Helm Bank S.A. and Subsidiary Companies. Notes... · Helm Bank Cayman was notified by the Monetary...

Helm Bank S.A. and Subsidiary Companies

Financial Statements for the Six Months

Ended on December 31 and June 30, 2013

HELM BANK S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED ON DECEMBER 31 AND JUNE 30, 2013 (All amounts are expressed in million pesos plus one decimal, except for amounts in foreign currency, the exchange rates and the nominal and intrinsic value of the shares)

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1. ECONOMIC ENTITY AND MAIN ACCOUNTING POLICIES AND PRACTICES

Helm Bank S.A. (the Bank) is a private entity, with main domicile in the city of Bogota D.C.,

incorporated by means of Public Deed number 2152 dated July 31, 1963 of Notary 8 of the

Circle of Bogota D.C. By means of Resolution number 3140 of September 24, 1993 the Finance

Superintendence of Colombia granted the renewal of the operating license in a definitive

manner. The term established in the Bylaws is until July 10, 2062; however, it may be dissolved

or extended before said term. The corporate purpose of the Bank is to execute or perform all the

operations and agreements legally permitted for banking establishments of commercial nature,

subject to the requirements and limitations of Colombian law.

As of December 31, 2013 the Bank operated with 2,039 employees (2,150 in June 2013)

through 87 offices (87 in June 2013), of which 46 are located in Bogota D.C. and 41 in different

areas of the country.

By means of public deed No. 1576 dated July 16, 2010, granted in Notary 25 of the Circle of

Bogota, the merge by integration and absorption was formalized, under which Helm Bank S.A.,

absorbed Helm Leasing S.A. Compañia de Financiamiento, a company dissolved without being

liquidated. On July 19, 2010 the registration of the merger’s deed was made in the

corresponding trade registry before the Chamber of Commerce of Bogota.

Relevant events – From July 1, 2013 until the date of issuance of the Financial Statements, the

relevant events detailed below have occurred:

The Finance Superintendency of Colombia by means of Resolution 1370/2013, stated it

had no objection to the acquisition by Banco CorpBanca Colombia S.A of 100% of the

outstanding shares as well as of the preferred shares as to dividend of Helm Bank S.A., by

means of three successive operations: The first one performed by Banco Corpbanca on

August 6, the second one performed on August 29 and the third operation, consisting in a

public takeover offer (PTO) up to 100% of the 571,749,928 non-voting preferred shares

issued by Helm Bank S.A., which was performed on December 21, 2013.

Consequently, on August 6, 2013 Banco CorpBanca Colombia S.A. made the payment for

a sum of $1,286,023,381,722.93 Colombian pesos (USD 682,878,115) in favor of several

selling shareholders of Helm Bank S.A., achieving with it a 51.60% interest over the total

of shares issued and outstanding (including common and non-voting preferred shares)

equivalent to 58.89% of the total of common shares of said financial entity, and achieving

through it an indirect interest in Helm Fiduciaria S.A., Helm Comisionista de Bolsa S.A.,

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both financial sector entities incorporated in Colombia; Helm Bank Panama S.A., Helm

Casa de Valores Panama, financial sector entities incorporated in Panama; and Helm Bank

Cayman, resulting in control situation over these companies.

On August 29, the Bank performed a second payment for a sum of $892,356,012,382.24

Colombian pesos (USD 473,840,834) in favor of several selling shareholders of Helm

Bank S.A., achieving in that way an in increase in its interest to 87.42% of the total of

shares issued and outstanding (including common and non-voting preferred shares)

equivalent to an approximate 99.75% of the total of common shares of Helm Bank S.A.

By means of Directors’ meeting minutes dated August 2, 2013, the decision to voluntarily

wind-up the company Helm Bank S.A. (Cayman) was made and by means of minutes dated

August 5, 2013, the Shareholders’ Assembly appointed the company KPMG Cayman as

the liquidators of the entity. Currently, the wind-up process is being carried out, which is

expected to conclude during the course of 2014.

The General Shareholders’ Assembly of the bank, in the meeting held on November 1,

2013 (Minutes No. 115), determined the change of the Statutory Auditor of the entity,

being the new appointed firm, the company Deloitte & Touche Ltda.

The performance by Banco Corpbanca Colombia S.A., from December 21, 2013 of a

Public Takeover Offer (PTO) for the non-voting preferred shares issued by Helm Bank

S.A.

The receipt in December 2013, of information by the major shareholder CorpBanca, a

Chilean financial entity, regarding offers for the consolidation of its business in Chile and

abroad with banking operators with recognized prestige, which offer is currently being

analyzed in order to eventually define counterparty and the structure for the operation.

As of December 31 and June 30, 2013 the Bank operated with 2,039 and 2,150 employees

respectively, through 87 offices, of which 46 are located in Bogota D.C. and 41 in different

parts of the country.

Helm Fiduciaria S.A. is a “sociedad anónima” incorporated under the laws of the Colombia,

company providing financial services, whose corporate purpose consists on the performance of

the trust business entrusted to it and in general the performance or execution of all the

operations legally permitted to trust companies subject to the requirements, restrictions and

limitations imposed by the laws of the Republic of Colombia. Helm Bank S.A. directly owns

99.98072% of this subsidiary company.

The corporate purpose of Helm Bank Cayman is to provide financial services without

restrictions. It may carry out banking business of any kind, except with customers of the

Cayman Islands, pursuant to the rules of said Islands. Helm Bank S.A. directly owns 100% of

this subsidiary company.

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In accordance to the Minutes of the directors’ meeting held on August 2, 2013, the Management

Council approved the voluntary wind-up of Helm Bank Cayman, the delivery of its Class “B”

license, issued pursuant to the Banks and Trust Companies Law of the Cayman Islands.

Helm Bank Cayman was notified by the Monetary Authority of the Cayman Islands of the

acceptance on the assignment of its Class “B” shares and Trust License. In the minutes of

directors’ meeting held on August 5, 2013, KPMG Cayman was approved as liquidator.

Helm Bank Panama S.A. is organized pursuant to the laws of the Republic of Panama and

operates since April 15, 1998 in said place with an international license granted by the Banking

Superintendency by means of Resolution 22-97 dated October 17, 1997, which authorizes it to

carry out the banking business abroad. Helm Bank S.A. directly owns 100% of this subsidiary

company.

Helm Comisionista de Bolsa S.A. pursuant to its corporate purpose, performs the activities

corresponding to a stockbroker firm subject to the legal requirements and particularly to those

established in Resolution No. 400/1995 (Sole Resolution), issued by the Finance

Superintendency (formerly known as the Superintendency of Securities), has an interest of

100% in the company Helm Casa de Valores Panama, an entity dedicated to the purchase and

sale of securities under the laws of the Republic of Panama. Helm Bank S.A. owns both directly

and indirectly, 99.996529% of Helm Comisionista de Bolsa.

As of December 31 and June 30, 2013, the value of the assets, liabilities and income of the

semester of the Parent Company and Subordinated companies included in the consolidation is

the following:

December 31

Asset

Liability

Equity

Semester’s

Income

Helm Bank S.A. (Parent

Company) (1) $ 12,984,913.0 $ 11,476,934.1 $ 1,507,978.9 $ 54,556.7

Helm Fiduciaria S.A. 46,224.6 4,492.5 41,732.1 1,340.2

Helm Comisionista de Bolsa

S.A. 22,681.5 2,398.2 20,283.3 462.6

Helm Bank Cayman S.A. 51,357.1 2,953.3 48,403.8 609.0

Helm Bank Panama S.A. 1,956,374.7 1,814,135.8 142,238.9 2,633.0

Total $ 15,061,550.9 $ 13,300,913.9 $ 1,760,637.0 $ 59,601.5

Consolidated $ 14,804,730.2 $ 13,296,359.0 $ 1,508,371.2 $ 50,608.8

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June 30

Asset

Liability

Equity

Semester’s

Income

Helm Bank S.A. (Parent

Company) (1) $ 12,671,976.4 $ 11,221,216.5 $ 1,450,759.9 $ 109,518.2

Helm Fiduciaria S.A. 45,380.4 5,290.1 40,090.3 4,454.3

Helm Comisionista de Bolsa

S.A. 30,574.3 12,342.5 18,231.9 1,506.4

Helm Bank Cayman S.A. 450,088.8 394,452.9 55,635.8 3,598.9

Helm Bank Panama S.A. 1,587,726.7 1,449,188.4 138,538.3 11,241.6

Total $ 14,785,746.6 $ 13,082,490.4 $ 1,703,256.2 $ 130,319.4

Consolidated $ 14,520,736.8 $ 13,071,548.1 $ 1,449,188.7 $ 92,616.5

(1) The information of the parent company includes its interest in the subsidiaries’ results, after the

corresponding eliminations and not including the minority interest.

Consolidated and Basic Accounting – The accounting policies and preparation of the financial

statements of the Bank and its local Subsidiary companies, are established by the Finance

Superintendence of Colombia and if there is any matter not provided in them, then the generally

accepted accounting principles in Colombia are applied pursuant to Decree 2649/1993.

Foreign subsidiary companies included in the consolidated financial statements are governed by

the accounting rules in force in the countries where they operate. For the purposes of the

consolidation, adjustments and reclassifications were performed in order to adapt them to the

rules established by the Finance Superintendency. These adjustments are not representative for

the purposes of the financial statements taken as a whole.

The results and balance sheet accounts of the foreign subordinated companies are converted to

Colombian pesos at the market representative rates of $1,926.83 per US$1 as of December 31,

2013 and $1,929.0 per US$1 as of June 30, 2013.

Intercompany accounts and transactions are eliminated in the consolidation of the financial

statements.

Basis of presentation – The financial statements have been prepared from accounting records,

kept under the historical cost method, modified in accordance with the legal standards to

acknowledge the effect of inflation only on certain non-monetary accounts of the general

balance sheet, including equity, until December 31, 2000.

Relative importance criterion – An economic event has a relative importance when, due to its

nature or amount, its awareness or lack of awareness of it, taking into account the circumstances

around it, may significantly alter the economic decisions of the users of the information.

The financial statements detail the specific amounts pursuant to the legal standards or those

representing five percent or more of the asset, liability, the equity and of the income, as the case

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may be. Inferior amounts are described when it is considered that it may contribute to a better

interpretation of the financial information.

Maturity of assets and expiration of liabilities – The maturity of assets of the Bank and its

Subordinated companies, in general, is framed according to the terms granted or agreed, such as

the loan portfolio, accounts receivable, investments and short, medium and long term deposits.

a. Transactions in foreign currency – With the approval of the Finance Superintendency, the

banks are authorized to manage bank accounts in foreign currency and other funds necessary

for the development of their operations. Transactions in foreign currency are performed

pursuant to current legal standards and are recorded at the exchange rates applicable on the

date of their occurrence. The balances denominated in foreign currency are expressed in

Colombian pesos at the market representative rates of $1,926.83 per US$1 as of December 31,

2013 and $1,929.0 per US$1 as of June 30, 2013. The differences in the exchange are

attributed to the corresponding asset and reflected in results, as the case may be.

b. Cash and cash equivalents – Cash and cash equivalents include the deposits in checking

accounts in Banco de la Republica in compliance with legal provisions on cash reserves,

monetary contraction deposits and deposits in foreign banks.

c. Assets from money market and related transactions - This item records the ordinary

interbank funds sold placed by the Parent Company and its Subordinated companies, using

the excesses in liquidity, with or without investment or loan portfolio guaranties, with

terms lower than 30 calendar days. Likewise, it records the so called "over-night"

transactions performed with foreign banks, using the funds of the Bank and its

Subordinated companies, deposited in foreign financial entities.

The operations not paid within the term stated are included in the loan portfolio.

Interbank funds are performed with first-rate entities.

Likewise, this amount records the transfer commitments in repurchase operations by means

of which the Bank and its subordinated companies acquire securities, in exchange for the

payment of an amount of money, assuming the commitment of transferring again the

ownership to the transferor the same day or in a subsequent date, at a determined price,

securities of the same type and features.

An open repurchase is the one by means of which it is established that the securities subject

to the repurchase operation are not immobilized. In this event, the transfer of the ownership

may be performed over securities of the same type and features.

A closed repurchase is the one by means of which the securities subject to the operation are

agreed to be immobilized, reason why the transfer commitment of the ownership must be

performed over the same immobilized securities, unless the replacement of such securities

is expressly established. The repurchase or repo operations are presumed closed unless

otherwise agreed.

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d. Investments – Includes the investments acquired by the Bank and its Subordinated

companies in order to maintain a secondary liquidity reserve, to acquire the direct or

indirect control of any company of the finance or technical services industry, to comply

with legal and regulatory provisions, or with the exclusive purpose of eliminating or

significantly reducing the market risk which the assets, liabilities and other items of the

financial statements may be subject to.

The accounting record and the disclosure of the investments is performed individually at

the fair exchange price, by which any security may be traded on a fixed date, pursuant to its

particular features and within the prevailing conditions in the market on such date. The fair

exchange price established corresponds to that by which a purchaser and a seller,

sufficiently informed, are willing to trade the corresponding security. The valuation and the

accounting records of the investments are performed on a daily basis.

The fair exchange price is considered as the one determined by the suppliers of prices or by

means of authorized methodologies by the Finance Superintendency of Colombia. As of

June 30, 2013, the Bank implemented Circular Letters 039 and 050 of 2012 for the

valuation of the investments using the price provided by Infovalmer as official supplier.

