SpareBank 1 SR-Bank Group

Transcription

1 SpareBank 1 SR-Bank Group Investor Presentation March 2010

2 SpareBank 1 SR-Bank At a glance Leading financial institution in South Western Norway # 2 of Norwegian Banks by Total Assets in Norway (# 5 of all banks operating in Norway) Part of the SpareBank 1 Alliance of Norwegian savings banks Listed on the Oslo stock-exchange Good 2009 financial results underpinned by stable net interest income NOK1.4bn profit before tax (17.5 percent return on equity after tax) Growth in retail lending No growth in corporate lending Capital increase of NOK2bn via equity and Tier 1 issue Core capital ratio: 9.6% Total capital ratio: 11.9% Mild downturn in Norwegian economy Fairly stable activity level and low unemployment rate (3,3 percent) and rising house prices during 2009 Page 2

3 Norway and the Norwegian Economy Page 3

4 Robust Norwegian Economy So far, the Norwegian Economy has proved robust through the credit crisis Both the Government and the Central Bank came out early with appropriate liquidity and stimulus measures Norway also had a good starting position, i.e. a solid surplus Economic Indicators (%) Norway Norway 2006 A 2007 A 2008 A 2009 Q E GDP Growth (mainland) ,3 2.1 Inflation ,4 0.9 Private Consumption ,0 5.4 Interest Rate (3m Money Market) ,1 2.7 Unemployment Current Account Surplus / GDP Budget Surplus / GDP Government Pension fund / GDP Source: Statistics Norway, Ministry of Finance, OECD, Bloomberg and Eurostat Page 4 4

5 Large Government Budget Surplus Large Government Budget Surplus due to petroleum revenues Petroleum Wealth accumulated in Norwegian Pension Fund, close to 100% of GDP, expected to rise to 150% of GDP next 5 years Government budget surplus 2008 (% of GDP) Sovereign wealth funds ($bn) Denmark Sweden 3,10 % 2,55 % Norway Euro-zone average -1,90 % 14 % UK US -5,35 % -5,80 % Japan -1,39 % Source: Bloomberg 10 % -5 % 0 % 5 % 10 % 15 % Page 5

6 Broad Stimulus Measures With strong government finances there is room to counter-act. The authorities have shown a strong commitment to dampen the effect of the credit crisis and subsequent downturn Stimulus measures Banking Package I (Nov 2008) Swap facility to ensure long term funding for the banking sector by depositing/repo covered bonds vs Norwegian T-Bills Up to 5 years total size NOK 350 bn (approx 40bn) Public spending Package I (Jan 2009) Increased public spending by 2.5% of GDP (mainland) related to infrastructure (roads, maintenance public buildings) Underlying spending increase in government budget of 5% from 2008 to 2009 Banking package II (Feb 2009) Finance fund for capital support for Norwegian Banks - NOK 50bn Bond fund for corporate refinancing (including banks) - NOK 50bn Monetary stimulus Cuts in deposit rate at Central Bank Current deposit rate is at 1.75% Page 6

7 The Norwegian economy significantly less impacted by the financial crisis Unemployment rates Manufacturing production production EMU 2 US Japan Norway Sweden US Germany 85 Sweden Norway UK Source: Thompson Page 7

8 Record-high oil investments expected to continue (2006-prices) Petroleum investment Petroleum investment (projected) Source: Central Bank of Norway Page 8

9 SR-Bank s key market area is the strongest outside Oslo The Rogaland area enjoys the highest GDP per capital outside Oslo due to the concentration of the oil and petroleum industry here 7 6 Unemployment raterates In addition, it has an employment rate lower than the national rate Percent Above NOK NOK NOK NOK Less than jan 2009 jun 2009 nov Norw ay Rogaland Hordaland Agder Page 9

10 SpareBank 1 SR-Bank Organisational Overview and Positioning Page 10

11 SpareBank 1 SR-Bank: Co-founder and one of the key owners of the SpareBank 1 Alliance Description SpareBank 1 The SpareBank 1 Alliance has a nationwide distribution network Total assets in Norway (BNOK, parent banks) The SpareBank 1 alliance s objective is to ensure the individual bank s independence and regional anchoring through strong competitiveness, profitability and solidity Key figures for the SpareBank 1 Alliance Founded in independent savings banks 1.6 million customers internet customers Total assets: NOK 614 bln Largest real estate brokerage chain in Norway 352 branches, 6300 employees Market surveys indicate that SpareBank 1 is the second most known brand name in the Norwegian financial industry 352 member branches and distribution through 378 branches DnB NOR SpareBank 1 Alliance Nordea Fokus Handelsbanken SpareBank 1 SR-Bank SpareBank 1 SamSpar SpareBank 1 SMN SpareBank Vest SpareBank 1 Nord Norge ,815 Note: (1) For Scandinavian banks, gross lending in Norway is used; (2) loans transferred to Boligkredit (Covered bond company) are included Page 11

