SPAREBANKEN PLUSS Annual Report ANNUAL REPORT

MACROECONOMIC ENVIRONMENT For the Oslo Stock Exchange, 2008 was a turbulent year. During the first 2008 was affected by the global financial crisis, which hit American half of the year, prices fell by 5.6 per cent. During the first part of the and European banks hard. During the course of the autumn of 2008, third quarter, prices continued to fall, and in September and October the American house mortgage loan giants, Freddy Mac and Fannie plummeted by 25 and 23 per cent respectively. Overall, prices on the Mae, were placed under public administration. In the wake of this, Oslo Stock Exchange fell by 54.1 per cent in 2008. several large investment banks were restructured, merged or acquired by the state. In many countries, it became necessary to introduce and The Norwegian krone weakened during the autumn of 2008, and implement comprehensive measures in order to re-establish trust in the the tightness in the labour market eased markedly. Figures from NAV financial institutions. showed an increase in unemployment, which at the end of December was 2.0 per cent. On a seasonally adjusted basis, there were 64,211 Turbulence and uncertainty in the financial markets brought about jobless, including people relying on local, municipal initiatives a situation in which the inter-bank market ceased to function. Banks all over the world were uncertain about their own and other banks’ BUSINESS AREA AND MARKET financial situation and avoided lending to each other. This triggered Sparebanken Pluss provides services within the areas of financing, savings increased interest rates in the money markets. and placements, insurance, pensions and payment transmission.

Norwegian banks also felt the effects of the global financial crisis. This The following is a brief excerpt from the Bank’s corporate vision manifested itself in losses on securities, higher costs for funding loans and statement: reduced access to liquidity. Interest rates for deposits from Norwegian investors in financially strong Norwegian banks rose during the course of ”Sparebanken Pluss shall be ‘The Bank for Sørlandet’; a leading, last autumn, involving a premium of more than two percentage points to financially strong and independent bank, with Sørlandet (the area along be added to the already high interest rates in the money markets. the southern coast and immediate inland districts of Norway, including Vest- and Aust-Agder) as its main market.” The international situation was dramatic. In several countries, the authorities were gradually forced to guarantee people’s deposits with The Bank’s head office is located in Kristiansand. There are 15 local the banks, and in our neighbouring countries state guarantees were branches, 10 in Vest-Agder and 5 in Aust-Agder. During the last four years, provided for the funding of the banking system. In spite of different the Bank has opened four new branches, at Arendal, Grimstad, Søgne and international government packages of measures, the access to long-term Lillesand. The last branch to be opened was Lillesand in May 2008. funding still remained difficult. The new branches have attracted a large number of new customers and By late autumn last year, the Norwegian authorities also had to introduce have been very important for the Bank’s overall growth in recent years. different measures in order to ensure the banks’ funding, partly through The Bank has plans for further branches in the Agder region, especially ‘Bankpakke 1’ (‘Banking package 1’). in the western part of Vest-Agder.

The global financial crisis contributed to intensifying the change in the The branch at Lund in Kristiansand was closed in February 2008, and general economic situation which was already in its first phase by the end the customers were transferred to the Bank’s head office. Even after this of 2007. During the course of 2008, house prices and company values closure, Sparebanken Pluss has three branches in Kristiansand, and is the fell much more than most observers had expected. Weaker international only bank with more than one branch in the town. growth resulted in lower demand for Norwegian goods, coupled with the fact that the prices of raw materials plummeted on a global basis. In recent years, Sparebanken Pluss has also enjoyed strong growth in geographic areas outside Sørlandet. This development has been evident Norges Bank changed its benchmark rates of interest five times in 2008. for several years and is primarily related to the Bank’s agreement with The interest rate was changed twice during the second quarter, on each Norway Christian Purchasing Society (KNIF). It has also been noticed occasion by 0.25 percentage points. As a result of the financial crisis, that customers who move away from Sørlandet still like to maintain interest rates were cut three times in the fourth quarter, on the first relations with their “old” bank. two occasions by 0.50 percentage points, and the last time by as much as 1.75 percentage points. At the end of 2008, the benchmark rate of Recently there has also been a tendency for customers who have been interest was 3 per cent. using so-called ‘fee-free’ Internet-linked banks, in addition to their main banks, to bring their banking transactions ‘home’, a situation which The annual growth in domestic gross debt, K2, fell to 9.9 per cent at Sparebanken Pluss has also noticed. This is partly related to changed fee the end of December last year. The 12-month growth fell, both for the policy. In 2008, a comprehensive restructuring of fees was introduced, business sector and private households, the growth of the latter not which means that customers at Sparebanken Pluss can also take having been that low since September 1999. advantage of the virtual absence of fees by using the Bank’s services. In 2008, it was decided to change provider in the insurance area. The aspect of the NOK 58.1 million write-down is the value change of the agreement with Terra Forsikring AS was cancelled on 1 July 2008. bond debt. At the end of the year, the latent gain on the bond-related Tennant Forsikring is now the Bank’s new provider of insurance services. funding and subordinated loan capital (the spread effect) far exceeds the The company is wholly-owned by Gjensidige Forsikring. Tennant provides loss on the bond portfolio. However, this impact has not been booked both non-life- and personal insurance. As a result of this cooperation, as income in the profit and loss account. Such income inclusion in the Sparebanken Pluss will be managing some insurance portfolios for accounts could have been applied according to IFRS. The Bank has a low Gjensidige at Agder. In this connection, however, the Bank has temporarily level of exposure in the bond- and share markets. established a branch in the municipality of Lyngdal. In 2008, operating costs totalled NOK 203.1 million, up by NOK 15.2 In addition to having changed provider of insurance, the Bank has also million on 2007. However, the relative figures show excellent progress. established its own insurance centre, which means increased focus on Costs in relation to average assets finished up at a low level, 0.75 per this area, coupled with the fact that customers are now offered improved cent, down from 0.82 per cent 12 months earlier. Costs as a percentage advisory services as well as special competence. For the same reason, a of income have also remained at a very low level. The overall ratio at the separate investment centre was also established in 2008. end of 2008 was 42.1 per cent