Classification and valuation – Investments are classified as explained below and are

represented in securities: 1) of debt and 2) equity securities. The first ones grant the

capacity as creditor of the issuer. The equity securities grant the capacity as co-owner of

the issuer and include mixed securities coming from securitization processes that

simultaneously acknowledge credit and interest rights.

The way in which the different kinds of investment are classified, valued and recorded is

indicated below:

Classification Term Features Valuation Accounting

Trading Short term Securities acquired in

order to obtain profit

from price

fluctuations.

Prices, reference rates

and/or margins calculated

and published on a daily

basis by the Colombian

Stock Exchange and other

price providers authorized

by the Finance

Superintendency are used.

The difference between the current

market value and the immediately

preceding is recorded as a higher

or lower value of the investment

and its counterpart affects the

income/(loss) for the period.

Held to

maturity

Until

maturity

Securities respect of

which the Bank has a

serious purpose and

the legal, contractual,

financial and

operational capacity

to keep them until the

expiration of their

term.

Exponentially from the

internal return rate

calculated at the time of the

purchase.

The present value is recorded as

the greater value of the investment

and its counterpart is recorded in

the income/(loss) for the period.

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Available for

sale – debt

securities

6 months After the 6 months,

they can be

reclassified in the

previous categories.

Prices, reference rates

and/or margins calculated

and published on a daily

basis by the Colombian

Stock Exchange and other

price providers authorized

by the Finance

Superintendency are used.

The exchanges occurred in these

values are recorded pursuant to the

following procedure:

• The difference between the

present value of the valuation

day and the immediately

preceding is recorded as a higher

value of the investment with

credit to income/(loss) accounts.

• The difference between the

market value and the present

value is recorded as an

unrealized income or loss

accrued, within the equity

accounts.

Available for

sale – equity

securities

Without Securities with low or

minimum

marketability,

unlisted, kept by the

Bank in its capacity

as controlling or

parent company.

Investments on equity

securities are valued on a

monthly basis and their

income/(loss) are recorded

with the same frequency, as

follows:

Low or minimum

marketability or unlisted

are increased or reduced in

the interest percentage of

the equity variations,

subsequent to the

acquisition of the

investment, calculated

based on the last certified

financial statements.

Low or minimum marketability or

unlisted:

The difference between the market

value or the updated value of the

investment and the value by which

the investment is recorded is

included as follows:

• If superior, in first instance

reduces the provision or de-

valorization until it is exhausted,

and the excess is recorded as

surplus for valuation.

• If inferior, it affects the surplus

for valorization until exhausting

it, and then the excess is

recorded as de-valuation.

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The acquisition cost is

increased or reduced in the

interest percentage

corresponding to the Bank

over the subsequent

variations of the issuer’s

corresponding equity.

For said purpose, the

variation in the issuer’s

equity is calculated based

on the certified financial

statements, as of June 30

and December 31 of each

year. However, upon

release of more recent

certified financial

statements, they are used to

establish the variation

mentioned. The Bank has a

maximum term of three (3)

months following the cut-

off date of the financial

statements, in order to

perform the relevant

update.

When dividends or income are

distributed in kind, including those

from capitalization of the equity

re-valuation account; the part

which had been recorded as

surplus for valuation is recorded as

income, with charge to the

investment and the surplus is

reversed. In cases of cash

dividends or profits, the value of

the surplus for valuation is

recorded as income, said surplus is

reversed, and the amount of the

dividends exceeding it will be

recorded as a lower value of the

investment.

Medium marketability

based on the average price

determined and published

by the stock markets, in

which it is listed. Said value

corresponds to the weighted

average price by the

amount traded in the last

five days in which there

have been negotiations.

• High and Medium

Marketability

The update of the market value of

the securities with high or medium

marketability listed in

internationally recognized foreign

stock exchanges is recorded as an

unrealized profit or loss accrued,

within the equity accounts, with

credit or charge to the investment.

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If the shares are traded in

local stock markets; and the

simple average price of the

last five days in which there

have been trades, if the

shares are traded in foreign

stock markets.

High marketability based

on the last daily weighted

average price for the trade

published by the stock

market.

The dividends or income

distributed in kind or in cash,

including those from the

capitalization of the equity

revaluation account, are recorded

as an income up to the amount that

has been recorded as unrealized

accrued profit during the year to

which the profits and revaluation

of the equity paid corresponds,

with charge to the latter. The

collection of the dividends in cash

is recorded as a lower value of the

investment.

The investments listed in foreign stock markets are valued by the closing price or, failing

this, the most recent quotation reported by the stock market in which it is traded, during the

last five days, including the valuation day. In the event that there is no closing price or

quotation during said period, these are valued by the average of the quotes listed during the

last 30 trading days, including the valuation day.

In the events in which the security is traded in several stock markets, the average of the

corresponding closing prices or quotes is taken, subject to those rules established in the

previous section.

The price of the relevant security will be converted to legal currency, using for said

purpose the market representative rate (MRR) calculated on the valuation day.

In cases in which there have been no quotations during the last 30 trading days, the

procedure is that according to the rules provided for the equity securities not listed in the

stock exchange using as purchase price, the last price of valuation recorded.

The stock exchange referred to, must be those that are members of the World Federation of

Exchanges (WFE). Otherwise, the securities will be valued subject to the rules provided for

the equity securities not listed in the stock exchange.

Investment transfer rights – Corresponds to restricted investments that have been disposed

of and represent the collateral security of commitments, as the case may be, delivered in a

simultaneous or temporary transfer repurchase operation.

In the temporary transfer of securities, the delivery of the core values will generate the

payment of the returns by the receiver, which will be caused exponentially during the term

of the operation. Such returns are an income or an expense for each of the parties as

applicable.

In those operations of temporary transfer of securities in which money resources are

delivered as support for the operation, the payment of returns may be performed and in this

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case the same will be accrued exponentially during the term of the operation. Such returns

are recorded in the balance sheets of the parties and will be an expense or income for each

of them, as applicable.

Provisions or allowances for loan losses by credit risk rating -

Category Risk Characteristics Allowances

A Normal

They meet the terms agreed in the security and they have

an appropriate capacity of payment of capital and

interests.

Not

applicable.

B

Acceptable

, greater

than

normal

It corresponds to issues with uncertainty factors that

might affect the capacity to continue meeting properly

the debt services. Likewise, its financial statement and

any other available information have weaknesses that

may affect its financial situation.

The net value

cannot be

greater than

eighty percent

(80%).

C Appreciabl

e

It corresponds to issues with a high or medium

probability of default in the timely payment of capital

and interests. Similarly, its financial statements and any

other available information show deficiencies in its

financial situation that engage the recovery of the

investment.

The net value

cannot be

greater than

sixty percent

(60%).

D Significant

It corresponds to those issues with a breach under the

terms agreed in the security, and also its financial

statements and any other available information show

deficiencies in its financial situation, so that the

probability to recover the investment is highly doubtful.

The net value

cannot be

greater than

forty percent

(40%).

E Uncollectib

le

Issuers that according to their financial statements and

any other available information estimate that the

investment is uncollectible. Moreover, if there are no

financial statements certified from at least six months

from the date of valuation.

The net value

cannot be

greater than

zero percent

(0%).

Loan portfolio and financial leasing operations – It records the loans and leasing

agreements granted by the Parent Company and its Subordinated companies under the

various authorized modalities and the financial leasing operations. The resources used in

granting the loans come from resources owned by the public in the modality of deposits

and other external and internal funding sources.

The loans are recorded for the value of disbursement and the financial leasing operations

are recorded for the value of each of the entity’s assets, prior to the relevant agreement

delivered in lease to the user for its use.

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The value to be funded of the financial leasing operations is amortized with the payment of

the financial leasing rents in the part corresponding to the capital savings.

The structure of the loan portfolio and financial leasing operations are of three types:

Consumer - They are granted to natural persons whose purpose is financing the purchase of

consumer assets or the payment of non-commercial services, regardless of the amount.

Commercial - They are granted to natural or legal persons for the development of

organized economic activities other than activities of micro-businesses; and for housing

purchase by means of the housing leasing transactions.

Mortgage - They are granted to natural persons intended for the new or used housing

purchase, or for the construction of individual housing.

Frequency of assessment - The Bank and its Subordinated companies assess every six

months in May and November, the commercial portfolio; the result of this assessment is

recorded at the end of the following month in which it is made. The behavior of the entire

independent portfolio of its kind is updated and monitored every month.

Criteria for the credit risk assessment – The credit risk is defined as the possibility that an

entity incurs in losses reducing the value of their assets, as a result of the fact that the

debtors fail to timely comply or not comply with the terms agreed in the relevant

agreements.

The Bank and its Subordinated companies evaluate the portfolio based on the following

criteria: debtors’ and co-debtors’ ability to pay; financial situation, review of the main

financial indicators in comparison to the risk acceptance criteria defined by the Bank for

each sector, cash flow of the project pursuant to the updated and recorded financial

information, in addition to the use of historical macroeconomic variables such as growth

rate, exchange rate and inflation rate as support parameters of the projection assumptions;

debt service and fulfillment of the terms agreed; information coming from credit bureaus,

consolidated with financial sector and from other commercial information sources

available; the information related to the economic group is also considered.

Additionally, the Parent Company performs a follow up of the situation of the economic

sectors, in order to report changes in their ratings. In the cases in which deterioration is

detected in any specific sector, the companies in said sector will be analyzed, with the

purpose of evaluating the Global Risk.

Credit ratings with regional entities – Regarding the rating of the loans granted to regional

entities, the Bank and its Subordinated companies review and verify the fulfillment of the

different conditions established in Law 358/1997 and observe the following aspects:

The loans in which the territorial entities pledge income as guaranty are rated in

category “D”, when there are no adequate mechanisms to reasonably verify that the

same have not been pledged as guaranty of other obligations, the guaranteed loans with

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pledge of income resulting in insufficiency to cover the amount of the obligation and

when the territorial entity has given to the loaned resources a different purpose to that

established by the Law.

The guaranteed loans with pledge of income that have previously been committed as

guaranty of another obligation are rated in category “E”; the loans requiring

indebtedness authorization by the Ministry of Finance and Public Credit or by the

respective Department, without having such authorization and the loans granted to

territorial entities which having adopted performance plans, pursuant to the established

by Law 358/1997, having not obtained compliance. In these cases, provisions for 100%

of the obligations are constituted, without taking into account the guaranty.

Fiscal Mending Law 617/2000 – The Law, seeking to structurally correct the excess of

operating expenses of the territorial entities, established that the Nation would grant

guaranties to contracted obligations by the territorial entities with financial entities

supervised by the Finance Superintendency, when all the established requirements are

fulfilled; among others, that the fiscal adjustment agreements be executed before June 30,

2001. Such guaranty would be up to 40% for the current loans as of December 31, 1999

and up to 100% for the new loans destined to be fiscally adjusted.

Some characteristics of these restructurings are the following: reversal of the provisions

constituted under the obligations subject to restructuring for the portion guaranteed by the

Nation; the portion of the obligations subject to restructuring without a guaranty by the

Nation may maintain the rating they had on June 30, 2001.

Rules for the rerating of restructured loans– Any mechanism evidenced by means of the

execution of a legal business, having as purpose the amendment of the agreed-upon

conditions, in order to allow the debtor the adequate attention to its obligation is understood

as a loan restructuring. Novations are considered restructurings. Before restructuring a loan

it must be reasonably established as being recoverable under the new conditions.

The loans may improve the rating after being restructured only when the debtor shows a

regular and effective payment behavior.

Extraordinary restructurings – Loans with extraordinary restructuring are framed, among

others, within the following parameters: restructurings’ deadlines do not exceed seven

years for their full amortization, for the case of territorial entities the deadline is up to ten

years; the agreements are accompanied with a Management Convention in order to

guarantee the fulfillment of the restructuring agreement and the viability of the company; it

is considered as unsafe practice to reserve provisions or improve the rating of the

restructured debtors, when the viability or fulfilment of the restructuring agreement is not

duly demonstrated; when a restructuring agreement is breached it will be rated immediately

to the debtor in the last category before the restructuring or in a higher risk rating.

Restructurings of Law 550/1999 – With Law 550/1999 the business reactivation and

restructurings of companies and territorial bodies was promoted and facilitated. At the

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beginning of the restructuring negotiation, the Bank suspends applying interests on current

loans and maintains the rating they had on the date of the negotiation. However, if the

customer is classified in risk category “A”, it is reclassified at least to category “B” and

100% of the allowance for accounts receivable is constituted.

Restructurings of Law 1116/2006 – With Law 1116/2006 the business reactivation and

restructuring of companies and territorial bodies was promoted and facilitated. At the

beginning of the negotiation of restructuring, the Bank suspends to apply interest on current

loans and maintains the rating they had on the date of the negotiation. However, if the

customer is classified in risk category “A”, it is reclassified to at least category “C”.

Loans’ Write-offs– The Bank authorizes, prior the approval of the Board of Directors, the

write-off of loans for those loans that, according to the Management, are considered as un

collectible or of remote or uncertain recovery, after having exhausted the corresponding

collection actions, in accordance with the opinions issued by the internal and external

attorneys.

Valuation of guaranties – As of June 30, 2012, the regulation established by External

Circular Letter 043/2011 entered into force in relation with the procedure to be applied in

order to determine the guaranties’ value at the moment of their granting and their

subsequent update.

Type of guaranty Granting Follow-up

Properties used for

housing

Technical Appraisal

Validity : 1 year

Bogota: Readjusts the Rural and Urban

Property Valuation Index IVIUR.

