BANCO CRUZEIRO DO SUL ANNOUNCES ITS RESULTS FOR THE SECOND QUARTER AND FIRST HALF OF Q11 HIGHLIGHTS

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1 BANCO CRUZEIRO DO SUL ANNOUNCES ITS RESULTS FOR THE SECOND QUARTER AND FIRST HALF OF 2011 São Paulo, August 15, 2011 Banco Cruzeiro do Sul (BM&FBovespa CZRS4), a privatesector, multiple-service bank operating a commercial and investment portfolio and authorized to execute foreign exchange operations, with operations primarily in the personal-credit segment through paycheck-deductible loans to public employees and social security beneficiaries, and which also offers short-term loans to small and midsized companies (middle market), typically secured by receivables, announces today its results for the second quarter of Banco Cruzeiro do Sul s audited financial statements are prepared in accordance with the Brazilian Corporate Law, considering the amendments introduced by Law 11,638/07 and Law 11,941/09 as well as the rules of the National Monetary Council (CMN), the Brazilian Central Bank (BACEN) and the Accounting Pronouncements Committee (CPC) when applicable. 2Q11 Conference Calls August 17, 2011 Portuguese 9:00 am (New York) 10:00 am (Brasília) Dial-in: Code: Banco Cruzeiro do Sul Replay: Code: English 10:30 am (New York) 11:30 am (Brasília) Dial-in: Replay: Code: Investor Relations Fausto Vaz Guimarães Neto João de Lacerda Soares Roberto Coutinho Naira Oey Phone: +55 (11) ri@bcsul.com.br Site: 2Q11 HIGHLIGHTS Net income in 2Q11 was R$40.5 million, for annualized ROAE of 14.0%, which was down slightly from R$41.0 million in the first quarter of the year. Net income in the first six months was R$81.5 million, for annualized ROAE of 14.2%. Net income in the second quarter was 8.3% higher than in the same period of The direct origination of paycheck-deductible personal loans totaled R$1,110.7 million in 2Q11 and R$2,174.5 million in the first half of the year. The monthly averages were R$370.2 million and R$362.4 million in 2Q11 and 1H11, respectively; Our loan portfolio reached R$7.580 billion, divided among: direct and credit card paycheck-deductible personal loans of R$7.216 billion and middle market loans of R$364.2 million; Time deposits totaled R$4,130.9 million, up 3.9% over the previous quarter (R$3,974.2 million) and 9.8% in relation to the same period of 2010 (R$3,761.9 million); Shareholders equity in the first six months of the year stood at R$1,175.2 million, up 5.7% from the R$1,111.6 million recorded in the same period of Average shareholders equity was R$1,159.9 million in the second quarter of 2011 and R$1,149.7 million in the first six months of the year. The capital adequacy (Basel) ratio stood at 18.3%. 1

2 MANAGEMENT COMMENTS In the second quarter of 2011, Banco Cruzeiro do Sul s origination of credit assets remained consistent with the bank s strategy of quality and liquidity, with the origination of paycheckdeductible personal loans consistent with the trends in the portfolio. Our origination of assets in both the paycheck-deductible personal loan and middle market segments remained selective, with efforts concentrated in operations with more attractive returns. Our administrative and personnel expenses came to R$88.8 million in quarter and R$168.6 million in the first six months, respectively. As a result, our efficiency ratios stood at 50.2% in the quarter and 50.0% in the first half, in line with the Bank s targets. Funding in the local market with and without guarantees from the FGC through time deposits with special guarantee (DPGEs) continued to represent a consistent funding source in terms of volume as well as maturities and prices, with maturities often renewed at higher terms and lower rates. The elimination of DPGEs slated for 2016, with a reduction of 20% each year in funding limits, is part of our funding strategy, with the consequent substitution of the resources raised through this funding instrument by other instruments available in the market and in our portfolio of funding instruments. We continue seeking to reduce our dependence on asset assignments to other financial institutions, with the aim of holding a higher volume of assets in the portfolio, though we still maintain relationships with partner financial institutions in order to assign credits as a funding source, with price and maturity levels that are compatible with our operations. In the first half of 2011, the Bank raised US$550.0 million offshore through its short and medium-term notes program, in addition to R$10.0 million through the private issue of notes (letras financeiras) with a ten-year term. The procedures for the accounting classification and disclosure of operations involving the sale or transfer of financial assets comply with Central Bank Resolution 3,809. However, on July 29, 2010, these procedures were postponed to January 2012 by Resolution 3,533, which required banks that had adopted them to resort to the accounting procedures used previously. Thus, Banco Cruzeiro do Sul presents its second quarter figures based on this new accounting methodology, with revenue and expenses from assignments with risk retention apportioned in advance, instead of in accordance with the remaining duration of the operations. Therefore, the accounting result is once again impacted by advance revenue from assignments. We also present our financial statements under IFRS standards, which substitutes the consolidated balance sheet required by the Securities and Exchange Commission of Brazil (CVM) when we held our IPO. Net income in 2Q11 was R$40.5 million, slightly less than the R$41.0 million recorded in the first quarter of the year. Net income in the first half of the year stood at R$81.5 million, up 8.3% from the same period in Shareholders equity in the first six months of the year stood at R$1,175.2 million, up 5.7% from R$1,111.6 million in the same period in Average shareholders equity was R$1,159.9 million in the second quarter of 2011 and R$1,149.7 million in the first six months of the year. Our Tier 1 and 2