2008 was the first whole year of operations for Pluss Garanti In 2008, a NOK 8.8 million write-down was applied to businesses in Eiendomsmegling AS. The company is owned by Kristiansand og Omegn which the Bank has shares and participations. The significant part of Boligbyggelag (KOBB) and the Bank. The company conducts business in the total amount is accounted for by write-down on shares in and Kristiansand and at Vennesla. In 2009, the real estate brokerage firm guarantees provided for Eksportfinans. and the Bank will intensify their cooperation in Kristiansand. By this spring, all the company’s brokers will be working at the Bank’s premises. After an estimated tax cost of NOK 69.8 million, the profit for the year At Vennesla, this is already the case. Pluss Garanti Eiendomsmegling ended up at NOK 155 million, down from NOK 202.2 million in 2007. AS, as were other real estate brokerage firms, was affected by the financial crisis during the second half of 2008. Adaptations to a market With reference to Law of Annual Financial Statements etc., paragraph with lower sales have been made, even though the sale of residential 3-3, the Bank’s Board of Directors confirms that the assumption of a property has picked up strongly at the beginning of 2009. Pluss Garanti going concern still applies, and that the annual report and accounts have Eiendomsmegling AS is not involved in the markets for holiday cottages been prepared on the basis of this assumption. and commercial property. LOSSES ON LOANS AND COMMITMENTS IN DEFAULT OPERATING RESULT In 2008, under the heading of losses on loans and guarantees, the Bank In 2008, Sparebanken Pluss made a NOK 224.8 million pre-tax profit ended up with a gross loss cost of NOK 48.2 million. Recoveries relating from operations, as against NOK 286.5 million in 2007. This is equivalent to previous confirmed losses totalled NOK 2.6 million. Overall, therefore, to 0.83 per cent of average assets, as opposed to 1.25 per cent in 2007. the Bank finished up with a net loss cost of NOK 45.6 million in 2008. About 25 per cent of the total amount was accounted for by collective The Bank’s net interest income was up by NOK 64.0 million, totalling write-downs. NOK 439.2 million. This amounted to 1.61 per cent of average assets, compared to 1.64 per cent in 2007. The Bank’s collective write-downs at the end of the year totalled NOK 91.9 million, equivalent to 0.36 per cent of gross lending. In view of the After several years of exemption from the levy normally payable to The composition of the Bank’s loan portfolio, its diversification in relation to Norwegian Savings Banks’ Guarantee Fund by the savings banks, the different commercial, industrial and other sectors, and the risk contained levy started to apply again in 2008. Sparebanken Pluss made a payment in the portfolio, the Board of Directors is of the opinion that the write- of NOK 3.5 million to the fund in 2008. downs are sufficient in order to cover the credit risk in the Bank’s loan portfolio. Other (non-interest) operating income totalled NOK 43.1 million in 2008, down by NOK 54.8 million on 2007. The shrinkage is due to the During the course of 2008, there was a marked increase in gross Bank - on account of the turbulence in the financial markets in 2008 - commitments in default, from NOK 13.0 million to NOK 133.7 million. having written down its bond portfolio by NOK 58.1 million. In view of In spite of the market growth, the level is deemed to be moderate in the fact that the Bank does not have any subsidiaries, IFRS has not been view of the current economic downturn. The relationship between gross implemented as accounting standard, and the Bank has accordingly commitments in default and gross loans therefore amounts to 0.53 per continued to do its accounts according to NRS. This means that the bond cent, whereas the corresponding ratio for 2007 was 0.06 per cent. portfolio is included in the accounts according to the lower of book- and market value. A limited part of the Bank’s securities portfolio is today Against the background of the present economic downturn, the Board classified as ‘To be held until maturity’ (about 5 per cent). The opposite of Directors is of the opinion that there is an increasing risk of losses in 2009. For many years, the Bank has experienced very low credit loss funding loans in the Norwegian and international money- and capital costs, and for the period 2009-2013, the Board of Directors maintains a markets. The global financial crisis has meant challenges as far as this target for the Bank’s aggregate loss level of under 0.25 per cent of gross work is concerned. However, the Bank’s good results and strong capital lending per annum. adequacy have helped to make sure that funding and capital have still been available at competitive terms and conditions. ALLOCATION OF PROFIT FOR THE YEAR The Board of Directors proposes that Sparebanken Pluss’s NOK 155.0 LOANS million profit for the year is allocated as follows: As at 31.12.2008, gross loans totalled NOK 25,445 million, up by NOK 3,403 million or 15.4 per cent, compared to lending growth of 16.6 per (NOK 1000) cent a year earlier. Dividend of NOK 12,00 per PCC 15 000 Transferred to the Dividend Equalisation Fund 35 At the end of 2008, retail banking- and corporate banking customers Transferred to the Savings Bank’s Fund 109 965 accounted for 60.9 and 39.1 per cent respectively of the Bank’s total Allocated for Donations Fund 30 000 loans. Corresponding figures a year earlier were 62.7 and 37.3 per cent respectively. ASSETS Assets expanded by NOK 4,474 million in 2008, standing at NOK 30.1 FINANCIAL STRENGTH AND CAPITAL ADEQUACY billion at the end of the year. In 2008, the rate of growth was 17.4 per EU’s new directive for capital adequacy, Basel II, was implemented by cent, compared to 19.2 per cent in 2007. Sparebanken Pluss with effect from 1 January 2008. Until further notice, the Bank will apply the standard approach for credit risk and the basis Deposits/Netloans (NOK mill.) approach for operational risk. The new rules and regulations are to a larger extent than previously, based on a closer conformity between 27000 actual risk and the capital employed. The introduction of Basel II means that figures for capital adequacy for 2007 will not be directly comparable 24000 with those for 2008. Deposits Netloans The Bank will adapt to the new rules and regulations in an optimal 21000 manner from the point of view of its size and risk profile, and in relation to what is expected from banks of a corresponding size. The Bank will 18000 therefore have an ongoing process in relation to whether it shall apply for IRB-approval in due course. 15000 An important part of the new capital adequacy rules and regulations is the need for the Bank to make regular assessments of the Bank’s 12000 aggregate capital requirements based on its risk profile as well as management and control of risk (Internal Capital Adequacy Assessment Process - (ICAAP). The process shall help make sure that the Bank has 9000 a level of risk management and –control which provides an overview of the risk to which the Bank is exposed, and which ensures that the 6000 Bank maintains a level of equity and related capital which takes care of these risks to a sufficient extent. The Board of Directors completed this capital assessment procedure in 2008, and Sparebanken Pluss has 3000 a level of equity and related capital which substantially exceeds the requirement which was arrived at through the ICAAP-process. However, 0 the Bank wishes to maintain a big, strategic buffer of equity and related 2004 2005 2006 2007 2008 capital in order to ensure a large degree of freedom of action, and the importance of this has become even more apparent during the current DEPOSITS financial crisis. Deposits from customers totalled NOK 12,936 million at the end of the year under review, following a reduction from NOK 13,425 during the At the end of the year, the Bank had subordinated loan capital of last 12 months. At the end of the year, 51.1 per cent of the Bank’s loans NOK 698 million and equity and related capital of NOK 1,899 million. were funded by deposits from customers. The Bank makes every effort The capital adequacy ratio was 13.52, far in excess of regulatory to fund the growth in assets mainly through deposits and long-term requirements. In spite of strong turbulence in the financial markets, the Bank has managed to maintain a relatively high return on equity capital. In accordance with the Bank’s dividend policy, the Board of Directors At the end of the fourth quarter, it amounted to 8.5 per cent, as against proposes to pay a cash dividend of NOK 12.00 per PCC. 12.0 per cent at the end of 2007. RISK AND INTERNAL CONTROL Total equity capital (NOK mill.) Risk is a fundamental aspect of banking business, and risk management and –control represents a key area of the Bank’s day-to-day operations 1800 and follow-up by the Board of Directors. Paid-in equity capital Retained earnings 1500 The Bank’s risk management and internal control shall help to ensure that the Bank’s risk is managed in a way which supports the Bank’s strategic targets, contributing to the Bank’s long-term wealth creation. 1200 The overall framework of the Bank’s risk management and –exposure is assessed and agreed annually by the Board of Directors in connection 900 with the maintenance of the Bank’s internal strategy- and steering documents. The Board of Directors fixes concrete targets and limits for the Bank’s credit risk, market risk and funding risk, as well as powers 600 of attorney and a structure for follow-up and control which include reporting systems for management and the Board of Directors as far as 300 the different risk groups are concerned. The Bank’s aim is to have a low level of risk exposure, and there is a continual process aimed at further developing and improving the Bank’s risk management. 0 2004 2005 2006 2007 2008 The most significant risk factors may be classified as strategic and business risk, financial risk and operational risk. Strategic risk is related PLUSS BOLIGKREDITT AS to the strategies, plans and changes which the Bank has or is planning On 22 December 2008, Sparebanken Pluss received the required licence to to have in connection with its marketing efforts. Financial risk comprises establish a mortgage company which will be able to issue covered bonds. credit risk, market risk (relating to the Bank’s exposure in the interest rate-, foreign exchange- and stock markets) and funding risk. Operational Pluss Boligkreditt AS is in the process of being established and the risk is defined as the risk of loss which may be incurred due to insufficient company will be wholly-owned by Sparebanken Pluss. The company or failing internal processes, systems or external events. is expected to become operative during the first quarter of 2009. The main purpose of the mortgage company is to ensure access for the Bank The Bank has an ongoing process relating to the monitoring and to stable and long-term funding at competitive terms and conditions. assessment of the different risk factors. Against the background of rules The establishment of Pluss Boligkreditt AS forms part of Sparebanken and regulations for internal control, all main areas have been subject Pluss’s long-term strategy, according to which the mortgage company’s to the completion of internal control confirmation, and an overall main purpose will be to issue preference bonds to be bought by risk assessment has also been done. The Bank has a separate risk national and international investors. Through the establishment of the management committee. In the Board of Directors’ opinion, the Bank’s credit company, the Bank will also be in a position to participate in the risk management is satisfactory. authorities’ scheme according to which covered bonds may be swapped for government securities. Credit risk Credit risk represents the most significant area of risk in the Bank, and PRIMARY CAPITAL CERTIFICATES (PCCs) is defined as the risk of loss as a result of customers or counterparts In 2008, 212,437 PCCs were traded, equivalent to approximately 17 failing to meet their obligations to the Bank. As a consequence of this, per cent of the Bank’s outstanding certificates. In 2007, the comparative all work involving credit risk is therefore given high priority in day-to-day figure was about 12 per cent. operations and as far as follow-up by the Board of Directors is concerned. The Board of Directors agrees the Bank’s credit strategy and credit policy, At the end of the year, the Bank had 1,772 PCC-holders. More than and credit risk is also managed through credit routines, credit processes 49 per cent of these investors were domiciled in the Agder counties, and delegated lending authority. Amongst other things, limits and ratios accounting for 54 per cent of the Bank’s PCC-capital. The Bank’s 20 are agreed for expected credit losses, concentration risk and large largest PCC-holders are shown in note 22 in Notes to the Accounts. customers. Compliance with the Bank’s credit policy is monitored by a These investors represented more than 38 per cent of the PCC-capital unit which is independent of the customer-related departments. at the end of the year. 12 of the Bank’s 20 largest PCC-holders were domiciled in Agder. Earnings per PCC ended up at NOK 12.00 in 2008. The Bank’s customers with credit commitments are classified through the Bank’s own risk classification system. During 2008, the risk classification Operational risk system was changed, and customers are now classified in default classes Operating risk is the risk of loss from different potential loss sources where the likelihood of default during a 12-month period is calculated relating to the current operations of the Bank. This may occur as a result on the basis of different internal and external financial data. The of insufficient or failing internal routines and processes, human failure portfolio is divided into 10 different risk classes in addition to one class or insufficient competence, failing IKT-systems, crime or internal fraud, for commitments in default and commitments with loss write-downs irregularity, malpractice or misconduct, mistakes from subcontractors etc. which are not in default. Risk development in the portfolio is registered through the classification system. The Bank has routines which cover all significant areas, and the internal control is an important help in order to reduce operational risk, both as Market risk far as the laying off of risk and follow-up are concerned. Market risk affects the Bank’s results through value changes in the interest rate-, foreign currency- and securities portfolios. The Board of The Bank’s security systems are maintained and periodically tested Directors agrees limits for the Bank’s market risk and reporting, and the throughout the year. limits are reviewed and assessed on an annual basis. ORGANISATION Interest rate risk occurs as a result of different interest rate fixing periods The working environment in the Bank is regarded as good. Systems and relating to agreements entered into for claims- and debt items on and routines are in accordance with the requirements contained in ‘Rules off the balance sheet. At the end of the year, the Bank’s interest rate risk and Regulations relating to Health, Environment and Safety”. The Bank measured as the impact on the Banks’ overall result of a certain change has embraced the concept of Care in the Workplace, having entered into in interest rates for different maturities was well within the limits agreed an arrangement in this connection with the Norwegian Social Security by the Board of Directors. Department. In relation to this agreement, the Bank wishes to see a reduction in staff’s absenteeism through illness. The Bank also wants Sparebanken Pluss is a foreign exchange bank and therefore subject its employees to work actively until their ordinary retirement age. to the authorities’ limits for position taking. The Bank has given itself Absenteeism through illness fell from an average of 3.3 per cent in significantly lower limits than those stipulated in the authorities’ 2007 to 2.6 per cent in 2008, which is well below the average for the requirements. At the end of 2008, all limits agreed by the Board of Norwegian savings bank industry as a whole. Directors were adhered to.

In 2008 too, the Bank had a very limited portfolio of shares. Investment Development in number of man-years and total assets in bonds and certificates was mainly related to the scheme involving securities pledged with Norges Bank as collateral security for borrowing 30000 340 and related to the authorities’ requirements according to which there 27000 320 must at all times be sufficient liquidity in order to cover the Bank’s Total assets liabilities at maturity. Number of man-years 24000 300 Funding risk 21000 280 The Board of Directors attaches a great deal of importance to the 260 Bank’s maintenance of a high level of internally generated funding in 18000 conjunction with other long-term funding of its operations. At the end 240 of the year, deposits from customers funded 51 per cent of the Bank’s 15000 220 aggregate lending. During the course of 2008, the reduction in customer deposits was compensated for by other long-term funding obtained from 12000 200 the market. 40 per cent of the Bank’s assets were funded through the Norwegian bond market. In addition, the Bank had established other 9000 180 long-term borrowing relationships with other Norwegian financial 160 institutions. At the end of 2008, the Bank’s long-term external funding 6000 (funding with maturities in excess of 12 months) amounted to 37 per 140 3000 cent of the balance sheet total. In addition, the Bank had established 120 standby facilities equivalent to 39 per cent of its bond- and certificate- 0 100 related financing, with maturities within 12 months. At the end of the 2003 2004 2005 2006 2007 year currently under review, the Bank’s liquidity reserves were high. The Bank has attached a great deal of importance to this in view of the ongoing financial crisis. As at 31.12.2008, the Bank employed 190 people, Management structure: equivalent to 170 man-years. During the last two years, the The Bank’s most senior body is the Board of Trustees, which consists number of man-years worked at the Bank decreased by 2. of representatives from the depositors, PCC-holders, staff and publicly 53 of the Bank’s staff work on a part-time basis. appointed members, each of the four groups being represented in equal proportions. The Board of Trustees elects an election committee which The Bank’s operations do not cause any pollution of the external proposes elected representatives for the Bank’s various bodies. environment. The Bank is managed by a Board of Directors consisting of six members. EQUALITY BETWEEN THE SEXES - EQUAL OPPORTUNITIES The Bank’s Chief Executive Officer is not a member of the Board of Since 1996, one of Sparebanken Pluss’s aims has been to achieve a Directors, in accordance with the rules and regulations contained in relatively even distribution of men and women at all staff levels. This has the Savings Banks’ Act, agreed in 2007. The Bank’s staff provides one helped to achieve an evening out of the levels of different positions both member of the Board of Directors. in the case of internal and external recruitment. The Bank has introduced a separate routine for the assessment of At the present time, the ratio of women among the Bank’s managers suitability requirements for members and deputy members of the Board and professional experts is 26 per cent, compared to 20 per cent a year of Directors earlier. Control mechanisms: In the case of the Bank’s staff (excluding General Managers), the salary The Control Committee is the Board of Trustees’ control body for index for men is 110 and for women 92. monitoring the Bank’s operations and consists of 3 members. The Control Committee makes an annual statement to the Board of Trustees and also The Bank has 8 departmental managers, 4 of whom are women. provides a report to FSAN about its work.

