amounts payable for the acquisition of real estate related receivables, substantially with maturity up to November 11, 2027, adjusted for 77.50% p.a. to % p.a. of the CDI and 12.68% p.a. + IGPM, pursuant to the related agreements. (b) Amounts to be transferred because of the fiduciary guarantee received, due to acquired real estate receivables flows, as well as receipts of third-party real estate receivables, which are managed by the Company. (c) This balance refers to the provision for the director's bonus and employee profit sharing, as well as the respective charges. (d) This balance refers to the provision for civil contingencies, as disclosed in Note 28(b). 30 of 57

34 15 Equity (a) Share capital The Company's capital in 2012 and 2011 is fully subscribed and paid up in the amount of R$ 100,229, and comprises 45,845,987 nominative common shares, with no par value. (b) Dividends The Company's bylaws determine the distribution of dividends amounting to at least 25% of the profit for the year, after the allocation to the legal reserve. In 2011, management proposed to the stockholders the distribution of minimum mandatory dividends, in accordance with statutory provisions, amounting to R$ 8,605, as well as the retention of the remaining profits for reinvestment in the activities of the Company, based on the capital budget approved by management. At the Annual General Meeting held on March 30, 2012, the stockholders approved the distribution of minimum mandatory dividends relating to 2011 and the allocation to the legal reserve and retained profits, as proposed on December 31, (c) Reserves From the profit for the year, after deductions and legal provisions, the following allocations will be made: Legal reserve: 5% of the profit for the year, until it reaches 20% of the capital. The purpose of this reserve is to ensure the integrity of capital, and it may be used only to offset losses or increase capital. Capital reserve: In accordance with Brazilian corporate legislation, the capital reserve comprises the premium paid by the Company on the subscription of shares that exceeds the amount intended to form the capital. The capital reserve can only be used for: (i) absorption of losses that exceed the retained earnings and revenue reserves, (ii) capital increase, or (iii) payment of dividends on preferred shares in certain circumstances. Expansion reserves: After the allocation of dividends, the remaining balance will be retained for reinvestment in the Company's activities, based on the capital budged approved by management. 16 Interest and similar income Interest and similar income in the statement of operations includes interest accrued during the year on all financial assets with implicit or explicit returns, calculated using the effective interest rate method. The analysis of the main items of interest and similar income in 2012 and 2011 is as follows: Loans and advances to financial institutions - 4,152 Debt instruments 32,166 57,092 Other loans and receivables - 85 Real estate related receivables (a) 33,406 56,223 Total 65, ,552 (a) In 2012, this balance includes income obtained by selling real estate receivables to Banco Panamericano, which amounted to R$ 5, of 57

35 17 Interest and similar expenses Interest and similar expenses in the statement of operations includes interest accrued during the year on all financial assets with implicit or explicit returns, including remuneration in cash, calculated using the effective interest method. The analysis of this balance is as follows: Liabilities from marketable securities 31,058 34,354 Total 31,058 34, Residual benefit in securitized transactions This amount corresponds to changes in the balances, net of any guarantees provided, of the separate equity of securitized transactions that, pursuant to Law 9514, of November 20, 1997, will be included again in the common equity of the securitization company, upon the extinguishing of the respective fiduciary arrangement and the settlement of the related real estate backed securities. The amount in 2012 was R$ 7,750 ( R$ 16,336). 19 Services revenue This balance includes all income earned from the provision of services accrued for the Company during the year. The analysis of this balance is as follows: Technical advisory services 2,837 3,351 Total 2,837 3, Gains (losses) on financial assets and liabilities (net) Gains (losses) on financial assets and liabilities (other than equity instruments) include proceeds from the disposal and carrying value adjustments of financial instruments, except those attributed to interest accrued as a result of the use of the effective interest rate method. The analysis of this balance is as follows: Gains (losses) on derivative transactions - swaps (1,522) 6,042 Total (1,522) 6, of 57

36 21 Exchange differences Exchange differences reflect the gains or losses on foreign borrowing, arising from the changes in foreign exchange rates. The analysis of this balance is as follows: Exchange variation gains (losses) - borrowing from IDB (Note 12) (17,025) (19,049) Total (17,025) (19,049) 22 Other operating income (expenses) Monetary variation gains Provision for contingencies (*) (350) (75) Other operating income (expenses) 2,907 4,649 Total 3,111 4,580 (*) Includes civil contingency expenses, as disclosed in Note 28(b). 23 Personnel expenses (a) Analysis The analysis of the "Personnel expenses" balance is as follows: Key management direct compensation Directors' fees 1,407 1,248 Directors' bonuses 1,720 1,250 Other direct compensation 8,538 3,159 Social security costs 2,403 1,304 Other social costs Benefits 1, Total 16,094 8,044 (b) Share-based compensation On May 2, 2008, options for the purchase of 7,323,636 nominative preferred shares of BFRE, the direct parent company of Brazilian Securities, were granted to the managers and employees holding management positions at BFRE and companies under its control, including Brazilian Securities, exercisable from 2009, according to the conditions established in the Plan and in the Agreements issued by BFRE itself, the grantor of the referred options. Management calculated the probable fair value of the options at the date of grant, through mathematical models based on multiples of the results of similar 33 of 57

37 companies, and determined that the fair value of these options was close to zero. Thus, there were no accounting entries to be made, in conformity with CPC 10 - "Share-Based Payments". In April 2011, all Plan beneficiaries, who held managing positions at BFRE Group, exercised the first third of options, which became exercisable from May 2, 2009, and one beneficiary exercised the second third of his options, exercisable from May 2, 2010; in April 2012, all beneficiaries exercised the second and the last third of options, which became exercisable as from May 2, 2010 and May 2, 2011, respectively. On July 7, 2011, BFRE, the direct parent company of Brazilian Securities, issued 1,295,661 preferred shares, as a result of the purchase option exercised by the Option Plan beneficiaries, of which 1,220,606 shares at the price of R$ and 75,055 shares at the price of R$ All the shares were fully subscribed and paid up to July 27, 2011, totaling R$ 4,881. Through July 27, 2011, based on a private transaction and upon the approval of the Brazilian Securities Commission (CVM), BFRE has acquired 1,295,661 preferred shares for R$ per share, with the total amount of R$ 7,304. On April 09, 2012, BFRE, the direct parent company of Brazilian Securities, issued 2,291,104 preferred shares, as a result of the purchase option exercised by the Option Plan beneficiaries, of which 1,145,552 shares at the price of R$ and 1,145,552 shares at the price of R$ All the shares were fully subscribed and paid up to April 23, 2012, totaling R$ 8,248. Through April 24, 2012, based on a private transaction and upon the approval of the CVM, BFRE has acquired 2,291,104 preferred shares for R$ per share, with the total amount of R$ 12,398. Therefore, the shares granted according to the terms of the Company's Stock Option Plan were automatically and legally extinct, considering that they were fully exercised. All 3,586,765 preferred shares maintained in treasury of the parent company BFRE were cancelled by a decision of the stockholders at the Extraordinary General Meeting held on April 26, Other administrative expenses The analysis of this balance is as follows: 34 of 57 Technical reports 7,308 10,118 Financial system services 1,645 5,818 Advertising 544 1,362 Insurance premiums 365 1,454 Technology and systems 952 1,018 Rentals and common area maintenance fees 1, Communications Travel expenses Surveillance and security Third-part services 809 1,476 Notary office fees Other administrative expenses (a) 491 1,533 Total 14,158 24,342 (a) In 2011, this balance includes R$ 1,005 for a tax assessment notice, as disclosed in Note 28(b).