3 Tier 2 Regulatory Capital totaled R$1,670.8 million for calculation of the Basel ratio, which stood at 18.3% in the quarter, of which 12.1% was Tier 1 and 6.2% was Tier 2. On June 30, 2011, Banco Cruzeiro do Sul s market capitalization was R$1,967.5 million, with its stock (CZRS4) trading at R$14.39 per share. Market capitalization corresponded to 1.67 times shareholders equity in the second quarter. The Bank s stock gained 32.3% in the last 12 months. Bear in mind that these stock gains do not consider the dividends and shareholders equity paid in the periods mentioned. Earnings per share in the second quarter were R$0.30, the same as in previous quarter (R$0.30) and 15.4% higher than in 2Q10 (R$0.26). The bank s free float stood at 19.4% in the period. The direct origination of paycheck-deductible personal loans totaled R$1,110.7 million in the second quarter of 2011 and R$2,174.5 million in the first half of the year. The monthly averages were R$370.2 million and R$362.4 million in the quarter and the first half of the year, respectively. Loan origination in the second quarter was 4.4% higher than in the previus quarter (R$1,063.8 million) and 4.9% higher than in the same period of 2010 (R$1,058.4 million). Loan origination in the first half of the year was 17.4% higher than in the first half of 2010 (R$1,851.5 million). Loan origination in the first six months of the year was in line with the product s historical seasonality. Assets from paycheck-deductible credit card operations reached R$332.9 million in the quarter, up 3.1% from last quarter (R$323.0 million) and 15.5% in relation to same period of 2010 (R$288.2 million). The number of cards issued stood at 396,500, which was 7.5% higher than in the same period of 2010 (368,700) and 1.4% higher than in the first quarter of 2011 (390,900). Active clients financing their outstanding balances accounted for The middle market segment ended the quarter with a loan portfolio of R$364.2 million, up 4.1% from previous quarter (R$350.0 million) and 16.3% higher than in the same period last year (R$313.2 million). The amounts in the middle market portfolio are consistent with the strategy adopted by the Bank for this business segment. In the second quarter of 2011, Banco Cruzeiro do Sul s foreign exchange desk maintained its operations in the interbank market, imports and exports, paper-currency distribution, gold exports and the buying and selling of foreign currencies for financial and commercial fund transfers. The loan portfolio, including guarantees, accounts receivable and subordinated shares in receivables-backed investment funds (FIDCs) booked under the item Securities, totaled R$7.580 billion, divided among: direct and credit card paycheck-deductible personal loans of R$ billion and middle market loans of R$ million. The overall portfolio increased by 5.0% from previous quarter (R$7.217 billion) and by 42.8% from the same period of 2010 (R$5.309 billion). Gross income from financial intermediation totaled R$208.1 million in the quarter, down 11.5% from first quarter of 2011 (R$235.2 million) and 0.6% higher than in the same quarter last year (R$206.8 million). 3

4 Time deposits totaled R$4,130.9 million, up 3.9% over the previous quarter (R$3,974.2 million) and 9.8% in relation to same period of 2010 (R$3,761.9 million). On June 30, 2011, cash and cash equivalents stood at R$372.9 million, equivalent to 31.7 shareholders equity. Period Highlights (R$ million) 2Q11 1Q11 2Q10 2Q11 x 1Q11 2Q11 x 2Q10 Paycheck-deductible origination 1, , , % 0.5% Net profit (1.2%) 13.8% Shareholder's equity 1, , , % 5.7% Credit portfolio quality (AA-C) 94.9% 97.7% 95.4% (2.8 p.p.) (0.5 p.p.) Credit portfolio quality (D-H/Credit) 5.1% 2.3% 4.6% 2.8 p.p. 0.5 p.p. Active clients (thousand) 1, , , % 24.8% Paycheck-deductible credit portfolio¹ 7, , , % 41.5% SME's credit portfolio % 16.3% Average commission to bank correspondents 6.7% 6.5% 5.9% 0.2 p.p. 0.8 p.p. Capital adequacy ratio 18.3% 18.9% 15.4% ¹ Considers credit card and subordinated quotas of FIDCs 4

5 COMMENTS ON PERFORMANCE Net Income Net income in the second quarter of 2011 was R$40.5 million, slightly less than the R$41.0 million recorded in the first quarter of the year. Net income in the first half of the year stood at R$81.5 million, up 8.3% from the same period in Recurring Net Income Net income in 2Q11 was impacted by non-recurring revenues and expenses resulting from the marking to market of our securities portfolio and by other administrative expenses, which together amounted to R$0.8 million. As a result, recurring net income in the second quarter was R$41.3 million. Net Income 40.5 Securities Results (0.1) Derivative Results - Other Operating Expenses 1.4 Income tax and social contributions (0.5) Expenses and Income Non-Recurring 0.8 Recurring Net Income 41.3 Net Interest Margin Our net interest margin contracted slightly due to the high funding costs, as presented in the chart below: 11.3% 8.3% 9.9% 9.9% 8.8% 7.4% Q10 1Q11 2Q11 Future Net Income Our credit operations booked on the balance sheet have a market value of R$1.967 billion¹. R$ Credit Portfolio Carrying Value 2Q11 Market Value Gain or Loss Potential 1,893,923 1,967,155 73,232 ¹- Note 23 a. of the Financial Statements for the second quarter of