Absenteeism through illness at Sparebanken Pluss is still higher for The Bank has its own internal audit department, which reports to the women than for men, the ratios being 3.7 and 1.5 per cent respectively. Board of Directors. The Internal Auditor attends the meetings of the However, the difference became somewhat smaller last year and is now Control Committee. in line with what may be found in similar firms. The Bank is subject to “Rules and regulations relating to the clarification Of the Bank’s 190 permanent employees, women account for 51 per of control responsibility, documentation and confirmation of the internal cent. 55 per cent of women work part-time. In 2008, the Bank recruited control”. An annual report is sent to the Board of Directors. 6 new staff, 3 women and 3 men. The Bank has a clear risk strategy which is explained in the ’Credit The Bank’s Board of Directors consists of 6 members – 3 women and Document’, the ‘Finance Document’ and the ‘ICAAP Document’, which 3 men. are discussed every year at the Board of Directors. In addition, there are the ‘Principles for Internal Control’, which have been agreed by the IFRS (International Financial Reporting Standards) Board of Directors. In general, the Bank has a low risk profile. Listed companies and companies which have debt instruments quoted on a stock exchange are required to prepare group accounts in accordance Furthermore, the Bank is subject to the Financial Supervisory Authority of with the international accounting standards (IFRS). Norway’s (FSAN) rules and regulations relating to ‘Minimum requirements for capital adequacy and rules pertaining to large commitments to As Sparebanken Pluss has no subsidiaries the Bank does not prepare individual customers in relation to equity and related capital’. group accounts for 2008 In addition, the Bank is subject to Oslo Stock Exchange’s rules for the CORPORATE GOVERNANCE reporting of trading for own account by primary insiders. Business concept, fundamental ideas and value basis: The Bank’s corporate vision is to be a leading, financially strong and PROSPECTS FOR 2009 independent bank with Sørlandet as its main market. The Bank shall The development in the Norwegian economy will continue to be contribute to growth and development within the region. dependent upon the situation in the global economy. Lower international demand and lower prices of raw materials will directly affect the Strict requirements with regard to honesty and business morals shall Norwegian krone rate, investment activity and employment. be the basis of the Bank’s operations. The Bank will accordingly expect its staff to have a high degree of integrity and to have attitudes in 2009 is likely to involve a marked change in the Norwegian economy, accordance with the Bank’s ethical guidelines. including an increase in the jobless level towards 4 per cent by the end of the year. The Ministry of Finance now expects the overall growth in expected to increase. After several years of high growth, good profitability the Norwegian economy to be negative in 2009. At the beginning of and small credit losses, however, Sparebanken Pluss is expected to be 2009, the government will be implementing packages of economic well prepared to handle future challenges. measures in order to counteract the negative impact on the economy. The fiscal measures are in particular aimed at counteracting the marked The Board of Directors expects the Bank’s operating result to be downturn in the labour market. satisfactory in 2009 too, but the financial crisis is likely to adversely affect loan growth, overall result margins, commitments in default and Private consumption and households’ demand have been the dual losses on loans during the year. driving force of the growth in the Norwegian economy in recent years. Private households’ demand fell markedly during the latter half of VOTE OF THANKS 2008 and there is reason to believe that this trend will continue. Lower The Board of Directors would like to thank all staff and elected employment and weaker wage growth affect decisions on saving and representatives for another good year for the Bank in spite of turbulent spending. Coupled with banks’ tighter credit practice, this may result framework conditions, and for their excellent efforts. At the same time, in reduced investment in residential property and a further fall in house the Board would wish to thank the Bank’s customers, PCC-holders and prices. Lack-lustre international growth and low prices of raw materials other connections for the way in which they have all supported the Bank, will also have an impact on the level of employment in the Norwegian and for the trust they have shown in the Bank during the year which is export industry. now behind us.

Norwegian money market interest rates and the funding of the DECLARATION IN ACCORDANCE WITH THE SECURITIES ACT, Norwegian banking industry will be affected by the situation in the PARAGRAPH 5-5 global international banking system. It is to be expected that the Ministry The Board of Directors and Sparebanken Pluss’s Chief Executive Officer of Finance in cooperation with Norges Bank will continue to provide hereby confirm that the Bank’s 2008 annual accounts have been prepared Norwegian banks with satisfactory liquidity. The expansive monetary in accordance with the currently valid accounting standards and that the policy coupled with lower benchmark rates of interest is expected to be information provided in the accounts provides a true and correct picture continued in line with developments in other countries. In addition to of the Parent Bank’s and Group’s assets, liabilities, financial position and this, through a special scheme involving the issuance of hybrid capital, overall result. the banks are being provided with the necessary financial support in order to be able to take care of credit demand from Norwegian industry In addition, we confirm that the annual accounts give a true and correct and commerce in a satisfactory manner. picture of the Bank’s development, result and financial position, together with a description of the most central risk- and uncertainty factors facing Weaker growth in the Norwegian economy will demand for credit from the Bank. private households and companies to which the savings banks industry normally lend. In view of the fact that several businesses are now likely 31. December 2008 to experience lower revenue generation, coupled with a reduced ability Kristiansand, to service their outstanding debt, credit losses in the banking sector are 26. February 2009

Arvid Grundekjøn Norunn Tveiten Benestad Thore Westermoen Kristin Wallevik Chairman Deputy Chairman

Peder Syrdalen Bente Pedersen Stein A. Hannevik Chief Executive Officer Profit and loss account

(Amounts in NOK thousand) Notes: 2008 2007 2006 Interest receivable and similar income from loans to and claims on credit institutions 59 252 45 638 22 307 Interest receivable and similar income from loans to and claims on customers 1 684 849 1 134 301 725 018 Interest receivable and similar income from certificates, bonds and other int. bearing securities 138 357 63 082 29 164 Interest receivable and similar income 1 882 458 1 243 020 776 489 Interest payable and similar costs relating to liabilities to credit institutions 78 402 47 663 6 799 Interest payable and similar costs relating to deposits from and liabs. to customers 646 599 442 240 232 040 Interest payable and similar costs relating to securities issued 664 658 343 429 195 743 Other interest payable and similar costs 20 50 149 34 559 12 364 Other interest and similar costs 13 3 498 0 0 Interest payable and similar costs 1 443 306 867 891 446 946 NET INTEREST- AND CREDIT COMMISSION INCOME 439 151 375 129 329 543 Dividends and other income from securities with variable yield 5 561 2 003 4 664 Guarantee commission 4 186 3 907 4 238 Other fees and commission income 7 88 019 94 154 91 532 Commissions receivable and income from banking services 92 204 98 062 95 769 Commissions payable and costs relating to banking services 13 503 13 451 13 433 Net value change and gains on certificates, bonds and other interest-bearing securities -57 882 -5 115 1 448 Net value change and gains on shares and other securities with variable yield -3 257 0 12 049 Net value change and gains on foreign exchange and financial derivatives 8 841 8 560 6 723 Net value change and gains on f/x and securities classified as current assets -52 298 3 445 20 220 Operating income from real estate 4 818 4 754 4 996 Other operating income 6 323 3 098 5 014 Other operating income 11 140 7 852 10 010 TOTAL OTHER OPERATING INCOME 43 105 97 912 117 230 Wages, salaries etc. 10/17 114 161 105 958 97 579 Broken down as follows: Wages and salaries 83 347 77 599 72 288 Pensions 14 454 12 179 11 281 Social costs 16 361 16 180 14 011 Administration costs 58 366 54 067 50 420 Wages, salaries and general administration costs 172 527 160 025 147 999 Depreciation etc. of fixed and intangible assets 14 11 239 10 149 9 649 Operating costs relating to real estate 4 399 3 913 3 627 Other operating costs 14 946 13 856 14 202 Other operating costs 19 345 17 769 17 829 TOTAL OPERATING COSTS 203 110 187 943 175 478 OPERATING RESULT BEFORE CREDIT LOSSES 279 146 285 098 271 296 Losses on loans, guarantees etc. 1 45 602 -1 360 -7 360 Write-downs on securities classified as fixed assets 8 781 0 0 OPERATING RESULT 224 763 286 458 278 656 Tax payable on ordinary result 18 69 763 84 254 77 341 RESULT FOR THE ACCOUNTING YEAR 155 000 202 204 201 315 Result/diluted earnings/result per PCC 12,00 17,00 18,81 Allocations: 8 Dividend payable on PCCs 15 000 21 250 23 125 Transferred to Savings Bank’s Fund 109 965 135 952 165 801 Transferred to Donations 30 000 45 000 12 000 Transferred to Dividend Equalisation Fund 35 2 389 Allocation of the result for the accounting year 155 000 202 204 201 315 Balance sheet

ASSETS (Amounts in NOK thousand) Notes: 31.12.2008 31.12.2007 31.12.2006

Cash-in-hand and claims on central banks 16/21 1 754 617 1 407 528 785 574 Loans to and claims on credit insts. without agreed maturity or notice of withdrawal 16 53 053 41 314 8 273 Loans to and claims on credit insts. with agreed maturity or notice of withdrawal 35 000 58 383 455 300 Net loans to and claims on credit institutions 21 88 053 99 697 463 573 Overdraft- and working capital facilities 16 5 941 408 4 476 505 2 485 320 Building loans 909 992 708 316 744 521 Repayment loans 5/16 18 593 572 16 857 360 15 671 168 Loans before specific and non-specific loss provisions 1/3/10/21 25 444 972 22 042 181 18 901 009 - Individual write-downs 1 43 254 9 468 13 813 - Write-downs on groups of lending 1 91 941 80 441 79 761 Net loans and claims on customers 25 309 777 21 952 272 18 807 435 Repossessed assets 327 308 308 Securities issued by public sector borrowers: Certificates and bonds 200 011 100 000 16 Issued by other borrowers: Certificates and bonds 5 2 240 479 1 646 828 1 166 379 Certificates, bonds and other interest-bearing securities 4/5 2 440 490 1 746 828 1 166 395 Equities, unit trust shares and PCCs with variable yield 9 145 060 138 260 32 619 Equities stakes in general partnerships, limited partnerships etc. 8 823 6 650 2 500 Equities, unit trust shares and PCCs with variable yield 9 153 883 144 910 35 119 Deferred tax asset 18 15 553 0 0 Intangible assets 15 553 0 0 Machinery, fixtures and fittings, and transport equipment 28 799 25 952 22 273 Buildings and other real estate 102 938 101 463 104 083 Fixed assets 14 131 737 127 415 126 356 Other assets 12 759 9 080 13 541 Accrued income, not yet received 242 654 188 129 141 560 Over-funding of pension liabilities 17 0 0 1 774 Prepaid costs, not yet incurred - accrued income, not yet received 242 654 188 129 143 333 TOTAL ASSETS 30 149 849 25 676 168 21 541 635 Balance sheet

LIABILITIES AND EQUITY CAPITAL (Amounts in NOK thousand) Notes: 31.12.2008 31.12.2007 31.12.2006

Loans and deposits from credit insts. - no agreed maturity or notice of withdrawal 39 401 58 935 36 750 Loans and deposits from credit insts. - with agreed maturity or notice of withdrawal 1 620 006 1 125 007 697 649 Liabilities to credit institutions 16/21 1 659 407 1 183 942 734 400 Deposits from and liabilities to customers - without agreed maturity 6 954 643 7 252 889 5 776 775 Deposits from and liabilities to customers - with agreed maturity 16 5 981 710 6 172 239 5 632 302 Deposits from and liabilities to customers 21 12 936 353 13 425 128 11 409 077 Certificates and other short-term borrowings 794 597 500 000 300 000 Bond debt 12 11 467 312 7 628 648 6 810 557 Borrowings through the issuance of securities 21 12 261 910 8 128 648 7 110 557 Other liabilities 181 675 210 721 182 061 Incurred costs and income received, not yet accrued 487 369 245 795 158 244 Pension commitments 17 21 377 23 895 20 179 Deferred tax 18 0 1 998 6 820 Other provisions 5 268 0 0 Provisions for liabilities 26 645 25 893 26 999 Perpetual capital bond 297 913 297 613 297 325 Subordinated loan capital 399 651 399 501 Subordinated loan capital 20 697 564 697 114 297 325 TOTAL LIABILITIES 28 250 924 23 917 242 19 918 663

Equity capital Paid-in equity capital: PCC-capital 125 000 125 000 125 000 Premium Fund 34 324 34 324 34 324 Paid-in equity capital 159 324 159 324 159 324

Accrued equity capital/retained earnings: Savings Bank’s Fund 1 698 303 1 588 338 1 452 386 Donations Fund 30 000 0 0 Dividend Equalisation Fund 11 299 11 264 11 262 Accrued equity capital/retained earnings: 1 739 602 1 599 602 1 463 648 TOTAL EQUITY CAPITAL 8 1 898 926 1 758 926 1 622 972 TOTAL LIABILITIES AND EQUITY CAPITAL 30 149 849 25 676 168 21 541 635

