Capital Markets DayQ1 2008 & Strategic Update

CEO Jon Ledaal

2

Agenda

1 Sandnes Sparebank and our market

2 Financial information

3 The future

3

Update on the fundamentals

• Fundamental conditions in the Norwegian economy remain good. – GDP-growth high yet again in 2007 but it is expected to decline somewhat in

2008. – Uncertainty primarily caused by weak development in the US and unrest in the

financial markets.

• Even though Norwegian financial institutions are not directly affected by the international financial unrest, all Norwegian players are exposed to a significant rise in the risk premium when taking up new funding.

– Will gradually be reflected in a higher risk premium to be paid by the customers.

• Competition in the financial industry is increasing in most areas. – New niche players are establishing themselves, and at the same time global

players and existing competitors are increasing their activities. – Higher demands and expectations from customers, combined with

technological changes, also make tough demands on the bank’s ability to be innovative and to adjust.

– The tight labour market means that the tough competition for competent labour will continue.

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Well positioned in an attractive region

• The Norwegian economy has enjoyed four years of buoyancy

• Moderate import prices and higher export prices significantly increased Norway's disposable income

• Household's purchasing power up

• Companies have enjoyed better profitability and increased investment ability

• Rogaland recorded the highest population growth in the country, + 1,7% in 2007.

• Full time unemployment rate was 1,0% at end of 2007 in Rogaland.

• Rogaland is Norway's most expansive county based on the extensive petroleum activity and the offshore supply industry.

• The region's ability to attract labour will be an important element in the future progress

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Agenda

1 Sandnes Sparebank and our market

2 Financial information

3 The future

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Corporate structure

100% 91% 100% 55%

Real estate agents

7

Controlled development in total assets

• Total assets reduced from NOK 32,5 bn to NOK 30,3 bn.

• Mainly due to liqudity adjustments after YE 07

• Net-booked structured deposits of NOK 11,8 bn. not included

• Reduced growth rate in Q1

• Deposits up 2,7%

• Lending up 2,1%

0

5

10

15

20

25

30

35

2003 2004 2005 2006 2007 31.03.2008

Total assets Lending Deposits

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Pre-tax profits

• Down from NOK 58,9 to NOK 52,2 mill.

• Affected by turbulence in capital markets

– Reduced income from savings related products

– Mark-to-market of financial assets

• Underlying core profits in line with last year

0255075

100125150175200225250275300325

2003

2004

2005

2006

2007

31.03

.200

4

31.03

.200

5

31.03

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6

31.03

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7

31.03

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8

0,00 %

0,20 %

0,40 %

0,60 %

0,80 %

1,00 %

1,20 %

1,40 %

1,60 %

1,80 %

2,00 %

Profit before tax % of average total assets

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Net interest income

• Up by 13,7% and MNOK 13,9 from last year.

• Margin fallen from 1,58% at YE 07 to 1,49%.

• Increased funding costs will materialize over time

• Lending margins raised by 20 - 50 bp in 2008

– Late January and April

• Net interest income from lending secured by structured deposits will decrease over the next two to three years.

– Current business needs to be replaced by other activities over time

050

100150200250300350400450500

2003

2004

2005

2006

2007

31.03

.200

4

31.03

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5

31.03

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31.03

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7

31.03

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8

0,00 %

0,50 %

1,00 %

1,50 %

2,00 %

2,50 %

3,00 %

Net interest income % of average total assets

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Other income

• A continued and strong focus over time in the organization

• Reduction of MNOK 16,3 mainly linked to

– MTM of financial assets (MNOK -8,9)

– Commission from cross-selling (MNOK -4,5)

– Reduced income from real estate brokerage and sale of controlled company

• Reasonable to expect volatility going forward based on project availability and more challenging financial markets

0

25

50

75

100

125

150

175

200

225

2003

2004

2005

2006

2007

31.03

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31.03

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0,00 %

0,20 %

0,40 %

0,60 %

0,80 %

1,00 %

1,20 %

1,40 %

1,60 %

1,80 %

2,00 %

Other income % of average total assets

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Other operating costs

• Cost/income ratio of 63%

– Negatively affected by the reduction in other income

• Operating costs in line y-o-y (up by MNOK 2,8) 0

50

100

150

200

250

300

350

400

2003

2004

2005

2006

2007

31.03

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31.03

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0,00 %0,20 %0,40 %0,60 %0,80 %1,00 %1,20 %1,40 %1,60 %1,80 %2,00 %

Operating costs % of average total assets

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A strong loss history over time

• Net losses of MNOK 1,2 posted in Q1

• Non-performing loans of MNOK 34,8

• Equals 0,13% of gross lending

• Loss history underlines a strong and focused credit culture combined with strong economical surroundings -15

-10

-5

0

5

10

15

20

25

30

35

40

2003

2004

2005

2006

2007

31.03

.200

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31.03

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31.03

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6

31.03

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31.03

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8

-0,20 %

-0,15 %

-0,10 %

-0,05 %

0,00 %

0,05 %

0,10 %

0,15 %

0,20 %

0,25 %

0,30 %

0,35 %

0,40 %

0,45 %

0,50 %

Losses % of average total assets

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Loan book diversification – focused on real estate financing

Total lending book NOK 26,1 mrd.