38 25 Transactions with related parties (a) Transactions with related parties The transactions and compensation for services between group companies are made at the usual market amounts, rates and terms. Transactions with related parties may be summarized as follows: 35 of 57 Assets Revenue Assets Revenue (liabilities) (expenses) (liabilities) (expenses) Brazilian Finance & Real Estate S.A. (j) Amounts payable (a) (36) - (66) - Dividends payable (Note 15(b)) - - (8,605) - Brazilian Mortgages Companhia Hipotecária (l) Amounts payable (b) (28) - - (1,296) Amounts receivable (c) Banco BTG Pactual S.A. (k) Bank Deposit Certificates (CDB) (d) Amounts payable (e) - (3,138) - - Amounts receivable (f) Banco Panamericano S.A. (k) Bank deposits Bank Deposit Certificates (CDB) (g) 77,699 1, Credit assignment (h) - 5, Panamericana de Seguros S.A. (l) Amounts payable (i) (3) (34) - - (a) Reimbursement of amounts relating mainly to the use of common space, that is, rentals and common area maintenance fees, the Real Estate Municipal Tax (IPTU) and energy consumption. (b) At December 31, 2012, this balance referred to the reimbursement of administrative expenses. In 2011, it corresponds to the recognition of the accounts payable to BM, for the purchase of real estate related receivables, restated at the pro-rata variation of IGP-M or TR + interest ranging from 7.67% p.a. to 18.50% p.a. (c) In 2011, amounts receivable related to credits granted by BM, which, however, collected these credits, according to the "Private Credit Assignment Agreement and Other Covenants", signed between the period from April to October (d) This refers to bank deposit certificates, which were restated at % of CDI and with maturity up to June 10, 2013, the early redemption of which was made on August 15, (e) This balance refer to the expense of the adjustment of the obligation from the acquisition of real estate receivables portfolio with Banco BTG Pactual S.A., pursuant to the Private Real Estate Credit Assignment Agreement and Other Covenants of May 25, 2012, which was remunerated at 94% of CDI and was settled on November 14, The real estate receivables acquired from

39 BTG Pactual S.A. were used to back a structured transaction, in the issue of the Series 279 CRI of May 25, 2012, whose accrued revenue had the same amount, that is, the related expense was fully offset. (f) Refers substantially to the revenue received for the rendering of securitization transaction structuring services (structured series 279). (g) This refers to bank deposit certificates, which are restated by % of CDI and fall due up to December 19, (h) Pursuant to the "Private Credit Assignment Agreements and Other Covenants" signed on September 26, 2012, October 29, 2012, November 27, 2012 and December 19, 2012, the Company granted real estate receivables to Banco Panamericano S.A., without substantial retention of risks and benefits, for R$ 155,152. The amount of the granted portfolio totaled R$ 149,592, generating a profit of R$ 5,560 with the sale. (i) Refers to group life insurance expenses. (j) Parent company. (k) Indirect parent company. (l) Associated company. (b) Management compensation Key management compensation is disclosed in Note 23(a) and refers to short-term benefits. The sharebased compensation agreement is disclosed in Note 23 (b). 26 Risk management The Company's risk management and control policy is in line with the best market prices and the guidelines defined by regulatory agencies. Policies and procedures and a risk management system capable of identifying, managing, assessing, controlling and mitigating risks inherent to its business were implemented, providing the Executive Officers with an overview of all risks. The risk management policies are designed to support calculation of risk exposure, guide employees and establish procedures to monitor, control, measure, assess and report the risks to the Executive Officers. The Company reviews and updates regularly its risk management policies and systems to reflect changes in the scenario, markets and products and to adopt best practices. (i) Governance and responsibility in regard to risks The Conglomerate's Governance and Compliance structure is intended to monitor, improve and advise the Board of Directors and the Executive Board regarding the principles, guidelines and the best corporate governance and risk management practices. The structure is responsible for defining, 36 of 57

40 managing and testing the adherence to the Code of Ethics and Good Behavior, assessing possible conflicts of interest, adopting strategies and measures for the dissemination of the Code of Ethics and Good Behavior of the Conglomerate, as well as referring violations for analysis and discussion by the appropriate area, dispelling doubts regarding the interpretation of the Code of Ethics and Good Behavior and of the Policies for Disclosure and Trading. (ii) Stress test scenarios Stress test scenario analyses are important tools to understand the Company's capital sensitivity and business plans in extreme but plausible situations and consider the potential financial effect on business plans. This tool provides Executive Officers with the possibility of establishing action plans to mitigate these events, should they occur. Periodic exercises are carried out to compare the existing capital requirements with the volume demanded by stress scenarios, including the deterioration of the global economic scenario on a more severe basis. Qualitative and quantitative tests are used to estimate the potential impact on the capital position under these scenarios. These tools assist in the mitigation of the risks presented by financial crises. While the prediction of future events may not cover all events or precisely identify future events, scenarios analyzed in the past may represent privileged information in the identification of actions required to mitigate risks when similar events occur. (iii) Sensitivity analysis Below is a sensitivity analysis of the consolidated position by primitive market risk factor of the financial instruments for which the Company is responsible. Scenarios (*) Risk factors Trading and Banking Portfolio Exposures subject to variation (1) Probable (2) Possible (3) Remote Price index coupon Price index coupon rates (103) (7,098) (13,723) Interest rate Fixed interest rate (14) (2,648) (5,017) Other interest rate coupon Interest rate coupon rates (10) (1,806) (3,345) Foreign currency Foreign exchange rates (15) (372) (745) Currency coupon Currency coupon rates (20) (919) (1,850) Total (162) (12,843) (24,680) (*) Amounts before tax and in thousands of reais. The sensitivity analysis was made with market data at the closing of the year ended December 31, 2012, and the negative impacts on the positions of each vortex/maturity were considered at all times. The effects do not consider the correlation of the vortexes, the risk factors nor the tax impacts. The financial impacts disclosed reflect the result of the risk factor variation management in the portfolio economic value and do not necessarily lead to financial disbursements or adjustments to market value, considering that the banking exposures represent a significant percentage of the portfolio. 37 of 57

41 The scenarios used were defined according to the provisions of CVM Instruction 475 of December 17, Scenario 1 - Application of movement (increase or decrease) of one basis point (0.01%) in the structure at forward interest rates to all vortexes/terms. Example: Rate of 10% p.a. becomes 10.01% p.a. or 9.99% p.a. The quotation of R$ /US$ dollar was considered.. Scenario 2 - Application of movement (increase or decrease) of 25% to the rates (1.25 multiplier used). Example: Rate of 10% p.a. becomes 12.50% p.a. or 7.50% p.a. The quotation of R$ / US$ dollar was considered.. Scenario 3 - Application of movement (increase or decrease) of 50% to the rates (1.50 multiplier used). Example: Rate of 10% p.a. becomes 15.00% p.a. or 5.00% p.a. The quotation of R$ /US$ dollar was considered. The results presented in the sensitivity analysis refer to simulations that involve, especially in the case of Scenarios II and III, high stress situations, and do not consider factors of correlation among the indexes. Therefore, they do not reflect any changes resulting from a dynamic market, considered as having a low likelihood of occurrence, nor from actions that may come to be performed by the Company to minimize any risks involved. (iv) Market risk Market risk is defined as the possibility of occurrence of losses resulting from fluctuations in forward market rates and mismatches of terms and currencies in asset and liability portfolios of the Company. These risks are managed on a daily basis using methodologies which are consistent with best practices. The Company carries out transactions involving derivative financial instruments, operating in organized and over-the-counter-markets, with the purpose of allowing market risk management in line with its policy. These instruments are used to hedge positions, meet the demands of counterparties, and reverse positions at times of significant oscillations. The transactions are exposed to real estate market risks, and the main factors are the adverse changes in the forward structure of risk-free interest rate, TR and IGP-M coupons. (v) Operating risk The Company defines and adopts operating risk as the possibility of losses resulting from failure, deficiency or inadequacy of internal processes, people and systems, or of external events, including legal risk, associated with inadequate or deficient contracts signed by the institution, with penalties due to noncompliance with laws, and with compensation for third-party damages arising from activities carried out by the institution. In order to be in compliance with the guidelines of the National Monetary Council (CMN) Resolution 2,554/98, CMN Resolution 3,380/06, Brazilian Securities Commission (CVM) Instruction 505/11 and Superintendency of Private Insurance (SUSEP) Circular Letter 249/04, the Conglomerate has an independent organizational structure responsible for the management and control of operating risks named Executive Management for Internal Controls, Compliance and Operating risks, which also includes Brazilian Securities. 38 of 57