Accounting items off the balance sheet: Contingent liabilities: Guarantees 2/3/16 424 917 380 023 454 286 Assets pledged as collateral security 15 2 264 721 1 361 148 1 141 281 Liabilities: Forward exchange contracts/share index-related bond loan 19/12

31. December 2008 Kristiansand, 26. February 2009

Arvid Grundekjøn Norunn Tveiten Benestad Thore Westermoen Kristin Wallevik Chairman Deputy Chairman

Peder Syrdalen Bente Pedersen Stein A. Hannevik Chief Executive Officer Cash flow statement

(Amounts in NOK thousand) 2008 2007 2006 Cash flows from operations Interest receivable 1 823 582 1 203 087 736 918 Interest payable -1 354 147 -820 666 -428 815 Dividends received 4 078 2 003 4 664 Other payments received 99 408 95 763 111 765 Other payments made -201 103 -170 806 -156 288 Recoveries relating to confirmed losses 2 649 3 574 1 745 Payment of tax -89 081 -80 052 -65 530 Payments - donations -9 902 -5 279 -4 936 Net cash flow from operations 275 484 227 626 199 523 Cash flows from investment activities Change in loans to and claims on other financial institutions 11 644 363 876 -186 531 Change in net loans to and claims on customers -3 405 756 -3 146 992 -2 802 260 Net change in securities -765 969 -690 223 -311 716 Net change in fixed assets etc. -12 625 -11 062 -16 456 Change in other claims -14 880 -2 535 5 883 Net cash flow from investment activities -4 187 586 -3 486 936 -3 311 081 Cash flows from financing activities Net change in deposits from customers -488 775 2 016 051 1 760 839 Net change in deposits from Norges Bank and other financial institutions 475 465 449 543 314 202 Net change in bond debt 4 133 262 1 018 091 1 167 495 Change in short-term liabilities 160 489 20 916 20 941 Subordinated loan capital 0 399 789 300 Payment of dividend -21 250 -23 125 -20 000 Net cash flows from financing activities 4 259 191 3 881 265 3 243 777 Net change in liquid assets during the year + / - 347 089 621 954 132 219 Liquid assets as at 01.01 1) 1 407 528 785 574 653 355 Liquid assets as at 31.12 1) 1 754 617 1 407 528 785 574 1) which consist of: Cash-in-hand; Norges Bank N OT E S TO THE ACCOUNTS

ACCOUNTING PRINCIPLES Impairment in value of loans – individual write-downs of losses The annual financial statement is prepared in accordance with the applicable The Bank makes a quarterly assessment of its loans in order to ascertain whether there accounting law for banks, and according to good accounting practice. is objective proof of a loan having been subject to impairment in value which would trigger a need for write-downs of loss. Write-down for impairment in value is done

In connection with the Bank’s accounts, certain assessments and estimates have been when there is objective proof of individual loans having been subject to impairment applied in some areas where there has been uncertainty relating to the assessments. in value as a result of impaired creditworthiness. Write-down is calculated as the The use of critical estimates and assessments is primarily related to write-down of difference between book and present value of estimated future cash flows. Losses as individual loans or groups of loans, pension liabilities, depreciation and amortisation, a result of impairment in value are charged to the profit and loss account during the coupled with the stipulation of fair market value of financial assets. period in which they occur.

In each note to the accounts, the accounting principles applied are explained. Group-related write-downs Loans are divided into groups with largely similar risk characteristics with regard to

All figures in the Notes to the Accounts are stated in NOK thousand, unless otherwise borrowers’ ability to service/pay their outstanding debt to the bank. Group-related specified. write-downs shall cover expected credit loss incurred through events which have occurred and shall take into account losses contained in the portfolio at the time of

Financial instruments assessment, but which are not yet identified in the case of individual commitments. In the balance sheet, financial instruments comprise shares, bonds and commercial Losses as a result of impairment in value of groups of loans are charged to the profit papers. In addition, in 2008 the Bank has used financial derivatives in order to hedge and loss account during the period in which they occur. interest rate- and foreign exchange risk which has been incurred in connection with the Bank’s ordinary operations. The use of financial derivatives comprises foreign currency Confirmed losses swaps, interest rate swaps, and equity swaps (see note 12/19). As at 31.12.2008, the When it is highly probable that losses are final, these are classified as confirmed losses. Bank did not have a trading portfolio of financial instruments. Some confirmed losses will be covered through previous individual loss write-downs, and the amounts will then be booked while taking into consideration such earlier

Accrual accounting of income and costs write-downs. Confirmed losses without cover through individual loss write-downs, and Interest, fees and commissions are included in the profit and loss account according to any over- or under-coverage in relation to previous loss write-downs, are charged to the accrual of this income and costs. the profit and loss account.

Prepaid income and incurred, not yet paid costs, are subject to accrual accounting and Commitments in default are entered as liabilities in the balance sheet. Accrued, not yet received income is A customer’s outstanding commitment is deemed to be in default if a part repayment treated as income and shown under accounts receivable in the balance sheet. has not been made within 90 days after the due date, or if a credit facility has been overdrawn for more than 90 days. Default is also deemed to have occurred when debt

Dividends on shares are included as income in the profit and loss account during the negotiations have been initiated or in the case of bankruptcy, or when legal steps have year such funds are received. been taken in order to recover the claim in question. When a customer has one or more loans in default, the customer’s total outstanding commitment is reported and not just

Fees related for the establishment of loan agreements with customers are included the individual loan in question. as income in their entirety in the year in which the loan agreement is established, as such fees are deemed to cover the costs relating to the establishment of the loan in In the case of default, this represents objective proof which means that the need for question. write-down of losses must be assessed.

Cash flow statement Bad and doubtful commitments The cash flow statement has been prepared on the basis of net cash flows from Commitments which are not in default, but where the customer’s financial position operational-, investment- and financial activities. The cash flow statement is based on is such that the Bank has had to make write-downs for losses, or in cases where it is the direct model where cash flows from operational activities are shown through net, highly probable that the Bank will have to make write-downs for losses, are classified aggregate payments received and made. as bad and doubtful commitments.

Repossessed assets 1. LOSSES ON LOANS When the Bank repossesses assets as a result of commitments in default, such assets 1a. Principles relating to the assessment of commitments are assessed at their market value. Normally, such assets would be booked as current As at 31.12.2008, loans are evaluated according to ’Rules and regulations relating to assets. If the assets are assessed at a lower value at a later date, the difference will the accounting treatment of loans and guarantees’. At the time of establishment, loans be booked as a confirmed loss. In the case of a sale, any loss is booked as a confirmed are assessed at market value plus direct transaction costs. In the case of subsequent loss on loans and guarantees, and any gain as recoveries relating to previous losses assessments, loans are valued at amortised cost, using the ‘effective interest’ method. on loans and guarantees. If the repossessed assets are to be owned by the Bank on a Amortised cost is defined as the acquisition cost minus repayments on the principal long-term basis, they will be shown in the accounts as fixed assets. amount, with additions or deductions for cumulative amortisation as a result of the application of the effective interest rate method, and with any deductions due to Repossessed assets are as follows: impairment in value (loss assessment). Number 31.12. Number 31.12. Number 31.12. of units 2008 of units 2007 of units 2006 Sites and building plots 1 327 1 308 1 308 Total reposessed assets 327 308 308

1b. Losses on loans 1c. Commitments in default Credit loss cost for the period Retail banking market 2008 2007 2006 31.12. 31.12. 31.12. 31.12. 31.12. Net credit loss cost on loans 45 516 -1 361 -7 361 2008 2007 2006 2005 2004 Losses on guarantees 85 0 0 Gross loans/credit Losses on loans and guarantees 45 601 -1 361 -7 361 in default 34 862 10 807 3 350 8 278 9 009 - Specific loss provisions 0 0 0 212 764 2008 2007 2006 = Net loans in default 34 862 10 807 3 350 8 066 8 245 Change in specific loss provisions Degree of provisions for retail during the period 32 090 -4 854 -4 562 banking loans in default 0,0 % 0,0 % 0,0 % 2,6 % 8,5 % + Change in non-specific loss provisions during the period 11 500 680 -5 700 Corporate market + Amortized loans 3 636 566 31.12. 31.12. 31.12. 31.12. 31.12. + Period’s confirmed losses, against which 2008 2007 2006 2005 2004 specific loss provision were previously made 261 3 636 3 050 Gross loans/credit + Period’s confirmed losses, against which in default 98 797 2 227 11 219 7 354 7 749 no specific loss provisions were previously made 679 2 185 1 596 - Specific loss provisions 11 030 177 2 849 1 711 1 922 - Period’s recoveries relating to earlier = Net loans in default 87 767 2 050 8 370 5 643 5 827 periods’ confirmed losses 2 650 3 574 1 745 Degree of provisions for = Credit loss cost for the period 45 516 -1 361 -7 361 corporate loans in default 11,2 % 7,9 % 25,4 % 23,3 % 24,8 %

Changes in specific loss provisions Total loans/credit in default 2008 2007 2006 31.12. 31.12. 31.12. 31.12. 31.12. Specific loss provisions as at 01.01. 8 959 13 813 20 337 2008 2007 2006 2005 2004 - Period’s confirmed losses, against which Gross loans/credit specific loss provisions were previously made 261 3 636 3 050 in default 133 659 13 034 14 569 15 632 16 758 + Increased specific loss provisions - Specific loss provisions 11 030 177 2 849 1 923 2 686 during the period 2 446 1 975 1 132 = Net loans in default 122 629 12 857 11 720 13 709 14 072 + New specific loss provisions during the period 33 173 2 950 2 875 Degree of provisions for - Reversal of specific loss provisions loans in default 8,3 % 1,4 % 19,6 % 12,3 % 16,0 % during the period 3 268 6 143 7 481 + Amortized loans 2 205 509 Other bad and doubtful loans/credits = Specific loss provisions as at 31.12. 43 254 9 468 13 813 31.12. 31.12. 31.12. 31.12. 31.12. 2008 2007 2006 2005 2004 Changes in write-downs on group of lending Commitments not in default, 2008 2007 2006 against which loss provisions Write-downs on groups as at 01.01. 80 441 79 761 85 461 have been made 114 453 32 959 39 484 54 636 60 663 + Changes in write-downs on groups - Specific loss provisions 32 223 9 291 10 964 18 415 16 302 during the period 11 500 680 -5 700 = Net bad and doubtful loans, = Write-down on groups as at 31.12 91 941 80 441 79 761 not in default 82 230 23 668 28 520 36 221 44 361 Degree of provisions for Changes in interest income not included in the profit and loss account loans not in default 28,2 % 28,2 % 27,8 % 33,7 % 26,9 % 2008 2007 2006 Accrued interest, not included as income Gross loans which have from loans shown in the balance sheet at 01.01 1 617 819 1 355 been put on a non-accrual - Period’s inclusion of income from previous of interest income basis 119 137 22 091 42 576 45 347 52 993 periods’ interest on loans 1 444 0 1 355 - Accrued interest, not incl.as income on loans Total specific loss provisions which have been removed from the balance sheet 0 30 0 31.12. 31.12. 31.12. 31.12. 31.12. + Period’s accrued interest, not incl. as income from 2008 2007 2006 2005 2004 loans which have been identified as bad and doubtful 743 828 819 Specific loss provisions for = Accrued interest, not included as income commitments in default 11 030 177 2 849 1 923 2 686 from loans shown in the balance sheet at 31.12. 916 1 617 819 + Specific loss provisions for commitments not in default 32 223 9 291 10 964 18 415 16 302 = Total specific loss provisions 43 253 9 468 13 813 20 338 18 988