12 SpareBank 1 Alliance Structure SpareBank 1 SR-Bank (19.5%) SpareBank 1 SMN (19.5%) SpareBank 1 Nord-Norge (19.5%) Sparebanken Hedmark (12.0%) Samarbeidende Sparebanker (19.5%) LO (10.0%) Product companies / Alliance owned companies SpareBank 1 Gruppen AS Companies owned directly by the banks: BN Bank Bank 1 Oslo SpareBank 1 Boligkreditt SpareBank 1 Næringskreditt EiendomsMegler 1 SpareBank 1 Skadeforsikring (100%) Argo Securities (75%) SpareBank 1 Gruppen Finans Holding AS (100%) ODIN Forvaltning (100%) SpareBank 1 Livsforsikring (100%) SpareBank 1 Medlemskort (100%) Alliance Cooperation Programme Focus areas Brand Technology Competence Common processes and use of best practices Purchasing Regional competence centres Payment services: Trondheim Credit: Stavanger Training: Tromsø SpareBank 1 Factoring (100%) Actor Fordringsforvaltning AS (90%) SpareBank1 LTO (100%) Verdigjenvinning (100%) Page 12

13 SpareBank 1 SR-Bank Core market South-Western Norway inhabitants Expansion areas Overview of SpareBank 1 SR-Bank SpareBank 1 SR-Bank is an independent savings bank with head office in Stavanger and 51 branches in Rogaland, Agder and Hordaland Norway s fifth largest bank with NOK 125 billion in total assets and more than customers Participant in the SpareBank 1 Alliance (second largest banking group in Norway), 19.5% ownership in the SB1 Group AS, 33.8% ownership in SB1 Boligkreditt, and 23.5% ownership in BNBank ASA Brief history of SpareBank 1 SR-Bank inhabitants Established in 1839 Listed on the Oslo Stock Exchange in 1994 Participated in the establishment of the SpareBank 1 alliance in 1996 Expansion to the Agder counties in 2001 Expansion to Hordaland in 2006 Acquired 20% of BNBank as part of a consortium in 2008, increased to 23.5% in inhabitants Page 13

14 SR-Bank s Strategy SpareBank 1 SR-Bank strategy SpareBank 1 SR-Bank shall, in our market area, have the industry s most attractive brand name and its hallmark shall be: To be the leading financial group in the region. To have satisfied customers that recommend our bank to others. To be best at creating value together with the customers. To be one of the best within the savings and pension market. To be the best with the ability to attract, challenge and develop the most competent employees. To be one of the most profitable finance institutions in the Nordic region. Purpose SpareBank 1 SR-Bank will add value to the region in which we are a part of Values Courage to speak your mind, strength to create Able to view things in a long-term perspective, and being open and sincere By showing responsibility and respect, a will and ability to improve Page 14

15 SR-Bank s Activities SpareBank 1 SR-Bank (parent bank) Retail market Corporate market Capital market EiendomsMegler 1 SR-Eiendom AS 100% SpareBank 1 SR-Finans AS 100% SR Investering AS 100% SR-Forvaltning ASA 100% Vågen Eiendomsforvaltning AS 100% SR-Fondsforvaltning AS 100% Real-estate agency: - Houses - Business -Projects Market leader in Rogaland Leasing Financing Investment in long-term equity Asset management Property management Securities fund management SpareBank 1 Gruppen AS 19.5% BN Bank AS (23.5%) Bank 1 Oslo (19.5%) SpareBank 1 Boligkreditt (33%) SpareBank 1 Næringskreditt (23.5%) Product companies Commercial bank located in Oslo and Trondheim (former Glitnir) Commercial bank located in Oslo Covered bond company (mortages) Covered bond company (commercial real estate) Page 15