42 Management has intensified efforts in managing and controlling the operating risks, through the implementation and spreading of concepts and attitudes focused on world and local banking standards, notably the precepts of the Basel Accords and rules published by the Brazilian Central Bank, the Brazilian Securities Commission and the Superintendency of Private Insurance. For this purpose, the main procedures adopted by the Conglomerate's companies are documented internally in policies, standards and manuals of instructions and processes. To provide an adequate environment for the identification and assessment of risks and internal controls, the Conglomerate has an approved Operating Risk Management and Control policy, which establishes guidelines and strategies and defines a system of rules, objectives, principles and responsibilities, designed to ensure the adequate management and control of operating risks. The operating procedures and the methodology for identification, assessment, measurement, control/mitigation and monitoring of risks, as well as the main concepts, are documented in the rules published and disclosed internally. (vi) Credit risk Credit risk consists of the possibility of occurrence of losses associated with default by the debtor or counterparty on their financial obligations under the agreed terms, as well as the devaluation of the credit contract due to the reduction of gain or compensation, advantages granted in renegotiations, and the cost of recovery. The decision-making process ensures agility and focus on credit actions, taking into consideration business opportunities and changes of scenarios. The priority has been to balance the asset volume growth and the risk/return ratio maximization. For this purpose, the Company has an independent department for credit risk management, following best governance practice. All transactions involving individuals or companies are mandatorily submitted for proper approval. The transaction approval mainly takes into consideration the analysis of the individual customer's ability to pay and, in the case of companies, the conditions/feasibility of the funded development, as well as the guarantees offered. The feasibility of a development is analyzed through a feasibility study developed by a specialized company, and the releases are made according to the construction work schedule, through reimbursement of the percentage already completed. The internal request for release of funds is approved by the director responsible for the transaction or, in his absence, by a statutory director. Controls and monitoring of the related processes, restrictions and established limits are carried out, as well as the risk analysis and its submission to approving levels and committees. (vii) Liquidity risk The liquidity risk is defined as (i) the possibility of the Company not being able to honor its expected and unexpected obligations, whether current or future, including those from commitments of guarantees, without affecting the Company's daily operations and not incurring significant losses; and (ii) the possibility of the Company not being able to negotiate a position at market value, because of its large size when comparing to the volume normally traded or because of some market discontinuation. 39 of 57

43 The Company constantly monitors its liquidity and gaps between primitive risk factors, rate and timing of assets and liabilities in its portfolio. Are performed constant accompaniments of the liquidity situation, the mismatch between the primary risk factors, fees and terms of assets and liabilities of the portfolio. The Company has adequate liquidity levels, resulting from the quality of its assets, and from the risk control, in line with the Market and Liquidity Risk policy established by the Company, adopting as management tools short-, medium- and long-term liquidity projections, risk limits, and the liquidity contingency plan. (viii) Capital management and allocation The Company's capital management approach is guided by its organizational strategies and needs, taking into consideration the economic and business environment in which the Company operates. The responsibility for allocating capital and related decisions rests with the Executive Officers, who concentrate on investment decisions and are responsible for allocating capital, in order to ensure that the investment is adequate given the cost of capital. Capital is managed to support the planned business growth and to comply with regulatory requirements in relation to the annual capital plan approved by the Company. 27 Events after the reporting period On February 6, 2013, the Company sold Real Estate Loan Backed Securities for R$ 15,166, generating a profit of R$ 1,486, net of tax effects, which was recorded in February. 28 Other information (a) Fair value of financial assets and liabilities not measured at fair value The Company's financial assets are measured at fair value in the balance sheet, except loans and receivables. The Company's financial liabilities are measured at amortized cost in the balance sheet, except financial liabilities held for trading and those measured at fair value. (i) Financial assets not measured at fair value The following is a comparison between the carrying amounts of the Company's financial assets measured at other than fair value and their related fair values at the end of the year: 40 of 57

44 Carrying amount Fair value Carrying amount Fair value Assets Loans and receivables (a) Debt instruments (Note 4) 179, ,779 40,737 40,737 Residual benefit in securitized transactions (Note 28(d) - III) 17,328 17,328 15,922 15,922 Other loans and receivables (Note 6) Total 197, ,750 56,725 56,725 (a) Although if these assets were not marked-to-market, their accounting balances substantially represent the related fair values. (ii) Financial liabilities not measured at fair value The following is a comparison between the carrying amounts of the Company's financial liabilities measured at other than fair value and their related fair values at the end of the year: Carrying amount Fair value Carrying amount Fair value Financial liabilities at amortized cost Liabilities from marketable securities (Note 10)(a) 70,488 71,350 82,401 84,482 Domestic borrowings (Note 11)(a) ,182 25,182 Total 70,488 71, , ,664 (a) The calculated fair values were based on discounted flows using markets rates of equivalent terms and considering the issuers' credit risk. (b) Contingent assets and liabilities In 2012 and 2011, the Company recorded a provision for contingent liabilities relating to civil lawsuits with likelihood of loss is probable, as shown below: Opening balance 75 - Additions, net of reversals and derecognition (a) Closing balance (a) Civil lawsuits substantially requesting the termination/review of real estate purchase and sale agreements. 41 of 57

45 In addition, in 2012, the Company was part to civil lawsuits where a loss was considered possible, for which there was no provision established, in the amount of R$ 129 ( R$ 732), relating to sundry civil liabilities. In March 2011, the Company received an assessment notice related to the deductibility of the portion of goodwill that was amortized in the period from July 2006 to December In March 2011, the Company decided to pay the assessment notice and the total amount paid, of R$ 1,005, is recorded under "Other administrative expenses" (Note 24(a)). (c) Residual maturity In compliance with CPC 40 - "Financial Instruments - Disclosures", we present below the analysis of financial instruments, cash and cash equivalents balances, as well as the related liquidity gap of such assets and liabilities, according to maturity ranges Spot Up to 3 months 3 to 12 months 1 to 3 years 3 to 5 years After 5 years Total Assets Cash and cash equivalents 2, ,210 Debt instruments 15,926 6, ,660 99,285 28, , ,122 Real estate related receivables 16,528 20,976 14,819 27,235 21,057 53, ,598 Residual benefit in securitized transactions ,328 17,328 Derivatives Other loans and receivables ,307 27, , ,520 49, , ,901 Liabilities Derivatives ,127 1, ,323 Liabilities from marketable securities - 7,825 20,913 29,595 2,776 9,379 70,488 Domestic borrowings Foreign borrowings 4, , ,720 Liabilities from acquisition of receivables - 9,227 4,028 11,964 13,834 53,232 92,285 4,886 17,783 26, ,858 16,610 62, ,816 Liquidity gap for financial instruments, cash and cash equivalents 30,421 9,767 93,411 (121,338) 32, , ,085 It is important to point out that the liquidity gap presented, in accordance with such CPC, includes only the balances of financial instruments (assets and liabilities) and cash and cash equivalents. Therefore, the balances of other asset and liability components are not presented, as, for example, other assets and other liabilities - sundry, tax assets and tax liabilities and, also, other non-current assets (investments in subsidiaries and controlled funds and property and equipment). Further, it is also fundamental to highlight that the liquidity position presented refers to a static position, based on the original maturity flows of each transaction. Finally, it does not reflect any changes resulting from a dynamic market or from any actions and strategies that were or may be performed by the Company. 42 of 57