Interest provisions for commitments against which specific loss provisioning has been raised are not shown separately in the accounts, but have been deducted from gross loans. 1d. Loans and guarantees broken down Breakdown of different risk groups as at 31.12.2008 by different risk classes Gross Potential Specific loss Credit risk Commitment % loans Guarantees exposure provision Credit risk is defined as the risk of loss due to customers or counterparts being unable Corporate customers: to meet their obligations to the Bank relating to loans, credits guarantees or similar. Low risk 6 297 826 52,4 4 976 552 289 338 1 031 936 0 The Board of Directors agrees the Bank’s credit strategy and credit policy, and credit Medium risk 3 122 727 26,0 2 842 973 79 076 200 678 0 risk is managed according to agreed limits and targets for amongst other things High risk 2 193 455 18,5 1 847 757 35 799 309 899 0 expected losses, concentration risk, growth and large customers. The calculation of the Commitments in default probability of default in the case of retail banking customers and in portfolio context is and com. against which write- an important part of the quantification of the Bank’s risk profile. downs have been made 210 798 1,8 140 786 0 28 370 41 642 De-classified 184 075 1,5 152 903 12 340 18 832 0 Principles for risk classification of commitments Total corporate The Bank has a system for risk classification of customers. All commitments in excess customers 12 008 881 100,0 9 960 971 416 553 1 589 715 41 642 of NOK 500,000 are classified on an annual basis. The risk classification system was Retail banking customers: changed in 2008, and customers are now classified in different default classes, the Low risk 11 252 026 64,8 9 712 326 3 916 1 535 784 0 probability of default during a 12-month period being calculated by using various Medium risk 2 955 494 17,0 2 775 466 1 025 179 003 0 internal and external financial data. Both the retail banking- and corporate portfolios High risk 2 010 159 11,6 1 940 550 964 68 645 0 are divided into 10 different risk classes, in addition to one risk class for commitments Commitments in default in default and commitments with loss write-downs which are not in default. Risk and com. against which write- development in the portfolios is registered through the classification system. downs have been made 37 315 0,2 33 213 0 2 491 1 611 De-classified 1 117 903 6,4 1 022 446 2 459 92 998 0 Against the background of the new risk classification system the portfolios as at Total retail banking 31.12.2007 have been reclassified in order to be able to compare the data as at customers 17 372 897 100,0 15 484 001 8 364 1 878 921 1 611 31.12.2007 and 31.12.2008. Total 29 381 778 25 444 972 424 917 3 468 636 43 253

The Bank’s risk classes: Breakdown within different risk groups as at 31.12.2007 Risk classes Lower limit Upper limit Gross Potential Specific loss 1 0,00 % 0,10 % Commitment % loans Guarantees exposure provision 2 0,10 % 0,25 % Næringslivskunder: 3 0,25 % 0,50 % Low risk 5 796 734 59,5 4 792 910 312 105 691 719 0 4 0,50 % 0,75 % Medium risk 1 966 670 20,2 1 703 465 26 812 236 393 0 5 0,75 % 1,25 % High risk 1 793 492 18,4 1 603 548 11 343 178 601 0 6 1,25 % 2,00 % Commitments in default 7 2,00 % 3,00 % and com. against which write- 8 3,00 % 5,00 % downs have been made 43 224 0,4 27 652 0 6 681 8 891 9 5,00 % 10,00 % De-classified 134 751 1,4 94 100 22 176 18 475 0 10 10,00 % 100,00 % Total corporate customers 9 734 871 100,0 8 221 675 372 436 1 131 869 8 891 Risik groups: Personkunder: Probability of default Low risk 10 129 190 66,5 8 917 785 3 178 1 208 227 0 Low risk 0,00 – 0,75 % Medium risk 2 366 826 15,5 2 280 621 1 572 84 633 0 Medium risk 0,76 - 2,00 % High risk 1 574 340 10,3 1 532 052 483 41 805 0 High risk 2,01 - 100,00 % Commitments in default and com. against which write- downs have been made 3 617 0,0 2 432 0 608 577 De-classified 1 168 974 7,7 1 087 616 2 354 79 004 0 Total retail banking customers 15 242 947 100,0 13 820 506 7 587 1 414 277 577 Total 24 977 818 22 042 181 380 023 2 546 146 9 468

Changes between different risk groups throughout the year In the case of the corporate portfolio, there has been a reduction of 7.1 percentage points in the share of commitments with low risk, whereas the share of commitments with medium risk has increased by 5.8 percentage points. The proportion of high-risk commitments and non-classified commitments remains unchanged. The aggregate risk for the corporate portfolio is deemed to be satisfactory.

In the retail banking portfolio, there is a 1.7 percentage point reduction in the share of commitments with low risk, whereas the share of commitments with medium risk has increased by 1.5 percentage points. The share of high-risk commitments has increased by 1.3 percentage points, whereas the share of non-classified commitments decreased by 1.3 percentage points. The aggregate risk for the retail banking portfolio is deemed to be satisfactory. Average annual expected credit loss level 3a. LOANS AND GUARANTEES BROKEN DOWN The Bank considers monitoring and management of credit risk to be of great BY THE MOST IMPORTANT GEOGRAPHICAL AREAS importance. Credit risk is monitored by analyses based on risk-classification of Loans Guarantees commitments and various risk reports. In addition credit risk is controlled through the 31.12.08 % 31.12.07 % 31.12.08 31.12.07 implementation of strategic credit guidelines and limits. Østfold 169 532 0,7 148 027 0,7 0 0 Akershus 581 568 2,3 568 744 2,6 8 405 4 966 In 2008, the Bank had a net loss of NOK 45,601.000 on loan losses. Based on Oslo 2 509 243 9,9 2 412 082 10,9 14 167 18 016 empirical data, local market conditions and the composition of the Bank’s existing Buskerud 135 784 0,5 135 940 0,6 47 0 portfolio, plus the present general economic situation, however, the Bank’s net credit Aust-Agder 3 094 510 12,2 2 317 236 10,5 19 186 7 270 loss cost for 2009 is expected to be at least at the same level. Vest-Agder 16 825 432 66,1 14 426 485 65,4 357 471 319 828 Rogaland 847 223 3,3 708 436 3,2 2 507 2 133 Hordaland 463 516 1,8 536 000 2,4 22 185 26 729 2. GUARANTEE LIABILITIES Møre 125 007 0,5 111 637 0,5 53 53 31.12.08 31.12.07 31.12.06 Trøndelag 242 003 1,0 244 325 1,1 304 354 Loan guarantees 0 0 0 Miscellaneous 451 154 1,8 433 269 2,0 592 674 Payment guarantees 68 311 76 204 56 337 Total 25 444 972 100,0 22 042 181 100,0 424 917 380 023 Contract guarantees 316 724 266 497 336 574 Guarantee for tax 300 300 250 Other guarantees 39 582 37 022 61 125 Guarantee liabilities relating to customers 424 917 380 023 454 286

3b. LOANS AND GUARANTEES AS AT 31.12.08, BROKEN DOWN BY THE MOST IMPORTANT COMMERCIAL-, INDUSTRIAL AND RETAIL BANKING MARKETS Gross Guarantees Potential Commitments Specific loss Bad and doubt- loans exposure in default provisions ful commitments Retail banking customers 15 484 001 8 364 1 878 920 34 862 1 611 2 452 Corporate customers 9 960 971 416 553 1 589 715 98 797 41 642 112 001 Total loans and guarantees 25 444 972 424 917 3 468 635 133 659 43 253 114 453 Agriculture, forestry and fishing 93 452 433 12 549 Industry, including manufacturing industry 178 673 74 773 185 263 23 2 541 10 090 Building and construction, energy and water supply 454 710 168 572 245 091 2 589 10 583 Retail and wholesale trade; hotel- and restaurant industry 457 408 44 753 109 653 7 620 12 161 31 407 Real estate management 5 895 250 56 865 464 170 60 009 11 475 17 924 Transport 87 536 15 626 3 332 Business-services 814 603 29 512 120 924 2 638 3 882 27 265 Social-services 1 971 296 26 019 429 349 28 507 8 994 14 732 Central and local government administration 8 043 19 384 Total - corporate customers 9 960 971 416 553 1 589 715 98 797 41 642 112 001

3c. LOANS AND GUARANTEES AS AT 31.12.07, BROKEN DOWN BY THE MOST IMPORTANT COMMERCIAL-, INDUSTRIAL AND RETAIL BANKING SECTORS Gross Guarantees Potential Commitments Specific loss Bad and doubt- loans exposure in default provisions ful commitments. Retail banking customers 13 820 506 7 587 1 414 278 10 807 577 1 389 Corporate customers 8 221 675 372 436 1 347 639 2 227 8 891 32 415 Total loans and guarantees 22 042 181 380 023 2 761 917 13 034 9 468 33 804 Agriculture, forestry and fishing 84 996 217 13 467 22 107 Industry, including manufacturing industry 172 174 88 730 108 317 1 655 8 689 Building and construction, energy and water supply 375 930 133 433 229 919 1 622 177 Retail and wholesale trade; hotel- and restaurant industry 376 275 45 786 148 341 540 3 286 15 840 Real estate management 4 954 685 46 992 438 022 64 Transport 67 354 16 789 3 734 Business-services 492 857 18 813 107 601 1 Social-services 1 667 428 21 601 298 238 3 751 7 779 Central and local government administration 29 976 75 0 Total - corporate customers 8 221 675 372 436 1 347 639 2 227 8 891 32 415

4. COMMERCIAL PAPERS AND BONDS 5. SUBORDINATED LOAN CAPITAL IN OTHER INSTITUTIONS Classification 31.12.08 31.12.07 31.12.06 The Bank’s portfolio of certificates and bonds is mainly classified as current assets. In Subordinated loan, included under bonds 268 780 4 019 16 000 accordance with the change in the rules and regulations relating to annual accounts, Subordinated loan, included under loans 22 000 22 000 0 a limited share of the portfolio was reclassified into ‘To be held until maturity’ in Total subordinated loan capital 290 780 26 019 16 000 December 2008. - Of which subordinated loan capital in other financial institutions accounts 268 780 4 019 16 000 Valuation Commercial papers and bonds are classified as current assets and assessed as an 6. CAPITAL ADEQUACY aggregate portfolio at the lower of acquisition cost and market value on the balance The Bank’s capital adequacy ratio as at 31.12.2008 has been calculated according to the sheet day in question. The portfolio assessment principle has been chosen as the Basel II rules and regulations. The figures for 2006 and 2007 were computed according Bank’s bond portfolio is managed as an aggregate risk. to the previous capital adequacy rules and regulations (Basel I) and are therefore not comparable with the figures for 2008. The portfolio classified as ‘To be held until maturity’ was assessed at amortised cost 31.12.08 31.12.07 31.12.06 at the time of reclassification. Capital adequacy ratio 13,52 % 14,89 % 13,88 % Minimum requirements for equity Certificates and bonds as at 31.12.08 and related capital 1 534 678 1 316 146 1 101 577 Current assets Calculation basis 19 183 475 16 451 823 13 769 711 Subordinated - Cash-in-hand and ordinary deposits loans in fin. in other banks 26 740 19 939 92 715 Certificates Bonds institutions Total - Short-term placements in securities 1 477 294 1 013 206 957 643 Issued by public - Loans 16 054 998 14 689 854 12 156 988 sector borrowers 200 325 97 680 0 298 005 - Other claims 17 885 117 303 76 687 Issued by other borrowers 100 185 1 773 520 122 937 1 996 642 - Fixed assets 179 242 165 332 159 139 Total book value 300 510 1 871 200 122 937 2 294 647 - Items off the balance sheet 715 404 517 739 415 946 - In this EUR 0 375 810 16 537 392 347 - Share of trading portfolio 24 805 11 280 USD 0 0 95 210 95 210 - Operationel risk 807 075 Acquisition cost 300 168 1 832 769 115 016 2 247 953 - Deductible items -95 163 -96 355 -100 687 Market value 1) 300 510 1 871 200 122 937 2 294 647 Net equity and related capital 2 593 262 2 452 817 1 786 410 Held until maturity Broken down as follows: Subordinated Core capital 2 195 225 2 053 316 1 782 291 loans in fin. - PCC-capital 125 000 125 000 125 000 Certificates Bonds institutions Total - Premium Fund 34 324 34 324 34 324 Issued by public - Savings Bank’s Fund 1 698 303 1 588 338 1 452 386 sector borrowers 0 0 0 0 - Donations Fund 30 000 0 0 Issued by other borrowers 0 0 145 843 145 843 - Dividend Equalis. Fund 11 299 11 264 11 262 Total book value 0 0 145 843 145 843 - Over-funding of pension liabilities 0 0 -1 774 - In this EUR 0 0 54 876 54 876 - Capital bond 297 913 297 613 286 093 Acquisition cost 0 0 135 376 135 376 - Equity and related capital in other Market value 1) 0 0 145 843 145 843 finacial institutionsr -1 614 -3 223 0 Discount, booked as income Supplementary capital 398 037 396 278 4 119 in the profit and loss account 0 0 15 15 - Subordinated loan 399 651 399 501 11 232 1) Market value is defined either as the price quoted on the stock exchange or as - Equity and related capital in other calculated present value based on securities’ contract-related cash flow discounted at finacial institutions -1 614 -3 223 -7 113 a rate of interest equivalent to the swap rate of interest at the turn of the year. Bonds in foreign currencies are hedge through foreign exchange swaps. When assessing 2008 fair market value, the financial effect of the foreign exchange swaps is not taken into Minimum requirements for equity and related capital 1 534 678 consideration. Capital requirements for credit risk according to the standard method 1 477 725 When calculating the yield on the Bank’s securities portfolio, the following elements - Local and regional authorities (incl.municipalities) 4 580 are taken into consideration: interest coupons, realised gains/losses and any change - Institutions 59 345 in unrealised gains/losses. The impact of hedge transactions relating to the portfolio is - Companies 724 795 also taken into consideration. The average rate of return on investment in bonds was - Mass market commitments 194 049 5.56 percent in 2008. The yield on bonds designated as ‘To be held until maturity’ was - Commitments secured by mortage on property 406 651 6.09 per cent. If the subordinated loans had not been reclassified into ‘To be held until - Commitments due 23 152 maturity’, their book value as at 31.12.2008 would have been NOK 123.3 million. - High-risk commitmentsr 1 225 - Preference bonds 1 400 The Bank’s portfolio of interest-bearing securities is related to collateral pledged as - Shares in securities funds 1 989 security in connection with loan facilities provided by Norges Bank, and in connection - Other commitments 60 539 with the establishment of other liquidity reserves. In connection, the Bank has invested Capital requirements for operationel risik 64 566 in ordinary, listed interest-bearing bonds and certificates. - Capital requirements according to the basis method 64 566 Deductions in the capital requirements -7 613 - Equity and related capital in other financial institutions -258 - Write-down on groups of loans -7 355