16 SR-Bank has a strong market position in Rogaland (the traditional core market) Retail Market Share YE 2008 (%) 36,7 38,5 Lending Deposits Non-financial Corporate Market Share YE 2008 (%) 27,1 25,5 SpareBank 1 SR-Bank has a strong market position in a growing market in Rogaland 35-40% market share within retail 25-30% market share within corporate The region s business community maintains an optimistic outlook Unemployment rates remains low Low interest rates and expansionary fiscal policy stimulating economy Oil prices up sharply from levels seen in first half of 2009 Petroleum investments expected to remain at high levels Lending Deposits Source: Statistics Norway per 31 Dec 2008 (latest available on regional basis), SpareBank 1 SR-Bank Page 16 Source: Statistics Norway per 31 Dec 2008, SpareBank 1 SR-Bank

17 SpareBank 1 SR-Bank Financial Performance Page 17

18 Financial Performance - Overview Very good result for the year Stable net interest income Good growth in lending in retail market, zero growth in corporate market Moderate losses MNOK Result before tax tax Result Result before losses losses and tax and underlying tax underlying operations operations Bolstered capital strength by increased equity (NOK 1,228 million) and Tier 1 perpetual bond issue (NOK 800 million) - the core capital ratio increased in 2009 from 6.4% to 9.6% FY 2009 pre-tax profit of NOK 1,432 million (NOK 643 million at FY 2008) Return on equity after tax of 17.5% (8.0%) Page 18

19 Key figures 2009 Q Q Return on equity after tax 17,5 % 18,2 % 8,0 % 2,0 % 19,4 % Net interest margin 1,35 % 1,46 % 1,49 % 1,46 % 1,42 % Cost ratio 46,7 % 46,2 % 58,5 % 54,1 % 51,7 % Loss percentage 0,38 % 0,38 % 0,41 % 0,41 % 0,01 % Non-performing and other problem commitments in % of gross loans 1,23 % 1,23 % 1,61 % 1,61 % 0,84 % Annual growth in loans to customers, gross (incl Boligkreditt) 5,3 % 5,3 % 20,2 % 20,2 % 19,8 % Annual growth in deposits from customers 2,4 % 2,4 % 5,5 % 5,5 % 18,0 % Deposit-to-loan ratio 58,1 % 58,1 % 53,1 % 53,1 % 56,9 % Total assets, BNOK Mortgage loans transferred to SpareBank 1 Boligkreditt, BNOK Capital adequacy ratio 11,9 % 11,9 % 9,8 % 9,8 % 9,8 % Core capital ratio 9,6 % 9,6 % 6,4 % 6,4 % 7,4 % Finanstilsynet's liquidity indicator (excl. draw. facil.) 102,7 % 102,7 % 102,2 % 102,2 % 94,6 % Market price per equity certificate (EC) at end of period, NOK 50,0 50,0 27,1 27,1 55,2 Result per equity certificate (EC), NOK 6,9 2,0 3,0 0,2 6,6 Book value per equity certificate (EC), NOK 42,1 42,1 37,2 37,2 37,6 Number of certificates issued, millions Page 19

20 High return on equity and total return % 18% 16% Total return to investor vs average ROE* Total return to investor vs average ROE* *Cpital gaint + re-invested dividend for the period Average ROE last 15 years Total return incl. re-invested dividend Total return Nordic bank shares 14% 12% 10% 8% 6% 4% 2% 0% SHB ROGG SWED DnB NOR MING NDA MORG NONG SEB SVEG TOTG Source: First Securities * Capital gained + re-invested dividend Note: Adjusted for dividend (reinvested). Log-scale Page 20

21 Income statement MNOK Q4 09 Q3 09 Q2 09 Q1 09 Q4 08 Net interest income Net commission and other income Net return on investment securities Total income Total operating expenses Operating profit before losses Loss on loans and guarantees Operating profit before tax and min. int Tax expense Net profit Of which minority interests Page 21