46 (d) I II Information on securitized transactions During 2012, the Company acquired R$ 1,374,458 ( R$ 1,948,763) in real estate receivables. In addition, retrocession transactions were carried out in the amount of R$ 19,456 ( R$ 21,756). In 2012 and 2011, the total installments overdue for more than 90 days of real estate loans linked to the issued series are as follows: Backing of series Overdue installments % in relation to the total portfolio Overdue installments % in relation to the total portfolio Spread 19, % 12, % Structured III The accounting balances under fiduciary regime are summarized as follows: 2012 Current Non-current Portfolios Total assets Cash Financial investments Real estate loans Other assets (a) Financial investments Real estate loans Series 34 and 35 1,209, , ,178,704 Series 36 and Series 46 64,386 1,659-14, ,812 Series 49 and 50 2, Series 53 and Series 60 and 61 3, ,156 1, Series 67 and 68 6, , ,443 Series 69 and 70 19, ,236 3, ,557 Series 71 and 72 4, , ,923 Series 74 and 75 4, ,811 1, ,952 Series 76 2, , Series 77 2, , ,452 Series 78 3, ,035 Series 79 76, , ,309 Series 80 to , , ,600 Series 85 2, ,174 Series 86 and 87 2, Series 88 3, ,216 Series 89 and 90 9, ,764 Series 91 29, , ,665 Series 92 and 93 1, Series 97 5, , ,854 Series , , ,495 Series 101 to , , ,268 Series , , ,970 Series 105 2, Series 106 2, ,131 Series , , ,889 Series , , ,830 Series 111 7, , ,734 Series ,722 1,523 2,281 15, Series 113 3, ,512 Series , , ,769 Series 116 6, ,500 Series 117 3, ,232 Series 118 and ,962 1, , , of 57

47 2012 Current Non-current Portfolios Total assets Cash Financial investments Real estate loans Other assets (a) Financial investments Real estate loans Series 120 4, , ,665 Series , , ,449 Series , ,716 Series 123 5, , ,683 Series 124 8, , ,070 Series 125 4, , ,463 Series 127 6, , ,001 Series , , ,579 Series , , ,186 Series 130 and , ,144 2, ,900 Series 132 8, , ,624 Series , , ,967 Series , , ,373 Series , , ,019 Series , ,422 8, ,293 Series 156 and , ,551 5, ,051 Series , , ,580 Series , , ,387 Series , , ,045 Series , , ,177 Series 162 5, , ,174 Series , , ,397 Series , , ,104 Series , , ,145 Series , , ,286 Series 169 and 170 6, ,573 Series 171 and 172 8, ,420 1, ,248 Series , , Series 174 1,394, , ,370,480 Series , , ,668 Series , ,002 Series , , ,105 Series , , ,633 Series 180 and , ,733 5,151 1,234-27,830 Series , , ,956 Series , , ,395 Series , , ,009 Series , , ,721 Series 186 and , ,004 1, ,415 Series , , ,442 Series , , ,916 Series ,266 5,787-22, ,306 Series 191 and , , Series , ,861 Series 194 and , ,020 2, ,236 Series , , ,323 Series 199 and , ,904-2,321 14,411 Series 201 and , ,975-3,445 31,441 Series 203 and , ,785-34,037 87,626 Series , , ,287 Series , , ,483 Series , , ,404 Series , , ,704 Series , , ,422 Series , , ,601 Series , ,650 Series , ,972 Series 217 and , ,376 7,771 Series 219 and , ,761-1,301 11,712 Series 221 and , ,356-1,825 7,016 Series , , ,482 Series 224 and 225 9, ,735 Series 226 and , , ,484 15, of 57

48 2012 Current Non-current Portfolios Total assets Cash Financial investments Real estate loans Other assets (a) Financial investments Real estate loans Series , , ,893 Series , ,989 Series , , ,739 Series , , ,060 Series 233 and , , ,595 14,600 Series 235 and , ,752 16,813 Series 237 7, ,554 Series 238 6, ,379 Series 239 6, ,207 3,994 Series 240 and , ,037 1, ,071 Series 242 and , ,154-1,637 14,883 Series 244 6, ,954 Series 245 and 246 9, , ,627 Series 247 and , ,754-2,007 10,104 Series , ,482 Series , , ,503 Series 251 and , ,078-4,278 26,649 Series 253 and , ,465-2,317 17,896 Series 255 and , , ,565 35,748 Series 257 and , ,122-1,868 8,403 Series 259 and , , ,917 Series 261 and , ,710-4,526 24,247 Series 263 and , , ,236 17,338 Series 265 and ,500 6,922-5,976-1, ,997 Series , , ,575 Series , ,756 Series 269 and , ,469-1,025 24,429 Series , ,733 Series , , ,664 Series , ,867 Series 274 and , ,842-1,449 22,958 Series 276 and , ,389-1,055 9,506 Series , , ,733 Series , , Series 280 and , ,177 58,129 Series 282 and , ,227-1,272 15,287 Series , , ,064 Series , , ,662 Series 286 to , , ,434 Series , , ,719 Series 292 and , ,787-1,131 82,903 Series , ,646 Total without guarantee 8,886,991 27,866 35, ,096 6,274 90,482 7,745,668 Series 95 and 96 29, , ,992 13,309 Total with guarantee 29, , ,992 13,309 (a) These refer to assets not for the Company's own use, amounts receivable for the sale of such assets and financial instruments. 45 of 57

49 (continued) Current Non-current Portfolios Total liabilities Real estate loan backed securities Other liabilities (b ) Real estate loan backed securities Other liabilities (b) Separate equity Series 34 and 35 (1,208,847) (50,830) - (1,158,017) Series 36 and 37 (777) (355) - (422) - - Series 46 (64,368) (14,861) - (49,507) - 18 Series 49 and 50 (2,220) (1,052) - (1,168) - - Series 53 and 54 (598) (321) - (277) Series 60 and 61 (2,178) (1,442) - (736) Series 67 and 68 (6,076) (206) - (5,870) - - Series 69 and 70 (19,201) (3,809) - (15,392) Series 71 and 72 (4,104) (1,114) - (2,990) - - Series 74 and 75 (4,925) (1,098) - (3,827) - - Series 76 (1,831) (762) (203) (866) Series 77 (2,178) (726) - (1,452) Series 78 (3,203) (583) - (2,620) - 97 Series 79 (75,818) (6,321) (188) (69,309) Series 80 to 84 (107,177) (8,187) (2,044) (87,607) (9,339) 263 Series 85 (2,236) (300) - (1,936) - - Series 86 and 87 (2,191) (1,106) - (1,085) - 32 Series 88 (3,242) (857) - (2,385) - - Series 89 and 90 (9,259) (359) - (8,900) - - Series 91 (29,776) (2,112) - (27,664) - 2 Series 92 and 93 (887) (169) - (718) Series 97 (5,923) (1,069) - (4,854) - 5 Series 100 (267,526) (20,031) - (247,495) - 4 Series 101 to 103 (20,658) (2,559) (502) (15,616) (1,981) 610 Series 104 (28,812) (3,938) - (24,874) Series 105 (2,014) (785) - (1,229) - - Series 106 (2,391) (54) - (2,337) - - Series 107 (19,974) (1,096) - (18,878) - 16 Series 108 (35,841) (955) - (34,886) - - Series 111 (7,030) (1,493) - (5,537) - - Series 112 (16,163) (15,560) - (603) - 3,559 Series 113 (3,932) (500) - (3,432) - - Series 114 (12,955) (2,191) - (10,764) - 5 Series 116 (6,708) (1,182) - (5,526) - - Series 117 (3,022) (406) - (2,616) - - Series 118 and 119 (135,753) (11,703) (115) (123,935) Series 120 (4,676) (854) - (3,822) - - Series 121 (126,497) (16) - (126,481) - 71 Series 122 (11,817) (538) - (11,279) Series 123 (5,646) (1,689) - (3,957) - - Series 124 (8,360) (1,203) - (7,157) - 19 Series 125 (4,922) (920) - (4,002) - - Series 127 (6,983) (748) - (6,235) - 8 Series 128 (68,040) (3,459) - (64,581) - - Series 129 (116,191) (3,111) - (113,080) Series 130 and 131 (16,840) (1,977) - (14,863) Series 132 (8,530) (1,252) - (7,278) - - Series 134 (100,610) (18,579) - (82,031) - - Series 153 (54,714) (2,380) - (52,334) - 56 Series 154 (73,931) (7,374) - (66,557) - 86 Series 155 (23,491) (1,844) - (21,647) - - Series 156 and 157 (35,441) (3,800) - (31,641) Series 158 (33,857) (3,201) (76) (30,580) - - Series 159 (14,878) (560) - (14,318) - - Series 160 (11,708) (1,700) - (10,008) - 88 Series 161 (33,160) (4,027) - (29,133) - 71 Series 162 (5,013) (1,123) - (3,890) - - Series 163 (138,262) (8,864) - (129,398) - - Series 166 (92,968) (8,794) (70) (84,104) - - Series 167 (10,352) (110) - (10,242) - - Series 168 (137,927) (7,528) (152) (130,247) - - Series 169 and 170 (6,716) (610) - (6,106) of 57