6 Gross Income from Financial Intermediation Gross income from financial intermediation came to R$208.1 million, down 11.5% from 1Q11 (R$235.2 million) and up 0.6% from 2Q10 (R$206.8 million). The reduction in gross income from intermediation was due to the increase in funding costs Q10 1Q11 2Q11 Origination of Paycheck-Deductible Personal Loans The direct origination of paycheck-deductible personal loans totaled R$1,110.7 million in 2Q11 and R$2,174.5 million in 1H11. Monthly averages were R$370.2 million and R$362.4 million in 2Q11 and 1H11, respectively. Loan origination in the quarter was 4.4% greater than in 1Q11 (R$1,063.8 million) and 4.9% greater than in 2Q10 (R$1,058.4 million). Loan origination in 1H11 was 17.4% greater than in 1H10 (R$1,851.5 million). Loan origination in 1H11 was in line with the product s historical seasonality. 4, ,276 3, , , ,663 2, , ,879 4,148 2, ,600 Public Employees INSS 1, , H , , ,386 1,265 1,111 1, Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Our paycheck-deductible loan origination in 2Q11 was divided between 27.7% for INSS beneficiaries and 72.3% for public employees, while 26.4 origination in 1H11 went to INSS beneficiaries, and 73.6% to public employees. 6

7 The government paycheck-deductible loan market has maintained the performance seen in recent quarters, increasing by 4.2% between March and June 2011 and 20.8% between June 2010 and June The continuous growth of the paycheck-deductible loan sector underscores the constant demand in this market. 140, , ,000 80,000 60,000 40,000 20,000 - PAYCHECK-DEDUCTIBLE LOANS 112, , , , , ,655 87,577 92,961 79,418 56,179 59,452 62,635 65,623 68,201 71, % 36.3% 40.1% 33.0% 26.8% 28.9% 27.2% 21.4% 20.3% 22.2% 20.8% Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 60% 50% 40% 30% 20% 10% 0% -10% Paycheck-deductible loans (R$ billion) YOY The 20 biggest agreements for paycheck-deductible personal loan origination accounted for 66.8% of our direct origination in 2Q11, as shown below: 20 Major Production Codes 2Q11 1Q11 1H11 1H10 State 19.8% 40.1% 15.3% 29.9% Federal 19.4% 16.8% 23.2% 13.7% INSS 27.7% 8.1% 26.4% 19.1% Municipalities 0.0% 0.9% 1.4% 1.1% Total 66.8% 65.9% 66.4% 63.8% Securities The bank s securities portfolio stood at R$6,302.2 million, up 22.3% over the same period in 2010 (R$5,151.0 million) and 10.7% on 1Q11 (R$5,694.0 million). Investments in the subordinated shares of receivables-backed investment funds (FIDCs) represented R$5,751.7 million, or 91.3 total, and are included in our own portfolio as shown below (R$5,196.5 million in 1Q11, or 91.3 ). Bonds Portfolio (R$ '000) 2Q11 1Q11 2Q10 2Q11 x 1Q11 2Q11 x 2Q10 Own Portfolio 478, , , % (5.9%) Subordinated quotas FIDCs 5,751,657 5,196,453 4,349, % 32.2% Subject to repurchase commitments , % (100.0%) Derivative Financial Instruments 50,264 21,067 40, % 22.7% Subject to guarantees provided 22,098 17, , % (82.6%) Total 6,302,168 5,694,023 5,150, % 22.3% Loan Portfolio The loan portfolio, including guarantees, accounts receivable and subordinated shares in receivables-backed investment funds (FIDCs) booked under the item Securities, totaled R$7.580 billion, divided into: R$7.216 billion in direct and credit card paycheck-deductible personal loans, and 7

8 middle market loans of R$364.2 million. The overall portfolio increased by 5.0% over 1Q11 (R$7.217 billion) and 42.8% over 2Q10 (R$5.309 billion). Credit Portfolio (R$ '000) 2Q11 1Q11 2Q10 2Q11 x 1Q11 2Q11 x 2Q10 Paycheck-Deductible Loans¹ 1,464, % 1,670, % 646, % (12.3%) 126.6% - Loans (direct way) 1,281, % 1,492, % 533, % (14.2%) 140.2% - Credit Card 183, % 177, % 112, % 3.1% 62.4% Subordinated Quotas of FIDCs 5,751, % 5,196, % 4,349, % 10.7% 32.2% - Loans (direct way) 5,602, % 5,051, % 4,174, % 10.9% 34.2% - Credit Card 149, % 145, % 175, % 3.0% (14.7%) Total Paycheck-Deductible Personal Loans 7,216, % 6,866, % 4,995, % 5.1% 44.4% Middle Market 364, % 349, % 313, % 4.1% 16.3% Total On-balance 7,580, % 7,216, % 5,309, % 5.0% 42.8% ¹ Considers 3533 effects 6, , , , , , , , , , , , , , , , , , Q10 1Q11 2Q11 Subordinated quotas of FIDC On Balance Credit (Loans) Direct Paycheck Deductible Loans Direct paycheck-deductible loans came to R$6,883.4 million in 2Q11 (R$1,281.2 million of which in assets booked on the balance sheet and R$5,602.2 million in subordinated shares of FIDCs), 46.2% higher than in 2Q10 (R$4,707.7 million) and 5.2% higher than 1Q11 (R$6,544.0 million). Paycheck-Deductible Credit Cards Assets from paycheck-deductible credit card operations reached R$332.9 million in 2Q11 (R$183.4 million booked on the balance sheet and R$149.4 million in subordinated shares of FIDCs), up 3.1% over 1Q11 (R$323.0 million, of which R$117.9 million were booked on the balance sheet and R$145.1 million in subordinated shares of FIDCs) and 15.5% higher than 2Q10 (R$288.2 million, of which R$112.9 million were booked on the balance sheet and R$175.3 million in subordinated shares of FIDCs) Q10 1Q11 2Q11 Subordinated Quota FIDC Credit Portfolio 8