22 Lending growth (12 months) MNOK 60,000 50,000 40,000 30,000 20,000 10, , % Corporate Market 39.7 % 31.0 % 29.2 % 30.4 % 21.1 % 13.7 % 5.8 % -1.6 % Q4 07 Q1 08 Q208 Q308 Q408 Q109 Q209 Q309 Q % 40 % 35 % 30 % 25 % 20 % 15 % 10 % 5 % 0 % -5 % Volume Split (incl Boligkreditt) Corporate Market 40.2% Retail Market 59.8 % Lending volume - CM Grow th % -CM MNOK 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Retail Market 15.7 % 13.8 %13.8 % 14.2 % 12.1 % 11.7 % 11.0 % 11.9 % 10.4 % Q4 07 Q1 08 Q208 Q308 Q408 Q109 Q209 Q309 Q % 16 % 14 % 12 % 10 % 8 % 6 % 4 % 2 % 0 % Growth in loans in corporate market (CM) in 2009 of -1,6 %, of which growth in Q409-1,6 % Growth in loans in retail market (RM) of ,4 %, of which growth in Q409 3,3 % High share of lending to retail market (mortages) and in general a well diversified lending book Lending volume - RM incl Boligkreditt Grow th % - RM incl Boligkreditt Page 22

23 Loans by industry As of (as of ). Incl. mortgage transferred to Boligkreditt. Fishing/fish farming; 0,5 % (0,7 %) Agriculture/forestry; 2,7 % (2,6 %) Retail customers incl Boligkreditt; 59,7 % (56,8 %) Oil/gas exploitation; 1,8 % (2,1 %) Real estate; 18,3 % (18,0 %) Industry; 2,6 % (3,6 %) Power/water supply; 0,3 % (0,2 %) Construction and building; 1,7 % (2,0 %) Commodity trade/hotels; 2,4 % (2,7 %) Shipping/offshore; 4,8 % (5,1 %) Development and sale of fixed property; 2,4 % (2,4 %) Purchase and sale of fixed property; 1,7 % (1,9 %) Housing cooperative; 1,1 % (1,1 %) Letting of fixed property; 12,2 % (12,1%) Boligkreditt; 20,9 % (10,9 %) Service industry; 4,7 % (5,3 %) Pub. management and financial services; 0,4 % (0,4 %) Property management; 0,8 % (0,7 %) Page 23

24 Loan to value Residential Mortgage (incl SpareBank 1 Boligkreditt) per The security coverage is good 90 % 84 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 9 % 7 % 0 % Below 60% Between 60% and 75% More than 75% Page 24

25 Deposit growth (12 months) MNOK Corporate Market 23,1 % 24,8 % 20,5 % 10,8 % -1,1 % -0,1 % 2,4 % -6,1 % -17,8 % Q4 07 Q1 08 Q208 Q308 Q408 Q1 09 Q209 Q309 Q % 25 % 20 % 15 % 10 % 5 % 0 % -5 % -10 % -15 % -20 % Corporate Market 53.6% Volume Split Retail Market 46.4 % CM Deposits volume CM Grow th % MNOK ,8 % 12,4 % Retail Market 13,7 % 13,6 % 14,7 % 12,6 % 10,1 % 7,0 % 2,5 % Q4 07 Q1 08 Q208 Q308 Q408 Q1 09 Q209 Q309 Q % 14 % 12 % 10 % 8 % 6 % 4 % 2 % 0 % Growth in deposits in corporate market (CM) 2009 of 2,4 %, of which growth in Q409 3,2 % Growth in deposits in retail market (RM) 2009 of 2,5 %, of which growth in Q409-1,1 % RM Deposits volume RM Grow th % Page 25

26 Net interest, lending and deposit margins 2.5% Lending margins 2.0% 1.5% 1.0% 0.5% 0.0% 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 1.96% 2.06% 1.62% 1.33% 1.69% 1.58% 1.21% 1.25% 1.22% 1.61% 1.18% 1.15% 1.11% 1.16% 1.51% 1.08% 0.99% 0.67% 0.60% 0.57% 0.65% 0.71% 0.48% 0.48% Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Lending margin CM Lending margin RM Deposit margins 1.45% 1.55% 1.69% 1.47%1.66% 1.56% 1.30% 1.33% 0.85% 0.42% 0.45% 0.39% 0.41% 0.32% 0.29% 0.32% 0.25% 0.30% 0.25% 0.44% 0.28% 0.24% 0.19% 0.18% Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 MNOK Net interest margins % 1.60% 1.46% 1.48% 1.47% 1.48% 1.46% 1.31% 1.14% Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q % 2.00% 1.50% 1.00% 0.50% 0.00% Deposit margin CM Deposit margin RM Net interest income Interest margin Definition: Average customer interest minus 3 months average nibor Net interest margin Net interest income/average total assets Page 26

27 Net commission income and other income MNOK Q4 09 Q3 09 Q2 09 Q1 09 Q4 08 Payment facilities Savings/placements Insurance products Commission income real estate (EM1) Commission income SpareBank 1 Boligkreditt Guarantee commission Salesprofit, building Arrangement- and customer fees Income Vågen Eiendom Other Net commission and other income Page 27