7. OTHER FEES AND COMMISSIONS 2008 2007 2006 Commissions - credit brokerage 7 180 8 937 8 992 Fees-securities trading and management/administration 7 981 12 584 13 893 Payment transmission 62 340 63 507 59 806 Insurance services 8 582 7 037 6 746 Other fees 1 936 2 089 2 095 Total other fees and commission income 88 019 94 154 91 532

8. CHANGE IN THE BANK’S EQUITY CAPITAL - 01.01.08 – 31.12.08 PCCs Premium Fund Savings Donation Dividend Total Bank’s Fund fund Equalisation Fund Equity capital as at 01.01.08 125 000 34 324 1 588 337 0 11 265 1 758 926 Allocation of profit for the year 0 0 109 965 30 000 35 140 000 Equity capital as at 31.12.08 125 000 34 324 1 698 302 30 000 11 300 1 898 926

9. SHARES, PARTICIPATIONS AND UNITS BANK’S SHARE Company’s Number of Equity Nominal Book Acquisition share capital shares stake value value cost Shares classified as current assets: NorgesInvestor Value AS 179 400 100 000 5,6 10 000 110 110 NorgesInvestor III AS 176 647 30 030 0,0 30 30 30 NorgesInvestor Long Short AS 72 500 50 000 0,1 57 57 57 NorgesInvestor Pro AS 138 300 130 000 9,4 13 000 9 750 13 000 NorgesInvestor lV AS 153 766 58 750 3,8 5 875 5 875 5 875 NorgesInvestor Opportunities AS 24 960 30 000 9,6 2 400 3 000 3 000 Total shares current assets 18 822 22 072 Shares classified as fixed assets: Nordito AS 253 846 60 698 0,6 1 517 3 863 3 863 Eiendomskreditt AS 160 000 112 396 7,0 11 240 11 321 11 321 Sparebankmateriell AS 3 156 590 1,9 59 59 59 Eksportfinans ASA 2 793 526 529 0,2 5 554 5 766 7 879 Other companies (12) 774 871 Shares in associated company: Pluss Garanti Eiendomsmegling AS 4 000 19 500 49,0 1 960 1 960 1 960 Total shares fixed assets 23 743 25 953 Participations classified as fixed assets: Banklikviditet Global 12,5 102 495 99 180 Skagerak Venture Capital 1 KS 9,7 8 823 10 223 Financial fixed assets - Movements during the year Opening balance Additions Disposals Write-downs Closing balance Total long-term placements 22 056 3 800 0 2 113 23 743 Portfolio of shares classified as current assets is assessed at the lower of acquisition cost and expected market value, when the shares in question are not listed on a stock exchange. The Bank’s portfolio of shares classified as long-term investment is valued at acquisition cost, unless circumstances of a permanent nature have necessitated a lower valuation. Shares in fund, Banklikviditet Global, have been valued at the price obtainable as at 31.12.2008. Participation in Skagerak Venture Capital KS are valued at estimated valueadjusted equity capital, the information provided by the company. In connection with the investment in Skagerak Venture Capital 1 KS, the Bank has a total obligation in the form of equity capital and loans amounting to NOK 25 million in all. The associated company Pluss Garanti Eiendomsmegling AS, Kristiansand was established in September 2007. The company’s preliminary result before taxes for 2008 was minus NOK 1,6 million and its equity capital amounted to NOK 2.5 million as at 31.12.2008. The equity stake has been incorporated into the accounts according to the cost method. None of the securities classified as fixed assets are listed. 10. INFORMATION RELATING TO BANK’S 10c. Loans/provision of security STAFF AND ELECTED REPRESENTATIVES for staff and elected representatives 2008 2007 2006 10a. Number of employees as at 31.12 CEO 1 469 2 291 2 749 2008 2007 2006 Management Team (Tot) 7 539 6 408 6 332 Number of employees 190 190 184 - Deputy CEO/Head of Corporate Market 2 040 Number of man-years 170 172 167 - Divisional Director Retail Market 2 004 Average number of staff 190 187 182 - General Manager Credit Risk 1 867 - General Manager Accounting and Reporting 1 628 Members of Board of Directors (Tot) 4 567 904 6 045 10b. Wages, salaries, pensions and other benefitsr - Arvid Grundekjøn (Chairman) 0 Pension Other - Norunn Tveiten Benestad 0 A. Wages, salaries, fees etc Wages Bonus cost benefits - Thore Westermoen 0 Management Team - Kristin Wallevik 2 541 - CEO 1 545 126 624 165 - Peder Syrdalen 0 - Deputy CEO/ - Bente Pedersen 2 026 head of Corporate market 988 93 203 154 Members of the Control Committee (Tot) 5 242 5 595 5 954 - Divisional Director, - Tor Emil Tellefsen (Chairman) 4 276 Retail market 895 87 273 149 - Olav Eivindson 966 - General Manager Credit Risk 790 80 115 126 - Greta Hilding 0 - General Manager Members of the Board of Trustees (Tot) 35 348 37 676 33 941 Accounting and Reporting 727 76 140 150 - Tormod Nyberg (Chairman) 0 - Kjell Bjarne Back 0 B .Total remuneration and fringe benefits - Vidar Andreas Tobiassen 707 Members of Board of Directors - Jan H. Munksgaard 816 - Chairman Fixed annual fee 88 - Ingeborg Akselsen Skjesol 1 866 - Other members Fixed annual fee 55 - Mette Vestberg Sørensen 3 889 Members of Control Committee - Per Olav Skutle 1 667 - Chairman Fixed annual fee 50 - Jan Kåre Haugland 0 - Other members Fixed annual fee 33 - Einar Sørensen 0 - Ole Fritjof Godtfredsen 2 780 Members of Board of Trustees - Hans Otto Lund 855 - Chairman Fixed annual fee 15 - Guri Langfeldt 9 - Other members Fixed fee per meeting 1 - Birger Bjellås 1 072 - Georg Fritzman 0 Bankens ledergruppe er redusert med en person siste regnskapsår. Medlemmer av - Helge Reme 6 966 styret, kontrollkomite og forstanderskap mottar kun honorar. Det samme gjelder - Tor Emil Tellefsen 4 276 fratrådte medlemmer av styret, kontrollkomite og forstanderskap. - Egil Galteland 800 - Arne Huser 0 C. Accrual of pension entitlements for senior staff and elected representatives - Kai Kyllingstad 1 768 The Bank’s Chief Executive Officer and other senior personnel accumulate entitlements - Arvid Berg 1 552 in the Bank’s general benefit-based pension scheme. The pension benefits comprise - Lars Falkenberg 2 022 old age pension, disability pension, supplementing the benefits from Folketrygden - Grethe Simonsen 2 203 (National Insurance Fund). A full pension requires an accrual period of 30 years and - Andreas Gulsrud 2 100 provides an entitlement to old age pension of the difference between 66 per cent of - Siv Eriksen 0 leaving salary and the estimated benefit to be paid by Folketrygden. In addition, The Total - other staff 230 532 213 934 176 371 Bank’s Chief Executive Officer and other senior personnel earn the right to retire earlier with an old age pension from the Bank equivalent to 66 per cent of leaving salary. Loans to staff are granted according to general loan rules and regulations pertaining In the case of the Bank’s Chief Executive officer, this applies from his 60th birthday. to staff. Loans to staff beyond general loan rules and regulations pertaining to staff The age limit for the Deputy Chief Executive officer and the Director, Retail Banking, are granted at ordinary customer terms and conditions. is 62 years. For the other members of the Bank’s management team the ordinary age Loans to elected representatives are granted at ordinary customer terms and limit is 65 years. conditions.¨

Elected representatives have no agreement in respect of accrual of pension. The interest rate benefit in relation to the taxation of benefits in kind involving the Bank’s staff amounts to NOK 1.0 million. D. Agreement relating to bonus/profit sharing The Chief Executive Officer is also part of the Bank’s bonus scheme, which applies to all the Bank’s staff. Depending upon the degree of target achieved, the bonus arrangement 10d. Remuneration paid to auditor can amount to up to one and a half time of monthly salary for each member of staff. 2008 2007 2006 Members of the Board of Directors are not part of the Bank’s bonus scheme. Auditing 467 415 390 Tax advice 36 28 35 E. Liabilities relating to subscription rights, options and private placements for staff Other advices 149 20 0 No agreements relating to subscription rights or options have been entered into. The amounts are exclusive of V.A.T. 11a. LIQUIDITY RISK – FUNDING Funding risk Funding risk is defined as the risk of the Bank being unable to meet its obligations at maturity. The Bank’s funding risk is in general low. In 2008, this was illustrated by the fact that a high proportion of the Bank’s loans was funded on a long-term basis. Long-term funding is defined as customer deposits, funding from the money- and capital markets with maturities in excess of 12 months, coupled with unutilised committed drawing rights facilities. The bank must at all time have sufficient liquid assets in order to meet its obligations. The Bank’s targets with regard to the composition and size of its liquidity reserves have been adopted by the Board of Directors. Other benchmark figures agreed by the Board of Directors, applied to the Bank’s operational activities, are guidelines for its refinancing requirement within different time intervals. In addition to diversification with regard to different maturities, the Bank has a policy to obtain its funding from different markets and through different instruments. In 2008, the Bank’s funding structure complied with all requirements introduced by law and by the Bank’s Board of Directors.