9 The number of cards issued stood at 396,500, a 7.5% increase over 2Q10 (368,700) and 1.4% increase over 1Q11 (390,900). Active clients financing their outstanding balances accounted for Banco Cruzeiro do Sul currently holds agreements for the origination of paycheck-deductible loans with 243 government entities as well as the INSS social security system Q10 1Q11 2Q11 Middle Market Loans The middle market segment ended 2Q11 with a loan portfolio of R$364.2 million, up 4.1% over 1Q11 (R$350.0 million) and 16.3% greater than in 2Q10 (R$313.2 million). The amounts in the middle market portfolio are consistent with the strategy adopted by the bank for this business segment Q10 1Q11 2Q11 The Bank maintains a conservative approach in relation to the origination of loans in the middle market. In the second quarter, we had 126 active clients in the segment, with an average portfolio term of 168 days and an average ticket per operation of R$1.1 million. Banco Cruzeiro do Sul maintains its focus on paycheck-deductible personal loans, both directly or through paycheck-deductible credit cards, where it has built a portfolio of high liquidity and quality, though without foregoing the middle market segment, seeking to diversify the loan portfolio. Quality of the Loan Portfolio Security in the approval and execution of credit operations is fundamental for developing the business and maintaining the quality of the loan portfolio. This efficient loan-portfolio management is demonstrated by the quality of the portfolio, with 94.9 credit assets rated between AA and C, in accordance with Resolution 2,682 of the Brazilian Central Bank. 9

10 At the close of 2Q11, the provision for loan losses stood at R$46.4 million, versus R$44.4 million in the first quarter of % 0.03% 11.42% 76.57% AA A B C The quality of our loans is ensured by the low level of default in paycheck-deductible loans, historically lower than 1% and averaging 0.8%. In the quarter, based on the individual balance sheet, the provision for paycheck-deductible loan operations accounted for 0.92 the portfolio. Our Ratings Banco Cruzeiro do Sul is analyzed by the following rating agencies: LF Rating, RiskBank, Moody s, Austin Rating and Standard & Poor s. Agency Rating Type LF Rating A Brazilian Currency Austin Rating A- Domestic Scale RISKbank Moody's Standard & Poor's (RISKbank Index) General Ranking in Mar/11: 38 (Dec/10: 35) Low risk for short term General disclosure: Excellent Ba 2/NP Negative Outlook Ba 2/NP Negative Outlook Ba 3/NP Negative Outlook A1.br/BR-1 Negative Outlook BB-/B Estable Outlook BrA-/2 Estable Outlook Brazilian Currency Foreign Currency Deposits Brazilian Currency Subordinated Domestic Scale Foreign Currency Deposits Brazilian Currency Foreign Exchange In the first half of 2011, Banco Cruzeiro do Sul s foreign-exchange desk maintained its operations in the interbank market, imports and exports, paper currency distribution, gold exports and the buying and selling of foreign currencies for financial and commercial fund transfers. Consistent with our high-volume and low-risk strategy, operations target institutions authorized by the Brazilian Central Bank, and price variations are always covered by derivative markets in Brazil and abroad. The area's activities in the interbank market led Banco Cruzeiro do Sul to place 18 th in the ranking published by the Brazilian Central Bank in June

11 Funding Banco Cruzeiro do Sul raises funds in the local market from institutional investors, individuals and companies. The instruments used for this funding are: time deposits with and without guarantee from the Credit Guarantee Fund (DPGEs), interbank deposits, credit assignments to other financial institutions and receivables-backed investment funds (FIDCs). In the international market, funding operations involve the issue of short- and medium-term notes. In 2Q11, the Bank s funding sources were composed of: Time deposits from individuals and companies: 45.0%; Credit assignments to other financial institutions: 13.9%; Offshore funding operations (STN & MTN): 29.0%; Credit assignments to FIDCs (senior shares): 10.2%; Interbank deposits: 1.9%. Funding (R$ '000) 2Q11 1Q11 Time deposits totaled R$4,130.9 million, up 3.9% over the previous quarter (R$3,974.2 million) and 9.8% on 2Q10 (R$3,761.9 million). The time deposits portfolio with and without guarantees from the FGC has a weighted average cost of the CDI rate and a weighted average term of 485 days, an improvement on the the CDI rate and weighted average of 430 days recorded in 1Q11. 2Q10 2Q11 x 1Q11 2Q11 x 2Q10 Time deposits¹ 4,130, % 3,974, % 3,761, % 3.9% 9.8% Interbank deposits² 172, % 172, % 253, % (0.5%) (32.1%) Securities issued abroad 2,662, % 2,575, % 1,127, % 3.4% 136.2% SubTotal On-balance 6,964, % 6,722, % 5,142, % 3.6% 35.4% Credit assignments 1,275, % 950, % 913, % 34.2% 39.7% FIDC's senior quotas 938, % 862, % 1,022, % 8.8% (8.2%) SubTotal Off-balance 2,214, % 1,813, % 1,935, % 22.1% 14.4% Total 9,178, % 8,535, % 7,078, % 7.5% 29.7% ¹ Considers Related Party Deposits of R$ million and R$2,573.4 million in DPGEs (deposits guaranteed by the government). ² Considers Related Party Deposits of R$ million, Interbank Deposits, Demand Deposits and Other Deposits. Time Deposits (R$ '000) 2Q11 1Q11 2Q10 2Q11 x 1Q11 2Q11 x 2Q10 DPGE 2, % 2, % 2, % 3.1% 17.7% CDB 1, % 1, % 1, % 5.4% (1.1%) Total 4, % 3, % 3, % 3.9% 9.8% In the first half of 2011, the Bank raised US$550.0 million offshore through its short- and mediumterm notes program, in addition to R$10.0 million through a private issue of ten-year notes. In July 2011, a total of R$20 million was raised through notes for the same ten-year term. Cash and cash equivalents In the second quarter, the Bank continued to exercise control over liquidity and the quality of assets adopted in previous quarters. We maintained our relationships with partner financial institutions, assigning credit assets that generated funds at prices and terms that are compatible with our operations. 11