Commercial real estate NOK 7,0 mrd

Service 2 %

Industry 2 %

Construction 1 %

Farming 1 %

Transport 0 %

div 0 %

Trade 3 %

Commercial real estate 29 %

Retail 58 %

Fish farming 1 %

Investments 3 %

Income producing residentials 8 %

Shopping centers 3 %

Owner-occupied commercials 13 %

Pre-sold appartmentprojects 19

%

Cooperatives 3%

Income producing commercials 53 %

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Retail portfolio

Residential 80-100%14 %

Residential 60-80%17 %

Residential < 60%51 %

Other14 %

Blanco4 %

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Funding platform

49,0 %

54,7 %49,6 %

44,0 % 44,1 %

49,5 %

0 %

10 %

20 %

30 %

40 %

50 %

60 %

2003 2004 2005 2006 2007 2008

Senior Bonds (FRN)30 %

CD's17 %

Fixed Maturity Deposits9 %

Bilaterale loans3 %

Schuld Schein5 %

Bank Syndication16 %

Senior Bonds 15 %

Subordinated bonds (tier 2)

3 %Subordinated bonds (tier

1)1 %

Index linked bonds1 %

•Deposit to loan ratio •External funding platform

•Rating relationship with DBRS terminated after they closed down Euro Office

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Funding platform and short-term maturity structure

• Available liquidity of NOK 4,0 bn. • Bank syndicates on the way to be refinanced for 2,5 years

0

500

1.000

1.500

2.000

2.500

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

MN

OK

Senior bonds CP's Index bonds Bank syndicates Sculd Schein

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Sound capital foundation

9,8 %8,8 %

8,1 % 8,3 % 8,5 %

2,5 %

2,0 %2,3 % 2,3 % 2,0 %

0,00 %

2,00 %

4,00 %

6,00 %

8,00 %

10,00 %

12,00 %

14,00 %

2004 2005 2006 2007 31.03.2008

Tier 1 Tier 2

• Capital adequacy ratio: 10,5 %

• Core capital ratio: 8,5 %

• Subordinated tier 1 bond (NOK 200 mill.) is part of core capital

• Basel II

– standardized approach from Q1 2008

• 46% of investors chose new PCC's as substitute for cash dividends

• Effect from May 2008

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Ownership and structure

• As a Norwegian savings bank, SSB has a specific ownership status.

• It is an independent foundation which has PCC bearers instead of stockholders or traditional owners.

• The main differences of PCCs compared to ordinary shares are that PCCs give ownership rights to specific parts of a bank’s capital, and that the governing bodies of a savings bank will have a broader representation than a commercial bank.

• The PCCs are quoted on the Oslo Stock Exchange. Ownership is diversified and the largest owner has 3,2% of the PCCs. The 20 largest PCC holders accounted for 27,6% of the PCCs as of Q1 2008.

OWNER No PCC Perc.FRANK MOHN A/S 216.665 3,2 %HELLAND A/S 185.000 2,8 %CLIPPER A/S 180.000 2,7 %KJELL MADLAND 178.068 2,7 %MORTEN CHRISTENSEN INVEST AS 174.130 2,6 %

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PCC – 14% effective yield on SADG

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2

4

6

8

10

12

14

16

18

20

26.10

.199

519

9519

9619

9719

9819

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0020

0120

0220

0320

0420

0520

0620

07

05 20

08

0

100

200

300

400

500

600

700

800

Dividends SADG index

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Agenda

1 Sandnes Sparebank and our market

2 Financial information

3 Strategic update

21

Strategic update

• SSB has a position well suited to meet the increased level of competition.

• The Bank has proved over many years a considerable ability of adjustment and will.

• The Bank has over time managed the combination of cost effective management with continuously increasing the level of competence and expansion of the business when it comes to the number of products and services offered. The composition of the profitability has also changed substantially.

• SSB has through some years systematically emphasized the use of a unique customer data base in the development of its products and services.

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The road ahead

• Consistent strategy – ”executing for our clients”

• Continued emphasis on quality people and infrastructure to support future growth

• Continued emphasis on income diversification in addition to margin improvement in core banking operations

• Remain opportunistic and adaptable

• Uncertainty related to the future credit spread and intensified competition can put further pressure on net interest income.

• Our portfolio of lending with collateral in structured deposits will decrease but will be replaced by other activity over time.

• Viewed overall, we expect that 2008 will be a good year for the group.

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The history and future direction in brief

Sandnes Sparebank has with success realized strong

growth

Sandnes Sparebank still sees good

growth opportunities and our goal is to

further capitalize on our position

• SSB has had a continued strong and profitable growth since 1994.

• The growth has been based on strong development of the bank itself - and an attractive and rapidly growing market.

• Return on equity has been good, but strong growth has created the need for additional capital over time.

• The macroeconomic prospects for continued growth are good in general and specifically within the bank’s main market area.

• but, uncertainty about the final impact of current market turbulence.

• SSB still has growth ambitions and to further strenghten our position in the region.