50 (continued) Current Non-current Portfolios Total liabilities Real estate loan backed securities Other liabilities (b ) Real estate loan backed securities Other liabilities (b) Separate equity Series 171 and 172 (8,547) (668) - (7,879) Series 173 (10,363) (10,347) - (16) - 58 Series 174 (1,394,229) (24,041) - (1,370,188) Series 176 (174,668) (27,000) - (147,668) - - Series 177 (123,002) - - (123,002) - - Series 178 (9,788) (2,020) (2,501) (5,267) Series 179 (29,275) (5,625) - (23,650) - 8 Series 180 and 181 (38,015) (3,540) - (34,475) - - Series 182 (11,619) (1,182) (4,056) (6,381) Series 183 (89,785) (8,491) - (81,294) - - Series 184 (108,700) (4,706) - (103,994) - 5 Series 185 (32,960) (13,241) - (19,719) - 57 Series 186 and 187 (11,072) (1,202) - (9,870) - 96 Series 188 (241,565) (74,123) - (167,442) - 47 Series 189 (14,017) (1,051) - (12,966) - - Series 190 (139,266) (22,172) (5,787) (111,307) - - Series 191 and 192 (48,035) (802) - (47,233) Series 193 (10,089) (251) - (9,838) Series 194 and 195 (18,547) (1,692) - (16,855) Series 196 (210,191) (17,827) (41) (192,323) Series 199 and 200 (19,691) (2,395) - (17,296) - - Series 201 and 202 (38,459) (2,042) - (36,417) Series 203 and 204 (147,397) (40,298) - (107,099) - - Series 205 (56,661) (2,362) - (54,299) - - Series 206 (127,771) (15,057) - (112,714) - 25 Series 207 (131,245) (5,543) (310) (125,392) - - Series 212 (56,416) (1,795) - (54,621) - - Series 213 (21,731) (2,082) (283) (19,366) - 5 Series 214 (12,884) (3,293) - (9,591) - - Series 215 (21,477) (881) - (20,596) Series 216 (150,043) - - (150,043) - - Series 217 and 218 (12,685) (455) - (12,230) - 31 Series 219 and 220 (15,423) (2,199) - (13,224) Series 221 and 222 (10,121) (1,166) - (8,955) Series 223 (21,036) (3,576) - (17,460) - 26 Series 224 and 225 (8,873) (796) - (8,077) Series 226 and 227 (20,412) (1,016) - (19,396) - 87 Series 228 (60,029) (6,249) - (53,780) - 29 Series 229 (122,983) - - (122,983) - 6 Series 230 (34,467) (2,969) - (31,498) Series 231 (12,427) (1,367) - (11,060) - 16 Series 233 and 234 (19,345) (1,146) (56) (18,143) - - Series 235 and 236 (19,117) (541) - (18,576) Series 237 (7,247) (234) - (7,013) - 64 Series 238 (6,232) (328) - (5,904) - 98 Series 239 (6,771) (340) - (6,431) - 63 Series 240 and 241 (11,656) (1,272) - (10,384) - - Series 242 and 243 (18,628) (1,097) (15) (17,516) - 74 Series 244 (6,201) (351) - (5,850) - 34 Series 245 and 246 (9,838) (502) - (9,336) - - Series 247 and 248 (13,911) (1,334) - (12,577) - 13 Series 249 (86,482) - - (86,482) - - Series 250 (21,349) (1,858) - (19,491) Series 251 and 252 (35,309) (1,910) - (33,399) - - Series 253 and 254 (22,743) (1,525) - (21,218) - - Series 255 and 256 (46,161) (2,633) - (43,528) Series 257 and 258 (11,425) (468) - (10,957) - - Series 259 and 260 (12,680) (1,133) - (11,547) - - Series 261 and 262 (32,707) (2,488) - (30,219) - - Series 263 and 264 (21,177) (975) - (20,202) - 90 Series 265 and 266 (187,500) (9,561) - (177,939) - - Series 267 (13,197) (2,199) (402) (10,596) of 57

51 (continued) Current Non-current Portfolios Total liabilities Real estate loan backed securities Other liabilities (b ) Real estate loan backed securities Other liabilities (b) Separate equity Series 268 (66,756) - - (66,756) - - Series 269 and 270 (27,906) (1,505) - (26,401) Series 271 (41,153) (324) - (40,829) - - Series 272 (15,768) (1,230) - (14,538) Series 273 (28,867) - - (28,867) - - Series 274 and 275 (27,219) (1,919) - (25,300) Series 276 and 277 (11,882) (576) - (11,306) - 82 Series 278 (133,546) (2,806) - (130,740) - 6 Series 279 (160,789) (160,737) (52) Series 280 and 281 (59,926) - - (59,926) - 9 Series 282 and 283 (18,034) (2,383) - (15,651) - - Series 284 (101,549) (55,605) - (45,944) - 66 Series 285 (77,651) (7,047) - (70,604) - - Series 286 to 288 (61,662) (1,982) - (59,680) - 38 Series 290 (76,507) (5,788) - (70,719) - - Series 292 and 293 (150,845) (40,708) - (110,137) - - Series 294 (102,639) (965) - (101,674) - 7 Total without guarantee (8,869,663) (877,345 ) (16,853 ) (7,964,145) (11,320) 17,328 Series 95 and 96 (16,797 ) (1,593 ) - (15,204 ) - 12,985 Total with guarantee (16,797 ) (1,593 ) - (15,204 ) - 12,985 (b) These refer to Other Liabilities and Derivative Financial Instruments 2011 Current Non-current Portfolios Total assets Cash and banks Financial investments Real estate loans Other assets (a ) Financial investments Real estate loans Series 34 and 35 1,194, , ,150,291 Series 36 and 37 1, Series 46 73,831 1,659-12, ,641 Series 49 and 50 3, , Series 53 and 54 1, Series 60 and 61 4, , ,395 Series 67 and 68 7, , ,491 Series 69 and 70 27, ,139 5, ,859 Series 71 and 72 4, , ,743 Series 74 and 75 6, ,487 1, ,271 Series 76 2, ,895 Series 77 3, , ,367 Series 78 4, , ,844 Series 79 93,321 1,778-16, ,439 Series 80 to , , ,297 Series 85 3, , ,090 Series 86 and 87 4, , ,406 Series 88 4, , ,499 Series 89 and 90 11, ,089 Series 91 31, , ,715 Series 92 and 93 1, Series 97 6, , ,912 Series 98 and 99 3, , ,590 Series , , ,578 Series 101 to , , ,930 Series , , ,864 Series 105 3, , , of 57