12 On June 30, 2011, cash and cash equivalents stood at R$372.9 million, shown in the table below. R$ million 2Q11 Local Currency 1,929 Foreign Investor 45,794 Cash and Gold 4,534 Cash equivalents 52,257 Interbank investments ¹ 255,819 Total of cash and cash equivalents 308,076 Goverment Bonds Free Portfolio 59,074 FIDC's cash balance 5,802 Goverment Bonds available at BM&F - Total 372,952 ¹- Operations whose maturity date on the effective investment date is equal to or shorter than 90 days. Administrative Expenses Administrative and personnel expenses totaled R$88.8 million in 2Q11, up 11.4% over the previous quarter. Personnel expenses came to R$34.2 million, up 17.3% over 1Q11 and 20.1% over 2Q10. The increase in personnel expenses was due to the increase in the number of employees and to bonuses paid to employees for The increase in operating expenses was a result of nonrecurring promotions and sponsorships in 2Q11. Personnel and Administrative Expenses (R$ '000) 2Q11 1Q11 2Q11 x 1Q11 As a result, our efficiency ratio stood at 50.2% in the period, in line with the bank s target. 2Q10 2Q11 x 2Q10 1H11 1H10 1H11 x 1H10 Personnel expenses 34,152 29, % 28, % 63,270 52, % Administrative expenses 54,685 50, % 55,721 (1.9%) 105, , % Total 88,837 79, % 84, % 168, , % 12

13 CAPITAL STRUCTURE Shareholders Equity Shareholders equity in 1H11 stood at R$1,175.2 million, up 5.7% over the R$1,111.6 million recorded in 1H10. Average shareholders equity was R$1,159.9 million in 2Q111 and R$1,149.7 million in 1H11. 1,048 1,069 1,068 1,127 1,112 1,151 1, Q10 1Q11 2Q11 Based on the net income of R$40.5 million in 2Q11 and R$81.5 million in 1H11, the Bank s annualized ROAE was 14.0% and 14.2%, respectively. Capital Adequacy Ratio (BIS) The offshore issue of subordinated debt in September 2010 with a ten-year term and totaling US$400 million was included in the Bank's tier 2 capital on December 14, 2010, when authorized by the Central Bank of Brazil, for the calculation of its capital adequacy ratio. 30.0% 19.0% 14.7% 15.7% 20.4% 16.1% 21.2% 15.4% 18.9% 18.3% Q10 1Q11 2Q11 Our tier 1 and 2 Regulatory Capital totaled R$1,670.8 million for the calculation of the Basel ratio, which stood at 18.3% in the quarter, of which 12.1% was tier 1 and 6.2% was tier 2, as shown below: Jun-11 Amount Credit-risk portion 880,539 Market-risk portion 32,407 Operating risk portion 91,965 Required reference capital (RRC) 1,004,911 Reference capital for compatibility limit of RC with RRC (RC), including Tier 2 capital 1,670,764 Capital Ratio (BIS) 18.29% 13

14 Banco Cruzeiro do Sul Stock (Bovespa CZRS4) The capital stock of Banco Cruzeiro do Sul comprises 99,897,555 common shares and 36,829,923 preferred shares, for a total of 136,727,478 shares, of which 26,507,221 shares (71.97 the preferred shares) are held by the market (free float). Position Commom % Preferred % Total % Foreign investor - - 7,867, % 7,867, % Brazilian Corporations - - 6,027, % 6,027, % Brazilian Individuals ,612, % 12,612, % Total Free Float ,507, % 26,507, % Cruzeiro do Sul Holding 99,897, % ,897, % Luis Felippe Indio da Costa - - 6,067, % 6,067, % Luis Octavio A. L. Indio da Costa - - 2,872, % 2,872, % Members of the Board , % 22, % Directors Treasury - - 1,360, % 1,360, % Total Management 99,897, % 10,322, % 110,220, % Total Shares 99,897, % 36,829, % 136,727, % On June 30, 2011, Banco Cruzeiro do Sul s market capitalization was R$1,967.5 million, with its stock (CZRS4) trading at R$14.39 per share. Market capitalization corresponded to 1.67 times shareholders equity in 2Q11. The Bank s stock appreciated by 32.3% in the past 12 months. Bear in mind that these stock gains do not consider the dividends and interest on equity paid in the periods mentioned. Earnings per share in 2Q11 were R$0.30, the same as in 1Q11 (R$0.30) and 15.4% higher than in 2Q10 (R$0.26). The Bank s free float stood at 19.4%. The table below shows the amounts paid as interest on equity and dividends, which represent R$2.53 per share since the IPO: Date of approval Return Return value per share (R$) The Amount of Income (R$ 000) Date of Payment 08/23/2007 Interest on own capital , /04/ /21/2008 Interest on own capital , /01/ /12/2008 Dividends , /25/ /14/2008 Interest on own capital , /15/ /03/2008 Interest on own capital , /15/ /03/2009 Dividends , /16/ /17/2009 Interest on own capital , /14/ /14/2009 Interest on own capital , /27/ /29/2010 Interest on own capital , /22/ /07/2010 Interest on own capital , /28/ /01/2010 Interest on own capital , /14/ /02/2010 Interest on own capital , /15/ /05/2010 Interest on own capital , /18/ /15/2010 Interest on own capital , /14/ /17/2011 Dividends , /26/ /31/2011 Interest on own capital , /10/ /01/2011 Interest on own capital , /11/ /25/2011 Interest on own capital , /11/ /12/2011 Dividends , /26/ /10/2011 Dividends , /20/ /30/2011 Dividends , /12/