Armenia, Barranquilla, Bucaramanga, Cali,

Cartagena, Cucuta, Florencia, Ibague,

Manizales, Medellin, Monteria, Neiva, Pasto,

Pereira, Popayan, Quibdo, Riohacha, Santa

Marta, Sincelejo, Tunja, Valledupar and

Villavicencio: annual readjustment of the

Property Valuation Index (IVP) published by

the National Administrative Department for

Statistics (DANE) for the respective city.

Other cities: national IVP

Property different of

housing

Technical Appraisal

Validity : 3 year

Technical Appraisal

Every 3 years

Machinery and

Equipment

New or under one year of

life: invoice purchase value.

Validity: 3 years

Older than one year of life:

Technical Appraisal

Every 3 years

- 22 -

Type of guaranty Granting Follow-up

Technical Appraisal

Validity : 3 year

Vehicles Classified in fasecolda: the

value of the respective

vehicle will correspond to the

value published in such

guide.

Not classified in fasecolda:

Commercial appraisal

information published by the

Ministry of Transportation or

applying the procedure

previously described for

machinery and/or equipment.

Classified in fasecolda: the value of the

respective vehicle will correspond to the value

published in such guide.

Not classified in fasecolda: Commercial

appraisal information published by the

Ministry of Transportation or applying the

procedure previously described for machinery

and/or equipment.

Securities

Chapter I of External

Circular Letter 100/1995, or

by using the value provided

by a price supplier for

assessment by the Finance

Superintendency of

Colombia.

Chapter I of the External Circular Letter

100/1995, or by using the value provided by a

price supplier for assessment by the Finance

Superintendency of Colombia

Exceptions – Credit establishments may choose not to make such appraisal, as long one of

the following assumptions is fulfilled:

The loan(s) deadline supported with the respective guaranty does not exceed three (3)

years and its value exceeds at least twice (2) the total of the outstanding balance of the

guaranteed loan(s).

The deadline to finish the payment of the guaranteed loan(s) is lower or equal to one

year.

The appraisal cost exceeds 10% of the value of the guaranteed loan(s) balance.

The guaranteed loan is 100% provisioned.

Allowances for Loan Losses – Reference Models – As of July 1, 2007 the Bank and its

Subordinated companies Helm Bank Cayman y Helm Bank Panama use the reference

model of commercial portfolio – MRC -, established in Annex 3 of the Basic Accounting

and Financial Circular Letter 100/1995 of the Finance Superintendency.

In 2009, the regulatory entity issued the External Circular Letter 035/2009 (amended by

External Circular Letter 054/2009) in which the structure of the current reference model for

- 23 -

commercial and consumer portfolio was amended. The current regulation since April 1,

2010, establishes two different methodologies for the calculation of provisions, the use of

one or the other depends on the periodic assessment of the indicators provided by the

regulation:

Methodology 1: Cumulative Stage

Methodology 2: Non-Cumulative Stage

Based on the regulatory provisions amended by the External Circular Letter 035, the Bank

assesses on a monthly basis the indicators established in the regulation to determine the

calculation methodology depending on which stage it currently is. As of the validity of the

regulation, the Bank is in currently in the Cumulative Stage.

Reference Model of Commercial Portfolio – MRC – Such model is based on segments,

differentiated by the level of the debtors’ assets:

Ranking of the Commercial Portfolio by Level of Assets Company size Level of Assets

Large Companies More than 15,000 current monthly legal

incomes

Medium-sized companies Between 5,000 and 15,000 current monthly

legal incomes

Small companies Less than 5,000 current monthly legal

incomes

The segmentation is performed with the value of the current monthly legal incomes of the

immediately preceding financial year. In 2013 this amount was of $616,000.

A category denominated “natural persons” was created to group all the natural persons who

are debtors of commercial loans.

Commercial portfolio agreements are classified in the following categories of credit risk

according to the default days and subjective conditions, as follows:

Components of the reference model of commercial portfolio – The estimation of the

individual allowance results from applying the following formula:

Individual Provision = CIP+CIC

Category Rank PUC AA Between 0 and 29 days A

A Between 30 and 59 days B

BB Between 60 and 89 days B

B Between 90 and 119 days C

CC Between 120 and 149 days C

Default Higher than 150 days D

E

- 24 -

• Where CIP: PEmatrix_A = PImatrix_A*PDI*E

Individual Allowance: Corresponds to the total value of provisions that must be constituted

according the credit risk of each debtor.

Individual Procyclical Component (hereinafter CIP): Corresponds to the portion of the

individual provision which reflects the credit risk of each debtor, in the present.

Individual Countercyclical Component (hereinafter CIC): Corresponds to the portion of the

individual allowance of the loan portfolios which reflects the possible changes in the credit

risk of debtors in moments in which the deterioration of such assets increases. This portion

is constituted in order to reduce the impact in the income statement when such situation

occurs. The internal reference models must take into account and calculate this component

based on the available information reflecting these changes.

The estimation of the expected loss results from applying the following formula:

Expected Loss = (Probability of Default) x (Asset exposure at the moment of default) x

(Loss due to default)

Where:

Probability of Default: Corresponds to the probability where, in a period of 12 months, the

debtors of a determined commercial portfolio fall into default.

Asset exposure at the moment of default: Corresponds to the current balance of principal,

interests, accounts receivable of interest and other accounts receivable of the commercial

portfolio’s obligations.

Loss due to default: Economic deterioration in which the entity will incur in case that any

of the following events of default occur:

• Commercial loans in default higher or equal to 150 days.

• Loans considered of treasury and in default.

• When consulting the central information systems, it is established that the debtor has

obligations that have been written-off, restructured or their deadlines extended in for

the payment of principal and/or interests.

• When the debtor is in an insolvency proceeding, extraordinary restructuring,

restructuring agreements pursuant to laws 550/1999, 617/2000 and 1116/2008, or any

type of judicial or administrative procedure that implies the management or forced

liquidation by the debtor.

- 25 -

The probability of default is defined according the following matrices:

Matrix A:

Category

Large

Company

Middle-size

Company

Small

Company

Natural

Person

AA 1.53% 1.51% 4.18% 5.27%

A 2.24% 2.40% 5.30% 6.39%

BB 9.55% 11.65% 18.56% 18.72%

B 12.24% 14.64% 22.73% 22.00%

CC 19.77% 23.09% 32.50% 32.21%

Default 100.00% 100.00% 100.00% 100.00%

Matrix B:

Category

Large

Company

Middle-size

Company

Small

Company

Natural

Person

AA 2.19% 4.19% 7.52% 8.22%

A 3.54% 6.32% 8.64% 9.41%

BB 14.13% 18.49% 20.26% 22.36%

B 15.22% 21.45% 24.15% 25.81%

CC 23.35% 26.70% 33.57% 37.01%

Default 100.00% 100.00% 100.00% 100.00%

The loss due to default (PDI) by type of guaranty is as follows:

Type of guaranty

PDI

Days after the

default

Days after the

default

New

PDI

Inadmissible collateral 55% 270 70% 540 100%

Subordinated credits 75% 270 90% 540 –

Financial collateral 0-12% 100%

Commercial and residential real

estate 40% 540 70% 1,080 100%

Assets given on real-state leasing 35% 540 70% 1,080 100%

Assets given on leasing other than

real-state 45% 360 80% 720 100%

Other collateral 50% 360 80% 720 100%

Collection rights 45% 360 80% 720 100%

Without collateral 55% 210 80% 420 100%

Countercyclical Component – Is the highest value between the CIC in the last period

affected by the exposure and the difference between the PEmatrix_B and the PEmatrix_A

at the moment of the calculation of the provision (t).

ConPEPEExp

ExpCIC tiAB

ti

ti

ti

,

1,

,

1, )(;*max

- 26 -

Is a mechanism (matrix A and B) by which the Finance Superintendency explicitly

provides countercyclical adjustments, so that in the periods of improvement in the credit

quality, higher provisions that necessary are constituted to compensate in part for the

allowance that must be constituted in periods of deterioration in the credit quality.

Once applied the above concepts the value of the allowance for the commercial portfolio is

determined, as follows:

The individual allowance of loan portfolio under the reference models is established as the

sum of the procyclical component plus individual component.

Individual Procyclical Component (hereinafter CIP): Corresponds to the portion of the

individual provision which reflects the credit risk of each debtor, in the present.

Individual Countercyclical Component (hereinafter CIC): Corresponds to the portion of the

individual provision of the loan portfolios which reflects the possible changes in the credit

risk of debtors in moments in which the deterioration of such assets increases. This portion

is constituted in order to reduce the impact in the income statement when such situation

occurs. The internal reference models must take into account and calculate this component

based on the available information reflecting these changes.

Calculation of allowances under Methodology 2 – Non-Cumulative Stage – The use of the

Methodology, non-cumulative stage, will depend on the periodic assessment of the triggers

and their entry or inapplicability and will also be subject to the determination of the bank

prior communication to the Finance Superintendency pursuant to the provisions of the

Basic Accounting and Financial Circular Letter 100/1995 in its Chapter 2, numeral

1.3.4.1.1.3. Special Rules.

In this methodology, the Individual Provision will be again equal to CIP+CIC; the methods

of calculation in the Non-Cumulative Stage are described as follows.

Individual Procyclical Component (CIP): For the portfolio whose ratified rating results in

A, this component will continue being equal to the PE calculated with Matrix A (Recession

Matrix), that is, the result obtained by multiplying the exposure of each obligation, the PI

of the Matrix A and the PDI associated to the debtor’s guaranty, pursuant to that

established in the corresponding reference model.

For the obligations or B, C, D and E rated portfolio, the CIP will be equal to the PE

calculated with Matrix B (Expansion Matrix).

Individual Countercyclical Component (CIC): In the Non-Cumulative Stage, the spirit of

the rule is allowing the accumulated countercyclical provisions during the Accumulation

In case of being higher than 1 it is assumed as 1

- 27 -

Phase to gradually become non-cumulative so as to soften the impact of provisioning the

rated portfolio using Matrix B. The CICi,t will be calculated based on the following

equation:

1,

,

1,,1,, 1*;maxti

ti

titititiExp

ExpCICFDCICCIC

Where tiFD , (Non-cumulative Factor) is given by:

mCIP

mtactive

ti

ti

ti PNRCIC

CICFD

*%40*

)(

1,

1,

,

Where,

mCIPPNR

: They are the net provisions of recoveries of the month related to the

individual cyclical component in the relevant portfolio modality (m).

)(

1,

tactive

tiCIC : It is the sum of the active obligations at the time of calculation of the

provision (t) in the relevant modality (m), of the balance of individual countercyclical

component thereof in (t-1).

0, tiFD , if negative, it is assumed as zero.

When 1,

,

tti

ti

Exp

Exp is assumed as 1

Consumer Portfolio Reference Model – MRCO -From July 1, 2008, the Bank and its

Subordinated companies Helm Bank Cayman and Helm Bank Panama use the consumer

portfolio reference model –MRCO-, set forth in Annex V of Chapter II of the Basic

Financial and Accounting Circular Letter of the Finance Superintendency.

Such model is based on segments, differentiated according to the products granted:

Consumer Portfolio Classification by Segments

Segment Destination

General – Automobiles: Loans granted for the acquisition of automobiles.

- 28 -

Consumer Portfolio Classification by Segments

Segment Destination

General – Others: Loans granted for the acquisition of consumer goods other than automobiles.

Credit Cards:

Revolving loan for the acquisition of consumer goods using a plastic card.

The consumer portfolio agreements are classified in the following credit risk categories,

thus:

Category

Attention to

debt

Risk Analysis Objective Conditions

Ability to pay Credit behavior

New Loans Whose

Rating at the time

of Granting is:

Rating Granted by

Applying the Methodology

of the MRCO Rating is

Equal to:

AA Excellent Optimal Excellent AA AA

A Adequate Appropriate Adequate A A

BB Acceptable Weaknesses BB BB

B Deficient Deficiencies Deficient B B

CC Insufficient Serious Deficiencies CC CC

Default

Default higher than 90 days

Obligations written off with the entity or the system

Insolvency proceeding or any type of judicial or

administrative process that involves the management or

compulsory liquidation of the debtor.

Rating Methodology – MRCO – For the debtors that at the time of rating do not belong to

the default category, the entities that use the MRCO must apply the following model

depending on the segment to rate. This model calculates a score, which is the product of the

particular characteristics of each debtor and is given by applying the following equation:

Where, Z varies according to the segment to which the debtor belongs. The ratings are set

out on this score according to the rating ranges described below.

In order to obtain the score of the debtors that belong to the different segments, the

following formulas are applied as follows:

General

Automobiles: 2505.0*5784.1*683.0*

4960.0*4605.5*7234.1*668.1*0205.3*855.1*779.2

CRBCACA

GIMMMMMMAMAMZ

MR

DCBCB

General

others:

1727.0*323.2*443.0*1328.0*

196.0*Pr428.3*450.1*437.1*602.3*023.2*9411.1

CRBCACAHipoteca

endaMMMMMMAMAMZ

MR

DCBCB

zeScore

1

1

- 29 -

Credit Cards:

277.0*470.2*748.0*

6.0*525.3*350.2*469.3*313.1*214.1*824.1

CRBCACA

PRAMAMMMMMMMZ

MR

CBDCB

CF –

Automobiles: 58.1*725.0*

9826.0*337.3*650.1*873.4*164.2*158.2*28.2

MR

CBDCB

CACA

GIAMAMMMMMMMZ

CF – Others:

216.0*418.1*496.0*

420.0*255.3*092.2*577.4*808.1*588.1*92.1

IPCACA

GIAMAMMMMMMMZ

MR

CBDCB

Where:

AMB (Current default between 31-60 days): It takes value 1, if the default height of the

customer at the time of rating for this type of loan in the entity is higher or equal to 31 days

and lower or equal to 60 days and zero if it is not.