28 Net return on investment securities MNOK Q4 09 Q3 09 Q2 09 Q1 09 Q4 08 Dividend Investment income, associates Securities gains/losses of which capital change in shares and certificates of which capital change in certificates and bonds Currency/interest gains/losses of which currency customer- and own-account trading of which IFRS-effects Net return on investment securities Page 28

29 Net losses last 10 years MNOK % Net losses Loss percentage Page 29

30 Provision rate for problem and gross nonperforming commitments at 31 Dec Gross non-performing commitments Problem commitments (not non-performing) 1.26% % 0.73% 0.81% % 0.42% 0.37% % 0.14% 0.10% % % 30% 28% 18% 26% 0.54% % % 37% 37% 12% 23% 31% Problem commitments Gross non-performing loans Share provisions for individual impairment losses Share provisions for individual impairment losses Problem commitments in % of gross lending Gross non-performing loans in % of gross lending Gross non-performing commitments non-performing loans before deduction of loss provisions. Non-performing over 90 days. Problem commitments Commitments that are not non-performing for which a loss provision has been made Page 30

31 Growth outlook Credit growth in Norway halved during 2009 from 10 to 5 percent, (growth in corporate sector turned negative), increased growth rate in January 2010 for the first time since spring 2008 Similar pattern in SR-Bank SR-Bank is well capitalised (and solid results) and positioned for growth Growth in SR-Bank in 2010 expected to be 5-10 percent Page 31

32 SpareBank 1 SR-Bank Funding, Liquidity and Capital Adequacy Page 32

33 Funding and maturity profile Funding next months months BNOK 4,000 3,500 Very good liquidity 3,000 2,500 2,000 1,500 Liquidity buffer of NOK 20.5 billion at ,000 0,500 0,000 mars.10 april.10 mai.10 juni.10 juli.10 august.10 september.10 oktober.10 november.10 desember.10 januar.11 februar.11 Net refinancing needs in 2010 is NOK 7.2 billion BNOK 12,000 10,000 8,000 FUNDING Stock of own bonds Funding per year Funding per year OMF (covered bonds) equalling NOK 16.2 billion used in the government swap scheme in 2009 Majority matures in ,000 4,000 2,000 0, FUNDING Stock of own bonds Page 33

34 Liquidity buffer and bond portfolio Liquidity Likviditetsbuffer Liquidity buffer M NOK illiard billion er N O K fe b.10 apr.10 jun.10 aug.10 okt.10 des.10 fe b.11 apr.11 jun.11 aug.11 okt.11 des.11 fe b.12 apr.12 jun.12 aug.12 okt.12 des.12 Liquidity buffer: cash, short-term placements, drawing rights in Norges Bank and home loans that are ready to be transferred to Boligkreditt. Provided deposits and lending remain unchanged, with no new borrowing during the period. Bond Bond portfolio Assets class BNOK Share Of which, securities classified to amortised cost BNOK Norwegian state/municipal 6,6 29 % 0,1 Norwegian bank/finance 3,0 13 % 0,7 Norwegian industry 0,3 1 % 0,0 Norwegian other 0,2 1 % 0,1 Foreign bank and finance 2,1 10 % 1,4 Other Norwegian covered bonds 10,4 46 % 9,6 Total 22,5 100 % 11,9 Page 34

35 Liquidity risk Market funding Diversification of funding sources SpareBank 1 SR-Bank s Funding Programmes Other Repos with CB 4 % Subordinated Tier I 2 % Subordinated Tier II 4 % Swap with CB Domestic EMTN Boligkreditt Gov't Swap Scheme 16 % Money Market Funding 2 % Description Gov t Bonds vs. Covered Bonds Certificate of Deposits/ Debentures Euro mediumterm debt instruments Covered Bonds Norway Long-Term Funding 39 % Euro Long-Term Funding 33 % Status Gov t Bonds Size NOK 350 bn Unlimited EUR 7.5 bn EUR 10 bn Maturity Up to 5 years Senior unsecured/ Subordinated 1 month plus Senior unsecured/ Subordinated 1 to 30 years Senior secured 1 year plus Status Terminated Page 35

36 Rating Moody's Fitch Long-term debt A1 Long-term IDR A Outlook Negative Outlook Outlook Negative Outlook Last updated 9. september september 2009 Page 36