15 In its July 19, 2011 edition, Valor Econômico newspaper stated that Banco Cruzeiro do Sul stock posted the highest yield (adjusted for earnings) for shareholders since its IPO, as shown below: Share performance since IPO - yield* (adjusted for earnings) - in % Cruzeiro do Sul Paraná Banco BicBanco ABC Brasil Pine Indusval Daycoval Panamericano Sofisa IPO day 25/06/07 13/06/07 11/10/07 24/07/07 30/03/07 11/07/07 28/06/07 16/11/07 30/04/07 IPO price (R$) Closing price* (R$) Source: Economática *Closing price of 07/15/2011 Client Portfolio In 2Q11, we had 1,635,807 active clients, up 77,428, or 5.0%, from 1Q11. The number of active clients in 2Q11 increased by 24.8% from 2Q10. The chart below provides the breakdown of the active client base among INSS beneficiaries, public employees and paycheck-deductible credit cards Credit Card Public Employee INSS , , , , , , Q10 1Q11 2Q11 Distribution Network For the origination of paycheck-deductible personal loans to public employees and INSS beneficiaries, in 2Q11, the Bank had a nationwide network of 404 correspondent banks, 16 which are exclusive banks, as shown in the chart below, compared with 380 (17% exclusive) in 1Q11 and 256 (25% exclusive) in 2Q10. The 10 largest correspondent banks accounted for 28.3 our direct origination of paycheckdeductible loans in 2Q11. 15

16 CORRESPONDENTS BY REGION 2Q % % 20.8% 8.9% 17.1% Q10 1Q11 2Q11 MID-WEST NORTHEAST NORTH SOUTHEAST SOUTH We constantly review the performance of our correspondent banks with the aim of increasing both origination and quality. These correspondent banks use third parties and employees to reach the target public. INSS Other Agreement Average Commission 9.57% 9.02% 8.54% 5.89% 6.47% 6.72% 5.20% 5.77% 6.02% 2Q10 1Q11 2Q11 The average weighted commission paid to correspondents in 2Q11 was 6.7%, versus 6.5% in 1Q11 and 5.9% in 2Q10. The average weighted commission paid in 2Q11 is in line with 1Q11 and 14.1% higher than in 2Q10. The slight increase between 1Q11 and 2Q11 was due to the higher paycheckdeductible loan origination to INSS beneficiaries, in which commissions are slightly higher compared to other agreements. In the middle market segment, the distribution network is organized in the form of the Bank's own commercial platforms located in the cities of São Paulo, Ribeirão Preto, Rio de Janeiro, and Goiânia, and is composed of 126 active clients. Agreements with Government Entities In 2Q11, the sales team had at its disposal 401 agreements (codes), 157 of which were federal, 122 state and 122 municipal. These agreements involved permission to offer paycheck-deductible personal loans to more than 3,000 government entities at the federal, state and municipal levels, including the INSS social security system. Between 2Q10 and 2Q11, 35 new government entities were added to our agreement network Q10 1Q11 2Q11 16

17 The 20 largest agreements with government entities accounted for 66.8 our direct origination in 2Q11. The approval of new agreements with municipal, state and federal entities to offer paycheckdeductible loans to public employees is formalized in strict observance of all applicable regulations. The process includes all necessary measures to minimize any risks (legal, image and operational). These procedures aim to avoid any problems that could emerge regarding the linking of loans to the payroll accounts of each government entity. Accordingly, three pillars are observed in these processes: 1. If the entity falls under the scope of the tax liability law (Supplementary Law 101 dated May 4, 2000); 2. If the entity is authorized by law to permit the linking of obligations owed under the loan agreement to the payroll accounts of its employees, duly approving and encompassing paycheckdeductible loan operations to public employees; 3. If the entity has an IT platform compatible with the operation of loan agreements over the internet. Sustainability Project and Social Policies Banco Cruzeiro do Sul is aware of the importance of social responsibility, as well as of growth and sustainable development. For years, it has been providing assistance to sports and cultural activities, as well as philanthropic assistance to needy children and the elderly, provided incentives to artistic and cultural entities, as well as environmental conservation projects. We launched the Jogando pelo Meio Ambiente (Playing for the Environment) project, a partnership between Ecoar Institute, Sport Club Corinthians Paulista and Sociedade Esportiva Palmeiras. The project is committed to reducing and compensating for CO2 emissions in a unique manner, namely planting 100 trees for each soccer game played by Corinthians or Palmeiras, and an additional 100 trees for every goal scored. For each game in which the opposite team does not score a goal against Corinthians or Palmeiras, another 100 trees will be planted, while 200 trees will be planted for each penalty saved or missed by opponents. In addition, if either team wins the São Paulo State Championship, 1,000 trees will be planted, and if they win the Brazilian Championship or South American Cup, 3,000 trees will be planted. As of August 2, 2011, a total of 24,900 seedlings will be planted, surpassing the number of seedlings planted in 2010 (23,000). The trees planted in 2010 form the Corinthians Banco Cruzeiro do Sul Forest Reserve, a 103,000 sq. mt. area located in Salto de Pirapora, in the interior of São Paulo. For 2011, the new reserve is located in the Ressaca neighborhood in the town of Sarapuí, in the interior of São Paulo. 17