52 2011 Current Non-current Portfolios Total assets Cash and banks Financial investments Real estate loans Other assets (a) Financial investments Real estate loans Series 106 3, ,854 Series , ,927 Series , ,327 Series 109 and , ,135 7, ,962 Series , , ,694 Series ,103 2, , ,574 Series 113 5, ,431 Series , , ,920 Series 116 9, , ,695 Series 117 3, ,685 Series 118 and ,086 1,758-10, ,749 Series 120 6, , ,969 Series , , ,508 Series , ,371 Series 123 7, , ,879 Series 124 9, , ,938 Series 125 7, , ,002 Series 127 7, , ,174 Series , , ,832 Series , ,080 Series 130 and , ,035 2, ,055 Series , , ,539 Series , , ,365 Series 135 and , , ,814 Series 137 and 138 6, , Series 139 and 140 2, , Series 141 and 142 5, , Series 145 and 146 5, , ,064 Series 147 and 148 4, , Series 151 and 152 4, , ,257 Series , , ,832 Series , , ,623 Series , , ,744 Series 156 and , ,085 6, ,428 Series , , ,762 Series , ,076 1, ,833 Series , , ,935 Series , , ,156 Series 162 7, , ,710 Series , ,719 Series , , ,749 Series , ,933 1, ,247 Series , , ,440 Series 169 and 170 8, ,848 Series 171 and , , ,654 Series , , ,404 Series 174 1,344, , ,323,807 Series , , ,223 Series , ,821 Series , ,570 Series , , ,562 Series , , ,453 Series 180 and , , ,926 Series 182 8, , ,675 Series , , ,616 Series , , ,516 Series , , ,496 Series 186 and , , ,725 Series , ,197 Series , , ,084 Series , ,657 Series 191 and , ,872 Series 193 9, , of 57

53 2011 Current Non-current Portfolios Total assets Cash and banks Financial investments Real estate loans Other assets (a) Financial investments Real estate loans Series 194 and , ,243 2, ,599 Series , , ,561 Series 199 and , ,578-1,584 17,735 Series 201 and , ,150 3, ,017 Series 203 and ,017 2,229-37,972-30, ,918 Series , , ,503 Series , ,608 Series ,542 2,627-4, ,565 Series , , ,494 Series , , ,368 Series , , ,217 Series , , ,076 Series , ,208 Series 217 and , ,015 10,517 Series 219 and , ,805-5,499 14,720 Series 221 and , , ,921 Series , , ,085 Series 224 and , , ,295 Series 226 and , ,456-1,800 18,479 Series , ,587 Series , ,211 Series , , ,268 Series , , ,832 Series 233 and , , ,318 Series 235 and , ,176 Series 237 7, ,367 Series 238 7, ,865 Series 239 7, ,516 Series 240 and , , ,884 Series 242 and , , ,862 Series 244 7, ,562 Series 245 and , , ,782 Series 247 and , , ,468 Series , ,632 Series , , ,359 Series 251 and , ,793-1,404 31,873 Series 253 and , ,808-1,027 22,864 Series 255 and , ,064 4,969-1,217 42,445 Series 257 and , , ,973 Series 259 and , ,819-1,892 14,424 Series 261 and , ,888-1,313 30,998 Series 263 and , , ,013 Series 265 and ,755 6,335-11,208-16, ,691 Series , , ,128 Series , ,628 Series 269 and , , ,539 Series , ,150 Series , ,313 Series 274 and , , ,837 Series 276 and , , ,376 Total without guarantee 8,713,215 31,947 32, ,030 2,766 76,963 7,949,177 Series 95 and 96 24,008 1,638 3,585 1, ,614 Total with guarantee 24,008 1,638 3,585 1, ,614 (a) These refer to assets not for the Company's own use, amounts receivable for the sale of such assets and financial instruments. 50 of 57

54 (continued) Current Non-current Portfolios Total liabilities Real estate loan backed securities Other liabilities (b ) Real estate loan backed securities Other liabilities (b) Separate equity Series 34 and 35 (1,193,751) (43,459) - (1,150,292) Series 36 and 37 (1,319) (392) - (927) - - Series 46 (73,812) (12,579) (860) (60,373) - 19 Series 49 and 50 (3,485) (1,480) - (2,005) - 22 Series 53 and 54 (894) (345) - (549) Series 60 and 61 (3,010) (1,479) - (1,531) - 1,050 Series 67 and 68 (7,416) (365) - (7,051) - - Series 69 and 70 (27,183) (5,165) - (22,018) Series 71 and 72 (4,583) (1,045) - (3,538) - 30 Series 74 and 75 (6,616) (1,890) - (4,726) - - Series 76 (2,237) (626) (87) (1,524) Series 77 (3,324) (920) - (2,404) Series 78 (4,421) (850) - (3,571) Series 79 (93,074) (4,657) (1,533) (86,884) Series 80 to 84 (110,335) (6,917) (1,210) (95,987) (6,221) 165 Series 85 (3,595) (799) - (2,796) - - Series 86 and 87 (4,284) (2,297) - (1,987) Series 88 (4,965) (1,344) - (3,621) - - Series 89 and 90 (11,700) (636) - (11,064) - - Series 91 (31,620) (1,891) - (29,729) - 3 Series 92 and 93 (1,266) (231) - (1,035) Series 97 (6,978) (1,065) - (5,913) - 5 Series 98 and 99 (3,102) (1,188) - (1,914) Series 100 (303,050) (19,317) - (283,733) - 5 Series 101 to 103 (22,514) (2,286) (247) (18,130) (1,851) 38 Series 104 (32,298) (3,519) - (28,779) Series 105 (3,360) (1,219) - (2,141) - - Series 106 (3,894) (437) - (3,457) - - Series 107 (20,898) (977) - (19,921) - 19 Series 108 (34,200) (806) - (33,394) - 1 Series 109 and 110 (17,413) (3,753) - (13,660) - - Series 111 (10,685) (2,994) - (7,691) - - Series 112 (30,143) (14,378) - (15,765) - 2,960 Series 113 (5,442) (1,166) - (4,276) - - Series 114 (14,867) (1,945) - (12,922) - 7 Series 116 (9,942) (1,788) - (8,154) - - Series 117 (3,587) (613) - (2,974) - - Series 118 and 119 (136,961) (10,465) (85) (126,411) Series 120 (6,095) (1,081) - (5,014) - - Series 121 (126,450) (14) (357) (126,079) - 50 Series 122 (13,575) (653) - (12,922) Series 123 (7,112) (1,765) - (5,347) - - Series 124 (9,050) (1,022) - (8,028) - 20 Series 125 (7,550) (1,354) - (6,196) - - Series 127 (7,654) (709) - (6,945) - - Series 128 (70,892) (3,074) - (67,818) - 16 Series 129 (116,600) (413) - (116,187) - 99 Series 130 and 131 (20,614) (2,305) - (18,309) Series 132 (11,666) (1,571) - (10,095) - - Series 134 (108,920) (17,405) - (91,515) - - Series 135 and 136 (17,076) (3,983) - (13,093) - - Series 137 and 138 (6,502) (5,922) - (580) - - Series 139 and 140 (2,833) (2,833) Series 141 and 142 (5,651) (3,496) (299) (1,856) - - Series 145 and 146 (5,152) (4,143) (108) (901) - - Series 147 and 148 (4,508) (4,197) - (311) - - Series 151 and 152 (4,882) (3,531) (231) (1,120) - - Series 153 (56,936) (2,112) (19) (54,805) - 31 Series 154 (76,567) (2,221) - (74,346) Series 155 (28,873) (2,419) - (26,454) - - Series 156 and 157 (41,191) (4,762) - (36,429) Series 158 (36,728) (2,892) (35) (33,801) of 57