AMC (Current default between 61-90 days): It takes value 1, if the default height of the

customer at the time of rating for this type of loan in the entity is higher or equal to 61 days

and lower or equal to 90 days and zero if it is not.

MMB (Maximum default between 31-60 days): It takes value 1, if the maximum default

height of the customer in the last 3 years in the entity and for this type of loan is higher or

equal to 31 days and lower or equal to 60 days and zero if it is not.

MMC (Maximum default between 61-90 days): It takes value 1, if the maximum default

height of the customer in the last 3 years in the entity and for this type of loan is higher or

equal to 61 days and lower or equal to 90 days and zero if it is not.

MMD (Maximum default higher than 90 days): It takes value 1, if the maximum default

height of the customer in the last 3 years in the entity and for this type of loan is higher 90

days and zero if it is not.

CRB (Active loans): It takes value 1, if the customer at the time of rating has other

consumer loans other than the segment active with the entity.

GI (Suitable guaranty): It takes value 1, if the customer does not have a suitable guaranty

associated with its loan.

Pledge (Pledged Guaranty): It takes value 1, if the customer has a pledge as a guaranty

supporting the operation and zero if it does not.

Mortgage (Mortgage guaranty): It takes value 1, if the customer has a mortgage as a

guaranty supporting the operation and zero if it does not.

- 30 -

PR (Prepayment): It takes value 1, if the customer at the time of rating does not have a

default higher than 30 days and if the installments received is significantly higher than

expected. It significantly implies that it is higher than 10% of the installments, as

applicable.

Variables of the annual behavior – For the construction of these variables, the default

heights reached by the customer within the relevant segment in the last previous three

quarter cut-off dates at the time of rating must be considered. A quarter cut-off date means

the months of March, June, September and December.

In order to make this calculation, each default weight must be assigned with the values

shown in the following table and, once assigned they must amount to:

Default Height Group Value

Default > = 0 days and < = 30 days 10




Default days > = 121 days 50

a. If the customer has the default information for the three quarters required, the variable

takes the following values:

CAR (Regular annual behavior): It takes value 1, if the sum of the values for the three

quarters is equal to 50 or 60 and zero if it is not.

CAM (Bad annual behavior): It takes value 1, if the sum of the values for the three

quarters is higher than 60 and zero if it is not.

b. If the customer has the default information for only two quarters required, the variable


CAR (Regular annual behavior): It takes value 1, if the sum of the values for both

quarters is equal to 30 or 40 and zero if it is not.

CAM (Bad annual behavior): It takes value 1, if the sum of the values for both quarters

is higher than 40 and zero if it is not.

c. If the customer has the default information for only one quarters required, the variable


CAR (Regular annual behavior): It takes value 1, if the value assigned to the quarter is

equal to 20 and zero if it is not.

CAM (Bad annual behavior): takes value 1, if the value assigned to the quarter is higher

than 20 and zero if it is not.

- 31 -

d. If the customer does not have the default information for any of the quarters required,

the variables CAR (Regular annual behavior) and CAM (Bad annual behavior), take

value zero.

Rating ranges – Based on the scores obtained by each of the models for each customer, it is

pursued to determine a rating in the new scale established. The cut-off points of each rating

in the score produced are as follows:

Rating General

automobiles General Others

Credit cards

AA 0.24840 0.3767 0.3735

A 0.68420 0.8205 0.6703

BB 0.81507 0.8900 0.9382

B 0.94941 0.9971 0.9902

CC 1 1 1

Components of the reference model – The estimate of the individual allowance results from

the application of the following formula:

Individual Allowance = CIP+CIC

Where CIP: PEmatrix_A = PImatrix_A*PDI*E

Individual allowance: It corresponds to the total value of the allowances that must be

formed according to the credit risk of each debtor.

Individual procyclical component (hereinafter CIP): It corresponds to the part of the

individual allowance that reflects the credit risk of each in the present.

Individual countercyclical component (hereinafter CIC): It corresponds to the part of the

individual allowance of the loan portfolio that reflects the possible changes in the credit

risk of the debtors when the impairment of said assets increases. This part is formed in

order to reduce the impact in the income statement when such situation arises. The internal

or reference models must take into account and calculate this component based on the

available information that reflects those changes.

The estimate of the expected loss results from applying the following formula:

Expected loss = (Probability of default) x (Exposure of the asset at the time of default)

x (Loss due to default)

Where:

Probability of default. It corresponds to the probability that, in a period of 12 months, the

debtors of a specified segment and rating of the consumer portfolio incur in default.

- 32 -

The probability of default is defined according to the following matrices:

Matrix A:

Category

General -

Automobiles

General –

Others

Credit

Cards

AA 0.97% 2.10% 1.58%

A 3.12% 3.88% 5.35%

BB 7.48% 12.68% 9.53%

B 15.76% 14.16% 14.17%

CC 31.01% 22.57% 17.06%

Default 100.00% 100.00% 100.00%

Matrix B:

AA 2.75% 3.88% 3.36%

A 4.91% 5.67% 7.13%

BB 16.53% 21.72% 18.57%

B 24.80% 23.20% 23.21%

CC 44.84% 36.40% 30.89%

Default 100.00% 100.00% 100.00%

Since December 31, 2011, the Bank adjusted the PDI of the type without guaranty, as

provided by the External Circular Letter 043/2011.

The loss given default (PDI) by type of guaranty is as follows:

Type of Guaranty

PDI

Days After

Default

New

PDI

Days After

Default

New

PDI

Inadmissible collateral 60% 210 70% 420 100%

Admissible financial collateral 0-12%

Commercial and residential real estate 40% 360 70% 720 100%

Assets given on real estate leasing 35% 360 70% 720 100%

Assets given on non- real estate leasing 45% 270 70% 540 100%

Other collateral 50% 270 70% 540 100%

Collection rights 45% 360 80% 720 100%

No collateral 75% 30 85% 90 100%

The exposed value of assets corresponds to the current balance of principal, interest and

other items.

Countercyclical component – It is the maximum value between the CIC in the previous

period affected by the exposure, and the difference between the PEmatrix_B and the PEmatrix_A

at the time of calculation of the allowance (t).

WithPEPEExp

ExpCIC tiAB

ti

ti

ti

,

1,

,

1, )(;*max

- 33 -

It is a mechanism (matrix A and B) by means of which the Finance Superintendency

explicitly considers countercyclical adjustments, so that in the periods of improvement in

the credit quality, higher allowances than necessary are formed to compensate in part those

that must be formed in periods of impairment in the credit quality.

Once the previous concepts are applied, the value of the allowance is determined for the

commercial portfolio, thus:

The individual loan portfolio allowance under the reference models is established as the

sum of the individual procyclical component plus the individual countercyclical

component.

Individual procyclical component (hereinafter CIP): It corresponds to the part of the

individual allowance of the loan portfolio that reflects the credit risk of each debtor herein.

Individual countercyclical component (hereinafter CIC): It corresponds to the part of the

individual allowance of the loan portfolio that reflects the possible changes in the credit

risk of the debtors at the time in which the impairment of said assets increases. This part is

formed in order to reduce the impact in the income statement when such situation arises.

The internal or reference models must take this into account and calculate this component

based on the available information that reflects those changes.

Calculation of allowances under methodology No. 2 non-cumulative phase – The use of the

non-cumulative phase Methodology will depend on the periodic evaluation of the triggers

and its entry or not into service will also be subject to the determination of the bank with

prior notice to the Finance Superintendency according to allowances of the Basic Financial

and Accounting Circular Letter 100/1995 in its Chapter 2 numeral 1.3.4.1.1.3. Special

rules.

In this methodology, the Individual Allowance again will be equal to CIP + CIC, the

methods of calculation for them in the Non-cumulative Phase are described below.

Individual Procyclical Component (CIP): For the portfolio whose approved rating is A, this

component will continue being equal to the PE calculated with the Matrix A (Recession

Matrix), that is, the result obtained when multiplying the exposure of each obligation, the

PI of Matrix A and the PDI related to the debtor guarantee, as provided in the relevant

reference model.

For the obligations or B, C, D and E rated portfolio, the CIP will be equal to the PE

calculated with Matrix B (Expansion Matrix).

1 as assumed isit 1,n higher tha if

101,

,

ti

ti

Exp

Exp

- 34 -

Individual Countercyclical Component (CIC): In the Non-cumulative Phase, the spirit of

the rule is allowing the accumulated countercyclical allowances during the Accumulation

Phase are gradually applied as non-cumulative so as to soften the impact to allowance the

rated portfolio using the Matrix B. The CICi,t will be calculated based on the following

equation:

1,

,

1,,1,, 1*;maxti

ti

titititiExp

ExpCICFDCICCIC

Where tiFD , (Non-Cumulative Factor) is given by:

mCIP

mtactivas

ti

ti

ti PNRCIC

CICFD

*%40*

)(

1,

1,

,

Where,

mCIPPNR

: Are the net allowances of recoveries of the month related to the individual

procyclical component in the relevant portfolio modality (m).

)(

1,

tactivas

tiCIC : It is the sum of the active obligations at the time of calculation of the

allowance (t) in the relevant modality (m), of the balance of individual countercyclical

component thereof in (t-1).

0, tiFD , if negative, it is assumed as zero.

When 1,

,

tti

ti

Exp

Exp is assumed as 1.

Additional individual consumer portfolio allowance - From the second half of 2012, the

allowances in the External Circular 026 regarding the establishment of an additional

temporary individual allowance entered into force, where its application is reflected in the

financial statements with cut-off date on June 30, 2013.

Applies

Entities whose balances have reported balances of gross consumer portfolio at least the last

twenty-five (25) months and whose parameter “α” is higher than zero (α > 0).

The additional individual allowance will not be calculated when the parameter “α” is lower

than or equal to zero (α ≤ 0) for a period of six (6) consecutive months.

- 35 -

Additional allowance establishment - The additional individual allowance will not be

calculated with the individual procyclical component as provided in numeral 1.3.4.1.

Chapter II of the Basic Financial and Accounting Circular Letter, and 0.5% is added on the

balance of capital of each consumer loan of the reference month, multiplied by the relevant

PDI.

The individual allowance (including the additional individual allowance) may not exceed

the value of exposure of the debtor. Where this occurs, the additional individual allowance

will be adjusted.

Allowance for housing loans (mortgage portfolio) - Helm Bank maintains allowances not

lower than the percentages indicated, calculated on the outstanding payment balance:

Credit Rating

Allowance percentage

over the secured party

Allowance percentage

over the unsecured

party

A 1% 1%

B 3.2% 100%

C 10% 100%

D 20% 100%

E 30% 100%

If during 2 consecutive years, the loan has remained in category “E”, the allowance

percentage on the secured party will be increased to sixty percent (60%). If an additional

year elapses under these conditions, the allowance percentage on the secured party will be

increased to one hundred percent (100%), unless sufficient evidence can be produced on

the existence of objective factors evidencing the loan recovery and the actions performed

by the collection thereof, identifying in this case the use of judicial or extrajudicial

remedies, and indicating the status of the relevant process.

Foreign affiliates – The treatment for the portfolio allowances for foreign affiliates is as

follows:

Helm Bank Panama uses the allowance method to provide for losses in the loans. The

increases in the allowance are charged as an expense in the income statement and the

penalties for uncollectible loans are charges against the allowance. The allowance is

calculated based on a portfolio analysis and other factors that, in the opinion of the

Management, need a current consideration in the estimate of possible losses on loans,

including the classification of loan by risks required by agreement 6-2000 of the Banking

Superintendency of Panama and the impairment in the recoverable value of the loans.

The mentioned agreement 6-2000 sets out that all loans must be classified in one of the

following five categories, according to their default risk and conditions of the loan, and sets

out a minimum reserve for each classification, which is calculated on the balance of the net

loan after guarantee.

- 36 -

Rating

Minimum allowance

demanded

Normal 0%

Special mention 2%

Subnormal 15%

Doubtful 50%

Irrecoverable 100%

Additionally, the Management maintains a generic allowance that recognizes the inherent

risks related to the loan portfolio.

Helm Bank Cayman bases its portfolio allowance on an assessment to the total of the loan

portfolio conducted by the Management. The Management’s assessment is made on the

review of loans individually, the experience of recent losses, the assessment of the

guarantee, the current economic conditions and other factors

Alignment rules – The Parent Company and its Subordinated companies Helm Bank

Cayman and Helm Bank Panama carry out the internal alignment process every month and

for each debtor, for which they take the loans of the same modality granted to it to the

higher risk category, unless there is sufficient existence of reasons for their rating in a

lower risk category is shown to the Finance Superintendence.

Since the Parent Company consolidates financial statements, it grants the same rating to all

the loans that are part of the group, unless sufficient evidence can be produced for its rating

in a different risk category.

Acceptances, cash transactions and derivatives -

Acceptances – The acceptances are letters accepted by financial entities, they have a

maturity term up to one year and they may only be originated in import and export

transactions of goods or purchase-sale of movables in Colombia.

At the time of acceptance of bills of exchange, their value is recorded simultaneously with

assets and liabilities, as “acceptances on term” and if not submitted at their maturity for

collection, they are rated under the heading “acceptances after the term”. If when payment

is made they have not been covered by the purchaser of the merchandise, they are re-rated

at the loan account “covered bank acceptances”.

The values recorded with assets are assessed by the credit risk according to the general

assessment procedures of the loan portfolio.