37 Financial ratios Return on equity after tax 17,5 % Core capital ratio 9,6 % Capital adequacy ratio 11,9 % The aim of SpareBank 1 SR-Bank is to be among the top third in return on equity of comparable banks SpareBank 1 SR-Bank's core capital was strengthened in the 4th quarter of 2009 by NOK2,028 million by way of equity certificate issues and a Tier 1 perpetual bond issue SpareBank 1 SR-Bank aims for a core capital ratio of minimum 9 percent Page 37

38 20 largest equity certificate holders 20 largest EC holders per Number Stake Gjensidige Forsikring % Odin Norge % Odin Norden % Køhlergruppen AS % Coil Investment Group AS % Clipper AS % Frank Mohn AS % Trygve Stangeland % State Street Bank and Trust, U.S.A % Lærdal AS % Grunnfond Invest AS % Brown Brothers Harriman, U.S.A % The Northern Trust, U.K % Verdipapirfondet Nordea Norge % Bjergsted Investering AS % Westco AS % Solvang Shipping AS % Forsand Kommune % Bank of New York, U.S.A % Tveteraas Finans AS % Total 20 largest holders ,5% Page 38

39 SpareBank 1 SR - Summary Norway s fifth largest bank with head office in Stavanger 51 branches in the counties of Rogaland, Agder and Hordaland Leading market position in Rogaland High share of other operating income (above 40% in 2009) Competent management with high focus on continuous renewal and development of the organization Strong value creation and significant growth opportunities Diversified loan portfolio and good risk management The bank has consistently delivered a high ROE and is the best performer among the Norwegian listed banks with 17% average ROE in the period % average dividend yield in the period The geographic expansion to Agder and Hordaland represents significant growth opportunities for the bank 60% of the loan book are to retail customers (mainly good secured mortgage loans) Approved by the regulatory authority, as 1 of 7 banks in Norway, for using the internal rating method (IRB) in the Basel II framework Centre of excellence regarding credit in the SpareBank 1-Alliance Ratings; Moody s A1 / P-1 / C- and Fitch A / F1 / B/C Member of the SpareBank 1 alliance The bank is a member of the SpareBank 1 alliance and owns 19.5% of the SpareBank 1 Group, the second largest banking group in Norway (proforma consolidated) Page 39

40 Contact Details Page 40

41 Contact details Chief Executive Officer Terje Vareberg Tel: Chief Financial Officer Inge Reinersten Tel: Head of Treasury Dag Hjelle Tel: For Further Information: Thor-Christian Haugland, Executive VP Public Relations Tel: Seri Berge, Board Secretary Tel: Switchboard Tel: Address: Bjergsted Terrasse 1 P.O. Box Stavanger Norway Website: SR-Bank s web site Hugin-Online: Financial calendar: Ex dividend issue: 26 March 2010 Results Q1 2010: 29 April 2010 Results Q2 2010: 11 August 2010 Results Q3 2010: 38 October 2010 Preliminary annual accounts for 2010 will be published 3 February 2011 Page 41

42 Disclaimer This presentation is the property of SpareBank 1 SR-Bank. By receiving this presentation, each recipient (i) acknowledges that the offering is being made only outside the United States to non-u.s. persons in reliance upon Regulation S under the U.S. Securities Act Of 1933 and (ii) is deemed to represent that it is not a U.S. person within the meaning of Regulation S and is not accessing the presentation from a location within the United States. By electing to receive this transmission, you represent, warrant and agree that you will not attempt to reproduce or re-transmit the contents of this presentation by any means. This presentation does not constitute a prospectus or other offering document (an "offering document") in whole or in part. Information contained in this presentation is a summary only. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy any security. The information given in this presentation is not intended to be relied on either as particular advice or for making investment decisions. By receiving this presentation each investor is deemed to represent that it is a sophisticated investor and possesses sufficient investment expertise to understand the risks involved in the offering. Investors must rely solely on their own examinations of the offering document and the offering in making a determination as to whether to invest in the securities offered. Although the statements of fact in this presentation have been obtained from and are based upon sources that SpareBank 1 SR-Bank believes to be reliable. SpareBank 1 SR-Bank does not guarantee their accuracy, and any such information may be incomplete or condensed. All opinions and estimates included in this presentation constitute SpareBank 1 SR-Bank's judgement, as of the date of this presentation and are subject to change without notice. Page 42