55 (continued) Current Non-current Portfolios Total liabilities Real estate loan backed securities Other liabilities (b ) Real estate loan backed securities Other liabilities (b) Separate equity Series 159 (17,880) (326) - (17,554) - - Series 160 (12,607) (1,715) - (10,892) - 18 Series 161 (36,703) (3,600) - (33,103) - 67 Series 162 (7,435) (1,659) - (5,776) - - Series 163 (125,719) - - (125,719) - - Series 166 (100,790) (7,948) (32) (92,810) - - Series 167 (13,743) (5) - (13,738) - - Series 168 (144,091) (6,191) (347) (137,553) - 23 Series 169 and 170 (8,633) (800) - (7,833) - - Series 171 and 172 (9,986) (759) - (9,227) Series 173 (24,210) (13,498) - (10,712) - 48 Series 174 (1,344,715) (20,075) - (1,324,640) Series 175 (370,150) (79,083) - (291,067) Series 176 (158,821) - - (158,821) - - Series 177 (124,570) - - (124,570) - - Series 178 (10,517) (2,424) - (8,093) Series 179 (32,528) (5,012) - (27,516) - - Series 180 and 181 (42,818) (4,242) - (38,576) Series 182 (8,699) (1,760) - (6,939) Series 183 (97,151) (7,516) - (89,635) - - Series 184 (112,790) (4,301) - (108,489) - 41 Series 185 (43,384) (11,817) - (31,567) - 48 Series 186 and 187 (12,313) (1,279) - (11,034) Series 188 (242,248) - (51) (242,197) - - Series 189 (15,780) (923) - (14,857) - - Series 190 (151,947) (18,420) - (133,527) - - Series 191 and 192 (45,452) (654) (44) (44,754) Series 193 (9,824) (423) - (9,401) - 11 Series 194 and 195 (19,737) (1,611) - (18,126) Series 196 (225,728) (15,989) (50) (209,689) - 83 Series 199 and 200 (23,062) (3,012) - (20,050) - 12 Series 201 and 202 (38,130) (2,041) - (36,089) Series 203 and 204 (209,525) (44,251) - (165,274) Series 205 (58,613) (2,086) - (56,527) - - Series 206 (114,608) - - (114,608) - - Series 207 (137,525) (4,021) (2,621) (130,883) - 17 Series 212 (54,745) (1,167) (3) (53,575) - - Series 213 (22,444) (1,837) (269) (20,338) - 20 Series 214 (15,111) (2,443) (17) (12,651) - - Series 215 (21,477) (1,561) - (19,916) - 24 Series 216 (150,196) - - (150,196) - 16 Series 217 and 218 (12,293) (398) - (11,895) Series 219 and 220 (22,815) (3,402) - (19,413) Series 221 and 222 (11,362) (1,270) - (10,092) Series 223 (23,328) (3,228) - (20,100) - - Series 224 and 225 (10,650) (1,156) - (9,494) Series 226 and 227 (21,507) (1,321) - (20,186) Series 228 (53,574) - - (53,574) - 13 Series 229 (112,204) - - (112,204) - 7 Series 230 (34,625) (2,525) - (32,100) Series 231 (13,029) (1,189) - (11,840) - 7 Series 233 and 234 (21,583) (1,821) - (19,762) - 42 Series 235 and 236 (21,448) (558) - (20,890) - 95 Series 237 (7,926) (233) - (7,693) - 6 Series 238 (7,726) (413) - (7,313) - 35 Series 239 (7,344) (314) - (7,030) - 8 Series 240 and 241 (13,507) (1,780) - (11,727) - 44 Series 242 and 243 (21,187) (988) - (20,199) Series 244 (7,841) (353) - (7,488) - 5 Series 245 and 246 (12,163) (3,018) - (9,145) - - Series 247 and 248 (14,240) (1,457) - (12,783) - 87 Series 249 (78,632) - - (78,632) of 57

56 (continued) Current Non-current Portfolios Total liabilities Real estate loan backed securities Other liabilities (b ) Real estate loan backed securities Other liabilities (b) Separate equity Series 250 (21,994) (1,612) - (20,382) - 1 Series 251 and 252 (37,343) (4,843) - (32,500) - 3 Series 253 and 254 (26,778) (2,104) - (24,674) - - Series 255 and 256 (49,696) (4,410) - (45,286) Series 257 and 258 (13,177) (2,129) - (11,048) - 86 Series 259 and 260 (18,078) (1,821) - (16,257) - 96 Series 261 and 262 (36,096) (2,390) - (33,706) Series 263 and 264 (25,303) (1,194) - (24,109) - 46 Series 265 and 266 (259,646) (10,608) - (249,038) Series 267 (14,340) (1,955) - (12,385) - - Series 268 (60,628) - - (60,628) - - Series 269 and 270 (30,508) (1,218) - (29,290) - - Series 271 (41,191) - - (41,191) - 1 Series 273 (26,313) - - (26,313) - - Series 274 and 275 (29,664) (1,328) - (28,336) - - Series 276 and 277 (15,848) (489) - (15,359) - 26 Total without guarantee (8,697,293) (567,134 ) (8,505 ) (8,113,582) (8,072) 15,922 Series 95 and 96 (22,102) (2,504 ) - (19,598) - 1,906 Total with guarantee (22,102 ) (2,504 ) - (19,598 ) - 1,906 (b) These refer to Other Liabilities and Derivative Financial Instruments. IV (a) (b) (c) Additional information: In 2012, real estate loans were inflation adjusted by IGPM, IPCA, INCC, TR, CDI, or no inflation adjustment index, plus interest rates up to 18.34% p.a. ( up to 14.70% p.a.), with maturity up to October 28, Real estate loan backed securities are inflation adjusted by IGPM, IPCA, TR, CDI or no inflation adjustment index, plus interest rates ranging from 2.00% p.a. to 65.40% p.a. (2011-3,07 p.a. to 65.40% p.a.), with maturities up to November 20, The total balance of separate equity, amounting to R$ 17,328 ( R$ 15,922) is recorded in noncurrent assets, under "Residual benefit in securitized transactions", and corresponds to the residual balance, net of any guarantees provided, of the separate equity of securitized transactions that, pursuant to Law 9514, of November 20, 1997, will be included again in the common equity of the securitization company upon the extinguishment of the fiduciary arrangement and settlement of the related real estate loan backed securities. * * * 53 of 57

57 (A free translation of the original in Portuguese) MANAGEMENT REPORT TO OUR STOCKHOLDERS The Management of Brazilian Securities Companhia ("BS" or "Company") submits to you the management report and the financial statements for the year ended December 31, 2012, together with the independent auditor's report. RECENT EVENTS According to the Significant Event Notice disclosed on December 28, 2011, Banco Panamericano S.A. ("Panamericano" or "Bank") signed on that date a Non-binding Memorandum of Understanding with the purpose of signing definite contracts for the acquisition of 100% of the share capital of Brazilian Finance & Real Estate S.A. ("BFRE"), the Company's parent company, for R$ million. The stockholders of Panamericano approved, on a General Meeting held on April 25, 2012, the indirect acquisition of 100% of BFRE's share capital. On June 11, 2012, the Brazilian Central Bank ("BACEN") approved the indirect transfer to Panamericano of the controlling interest of Brazilian Mortgages Companhia Hipotecária. As a result, on July 19, 2012, BFRE stockholders, in an Extraordinary General Meeting, approved the partial spin-off of BFRE, through which the investment in Brazilian Capital Companhia de Gestão de Investimentos ("Brazilian Capital") was spun-off. In addition, also on July 19, 2012 and after the spin-off described above, the indirect acquisition of 100% of BFRE's share capital by Panamericano was concluded and, consequently, also the acquisition of the origination, financing and securitization assets developed by its subsidiaries BM Sua Casa, Brazilian Mortgages and Brazilian Securities. ECONOMIC ENVIRONMENT Throughout 4Q12, the economy kept its moderate expansion rhythm, according to the high frequency indicators. Among the activity determinants, the labor market remained tight, and the unemployment rate continued to break historical records by registering the lowest monthly results since the current series was initiated, in Average income increased again and, added to the expansion of the employed population, resulted in the continuous growth of the actual total salaries paid. In this scenario, regardless of the characteristics of each industry, the restrictions to the labor force availability will probably continue to be a bottleneck to the activity expansion. On the other hand, the credit showed evidence of moderate growth, even though there were signs of improvement in the indebtedness level index margin by family. Retail sales once again remained as the more robust activity segment, while the industrial production continued in downturn. Industrial researches evidenced more adjusted inventories, but the situation was still heterogeneous, and the industry growth in 4Q12 was probably nearly zero, if not negative (after the increase in 3Q12 - the first increase after five consecutive threemonth periods in reduction). Regarding investments, the recent signals were not so much encouraging. The capital goods segment faced in November the fourth consecutive decrease in its production level. Considering this scenario, the current news concerning the risks of the energetic balance in 2013/2014 comes not in a proper time. Even with the possible acceleration of the GDP in 4Q12, when considering the confidence range of the projection models, the probability is that such acceleration was a modest one. If this scenario turns out to be true, it is possible that the GDP for 2013 will be reviewed to lower levels, because of the lower interannual carry-over. 54 of 57