18 Personnel Management To advance our growth strategy, the People Management Department works to ensure that attitude and postures are effectively aligned with the organization s values: Result-oriented focus with accountability Commitment to the client Efficiency and effectiveness Entrepreneurism and agility Professionalism Ethical behavior Team spirit Respect for individuals In this light, the department drafts and updates its policies with a view to valuing, motivating, retaining and attracting human capital, and developing experienced professionals in their various areas of specialization. To achieve this, it developed, among other initiatives, the Internal Profit Sharing Program (PLR PLUS), which is in addition to the profit-sharing program established under the collective bargaining agreement, and is based on: Identification of areas that require attention; Recognizing and promoting competencies; Professional dedication; Performance evaluations; During the quarter, the Health and Quality of Life Program for employees and their family members, as well as lectures, training sessions and a healthcare plan covered 1,878 beneficiaries. In 2Q11, Banco Cruzeiro do Sul had 787 employees, an increase of 2.6% over 1Q11 (767) and 18.2% over 2Q10 (666). The increase in the number of employees is due to operational adjustments to the new market conditions and to the growth in paycheck-deductible loan origination. Management of Market Risk In compliance with CMN Resolutions 3,464/07 and 3,354/06, Banco Cruzeiro do Sul has a special structure for managing the market risks of its operations. We are also complying with CVM Instruction 474/08 by disclosing sensitivity analyses of our asset and liability positions and exposures, according to the Explanatory Note Sensitivity Analysis. The result of the market-risk analyses are discussed periodically in the Risks and Liquidity Committee, which evaluates primarily if the level of risk assumed by the operating areas are aligned with the operating limits pre-approved by Senior Management. Management of Operational Risk In compliance with CMN Resolution 3,380/06, Banco Cruzeiro do Sul has an Operational Risk Management Policy and a special structure for the entire Conglomerate for managing operational risks. The results of the studies conducted by the teams involved in the operational risk process are evaluated by the Risk and Liquidity Committee and by the Board of Directors and, if applicable, corrective or preventative measures are implemented to remedy the points raised. 18

19 In addition, in accordance with said resolution, the Cruzeiro do Sul Conglomerate adopted the POPR Share, the methodology of Basic Indicator Approach to calculate the Reserve Requirements related to the operational risk. Ombudsman Our ombudsman has the duty of representing the clients who use the Bank s products and services. Accordingly, the Bank s Management assures that all of the conditions needed for the department to operate are guided by transparency, independence and impartiality when dealing with clients and accessing the required information. Audit Committee The Audit Committee of Banco Cruzeiro do Sul S.A., which was constituted under the terms of Article 34 of the Bank s Articles of Incorporation, elected in accordance with minutes of the annual and special shareholders meetings held on April 23, 2008, and installed on November 3, 2008, is a statutory body composed of three independent members with a one-year term of office, as determined by Resolution 3,198 of May 27, 2004, of the National Monetary Council (CMN). The members of the Audit Committee were reelected in accordance with the minutes of the Board of Directors meeting held on April 29, 2011 for a term of office of one (1) year. The committee s composition, attributions and rules of conduct were established in accordance with the regulations issued by the Brazilian Central Bank and are governed by the Bank s Articles of Incorporation and by the Operational Rules of the Audit Committee, which were approved by the Company s Board of Directors. The Bank s Audit Committee is currently composed of the following members: Gilberto Braga, Miguel Vargas Franco Netto and Paulo Roberto Barral. Implementation of the International Financial Reporting Standards (IFRS) Resolution 3,786/09 of the National Monetary Council (CMN) and Official Letter 3,472/09 of the Brazilian Central Bank (BACEN) set forth that financial institutions and other institutions authorized to operate by the Central Bank and that are incorporated as publicly held companies or that are obligated to establish an Audit Committee must, as of December 31, 2010, prepare their annual consolidated financial statements in compliance with the International Financial Reporting Standards (IFRS), observing the international pronouncements issued by the International Accounting Standards Board (IASB). Based on the regulatory aspects, the management of Banco Cruzeiro do Sul implemented the IFRS Project. This project is designed to align the new requirements with corporate governance initiatives that seek i) the continuous improvement of the internal controls environment and ii) greater transparency in the group s management. The main impacts on Banco Cruzeiro do Sul s financial statements dated December 31, 2010, are detailed in Note 25e. As a result of this project, the consolidated financial statements of the Cruzeiro do Sul Conglomerate with a base date of December 31, 2010, will be presented in compliance with international 19

20 standards, in comparison with the immediately prior year. In compliance with Official Letter 3,435/10, Banco Cruzeiro do Sul s management prepared the opening balance sheet for the base date of January 1, The following CMN resolutions have received some CPCs that are already causing an impact on the individual statements of financial institutions: Resolution 3,566/08 Asset Impairment; Resolution 3,604/08 Cash Flow Statement; Resolution 3,750/09 Disclosure of Related Parties; and Resolution 3,823/09 Provisions, Contingent Liabilities and Contingent Assets. As the Brazilian Central Bank (BACEN) approves the other pronouncements, the asymmetries between the financial statements prepared to meet BACEN s requirements and those prepared according to international standards will be eliminated, so that the criteria used for the individual financial statements and consolidated financial statements will be identical. 20