Remaining maturity period for main accounting items Up to 1 - 3 3 months - 1 - 5 Over Without Balance sheet items Total 1 month months 1 year years 5 years maturity

Assests: Cash-in-hand and claims on the central bank 1 754 617 1 690 821 63 796 Loans to and claims on fiancial institutions 88 053 53 053 35 000 Loans to and claims on customers 25 309 777 6 446 695 730 577 1 523 981 2 216 856 14 526 863 -135 195 Bonds and certificates 2 440 490 410 616 330 081 1 245 443 397 877 56 473 Other assets 556 912 239 062 317 850 Total assets 30 149 849 8 429 631 1 176 193 1 854 062 3 462 299 14 924 740 302 924 - Of which in foreign currencies 1 595 857 413 747 619 833 15 038 431 113 54 917 61 209

Liabilities: Liabilities to other financial institutions 1 659 407 59 407 1 000 000 600 000 Deposits from and liabilities to customers 12 936 353 12 686 039 239 080 11 234 Borrowings through the issuance of securities 12 261 910 500 000 2 950 122 8 811 788 Other liabilities 695 689 156 235 195 396 119 304 160 095 38 000 26 659 Subordinated loan capital 697 564 697 564 Equity capital 1 898 926 1 898 926 Total liabilities and equity capital 30 149 849 12 901 681 934 476 3 080 660 9 971 883 1 335 564 1 925 585 - herav utenlandsk valuta 291 651 187 518 97 899 6 234 Net funding exposure on balance sheet items -4 472 050 241 718 -1 226 598 -6 509 584 13 589 176 -1 622 661 - Of which in foreign currencies 1 304 206 226 229 521 934 8 804 431 113 54 917 61 209 Forward purchases of foreign currency - NOK 1 708 543 603 722 1 013 593 89 806 1 422 - Foreign Currency 852 693 280 999 481 956 89 658 80 Forward sales of foreign currency - NOK 731 721 251 167 397 969 82 503 82 - Foreign Currency 1 980 877 718 514 1 162 628 98 219 1 516 Forward foreign exchange transactions -151 362 -84 960 -65 048 -1 258 -96 11b. INTEREST RATE RISK Repricing date (gap) for assets and liabilities Interest rate risk occurs in connection with the Bank’s ordinary lending and borrowing activities and in relation to the activities in the money and capital markets. Interest risk may occur when repricing dates on assets and liabilities also including off-balance instruments, are not matched. An interest risk limit has been adopted by the Board of Directors, and is measured as a maximum loss as a result of a parallel displacement of the yield curve by two percentage point. Interest rate risk is neutralised through matching of repricing on balance sheet items or by off-balance hedging instruments. The Bank’s interest rate exposure is reported to the Board of Directors on a quarterly basis. Interest rate exposure was as at December far lower than the risk limit adopted by the Board. The exposure would give a benefit for the Bank of NOK 9 million from a potential upward fluctuation of interest rates.

The table below shows for how long a period the Bank is locked into the applicable rates of interest for the different balance sheet items.

Up to 1 - 3 3 months - 1 - 5 Over No interest Balance sheet items Total 1 month months 1 year years 5 years rate exposure

Assets: Cash-in-hand and claims on the central bank 1 754 617 1 690 821 63 796 Loans to and claims on financial institutions 88 053 52 418 35 635 Loans to and claims on customers 25 309 777 22 556 070 682 150 116 909 1 152 314 937 529 -135 195 Bonds and certificates 2 440 490 617 322 1 766 629 56 539 Other assets 556 912 239 062 317 850 Total assets 30 149 849 24 916 631 2 687 841 173 448 1 152 314 937 529 282 086 - Of which in foreign currencies 1 595 857 749 655 769 955 71 511 4 736

Liabilities: Liabilities to other financial institutions 1 659 407 59 407 1 100 000 500 000 Deposits from and liabilities to customersr 12 936 353 12 686 039 239 080 11 234 Borrowings through the issuance of securities 12 261 910 1 089 759 6 080 657 1 255 170 3 836 324 Other liabilities 695 689 695 689 Subordinated loan capital 697 564 697 564 Equity capital 1 898 926 1 898 926 Total liabilities and equity capitall 30 149 849 13 835 205 8 117 301 1 266 404 4 336 324 2 594 615 - Of which in foreign currencies 291 651 187 518 97 899 6 234 Net interest exposure on balance sheet items 11 081 426 -5 429 460 -1 092 956 -3 184 010 937 529 -2 312 529 - Of which in foreign currencies 1 304 206 562 137 672 056 65 277 4 736 Off balance sheet financial derivatives -1 031 623 -1 836 000 190 000 3 547 623 -870 000 Net total - all items 10 049 803 -7 265 460 -902 956 363 613 67 529 -2 312 529 - Of which in foreign currencies 1 304 206 562 137 672 056 65 277 4 736 12. SECURITISED DEBT 14. FIXED ASSETS ISIN-number Issued Maturity Nominal value Rate - interest Value assessment NO 001 022954.5 2004 17.06.09 600 000 NIBOR related Real estate and other fixed assets are shown in the balance sheet at acquisition NO 001 029055.4 2005 09.11.10 300 000 4,05 2) cost, plus previous write-ups, minus accumulated depreciation and any write-downs. NO 001 029056.2 2005 09.11.10 800 000 NIBOR related Depreciation is based on cost price, plus previous write-ups, spread evenly over the NO 001 026595.2 2005 26.04.10 800 000 3,75 2) economic life of the assets in question. If the actual value of an asset is significantly NO 001 025290.1 2005 22.03.11 19 552 1) lower than its book value, and if the reduction in value cannot be expected to be of a NO 001 028268.4 2005 12.03.12 600 000 3,80 2) temporary nature, in that case, the asset is written down to its actual value. NO 001 030221.9 2006 02.03.09 500 000 NIBOR related NO 001 028754.3 2006 06.08.09 75 047 1) Machinery, Other NO 001 032099.7 2006 18.09.09 42 710 1) fixture, fittings Bank real NO 001 029390.5 2006 28.09.09 59 478 1) transp. equipm. buildings estate NO 001 030213.6 2006 26.10.09 31 147 1) Acquisition cost as at 01.01. 110 463 90 616 22 603 NO 001 034094.6 2006 09.11.09 500 000 4,50 2) + Written up as at 01.01. 0 17 405 4 136 NO 001 030689.7 2006 22.12.09 46 961 1) + Additions in 2008 11 591 4 652 118 NO 001 034744.6 2006 22.12.09 800 000 NIBOR related - Disposals in 2008 4 697 276 419 NO 001 033278.6 2006 12.09.11 800 000 4,50 2) - Total depreciation NO 001 039841.5 2007 20.05.11 800 000 NIBOR related and write-downs 88 558 27 949 7 948 NO 001 039377.0 2007 24.08.10 800 000 NIBOR related Book value as at 31.12. 28 799 84 448 18 490 NO 001 038968.7 2007 08.10.13 800 000 6,00 2) NO 001 045924.1 2008 18.09.09 295 000 NIBOR related Depreciation in 2008 8 274 2 194 771 NO 001 046482.9 2008 08.10.09 300 000 8,40 Depreciation rates 10-30 % 2% 2% NO 001 047061.0 2008 28.10.09 200 000 6,69 Tax-related value 30 675 65 481 14 847 NO 001 042311.4 2008 29.03.10 800 000 NIBOR related NO 001 042033.4 2008 11.03.11 700 000 NIBOR related Buildings are depreciated over an economic life of 50 years. NO 001 044185.0 2008 04.07.11 550 000 5,37 2) Eletronic data equipment is depreciated over an economic life of 3 years. NO 001 044081.1 2008 11.07.12 400 000 NIBOR related Other fixtures, fittings and equipment are depreciated over an economic life of NO 001 047063.6 2008 30.10.13 685 000 NIBOR related 3-10 years. Total bond loans 12 304 895 Discount 42 986 The bank’s head office building is shown in the balance sheet at a book value of Book value as at 31.12.08 12 261 909 NOK 63,7 million. The Bank’s securitised debts are listed on the Oslo Stock Exchange. The building is located in the middel of Kristiansand and is mostly used for banking The loans are not subject to instalments. operations.

1) The return for bondholders is linked to the value of one or more equity indices at the An agreement of rental of bank premises has been entered into. point of assessment. The obligation to pay a yield to the investors has been hedged The annual rental for 2008 amounted to NOK 1,3 million. through financial derivatives agreements. 2) Fixed interest loans. Interest rate terms and conditions have been swapped into The Bank pays a NOK 1.4 million annual rental cost for machinery relating to electronic floating rates of interest. data network. As at 31.12.08, the Bank has no own holdings of bonds. Any discount in relation to par price as shown in the accounts is charged to the profit and loss account as interest payable throughout the fixed life of the loan in question. 15. COLLATERAL SECURITY As at 31.12.08, the Bank has deposited bonds of a total book value of NOK 2,264.7 million as collateral security for drawing rights at Norges Bank. 13. LEVY PAYABLE TO THE SAVINGS BANKS’GUARANTEE FUND In 2006 and 2007, all savings banks were exempt from payment of the levy to the Savings Banks’ Guarantee Fund. In 2008 Sparebanken Pluss made a payment of 3.5 milliom to the Savings Banks’ Guarantee Fund booked under ‘Interest payable and similar costs’ in the profit and loss account.

The Guarantee Fund is legally obliged to cover losses up to NOK 2 million incurred by a customer on a deposit at a savings bank. This arrangement does not apply to deposits received from other financial institutions. 16. ACCOUNTING PRINCIPLES FOR FOREIGN CURRENCY ITEMS Employers’ social security contributions are calculated on net, actual under-funding and included in gross pension liabilities. 31.12.08 31.12.07 31.12.06 Assets in foreign currencies 1 595 857 463 735 396 742 In the actuarial computations relating to pensions, the following assumptions have Liabilities in foreign currencies 291 651 837 520 339 867 been applied as a basis: 31.12.08 31.12.07 31.12.06 Opened, uncovered letters of credit Rate of discounting 3,80% 4,75% 4,75% as at 31.12 which have not been Investment return on pension resources 5,80% 5,75% 5,75% included in the balance sheet 4,6 mill 23,6 mill 3,1 mill Wage adjustment 3,75% 4,25% 4,25% ”G” - adjustment 3,75% 4,25% 4,25% The balance sheet for foreign currency items has been converted into NOK at the Pension adjustment 1,5% 2,0% 2,0% foreign exchange rates as at 31.12.08 (mid. price). Voluntary retirement 0% 0% 0% Income and costs in foreign currencies are converted into NOK at the foreign exchange Propensity to take up SERP 30% 30% 30% rates quoted at the time of the transaction involved. The Bank’s Board of Directors has decided on a limit for net positions in individual currencies which must not exceed the The year’s pension cost foreign currency equivalent of NOK 10 million; the total net foreign currency position 2008 2007 2006 may be up to the foreign currency equivalent of NOK 30 million. The Bank’s foreign The year’s pension accruals 7 580 6 688 6 118 exchange exposure is monitored on a daily basis, and the Board of Directors receives Interest cost relating to pension liabilities 8 123 7 507 6 982 a report on net foreign currency positions at its meetings. In the case of forward Expected return on pension resources -6 428 -5 287 -4 884 exchange contracts for customers, the foreign exchange risk occurring is hedged by Amortisation of estimated entering into matching transactions with other counterparts in the market. discrepancies,changed employers’ As at 31.12.08, the net foreign exchange exposure, taking into consideration off- social security contribuions etc. 5 179 3 271 3 065 balance sheet financial derivatives, totalled NOK 23.0 million. Net pension cost 14 454 12 179 11 281 The net position in foreign currencies is mainly made up of USD, JPY, CHF and Eur. For further details, please see note 21. Balance Sheet 31.12.08 31.12.07 31.12.06 Insured Not insured Insured Not insured Insured Not insured 17. PENSIONS Estimated incurred The Bank provides pension insurance for its staff through Nordea Liv AS. The pension pension liabilities 164 913 32 778 141 044 28 749 131 458 26 197 insurance comprises 251 persons, of whom 66 former employees were receiving Value of pension pensions as at 31.12.08. The Bank’s pension schemes comply with the requirements by resources 122 010 0 105 677 0 97 134 0 the Law of Obligatory Occupational Pension Scheme. Estimated pension resources/(-liabilities) -42 903 -32 778 -35 367 -28 749 -34 324 -26 197 In addition, the Bank has pension liabilities covering 27 persons who are not covered Employers’ social by the insurance arrangement in connection with early retirement- and supplementary security levy -6 049 -4 621 -4 987 -4 084 -4 840 -2 494 pensions. Impact of estimate discrepancies not The pension schemes are treated in accordance with the Norwegian accounting included in profit standard for treatment of pension costs. The pension schemes are deemed to be and loss account 52 570 12 404 38 448 10 846 40 938 8 512 contributory plans. Changes in estimates and any discrepancies are amortised over the Pension resources remaining time of accruals without the use of a ’corridor’. (-liabilities) in the balance sheet 3 618 -24 995 -1 906 -21 987 1 774 -20 179 The arrangement relating to statutory early retirement pension (Referred to as SERP below) from the 62nd birthday has been taken into consideration in the pension liabilities. 8 persons receive pensions within the Bank’s SERP arrangement as at 31.12.08.