58 (A free translation of the original in Portuguese) In its turn, the inflation for the consumer increased more than expected in 4Q12. The Amplified Consumer Price Index (IPCA) was 2% above the year-ago period (1.5%) and, once again, in a rather high level when compared to its historical pattern. The food group had again an important contribution to this, but pressures were disseminated. Durable assets returned to the inflation grounds, while services inflation had a strong increase in December. Therefore, core measures reached a high level at the end of the year, closing with an accumulated increase of 5.8%, in line with headline inflation, and the diffusion index had its second worse result of the historical series for December. More similar results are expected, at least at the beginning of 2013, due to the inflation at 6% during a long portion of the year. The chances for a readjustment in the price of fuel in the first quarter of 2013 seem to be growing. In addition, the energetic balance problem is suggesting a more intense use of thermal energy in 2013, the effect of which will probably be the increase in the fees throughout the year. This increase would mitigate the effects of the decrease applied to these fees scheduled to February. Basically, the inflation underlying tendency still does not show evidence of a scenario with the IPCA in convergence to the middle of the inflation target, even with certain effects that new tax reductions may have upon this index. Inflation expectations are still anchored for 2013 and longer periods, which indicates that economic agents see a higher inflationary risk. Tax-related results continued to be weak, pointing towards the difficulty to meet the full target for the primary surplus. In November, however, public sector accounts were a surprise with the primary deficit - the first deficit since March The primary accumulated in 12 months decreased to 1.9% of GDP. The primary result in December was elevated by isolated financial transactions involving the Sovereign-wealth Fund for Brasil ("FSB") and the prepayment of dividends to the National Treasury, so as to allow that the annual goal is achieved once the deduction of the Program for Stimulating Growth (PAC) is made, as established by the Budget Guidelines Law. Recent news suggests a larger tax relief also in relation to the primary surplus of The quotation of the Brazilian real against the US dollar at the end of 4Q12 was R$ 2.05/US$, similar to the previous quarter (R$ 2.03/US$). Yet, the volatility increased, and there was an additional currency depreciation peak (R$ 2.14/(US$), the recovery of which was started to be seen in mid-december. The reversal resulted from a change in the actions of the Central Bank in the foreign exchange market as well as from explicit statements of authorities, reaffirming their preference regarding the Brazilian real returning to the previous levels in spite of the depreciation wave that started in November. This reversal approximates again the exchange rate and the levels suggested by its traditional bases, which suggested no reasons for the depreciation wave. Concerning the payment balance, the current account continues to fluctuate, with a deficit a little larger than 2% of the GDP in 12 months, a behavior which is observed since mid Even though the net direct investment is maintained at approximately 3% of the GDP since mid-2011, the financing volume of the payment balance has been decreasing, mainly due to the lower rollover rate of private sector debt maturities. Despite the weaker performance of the payment balance, the BACEN will probably continue, with no difficulties, to deal with short-term imbalances, because of the level of international reserves (approximately US$ 400 billion), as evidenced by BACEN actions in the foreign exchange market at the end of In relation to the monetary policy, the Special System for Settlement and Custody (SELIC) rate was reduced by 25 basis point during 4Q12, down to 7.25%. Clearly is the Central Bank showing its intentions to maintain the rate at this level for a long period and, in its most recent communication, there was no evidence that BACEN is planning to abandon this strategy. In addition, considering that the current monetary policy establishes stimulus (a position which probably will not be permanent), it is natural to expect that the basic rate will increase again when the economy overcomes this period of downturn in activities. In any case, it is probable that the most recent developments of the economic news have reduced the changes of additional interest rate cuts, because of more intense inflationary pressures, and postponed discussions about the natural necessity of increasing this rate, sooner or later, in order to settle down the monetary conditions. In spite of the probable postponement of the discussion regarding possible increases, it is reasonable to expect that the SELIC rate will start to increase before the end of of 57

59 (A free translation of the original in Portuguese) MAIN RESULTS Within this scenario of moderate economic performance and gradual accommodation of individual default, the balance of real estate loans (free + directed) totaled R$ billion in 4Q12, a growth of 5.9% when comparing to the previous quarter and of 30.6% when comparing to the year-ago period. R$ billion of the total amount corresponds to directed funds, with a growth of 5.9% and 30.0% in the quarterly and annual comparatives, respectively. The balance of free real estate loans amounted to R$ 20.4 billion, an actual growth of 6.6% when comparing to the previous quarter and of 38.2% in the last twelve months. The real estate loan market corresponded to 6.3% of GDP, that is, an increase of 1.4 p.p. within the last year. According to data provided by the Brazilian Central Bank (BACEN) and the Brazilian Association of Real Estate Loan and Savings Entities, the actual total granting of free real estate loan and contracted transactions obtained with funds from the Brazilian Savings and Loan System ("SBPE") totaled R$ 27.5 billion in 4Q12, an increase of 12.7% vs. the previous quarter (seasonally-adjusted figures) and of 5.4% when comparing to the year-ago period. The over 90 default rate of free real estate loans reached 1.4% in 4Q12, stable when comparing to the annual figures and a decrease of 0.1 p.p. in relation to the previous quarter. On the other hand, the level of default of real estate loans obtained with SBPE funds (agreements signed after 1998 and Special Range) was 1.8% in the last quarter of 2012, that is, a decrease of 0.1 p.p. and 0.2 p.p. comparing to the previous quarter and the year-ago period, respectively. The Company issued Real Estate Loan Backed Securities ("CRIs") amounting to R$ 1,115.9 million in 2012, when comparing to the R$ 2,671.4 million issued in Up to December 31, 2012, BS had already issued throughout its existence an accumulated total of R$ 10.9 billion in CRIs. The Company's performance was quite diversified in 2012, including the issue of both residential and diversified backed CRIs as well as concentrated and diversified commercial backed CRIs. The Company's consolidated results in 2012 amounted to a loss of R$ 5.0 million vs. the profit of R$ 36.2 million in DIVIDENDS The Company's bylaws determine the distribution of dividends amounting to at least 25% of the profit for the year, after the allocation to the legal reserve. In 2011, management proposed to the stockholders the distribution of minimum mandatory dividends, in accordance with statutory provisions, amounting to R$ 8.6 million, as well as the retention of the remaining profits for reinvestment in the activities of the Company, based on the capital budget approved by management. At the Ordinary General Meeting held on March 30, 2012, the distribution of minimum mandatory dividends was approved, as well as the appropriation to the legal reserve and retention of profits proposed at December 31, SHARE CAPITAL BS is a listed corporation authorized by CVM to operate in the organized OTC market. The Company's capital is fully subscribed and paid up in the amount of R$ million, and comprises 45,845,987 nominative common shares, with no par value. INDEPENDENT AUDITORS The Company's quarterly information and financial statements are audited by PricewaterhouseCoopers Auditores Independentes ("PwC"). In accordance with CVM Instruction 381, BS did not contract services not related to external audit from PwC, nor did this firm render such services to BS in The adoption of this policy complies with the principles that guarantee the auditor's independence, in 56 of 57

60 (A free translation of the original in Portuguese) accordance with the internationally accepted criteria, that is, auditors cannot audit their own work nor can they perform management functions for their clients or promote their clients' interests. ACKNOWLEDGEMENTS We thank our employees for their efforts and dedication towards the execution of the operational restructuring measures of Panamericano and also the application of the new guidelines. We also thank our customers, investors and partners, who have honored us with their renewed support and trust. São Paulo, February 18, of 57