After maturity, bank acceptances are subject to the cash reserve established for current

liabilities at sight and before thirty (30) days.

Derivatives and cash transactions –The Parent Company and its Subordinated companies

record the value of the agreements entered into between two or more parties in order to

purchase and sell assets in a future, such as foreign exchange or securities, or financial

- 37 -

futures on rates of exchange, interest rates or stock market indexes, previously defining the

amount, the price and the date of performance of the transaction, in order to provide or

obtain coverage under the terms defined by the competent authorities. Therefore, reciprocal

and unconditional rights and obligations arise. The cases, whose compliance is convened

within the three business days immediately following the day on which they are convened,

are recorded as cash transactions.

The transactions by means of which securities are acquired in primary issues conducted

abroad, whose date of execution is prior to the date of issue of securities subject thereto,

will be understood as cash operations, provided that the term for their clearing and

settlement is equal to the date of their execution or registration, that is, today (t+0) or up to

three (3) business days counted from the day following the issue of the relevant securities.

In any case, so that these operations can be reported as cash operations, it will be necessary

that they are settled and cleared by means of the delivery versus payment mechanism.

The financial assets acquired in cash operations are recorded on the date of compliance or

settlement thereof and not on the date of negotiation, unless these two coincide. Thus it is

achieved that the records in the balance are in compliance with the records of the same

transactional and registration systems. Notwithstanding the foregoing, the changes in the

market value of the alienated instruments are reflected in the income statement as from the

date of negotiation, as applicable.

Under the method of the date of settlement, the financial asset is recorded in the sale in its

balance until the delivery thereof and, additionally, it records a right to receive the money

from the transaction and an obligation to deliver the negotiated asset with the asset

accounts enabled for this type of transactions. The latter has to be valued at market prices,

in accordance with the rules set forth in Chapter I of the External Circular Letter 031/2008

applicable as from January 1, 2009, by means of which the variations of the assessment of

this obligation are recorded in the income statement.

When the purchase of the asset is carried out, it does not record the financial asset in its

balance until the delivery thereof but it records a right to receive the asset, which is valued

at market prices, and an obligation to deliver the money agreed in the operation in the asset

account enabled for this type of transactions.

When the transaction is effectively enforced, both the rights and the obligation recorded

from the time of negotiation are reversed.

In the purchase operations of securities, the right is calculated by valuing the security at

market prices and the obligation, by obtaining the present value of the purchase amount

accreted. In case of the forward sale transactions on securities, the right is calculated by

obtaining the present value of the sale amount accreted and the obligation, by valuing the

security at market prices.

The methodology of valuation for the forward and cash operations on foreign exchange

used by the Bank and its Subordinated companies is based on the estimate of the valuation

- 38 -

rate according to the market information and the maturity term of the operation. The value

of future flows of the operation is calculated based on it and on the rate contractually

agreed (obligation and right).

The valuation and its relevant accounting are made according to the regulation provided in

Chapter XVIII of the Basic Financial and Accounting Circular Letter of the Finance

Superintendence. As long as the derivative position is open, the cumulative valuation is

recorded in the income or expense accounts by valuation of derivatives, as applicable. Once

the position is settled upon maturity, the resulting profit or loss is recorded in the income or

expense accounts for sales of derivatives, as applicable, paying the balances recorded in the

results by valuation.

e. Accounts receivable – The Bank makes an allowance on its accounts receivable not related

to the loan portfolio from the thirty days applying the percentages of 1%, 20%, 50% and

100% for the accounts receivable rated in categories “B”, “C”, “D” and “E”, respectively.

The Bank accrues the interests and other portfolio items to 100% with a “C” rating and

higher.

f. Assets available for sale, foreclosed assets and returned assets from Leasing– It registers

the value of the assets received by the Parent company in payment of outstanding balances

from loans at its favor and the goods restituted of leasing operations, and which were used

no more during the performance of its corporate purpose.

The assets received in lieu of payment represented in properties are received based on the

commercial appraisal technically determined and the personal property, shares and

interests, based on the market value.

The following conditions are taken into account for the record of the assets received in lieu

of payment:

The initial registration is carried out in accordance with the value determined in the

legal awarding or the agreed upon with the debtors.

The Bank accepts assets in lieu of payment having adequate characteristics to be

transferred and obtain the best possible recovery of the exposed resources.

When the asset given in lieu of payment is not in conditions of transfer, its cost

increases with the necessary expenses incurred for sale.

If between the value by which the asset is received and the loan value to pay, there is a

resultant balance in favor of the debtor, this difference is counted as an account

payable; in case that the good’s value does not cover the entirety of the obligations, an

equivalent allowance of the discrepancy is constituted.

The assets received in payment corresponding to investment securities are valued with

the application of the criteria established in Note 1 for investments.

- 39 -

For the purposes of the realization of appraisals, supervised entities must observe the

minimum criteria and contents established in articles 1 and 2 of Decree 422/2000 and

subsequent allowances that modify or supersede them. In all cases, the technical

appraisal used by supervised entities may not have more than three (3) years of life

(elaboration date) counted from the accounting cut-off date on which is intended to be

used.

g. Allowance on assets available for sale, foreclosed assets and returned assets from

Leasing– In compliance with External Circular Letter 034/2003 issued by the Finance

Superintendency of Colombia and taking into account that the Bank and its local

Subordinated companies do not have a calculation model of individual allowances of assets

received in lieu of payment approved by the same, the individual allowances of these assets

are calculated as follows:

For the property received in lieu of payment and restituted whose receipt at the moment of

the issuance of the External Circular Letter 034/2003 of the Finance Superintendency of

Colombia is less than two years or more will be set up an allowance in monthly aliquots

until it reaches the 80% of the acquisition value of the property within a deadline expired

on December 31, 2005.

The property received in lieu of payment and restituted whose receipt at the moment of the

issuance of the External Circular Letter 034/2003 of the Finance Superintendency of

Colombia is less than two years and the received as of October 1, 2003 will be set up in

monthly aliquots within the following year to receipt of the asset, an allowance equivalent

to 30% of the acquisition cost, which increases in monthly aliquots within the second year

in an additional 30% until it reaches 60% of the acquisition cost.

Once the legal term for sale has expired without the extension is authorized, the allowance

will be 80% of the acquisition cost. In case of an extension, the remaining 20% of the

allowance is constituted within its term.

When the acquisition cost of the property is lower than the debt value registered in the

balance, the difference is immediately recognized in the income statement.

When the commercial value of the property is lower than the value in the books of the

goods received in lieu of payment, an allowance by the difference is counted.

For furniture received in lieu of payment and restituted whose receipt at the moment of the

issuance of the External Circular Letter 034/2003 of the Finance Superintendence of

Colombia is less than two years and the received as of October 1, 2003 will be set up in

monthly aliquots within the following year of receiving the good, a provision equivalent to

35% of the acquisition cost, which increases in monthly aliquots within the second year in

an additional 35% until it reaches 70% of the acquisition. Once the legal term for sale has

expired without the extension being authorized, the provision will be 100% of the

acquisition cost. In case of an extension, the remaining 30% of the allowance is constituted

within its term.

- 40 -

When the acquisition cost of the movable asset is lower than the debt value registered in

the balance, the difference is immediately recognized in the income statement.

When the commercial value of the movable good is lower than the value in the books of the

goods received in lieu of payment, an allowance for the difference is counted.

The allowances that have been constituted on assets received in payment or assets restituted

of leasing operations, may be reversed when these are completely sold. If such assets are

put in portfolio or in leasing operations, the income generated as consequence of the asset

transfer to the accounts of group 14, must be deferred until the deadline in which the

transaction was agreed.

h. Property and equipment – It registers the acquired, built or in process of import, building or

assembly tangible assets permanently used in the development of the business course and

whose useful life exceeds one year. It includes the direct and indirect costs and expenses

caused until the asset is under operating conditions.

In accordance with Circular Letter 014/2001, regarding the elimination of integral

adjustments due to inflation for accounting purposes, the value of the adjustments

performed until December 31, 2000, is part of the balances of non-monetary assets and

make up its value in the books for all purposes.

Extraordinary additions, improvements and repairs that significantly increase the useful life

of assets, are registered as a higher value and the disbursements for maintenance and

repairs performed for the conservation of the assets are charged to expenses, when accrued.

Depreciation is registered using the straight line method and in accordance with the number

of years of estimated useful life of assets over 100% of the cost of acquisition.

Annual depreciation rates for each item of assets in both the Parent Company and

Subordinated local companies are:

Buildings 5%

Equipment, furniture and office supplies 10%

Computer equipment 20%

Vehicles 20%

Helm Bank Panama depreciates its assets in accordance with the useful life as follows:

Property 20 years

Furniture and equipment 3 to 10 years

Enhancements to property 10 years

Rolling equipment 5 years

- 41 -

Property and equipment acquired during the first semester of 2013 and whose cost of

acquisition is equal or less than $1,342 are depreciated in the same accounting period, in

accordance with Decree 4344/2004.

The income or loss in the sale or retirement of property and equipment is recognized in the

semester’s operations in which the transaction is performed. The adjusted cost and

accumulated depreciation are eliminated from the respective accounts.

i. Assets under operating leasing – This item records the cost of the assets given on operating

leasing that the Parent Company, after the execution of the corresponding agreement,

delivers on lease to the user.

For the case of assets given on operating leasing, depreciation is performed over the lesser

of the useful life of the asset and the term of the leasing agreement; the methodology is that

of financial depreciation (minus the residual value) so that the depreciation of the assets on

lease keeps an adequate relation with the generated profits.

The system of financial depreciation requires that in all the months or fraction of months

the depreciation expense is recorded, and therefore, methods of depreciation with grace

periods are inadmissible, or, that use discount rates outside the market for the value

estimate of the depreciation.

In all cases, the value of non-amortized goods in lease payments (residual value) is not

subject to depreciation. However, when the entity does not have the residual value

guaranteed by a third party, the depreciation is performed for one hundred percent of the

value of the assets in leasing.

j. Branches and agencies – This item records the movement of the operations performed

between the General Directorate of the Parent Company and the subordinated companies,

their branches and agencies, as well as the operations performed between the offices of the

country.

Balances are reconciled in a daily manner and the items pending are regulated in a term no

longer than 30 calendar days.

The Parent Company and its Subordinated companies, at the closing of the accounting

period reclassify net balances reflected by the branches and agencies, to asset or liability

accounts, and the corresponding income and expenses are recognized.

k. Expenses paid in advance and deferred charges – The expenses paid in advance

correspond to expenditures incurred by the Parent Company and its Subordinated

companies during the performance of their activities, whose benefit is received in various

periods, may be recoverable and suppose the successive execution of the services to be

received.

- 42 -

Deferred charges correspond to costs and expenses that benefit future periods and are

susceptible of recovery. Amortization is recognized from the date that such charges

contribute to the generation of income, taking into account the following:

Item Amortization Expenses paid in advance: The insurance during the validity term of the insurance

policy.

The maintenance of equipment during the validity term of

the agreement and the other anticipated expenses during the

period in which the services are received or in which the

expenses or costs are accrued.

Fees due to vehicle leasing in the accounting period in

which they are paid.

Other expenses during the prepaid period.

Deferred charges:

Remodeling Not higher than two years.

Studies and projects Not higher than two years.

Computer software Not higher than three years.

Stationery and supplies Depending on consumption.

Enhancements to rented properties During the validity term of the agreement.

Fees for placement of securities During the term for their redemption or placement.

Deferred income tax "debit" By the temporary differences at the moment in which the

fiscal, legal and regulatory requirements are met

Publicity and advertising Not higher than three (3) years.

Taxes In a period of twelve (12) months.

Contributions and Affiliations In a period equal to the one paid.

Losses in adjustments due to

valuation

A period of 12 months.

Other items are amortized during the estimated period of recovery of the expenditure or by

obtaining the expected benefits.

l. Assets to be placed in leasing agreements – The new assets acquired by the Parent

Company are recorded in this item, whose agreement has not initiated due to the lack of a

requirement for its legalization. Also, assets under operating lease returned by the lessee

are also recorded in this item.

The restitution of these assets must be included for their cost in the books (acquisition cost

minus accumulated depreciation), are not subject to depreciation, but are subject to

applicable provisions.

m. Trust rights –The rights acquired by virtue of the execution of commercial trust agreements

are recorded in this item. These rights give the trustor or beneficiary the possibility to

exercise them pursuant to the agreement or the Law. Company issued bonds, whose

issuance is guaranteed by Fiduciaria de Occidente S.A. through the execution of an

Irrevocable Management of Guaranty Commercial Trust Agreement.

- 43 -

n. Appraisals - Permanent contributions, property and equipment, specifically fixed assets and

investments available for sale through participative instruments are assets subject to

valorization.

Appraisals of investments available for sale through equity instruments are included based

in the equity variations of the issuer.

Appraisals of real estate are determined when comparing the net adjusted cost of the

properties with the commercial valuations performed by recognizable specialty

independent persons or firms.

A provision is established for each property individually considered, in the event of a

impairment pursuant to the standard of prudence.

Valorizations of permanent contributions are included based on the equity variations of the

issuer or on the market value of the contribution in the club.

o. Deposits and financial claims – This item records the obligations undertaken by the Bank

in cash or term deposits through diverse authorized mechanisms, for services provided, as

well as for the operations proper to the banking activity.

p. Liabilities from money market and related transactions – This item records the funds

obtained by the Parent Company and its Subordinated companies from other financial

entities in a direct manner and without mediating for it, portfolio or investment repurchase

agreement, with the purpose of attending transitory necessities of liquidity. The maximum

term for the payment of these operations is of 30 days. The transactions not paid within the

term indicated must be included in other financial obligations.