18. TAX 19. FINANCIAL DERIVATIVES The difference between the result before tax cost and the tax basis for the year: Off balance interest rate- and foreign currency instruments 2008 2007 2006 Nominal Market Nominal Result before taxation cost 224 763 286 458 278 656 amount value value Dividends received -3 572 -1 497 -4 664 31.12.08 31.12.08 gj.sn. 2008 Permanent differences 8 541 -2 672 -14 357 Interest rate swaps 7 076 709 599 044 6 277 688 Change in temporary differences 62 684 17 219 9 729 Equity index agreements 719 758 -21 740 931 777 Tax basis for the year 292 416 299 508 269 364 Foreign exchange agrements 2 561 227 155 697 2 217 696 Income tax 81 876 83 862 75 422 Nominal amount equals principal sum. Wealth tax 5 750 5 218 4 635 Change in deferred tax -17 551 -4 821 -2 724 Trading in financial derivatives is primarily done in order to reduce interest rate- and Previous years’ payable tax -312 -5 8 foreign exchange risk in the balance sheet. Equity-related agreements such as equity Tax cost for the year 69 763 84 254 77 341 swaps are used to hedge structured investment products sold to customers. Financial derivatives are traded with solid Norwegian and international banks, making sure that The reconciliation of tax cost in relation to estimated tax payable on the result as the counterpart risk is limited. Profit and loss account items from hedge transactions shown in the profit and loss account: are booked in conjunction with the booking of the result relating to the hedged item. 2008 2007 2006 Result before taxation cost 224 763 286 458 278 656 Sparebanken Pluss has used the following financial derivatives in 2008: 28% tax of pre-tax result 62 934 80 208 78 024 Tax impact of permanent differences 2 391 -748 -4 020 Interest rate swaps: Agreements to swap interest rates for an agreed Tax impact of dividends received -1 000 -419 -1 306 amount for an agreed period. Only interest Wealth tax 5 750 5 218 4 635 payments are involved as far as transaction Change relating to previous years -312 -5 8 flows are concerned. Tax cost for the year 69 763 84 254 77 341 Equity index agreements: Agreements to swap terms from a yield linked (equity swaps) to one or more equity indexes into floating-based Estimated tax payable for 2008, NOK 87,626,000,- is included in ’Other liabilities’ in terms. the balance sheet. Foreign exchange agreement: Agreements to buy or sell a certain foreign currency Deferred tax and deferred tax benefit are calculated on the basis of the temporary amount at a future point in time at an agreed rate of differences which existed at the end of the accounting year between the values in the exchange against another currency. accounts and the tax-related values. Below is a breakdown of the temporary differences, as well as calculations of deferred tax and deferred tax benefit. 20. SUBORDINATED LOAN CAPITAL In March 2007, The Bank issued a NOK 400 million 10-year subordinated loan with an option of redemption after 5 years. The interest rate is NIBOR plus 40 basis points. Deferred tax (Deferred tax benefit) The costs relating to the issue of the loan have been capitalised at an amount of NOK 2008 2007 2006 540,000 and will be amortised over the expected life of the loan. Differences relating to buildings 16 803 16 681 17 249 Gains/loss account 10 417 10 084 12 605 In addition, the Bank’s equity and related capital comprises perpetual capital bonds Differences relating to securities -62 696 -5 441 0 which were issued in December 2005. The amount is NOK 300 million and the interest Differences relating to pensions -21 377 -23 895 -18 405 rate is 3 months’ NIBOR, plus a margin of 100 basis points. The Bank has the option to Other differences 1 308 9 707 12 907 repay the loan in December 2015. Alternatively, the loan may be extended, at a higher Total temporary differences -55 545 7 136 24 356 cost. The cost pertaining to the establishment of the loan have been capitalised and Rate of tax applied 28% 28% 28% will be amortised over the life of the loan with NOK 300,000.- each year. Deferred tax (Deferred tax benedit) -15 553 1 998 6 820 21. ASSETS AND LIABILITIES AS AT 31.12.2008 IN NOK BROKEN DOWN BY DIFFERENT FOREIGN CURRENCIES Other Total NOK USD JPY EUR CHF currencies Assets: Cash-in-hand and claims on central banks 1 754 617 1 749 881 714 30 1 957 80 1 955 Loans to financial institutions with no agreed maturity 53 053 40 042 789 5 036 835 94 6 257 Loans to financial institutions with agreed maturity 35 000 35 000 Overdraft- and working capital facilities 5 941 408 5 883 080 5 228 1 147 51 952 1 Building loans 909 992 909 992 Repayment loans 18 593 572 17 616 410 44 912 370 050 549 237 12 963 Write downs on loans -135 195 -135 195 Repossessed assets 327 327 Sertificates, bonds, and equities 2 594 373 2 051 911 95 210 447 252 Fixed assets 131 737 131 737 Other assets 270 965 270 848 34 49 34 Total assets items 30 149 849 28 554 033 146 887 376 263 502 045 549 412 21 209

Other Total NOK USD JPY EUR CHF currencies interest % Liabilities: Liabilities to financial institutions with no agreed maturity 39 401 37 331 277 1 793 4,37 Liabilities to financial institutions with agreed maturity 1 620 006 1 620 006 5,60 Deposits from customers with no agreed maturityd 6 954 643 6 891 987 40 537 390 14 396 104 7 229 3,88 Deposits from customers with agreed maturity 5 981 710 5 754 785 220 691 6 234 6,30 Certificates and other short-term borrowings 794 597 794 597 5,90 Bond debt 11 467 313 11 467 313 6,86 Other liabilities 695 689 695 689 0,00 Subordinated loan capital 697 564 697 564 4,92 Equity 1 898 926 1 898 926 0,00 Total liabilities items 30 149 849 29 858 198 261 228 390 14 673 104 15 256

The interest is the effective rate of interest as at 31.12.08

22. PRIMARY CAPITAL CERTIFICATES (PCCs) (Issue Nb. 6001502)

The 20 largest PCC holders as at 31.12.08 NAME Number of % of total NAME Number of % of total PCCs held PCC capital PCCs held PCC capital 1. Sparebankenstiftelsen DnB NOR 62 300 4,98 11. Birkenes Sparebank 20 000 1,60 2. Glastad Farsund AS 46 250 3,70 12. Flekkefjord Sparebank 15 800 1,26 3. Sparebank 1 SR-Bank Finansavd. 37 497 3,00 13. Hol Sparebank 15 000 1,20 4. Terra Utbytte VPF 33 900 2,71 14. Strømme Leif 13 400 1,07 5. Varodd AS 32 800 2,62 15. Bratland Bjørn 12 800 1,02 6. Sparebanken Sør 31 600 2,53 16. Allumgården 12 350 0,99 7. Brøvig Holding AS 27 000 2,16 17. Engelschiøn Marwell Hauge pensj. 10 500 0,84 8. Spareskillingsbanken 26 600 2,13 18. Mørch Gerd Turid 10 200 0,82 9. Gumpens Auto AS 26 350 2,11 19. Pareto AS C/O Pareto Forvaltning 10 150 0,81 10. MP Pensjon 26 000 2,08 20. Akselsen Carsten 10 050 0,80 Total - 10 largest PCC holders 350 297 28,02 Total - 10 largest PCC holders 480 547 38,43

Sparebanken Pluss does not hold any of its own PCCs at the end of the year. As at 31.12.08, the PCC-capital totalled NOK 125 million, made up of 1,250,000 certificates, each of a nominal value of NOK 100. Auditor´s report from the report control committee for 2008 for 2008

We have audited the annual financial statements of Sparebanken Pluss as of 31 The Control Committee has monitored the Bank’s operations, making sure December 2008, showing a profit of NOK 154 999 816. We have also audited that these operations have been conducted in accordance with the rules and the information in the Directors’ report concerning the financial statements, the regulations contained in the Savings Banks Act, the Bank’s bylaws, the Board going concern assumption, and the proposal for the allocation of the profit. The of Trustees’ resolutions and other rules and regulations to which the Bank has financial statements comprise the balance sheet, the statements of income and to adhere. cash flows and the accompanying notes. The regulations of the Accounting Act and accounting standards, principles and practices generally accepted in Norway The Control Committee has reviewed the minutes of the Board of Directors’ have been applied in the preparation of the financial statements. These financial meetings and also examined various matters in compliance with the Savings statements and the Directors’ report are the responsibility of the Bank’s Board Banks Act and the instructions applying to the Control Committee. of Directors and Chief Executive Officer. Our responsibility is to express an opinion on these financial statements and on other information according to the At its meeting on 10 March 2009, the Control Committee examined the annual requirements of the Norwegian Act on Auditing and Auditors. report from the Board of Directors, the profit and loss account and balance sheet, with notes to the accounts, as well as the auditor’s report, and has no comments We conducted our audit in accordance with laws, regulations and auditing to make in that connection. standards and practices generally accepted in Norway, including the auditing standards adopted by the Norwegian Institute of Public Accountants. Those The Control Committee would like to recommend that the profit and loss account standards and practices require that we plan and perform the audit to obtain and balance sheet are adopted as the Bank’s annual financial statement for reasonable assurance about whether the financial statements are free of material 2008. misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Kristiansand, 10 March 2009 To the extent required by law and auditing standards, an audit also comprises a review of the management of the Bank’s financial affairs and its accounting and internal control systems. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, Tor Emil Tellefsen • the financial statements have been prepared in accordance with laws and Chariman regulations and present fairly, in all material respects the financial position of the Bank as of 31 December 2008, and the results of its operations and its cash flows for the year then ended, in accordance with accounting standards, principles and practices generally accepted in Norway • the Bank’s management has fulfilled its duty to properly record and document the Bank’s accounting information as required by law and generally accepted Greta Hilding Olav Eivindson bookkeeping practice in Norway • the information in the Directors’ report concerning the financial statements, the going concern assumption, and the proposal for the allocation of the profit is consistent with the financial statements and comply with law and regulations.

Kristiansand, 26 February 2009

Øystein A. Kvåse (sign.) State Authorised Public Accountant (Norway)

Note: The translation to English has been prepared for information purposes only. Returadresse: Sparebanken Pluss Postboks 200, B 4662 Kristiansand

Hovedkontor: Rådhusgt. 7/9, Postboks 200, 4662 Kristiansand Telefon: 38 17 35 00 Telefax: 38 17 35 04 [email protected]

Head Office: Rådhusgt. 7/9, P.O.Box 200, N-4662 Kristiansand, Norway Telephone: +47 38 17 35 00 Telefax: +47 38 17 35 04

www.sparebankenpluss.no