21 STATEMENT OF INCOME (R$ 000) Statement of Income (R$ '000) 2Q11 1Q11 2Q11 x 1Q11 2Q10 2Q11 x 2Q10 1H11 1H10 1H11 x 1H10 Financial operations income 322, ,380 (17.2%) 385,489 (16.3%) 711, ,694 (6.4%) Loans 282, ,842 (10.2%) 259, % 597, , % Securities income 196, , % 119, % 372, , % Derivative financial instruments (162,370) (110,204) 47.3% 6,466 (2611.1%) (272,574) 11,772 (2415.4%) Foreign exchange operations 5,606 9,218 (39.2%) % 14,824 3, % Financial operations expenses (114,407) (154,159) (25.8%) (178,689) (36.0%) (268,566) (351,894) (23.7%) Deposits, money market and interbank funds (95,239) (144,077) (33.9%) (149,695) (36.4%) (239,316) (285,136) (16.1%) Borrowings and repass (841) (22) % (1,210) (30.5%) (863) (1,472) (41.4%) Sale or trasfering of financial assets operations (4,237) (5,145) (17.6%) (24,398) (82.6%) (9,382) (52,066) (82.0%) Allowance for doubtful loans (14,090) (4,915) 186.7% (3,386) 316.1% (19,005) (13,220) 43.8% Gross income on financial operations 208, ,221 (11.5%) 206, % 443, , % Other operating income/(expenses) (131,605) (161,652) (18.6%) (151,853) (13.3%) (293,257) (291,014) 0.8% Service income 2,600 2,791 (6.8%) 2,941 (11.6%) 5,391 5,913 (8.8%) Bank fees income 47, % % 47, % Personnel expenses (34,152) (29,118) 17.3% (28,425) 20.1% (63,270) (52,229) 21.1% Other administrative expenses (54,685) (50,623) 8.0% (55,721) (1.9%) (105,308) (100,006) 5.3% Tax expenses (14,335) (10,102) 41.9% (7,528) 90.4% (24,437) (13,562) 80.2% Equity in income of subsidiaries 2,598 3,330 (22.0%) % 5,928 (1,173) (605.4%) Other operating income 4,330 4, % 2, % 8,605 6, % Other operating expenses (85,052) (82,627) 2.9% (66,150) 28.6% (167,679) (136,506) 22.8% Operating results 76,531 73, % 54, % 150, , % Non operating results 2, % (210) (1327.1%) 2,622 (188) (1494.7%) Results before income taxes 79,108 73, % 54, % 152, , % Income tax and social contributions (30,625) (19,486) 57.2% (13,080) 134.1% (50,111) (34,566) 45.0% Provision for income tax (16,474) (8,529) 93.2% (6,681) 146.6% (25,003) (15,908) 57.2% Provision for social contribution (9,547) (5,191) 83.9% (3,731) 155.9% (14,738) (9,181) 60.5% Deferred tax assets (4,604) (5,766) (20.2%) (2,668) 72.6% (10,370) (9,477) 9.4% Profit sharing - Employees (7,966) (13,099) (39.2%) (6,053) 31.6% (21,065) (7,760) 171.5% Net profit/(loss) for the period 40,517 41,029 (1.2%) 35, % 81,546 75, % Interest on own capital - 11,000 (100.0%) 15,840 (100.0%) 11,000 31,640 (65.2%) 21

22 BALANCE SHEET - ASSETS (R$ 000) Assets (R$ '000) 2Q11 1Q11 2Q10 2Q11 x 1Q11 2Q11 x 2Q10 Current assets 8,529, % 7,990, % 7,264, % 6.7% 17.4% Bank and cash 52, % 105, % 88, % (50.5%) (41.2%) Interbank funds applied 341, % 362, % 19, % (6.0%) % Securities and derivative financial instruments 6,302, % 5,693, % 5,150, % 10.7% 22.3% Interbank accounts 4, % 4, % 3, % 7.2% 26.0% Loans 789, % 859, % 824, % (8.1%) (4.2%) Other receivable 1,021, % 938, % 1,104, % 8.9% (7.5%) Other assets 18, % 26, % 73, % (31.1%) (75.5%) Non current assets 1,457, % 1,495, % 815, % (2.6%) 78.8% Interbank funds applied 294, % 175, % 71, % 68.0% 309.8% Securities and derivative financial instruments % % % (50.7%) (29.2%) Loans 906, % 1,051, % 502, % (13.8%) 80.2% Other receivable 196, % 201, % 225, % (2.7%) (12.9%) Other assets 60, % 67, % 14, % (9.7%) 309.9% Permanent assets 231, % 229, % 207, % 1.1% 11.8% Investments 182, % 177, % 170, % 3.0% 7.2% Premises and equipment 35, % 37, % 22, % (5.9%) 55.2% Deferred charges 7, % 7, % 10, % (9.6%) (30.7%) Intangible 6, % 6, % 4, % 0.9% 67.3% Total Assets 10,219, % 9,715, % 8,287, % 5.2% 23.3% 22

23 BALANCE SHEET - LIABILITIES (R$ 000) Liabilities (R$ '000) 2Q11 1Q11 2Q10 2Q11 x 1Q11 2Q11 x 2Q10 Current Liabilities 4,615, % 4,189, % 4,677, % 10.2% (1.3%) Deposits 2,761, % 2,838, % 3,023, % (2.7%) (8.7%) Money market repurchase commitments 99, % 62, % 124, % 58.3% (20.5%) Acceptances and endorsements 139, % 193, % 211, % (27.6%) (34.0%) Interbank accounts 3, % 2, % 1, % 30.7% 156.4% Interdependent relations % - 0.0% - 0.0% 0.0% 0.0% Obligations due to loans 6, % 1, % 4, % 214.0% 30.1% Derivative financial instruments 177, % 86, % 16, % 106.2% 967.0% Other liabilities 1,427, % 1,004, % 1,294, % 42.1% 10.3% Non current liabilities 4,427, % 3,944, % 2,498, % 12.2% 77.3% Deposits 1,541, % 1,308, % 992, % 17.8% 55.4% Acceptances and endorsements 1,895, % 1,734, % 915, % 9.3% 107.1% Derivative financial instruments 317, % 193, % 54, % 64.1% 484.3% Other liabilities 673, % 1,138, % 536, % (40.9%) 25.5% Deferred income % % % 3.7% (46.3%) Shareholders' equity 1,175, % 1,151, % 1,111, % 2.1% 5.7% Total Liabilities 10,219, % 9,715, % 8,287, % 5.2% 23.3% 23