In addition, this item records the commitments of repurchase transfer operations by means

of which the Bank and its subordinated companies transfer the ownership of securities, in

Exchange of the payment of a sum of money, bearing this type of act and at this moment,

the commitment of acquiring them back from their counterparty or acquiring securities of

the same type and features, during the same day or in a subsequent date, at a determined

price or amount. The participant in this operation is called a transferor.

An open repurchase is the one by means of which it is established that the securities subject

to the repurchase operation are not immobilized. In this event, the transfer of the ownership

may be performed over securities of the same type and features.

A closed repurchase is the one by means of which the securities subject to the operation are

agreed to be immobilized, reasons why the transfer commitment of the ownership must be

performed over the same immobilized securities, unless the replacement of such securities

is expressly established. The repurchase or repo operations are presumed closed unless

otherwise agreed.

q. Accounts Payable – This item records the pending payment amounts that the Parent

Company and its Subordinated companies have with their customers, suppliers and external

- 44 -

control bodies. These pending payments include, agreed returns for the usage of third party

resources, taxes, withholdings, labor contributions, contributions and affiliations, as well as

other payable amounts of similar characteristics.

r. Long-term Debt – This item records the nominal value of the Parent Company’s

outstanding bonds. The discounts conceded in their issuance are charged to the discount

subaccount of the placement of investment securities, and the premiums, in the premium

subaccount of the placement of investment securities.

Pursuant to Article 752 of the Code of Commerce, bonds are instruments which represent

an even part of a collective loan entered into by a company or organization subject to the

Government's inspection and supervision

s. Anticipated income – This item records the deferred income and the ones received in

advance by the Bank and its Subordinated Companies during the performance of their

activities, amortized during the period in which they are accrued or in which the services

are provided.

t. Labor obligations – Colombian labor laws establish the payment of deferred compensation

to certain employees at the date of their retirement from the Bank and its Subordinated

companies. The amount received by each employee depends on the date of entry of the

employee, contracting modality and salary. In addition, in certain cases, interest at an

annual rate of 12% is recognized over accumulated amounts in favor of each employee.

When the employee is terminated without justification, he has the right to receive

additional payments according to its time of service and salary.

Colombian labor laws require companies to pay old-age pensions to employees who meet

requirements of age and time of service. However, the Social Security Institute (now

Colpensiones) or private pension funds, have completely assumed such obligation.

u. Retirement pensions – The Parent Company applies the established in Decree 2984/2009,

which modified Decree 1517 dated August 4, 1998, allowing for an annual increase of the

amortized percentage of the actuarial calculation in four percentage points over the value

amortized for the immediately previous year.

The annual provision is increased rationally and systematically, meaning that by December

31, 2011, 100% of the corresponding calculation is amortized. From then, the amortization

will be maintained in said percentage.

The payments made to retirement pensions are charged against the provision established

for it.

v. Estimated liabilities and provisions – The Parent Company and its Subordinated companies

record provisions to cover estimated liabilities, taking into account that:

There is an acquired right and, in consequence, a contracted obligation,

- 45 -

The payment is enforceable or probable and

The provision is justifiable, quantifiable and verifiable

Likewise, this item records the estimated values of taxes, contributions and affiliations.

In addition, this item registers the estimated liability provisions in order to cover the legal

processes against the companies, whose possibility of loss is probable, pursuant to the

classification established by the attorney in charge of the process.

The provisions regarding legal processes with a possibility of probable loss are established

at the beginning of the process in a gradual manner, and based on the amount that the

attorney in charge of the process determines as the probable amount of loss for the Parent

Company.

The gradual manner in which the provision is established depends on the fulfillment of

certain procedural stages determined by the attorney in charge of the process, in accordance

with its nature. 20% of the probable amount of loss is established at the date where the

judicial decision of first instance is issued.

If the first instance sentence is unfavorable for the Parent Company, the remaining 80%

will be constituted gradually during the process of the second and last instance, according

again with the procedural steps determined by the attorney based on the nature of the

process. Likewise, the remaining provisions will be constituted based on the amount

established in the sentence, as the case may be.

If the first instance sentence was favorable for the Parent Company, there would be room

for the reversal of provisions.

Income Tax – The income tax expense of the Parent Company and its local Subordinated

companies is determined based on the taxable income or presumptive income, whichever is

greater. The provision for the income tax includes, among others, the resulting taxes from

the temporary differences between the deductible expenses for tax purposes and the

registered expenses for financial statement’s purposes. The tax benefit or expense

corresponding to certain temporary differences is recorded on an account of income tax

deferred in assets or liabilities account, respectively. The income tax is provided in the net

general balance of withholding tax and balances of credit.

According to the tax legislation of Panama, Helm Bank Panama S.A. is not subject to the

income tax payment, since it exclusively manages, from an office established in Panama,

transaction formalized, consumed and whose effects are performed abroad, and in

consequence, most of its income is foreign. In addition, the income deriving from interests

on term deposits in banks whose operation is in Panama is exempt of income tax payment.

For the case of Helm Bank Cayman S.A. currently there are no taxes over income or profits

established by the Government of the Cayman Islands.

- 46 -

w. Recognition of interests’ income and financial lease – The Parent Company and its

Subordinated companies recognize the income from financial returns and other concepts

when accrued, except the originated in:

Loans or commercial leasing agreements, rated as in default and those of consumption

rated in “C-deficient”, or in higher risk categories, or when it passes 91 days of default for

commercial, 61 days for consumption.

Those loans or leasing agreements that at least once have ceased to accrue interests,

monetary correction, adjustment in change and income by other concepts in default will

cease to accrue such income from the first day in default. Once the customer catches up

with the payments, it may be accrued once again. While its collection is made, the record is

made in contingent receivable accounts.

Regarding interest capitalization, its record is made on the account of deferred payment and

income is recognized in the extent that is effectively collected.

Regarding the income accrued due to trust fees, these are recognized when accrued,

according to the established in each trust agreement.

x. Contingent accounts – In these accounts, the operations by means of which the Bank and

its Subordinated companies acquire a right or assume an obligation whose emergence is

conditioned to the occurrence of an event or not, depending on future, eventual or remote

factors, are registered. Within the receivable contingents, the financial returns and lease

payments are recorded as of the moment in which the accrual in the accounts of loan

portfolio and goods under leasing is suspended.

y. Memorandum accounts – In these accounts, the operations performed with third parties that

due to their nature do not affect the financial situation of the Bank and its Subordinated

companies, are registered. Likewise, the fiscal memorandum accounts are included, where

the figures for the elaboration of tax statements are recorded; equally, it includes those

memorandum accounts used for tax purposes, internal control or management information.

In Helm Fiduciaria and Helm Comisionista de Bolsa, the balances corresponding to money

and goods under trust, are recorded in trust memorandum accounts, separate from company

assets and create stand-alone trust funds, according to legal provisions of the Code of

Commerce and the Finance Superintendence.

The goods subject to the trust businesses do not make part of the general guaranty of the

creditors to the trust company and only guarantee the contracted obligations in the

fulfilment of the trust agreement’s purpose.

z. Use of Estimates – The preparation of financial statements pursuant to the provisions and

instructions by the Finance Superintendency, requires the Administration to make estimates

and presumptions that may affect the registered amounts of assets, liabilities and results of

the operations. The current values or market values may differ from such estimates.

- 47 -

2. CASH AND CASH EQUIVALENTS, NET

December 31, 2013

June 30, 2013

Local currency Cash, banks and others $ 1,157,835.6 $ 929,306.0 Foreign currency Cash reserve, banks and others 331,756.5 12,306.5 Provision over available (60.9) (88.2) $ 1,489,531.2 $ 941,524.3 The cash and the deposits in the Banco de la Republica in local currency compute for purposes

of the available reserve that the credit establishments must maintain on deposits, according to

regulation.

There are no different restrictions on cash and cash equivalents.

As of December 31 and June 30, 2013, there are outstanding items, in local and foreign

currency with terms higher than 30 days for $60.9 and $88.2, respectively.

As of December 31 and June 30, 2013, the Bank has a share of 78% and 62.6%, respectively, in

the consolidated net cash.

3. ASSETS FROM MONEY MARKET AND RELATED TRANSACTIONS

Interbank funds sold

Banks $ 104,051.3 $ 314,633.6

Transfer commitments

Banks 77,289.4 139,278.7

Other entities 503.2 7,050.8

$ 181,843.9 $ 460,963.1

There are no restrictions over money market and related transactions.


the interbank funds sold and transfer commitments.

4. INVESTMENTS, NET

Marketable debt securities $ 569,273.0 $ 578,965.8

Marketable equity securities 33,509.1 28,371.6

Held to maturity 399,072.8 354,312.1

Debt securities available for sale 671,669.3 822,471.2

Equity securities available for sale 4,914.2 4,914.2

Transfer rights of marketable investments in debt

securities 205,212.4 1,879.1

- 48 -

December 31,

2013 June 30,

2013

Transfer rights of investments available for sale - 164,254.1

Investment pledge in derivative transactions 32,423.7 29,586.5

Allowance for equity securities available for sale (59.2) (59.2)

$ 1,916,015.3 $ 1,984,695.4

Marketable debt securities:

Internal debt securities issued or guaranteed by

Central Government:

Treasury securities $ 242,203.8 $ 151,763.1

Colombia Bonds 118.8 -

242,322.6 151,763.1

External debt securities issued or guaranteed by

Central Government:

Structured credit notes 71,633.0 93,384.5

Bonds 19,892.5 64,129.1

91,525.5 157,513.6

Other public debt securities:

Bonds of Solidarity for Peace 1.1 3.3

Tax refund securities TIDIS 62.0 347.0

Bonds 33,975.2 43,285.5

34,038.3 43,635.8

Securities supported or guaranteed by institutions

supervised by the Finance Superintendency:

Term Deposits 9,468.5 126,936.7

Bonds 38,948.6 59,014.3

48,417.1 185,951.0

Securities supported or guaranteed by foreign

governments

Bonds 12,940.2 13,399.9

Securities supported or guaranteed by foreign

banks

Bonds 93,077.3 91,862.6 Securities issued or guaranteed by multilateral

lenders

Bonds 16,695.3 28,764.2

- 49 -

December 31,

2013 June 30,

2013

Securities issued by residents abroad

Notes 30,256.7 30,138.1

30,256.7 30,138.1

Other debt securities

Commercial papers - 314.1

$ 569,273.0 $ 578,965.8

Marketable equity securities:

High liquidity shares $ 6,054.5 $ 2,167.2

Investment funds 306.7 1,216.1

Pension and Severance Funds 21,176.4 20,675.9

International mutual funds 486.0 -

Interests in Open Mutual Fund Helm

Treasury 5,485.5 4,312.4

$ 33,509.1 $ 28,371.6

Held to maturity:

Securities issued by Governmental entities:

Debt reduction securities $ 36,637.9 $ 42,020.5

Agricultural development securities Class A 149,584.5 131,330.2

Agricultural development securities Class B 204,309.5 171,984.3

TIPS 4,034.6 6,659.1

$ 394,566.5 $ 351,994.1

Securities supported or guaranteed by institutions

supervised by the Finance Superintendency:

Term Deposits 4,506.3 2,318.0

$ 399,072.8 $ 354,312.0

Debt securities available for sale


Equity securities available for sale:

December 31

Corporate name Equity % Interest

Adjusted

cost Equity value

Valorization

(De-

valorization) Allowance Rating

Banco Central

Hipotecario (409,023.8) - $ 59.2 $ - $ - $ (59.2) E

- 50 -

December 31


Adjusted

cost Equity value

Valorization

(De-


Tecnibanca 62,424.49 4.5 1,913.9 2,830.9 917.0 - A

ACH Colombia S.A. 23,393.26 0.5 30.0 128.3 98.3 - A

Bolsa de Valores de

Colombia 110,361.4 0.7 92.0 2,038.4 1,946.4 - A

Deposito centralizado

de Valores – Deceval 66,067.21 5.6 2,008.9 3,705.2 1,696.3 - A

Camara de

Compensacion de

Divisas S.A. 4,270.1 4.9 114.2 195.3 81.1 - NA

Camara de Riesgo

Central de Contraparte

S.A.

30,339.6.7

1.2

479.4

357.0

(122.4) -

NA

CIFIN 6,000.0 3.6 216.6 216.6 - - NA

$ 4,914.2 $ 9,471.7 $ 4,616.7,7 $ (59.2)

June 30


Adjusted

cost Equity value

Valorization

(De-


Banco Central

Hipotecario (409,023.8) - $ 59.2 $ - $ - $ (59.2) E

Tecnibanca 57,964.9 4.5 1,913.9 2,628.6 714.8 - A

ACH Colombia S.A. 21,090.6 0.5 30.0 115.7 85.7 - A

Bolsa de Valores de

Colombia - - 92.0 - 382.1 - A

Deposito centralizado

de Valores –Deceval 52,092.1 5.5 2,008.9 2,866.9 927.2 - A

Camara de

Compensacion de

Divisas S.A. 3,632.6 3.2 114.2 115.8 36.1 - NA

Camara de Riesgo

Central de Contraparte

S.A. 29,948.7 1.2 479.4 352.4 (127.0) - NA

CIFIN 6,000.0 3.6 216.6 216.6 - - NA

$ 4,914.2 $ 6,296.0 $ 2,018.9,9 $ (59.2)

As of December 31 and June 30, 2013, the valuation was performed with the equity change,

certified as of November 30 and May 31, respectively.

- 51 -

Transfer rights in marketable debt securities

December 31,

2013 June 30,

2013

Treasury securities $ - $ 1,346.4

Other debt securities - 532.7

$ - $ 1,879.1

Transfer rights in marketable debt securities:


Investments available for sale pledged in derivative financial instruments, transactions,

structured products and others, in debt securities


There are no restrictions over investments.

The Bank’s majority share in the investments as of December 31 and June 30, 2013,

corresponds to 92% and 90.7%, respectively.

5. LOAN PORTFOLIO, NET

As of December 31 and June 30, 2013, the Parent Company and its Subordinated companies

Helm Bank Panama and Helm Bank Cayman assessed 100% of the commercial portfolio. The

result of the assessment is as follows:

December 31

Parent Company and

Subordinated

companies

Commercial

Loans

Consumer

Loans

Housing

Loans Total

A – Normal $ 8,357,095.1 $ 1,498,170.1 $ 28,013.4 $ 9,883,278.6

B – Acceptable 165,477.9 33,880.4 - 199,358.3

C – Appreciable 99,352.0 24,750.4 - 124,102.4

D – Significant 46,990.4 22,576.6 - 69,567.0

E – Uncollectible 77,279.0 22,219.9 - 99,498.9

8,746,194.4 1,601,597.4 28,013.4 10,375,805.2

Individual allowance (373,853.7)

10,001,951.5

A – Normal 329,304.0 - - 329,304.0

B – Acceptable 1,593.2 - - 1,593.2

C – Appreciable - - - -

- 52 -

December 31

Parent Company and

Subordinated

companies

Commercial

Loans

Consumer

Loans

Housing

Loans Total

D – Significant 30,983.3 - - 30,983.3

E – Uncollectible 238.3 - - 238.3

362,118.8 - - 362,118.8

General allowance (2,232.4)

$ 10,361,837.9

June 30

Parent Company and

Subordinated

companies

Commercial

Loans

Consumer

Loans

Housing

Loans Total

A – Normal $ 7,578,922.7 $ 1,371,595.8 $ 18,858.0 $ 8,969,376.5

B – Acceptable 130,933.0 44,178.8 - 175,111.8

C – Appreciable 92,648.9 21,321.5 - 113,970.4

D – Significant 139,894.5 32,825.3 - 172,719.8

E – Uncollectible 45,824.3 14,756.7 - 60,581.0

7,988,223.4 1,484,678.1 18,858.0 9,491,759.5

Individual allowance (373,352.5)

9,118,407.0

A – Normal 1,106,518.4 - - 1,106,518.4

B – Acceptable 17,519.4 - - 17,519.4

C – Appreciable 60.5 - - 60.5

D – Significant 1,956.6 - - 1,956.6

E – Uncollectible 4,070.2 - - 4,070.2

1,130,125.1 - - 1,130,125.1

General allowance (2,572.1)

$ 10,245,960.0


the consolidated loan portfolio.

According to the flows expected for the bands from 1 to 90 days, depending on the Liquidity

Management format, as indicated in Chapter VI of the Basic Accounting and Financial Circular

Letter, the following is the detail of the portfolio of loans and financial leasing operations and

interest by maturity period for the Parent Company:

- 53 -

December 31,

2013 June 30,

2013

Commercial:

1 to 7 days $ 78,524.2 $ 80,936.9

8 to 15 days 183,662.4 159,169.9

16 to 30 days 650,295.4 386,485.2

31 to 90 days 1,538,683.6 958,118.7

Consumer:

1 to 7 days 18,335.1 24,350.1

8 to 15 days 14,427.8 36,034.1

16 to 30 days 107,453.0 44,925.8

31 to 90 days 376,727.8 199,718.4

$ 2,968,109.3 $ 1,889,739.1

The following are the portfolio maturities for Helm Bank Panama, determined on the basis of

the remaining period between the date of the financial statements and the contractual maturity:

Until 1 year 489,111.4

From 1 to 3 years 294,943.1

From 3 to 5 years 264,004.4

More than 5 years 193,862.0

As of December 31, 2013 the affiliate Helm Bank Cayman (in Liquidation), records loans for

$7,273.4 and $6,786.5 with maturity in one year and up to five years respectively.

Allowance of loan portfolio - The following is the movement in the loan portfolio allowance:

Initial balance $ 375,924.6 $ 356,912.5

Plus:

Allowance charged to expenses of the period 184,141.4 111,768.7

Exchange difference foreign branches 367.1 2,021.7

Less:

Reimbursement to revenues – recoveries 86,568.2 39,188.0

Use of Allowances on forgiven loans 5,534.6 8,617.1

Reversal of the allowances of the period 1,501.9 -

Transfer of allowance – portfolio sale 5,751.3 -

Write-offs 84,991.0 46,973.2

Ending balance $ 376,086.1 $ 375,924.6

In compliance with the commitment before the Finance Superintendency of Colombia within

the consolidation process of the financial statements, the recognition (application of Colombian

standards) in the item of portfolio and interest for foreign affiliates was carried out.

- 54 -

6. ACCEPTANCES AND DERIVATIVES

Quantitative information - The following is the summary of derivatives whose net value

between rights and obligations is positive for the Bank and its Subordinated companies

regarding bank acceptances:

December 31, 2013

June 30, 2013

Acceptances $ 8,245.7 $ 6,868.1

Cash transactions:

Purchase on currencies:

Right - 1,929.0

Obligation - (1,930.4)

Sale on currencies:

Right 1,149.0 996.3

Obligation (1,151.7) (996.8)

Purchase on securities:

Right - -

Obligation - -

Sale on securities:

Right - 497.3

Obligation - (532.7)

(2.7) (37.3)

Options:

Forwards:


Right 534,399.4 1,658,946.1

Obligation (527,549.2) (1,613,885.2)

Sale on currencies:

Right 1,230,696.6 219,497.6

Obligation (1,220,339.3) (218,401.5)

17,207.5 46,157.0

Futures:

On currencies:

Right 493,791.6 302,985.4

Obligation (493,791.6) (302,985.4)

December 31,

2013 June 30,

2013

On interest rates:

- 55 -

Right 214,525.2 184,615.2

Obligation (214,525.2) (184,615.2)

Sale on securities:

Right - 2,060.9

Obligation - 2,060.9)

Swaps:

On currencies:

Right 272,301.7 263,542.6

Obligation (256,126.8) (245,073.8)

On interest rate:

Right 245,572.9 257,941.5

Obligation (236,601.0) (245,504.3)

25,146.8 30,906.0

Options:

On currencies:

Calls 1,016.4 5,633.3

Puts 125.4 116.7

1,141.8 5,750.0

Hedging forwards:

Sale of currencies:

Right 22,275.3 25,088.6

Obligation (22,155.9) (25,074.6)

119.4 14.0

$ 51,858.4 $ 89,657.8

As of December 31 and June 30, 2013, the Parent Company has a share of 100% in

consolidated derivatives and acceptances.

In derivatives, when the present value of the obligation exceeds the present value of the rights

(the net value is negative for the Bank and its Subordinated companies), these are transferred to

liabilities. The following is the summary of derivatives whose net value is negative for the

Parent Company and acceptances:

December 31,

2013 June 30,

2013

Acceptances $ 8,245.7 $ 6,868.1

Derivatives:

Forwards:

- 56 -

December 31,

2013 June 30,

2013


Right (854,369.6) (255,210.1)

Obligation 861,854.3 256,479.6

Sale on currencies:

Right (732,167.1) (2,013,213.9)

Obligation 740,626.4 2,077,228.2

15,944.0 65,283.8

Swaps:

On currencies:

Right (193,279.3) (248,192.7)

Obligation 207,065.8 265,430.0

On interest rate:

Right (219,433.6) (223,083.9)

Obligation 228,521.5 233,370.0

22,874.4 27,523.4

Options:

On currencies:

Calls 746.9 3,781.1

Puts 920.7 767.7

1,667.6 4,548.8

Hedging forwards:

Right - (144,345.1)

Obligation - 146,587.2

- 2,242.1

$ 48,731.7 $ 106,466.2

The Parent Company records cash transactions and agreements executed of operations with

speculation derivatives; such as forwards, swaps and options and daily accumulated profits

from the sale of speculation derivatives in accordance with the provisions of Chapter XVIII of

the Basic Accounting and Financial Circular Letter.

In accordance with Resolution 1420/2008, the Parent Company records daily accumulated

profits from the sale of speculation derivatives as established in Chapter XVIII of the Basic

Accounting and Financial Circular Letter.

As of December 31 and June 30, 2013, the Bank had a share of 100% in consolidated

derivatives whose net value is negative and bank acceptances.

- 57 -

7. ACCOUNTS RECEIVABLE, NET

December 31, 2013

June 30, 2013

Interest $ 75,902.2 $ 85,787.5

Financial component of leasing operations 11,698.0 13,161.4

Commissions 3,803.4 4,002.4

Dividends 578.0 755.0

Fees from assets given on operating leasing 10,963.9 10,764.6

Payments from customers 24,927.9 21,466.0

Advance payments of agreements 93,725.4 94,060.6

Advance payments to personnel 0.4 4.5

Guaranteed loans 4,489.2 6,818.4

Others in foreign currencies 360.3 -

Miscellaneous 11,883.8 19,304.1

Allowance (18,823.5) (20,748.4)

$ 219,508.4 $ 235,376.1

Allowance for accounts receivable –The following is the movement in the allowance for

accounts receivable:

Initial balance $ 20,748.4 $ 17,032.3

Plus:

Allowance charged to expenses of the period 20,608.4 15,153.7

Less:

Reimbursement to revenues – recoveries 13,716.8 5,149.4

Use of Allowances on forgiven loans 3,799.6 3,296.3

Use of Allowances on loan portfolio sale 321.0 -

Write-offs 4,695.9 2,991.9

Ending balance $ 18,823.5 $ 20,748.4

As of December 31 and June 30, 2013, the Bank had a share of 96.4% and 96.4%, respectively,

in net consolidated accounts receivable.

8. ASSETS AVAILABLE FOR SALE, FORECLOSED ASSETS AND RETURNED ASSETS

FROM LEASING, NET

The detail of the goods received in lieu of payment and returned leasing assets is as follows:

Furniture assets $ 15,399.2 $ 7,070.5

Fixed Assets intended for housing 624.0 624.0

Fixed Assets other than for housing 12,801.1 9,888.4

December 31, 2013

June 30, 2013

- 58 -

Returned Furniture assets 1,856.2 6,431.4

Returned Fixed assets 18,234.7 20,885.5

Less:

Allowance of goods received in lieu of payment

intended for housing

(483.6) (452.4)

Allowance for assets other than housing (14,518.2) (13,373.8)

Allowance for returned leasing assets (8,189.5) (6,442.4)

$ 25,723.9 $ 24,631.2

The following is the detail of the furniture assets received in lieu of payment:

Securities:

Shares $ 58.0 $ 58.0

Enka Shares 717.0 717.0

Soc. Flor del Monte Shares 8,328.7 -

Fiduciary rights 1,720.7 1,720.7

Furniture assets 4,574.8 4,574.8

$ 15,399.2 $ 7,070.5

The detail of the assets received in lieu of payment, according to tenure, is as follows:

December 31

Assets

No longer

than one

Year

Between

one and

three

Years

Between

three and

five Years

Total

Allowance

Furniture $ 8,328.7 $ 267.9 $ 6,802.6 $ 15,399.2 $ 7,095.0

Fixed assets intended for

housing - - 624.0 624.0 483.6

Fixed assets other than for

housing 3,511.5 5,030.4 4,259.2 12,801.1 7,423.2

Returned assets from Leasing

Fixed assets 14,481.2 3,488.0 265.5 18,234.7 7,149.7

Furniture assets 836.8 807.5 211.9 1,856.2 1,039.8

$ 27,158.2 $ 9,593.8 $ 12,163.2 $ 48,915.2 $ 23,191.3

- 59 -

June 30

Assets

No longer

than one

Year

Between

one and

three

Years

Between

three and

five Years

Total

Allowance

Furniture $ - $ 1,720.7 $ 5,349.8 $ 7,070.5 $ 6,723.0

Fixed Assets intended for

housing - - 624.0 624.0 452.4

Fixed Assets other than for

housing 1,467.2 4,162.0 4,259.2 9,888.4 6,650.8

Returned assets from Leasing

Fixed 20,047.9 3,900.6 265.5 24,214.0 5,328.8

Furniture 1,541.3 1,349.8 211.9 3,103.0 1,113.6

$ 23,056.4 $ 11,133.1 $ 10,710.4 $ 44,899.9 $ 20,268.6

As of December 31 and June 30, 2013, the net value of these assets represents 0.38% and

0.35%, respectively, of the total assets of the Parent Company. The Parent Company considers

that the immobilization and materiality of these assets will not produce any significant negative

impacts on the financial statements.

For the assets received in lieu of payment there are updated appraisals with validity not longer

than three (3) years from December 2012; they are currently in good condition. It is the Bank’s

policy to update appraisals once this time has elapsed.

As a general policy for the marketing of the assets received in lieu of payment, the Parent

Company carries out the steps described below: the possibilities of disposal and administration

of these assets received in lieu of payment are viable, and are in charge of the Marketing of

Assets Received in lieu of Payment and Returned Assets from Leasing area, legal procedures

are carried out by the Legal Vice Presidency and the Marketing of Assets Received in lieu of

Payment and Returned Assets from Leasing area. These Assets are marketed through national

circulation newspapers, real estate brokers; they are reported to the officials of the Bank

through Intranet and are available to the customers of the Bank and third parties through the

website of the Bank. The Bank's Management has concluded that all assets are likely to be sold

in a normal market. As of December 31, 2013 and June 30, 2013, the assets received in lieu of

payment, including vehicles, are covered for basic protection against fire, earthquake, AMIT,

violent theft and business assistance, according to Business Protection Policy No. 21117 with

A.I.G. Seguros Colombia S.A. Validity Term: From December 1, 2013 to November 30, 2014.

Reinstated or returned agreements of financial leasing products (General), are covered under

policy LGP - 281, all risk coverage from property damage (real estate, furniture and fixtures,

machinery and fixed equipment, fixed and mobile and/or portable electronic and/or electric

equipment), which is effective from September 1, 2013 to September 1, 2014.

Reinstated agreements of financial leasing products (Mobile Machinery and Equipment), are

covered under Policy No. 16886, coverage for mobile machinery and equipment (yellow

machinery), which is effective from November 1, 2013 to September 1, 2014.

- 60 -

Reinstated agreements of home leasing products are covered under Policy No. 8000, home

coverage, which is in effect from September 1, 2013 to September 1, 2014.

Allowance for assets received in lieu of payment and returned leasing assets- The movement

of the allowance for foreclosed assets received is as follows:

December 31, 2013

June 30, 2013

Initial balance $ 20,268.6 $ 17,386.3

Plus allowance charged to expenses of the period 5,173.4 3,632.0

Less reversal of allowance for foreclosed assets 2,250.7 749.7

$ 23,191.3 $ 20,268.6

9. PROPERTY AND EQUIPMENT, NET

Land $ 11,032.7 $ 11,432.8

Buildings 78,353.6 79,764.2

Equipment, furniture and fixtures 29,234.3 29,463.0

Computer equipment 62,397.1 62,417.2

Vehicles 1,888.4 2,069.4

Accumulated depreciation (100,226.0) (97,507.4)

Allowances (278.2) (593.5)

$ 82,401.9 $ 87,045.7

As of December 31 and June 30, 2013, there are insurance policies covering the risks of theft,

fire, earthquake, riot, mutiny, explosion, volcanic eruption, low voltage, loss or damage to

premises, offices and vehicles.

The depreciation charged to the expenses in the semesters ended on December 31 and June 30,

2013 was of $6,967.7, $7,502.1, and $27,963.5, $25,563.1, for own usage assets and assets

given on leasing, respectively.

The valuation of the fixed assets of the Bank and local Subordinated companies is supported by

the appraisals conducted in years 2012 and 2013.

During the second half of 2013, allowances for property and equipment amounting to $903.4

was made and $322.1 was reinstated. As of December 31 and June 30, 2013, allowances for

operatingleasing assets for $610.3 and $161.0 were made, respectively.

There are no mortgages or ownership restrictions on the same nor have they been pledged.

As of December 31 and June 30, 2013, the Bank had a share of 98% and 97.7%, respectively, in

consolidated properties and equipment.

- 61 -

10. OPERATING LEASING ASSETS, NET

December 31, 2013

June 30, 2013

Machinery and equipment $ 59,742.2 $ 63,144.4 Vehicles 226,951.0 209,817.6 Furniture and fixtures 66.4 66.4 Computer equipment 288.8 308.4 Computer software 0.7 0.7 Ongoing imports 19,909.4 9,728.9 Accumulated depreciation and amortization (94,861.5) (96,273.9) Allowance (4,582.2) (3,880.8) $ 207,514.8 $ 182,911.7 As of December 31 and June 30, 2013, the total depreciation charged to income for the assets

given in leasing was of $27,963.5 and $25,563.1, respectively.

11. OTHER ASSETS, NET

Assets to be given in leasing (1) $ 78,107.1 $ 61,521.8

Deferred charges (2) 38,809.7 50,265.3

Miscellaneous (3) 13,756.3 26,321.4

Prepaid expenses (4) 5,705.5 6,520.8

Deposits 3,214.5 4,382.8

Loans to employees 2,218.7 3,064.2

Artistic and cultural assets 1,025.4 1,031.7

Permanent contributions 116.6 116.6

Allowance (5) (1,081.8) (870.3)

$ 141,872.0 $ 152,354.3 (1) Assets to be given in leasing:

Fixed assets $ 46,776.4 $ 27,229.1

Computer equipment - 39.7

Machinery and equipment 13,970.4 11,901.6

Vehicles 17,360.3 22,351.4

$ 78,107.1 $ 61,521.8

(2) Deferred charges

The movement of deferred charges is as follows:

Remodeling $ - $ 51.1

Studies and projects - -

Computer software 20,279.7 24,995.9

Supplies and stationery 505.0 500.8

Improvement to properties leased 3,639.8 4,438.1

Commission for placement of securities 1,369.7 1,808.7

Deferred income tax (*) 12,562.8 14,393.9

Taxes 452.7 784.0

- 62 -

December 31, 2013

June 30, 2013

Deposits and current liabilities - 285.7

Advertising and publicity - 92.2

Others - 2,914.9

$ 38,809.7 $ 50,265.3

(3) Other Assets - Others

The detail of other assets, others, is as follows:

Surplus from advance payments $ 80.0 $ 11,806.5

Income tax advance payments 11,686.4 -

Income withholding 1,018.4 12,903.9

Consortium or joint ventures 641.2 1,198.2

Consignments in transit - -

Petty cash 9.3 9.6

Unpaid checks 4.8 122.8

Others 316.2 280.4

$ 13,756.3 $ 26,321.4

(4) Prepaid expenses

The detail of prepaid expenses, others, is as follows:

Insurance $ 2,577.2 $ 1,585.0

Maintenance of equipment 222.7 378.0

Leases 538.8 233.4

Others 2,366.8 4,324.4

$ 5,705.5 $ 6,520.8

(5) Allowance for other assets

The movement in the allowance for other assets is as follows:

Initial balance $ 870.3 $ 582.8

Plus:

Allowance for returned assets from car leasing 659.5 634.1

Allowance for unpaid checks 0.2 9.2

Allowance for assets to be placed on leasing 23.5 -

Loans to employees 4.4 5.2

Less:

Reimbursement of allowance for returned leasing

assets

411.2 325.9

Reimbursement of employee loans 13.5 14.7

Reimbursement of allowance for unpaid checks 27.9 18.4

Forgiveness on unpaid checks - 1.6

Write-off of assets to be placed on leasing 23.5 -

Write-offs of employee loans - 0.4

- 63 -

$ 1,081.8 $ 870.3

12. APPRAISALS, NET

December 31, 2013

June 30, 2013

Permanent contributions $ 8.2 $ 8.2

Property and equipment 117,860.9 109,399.7

Artistic and cultural assets 4,136.7 4,190.4

Investments available for sale 4,739.1 2,145.9

Mark to market of investments available for sale (122.4) (127.0)

$ 126,622.5 $ 115,617.2

13. DEPOSITS AND FINANCIAL CLAIMS

Deposits in checking accounts $ 2,089,235.8 $ 1,928,284.5

Term deposit certificates:

Less than 6 months 1,857,823.4 1,658,115.6

Equal to or longer than 6 months and less than 12

months 1,257,335.1 1,094,428.1

Equal to or longer than 12 months and less than 18

months 484,417.2 342,996.4

Equal to or longer than 18 months 1,118,111.3 1,273,784.0

4,717,687.0 4,369,324.1

Deposits in saving accounts 4,391,233.6 4,265,316.4

Others:

Banks and correspondents 9,298.4 115.9

Special deposits 38.6 38.6

Current liabilities from bank services 91,350.0 65,738.1

Bank collection services 545.3 6,178.6

102,232.3 72,071.2

$ 11,299,388.7 $ 10,634,996.2

The majority shareholding of the Bank as of June 30, 2013 and December 31, 2013 corresponds

to 82.9% and 84.4%, respectively, of deposits and financial claims.

- 64 -

14. LIABILITIES FROM MONEY MARKET AND RELATED TRANSACTIONS

December 31 June 30

Balance Rate Balance Rate

Ordinary interbank legal tender (1) $ - $ 125,000.0 3.16%

Investment repurchase commitment (2) 201,035.2 3.16% 170,675.6 3.25%

$ 201,035.2 $ 295,675.6

(2) As of December 31, 2013, it corresponds to:

Entity Initial Date Final Date Value

Banco de la Republica 12-30-2013 01-02-2014 $ 201,035.2

(1) As of June 30, 2013, it corresponds to:


Banco Agrario 06-28-2013 07-02-2013 $ 70,000.0

Banco Popular 06-27-2013 07-02-2013 5,000.0

Bancolombia 06-27-2013 07-02-2013 50,000.0

$ 125,000.0

(2) As of June 30, 2013, it corresponds to:


Banco de la Republica 06-28-2013 07-02-2013 $ 141,037.1

Correval 06-27-2013 07-02-2013 21,768.2

Valores Bancolombia 06-28-2013 07-02-2013 1,004.4

Acciones y Valores S.A. 06-28-2013 07-02-2013 3,810.5

Casa de Bolsa 06-28-2013 07-02-2013 556.2

Bolsa y Renta S.A. 06-28-2013 07-02-2013 1,342.4

Bancolombia 06-28-2013 07-02-2013 522.4

Comercializadora R Doron SAS 06-28-2013 07-02-2013 138.0

Doblefer S.A. 06-28-2013 07-02-2013 496.4

$ 170,675.6

There are no restrictions or limitations over these transactions.

The share of the Bank as of June 30, 2013 and December 31, 2013 corresponds to 96.8% and

0.1%, respectively, of short positions in consolidated money market and related operations.

15. BANK LOANS AND OTHER FINANCIAL LIABILITIES

The following is the detail of bank loans and other financial obligations in local and foreign

currency translated into local currency:

- 65 -

December 31

Up to 1 Year

Between 1

and 3 Years

More than

3 Years Total

Banco de Comercio Exterior (1) $ 381.5 $ 20,907.1 $ 60,033.2 $ 81,321.8

FINAGRO (2) 52.0 410.1 53,790.5 54,252.6

FINDETER (3) - 7,254.0 124,942.3 132,196.3

Foreign banks (4) 329,440.8 - - 329,440.8

Others (5) - - 372.0 372.0

$ 329,874.3 $ 28,571.2 $ 239,138.2 $ 597,583.5

(1) It includes 324 obligations in local currency for $78,125.0 with interest ranging from DTF (Fixed Term

Deposit Rate) -6 to DTF +5 and final maturities until 2027; and 11 obligations in foreign currency for

$3,196.8 with an interest rate from 0.38% to 2.40% and final maturity in 2018.

(2) It corresponds to 92 obligations in local currency with interest rates between DTF -3.5 to DTF +2.0 and final

maturities until 2025.

(3) It includes 72 obligations in local currency with interest from DTF -4 to DTF +4.3 and final maturities until

2027.

(4) It corresponds to 52 obligations in foreign currency with interest rates between 0.74% and 2.15% and final

maturities until August 2014.

(5) It corresponds to 6 financial leasing operations with final maturities until January 2017, interest rates from

DTF +0 to DTF +6 and purchase options ranging from $3.1 to $13.5 and an operation with the National

Planning Department with an interest rate of 1.84% and final maturity until November 2025.

June 30

Up to 1 Year

Between 1

and 3 Years

More than

3 Years Total

Banco de Comercio Exterior (1) $ - $ 10,262.4 $ 66,868.8 $ 77,131.2

FINAGRO (2) - 4,080.2 57,675.6 61,755.8

FINDETER (3) - 38.8 105,806.2 105,845.0

Foreign banks (4) 344,161.2 - - 344,161.2

Others (5) - 112.3 863.1 975.4

$ 344,161.2 $ 14,493.7 $ 231,213.7 $ 589,868.6

(1) It includes 446 obligations in local currency for $73,827.4 with interest rates ranging from DTF -6 to DTF +5

and final maturities until 2022; and 14 obligations in foreign currency for $3,303.8 with interest rates from

1.08% to 5.00% and final maturity until 2018.

(2) It corresponds to 101 obligations in local currency with interest rates between DTF -3.5% to DTF +1.0% and

final maturities until 2024.

(3) It includes 69 obligations in local currency with interest rates from DTF -4% to DTF +4.3% and final

maturities until 2027.

- 66 -

(4) It corresponds to 115 obligations in foreign currency with interest rates between 0.23% and 0.98% and final

maturities until April 2013.

(5) It corresponds to 9 financial leasing operations with final maturities until January 2017, interest rates of DTF

+0 and DTF +6 and purchase options ranging from $0.0 to $13.5 and two operations with the National

Planning Department with interest between 2.0% and 2.02% and final maturities until May 2014.

The following is the detail of foreign banks translated into local currency:

December 31, 2013

June 30, 2013

Bank of America $ 23,665.1 $ 17,175.7

Citibank 81,309.8 106,481.0

The Bank of Montreal 28,574.8 30,844.3

Mercantil Commercebank, N.A. 15,937.3 17,108.9

Standard Chartered Bank 7,536.7 21,439.7

Deutsch Bank A.G. 70,197.5 38,547.4

Wells Fargo Bank 79,651.6 112,564.2

Bank Of Nova Scotia 22,568.0 -

$ 329,440.8 $ 344,161.2

The following is the detail of interest in respect of banks and other financial obligations in local

and foreign currency translated into local currency:

Banco de Comercio Exterior $ 439.5 $ 317.3

FINAGRO 865.8 984.9

FINDETER 244.7 210.7

National Planning Department 0.4 1.1

Foreign banks 807.3 935.5

$ 2,357.7 $ 2,449.5

16. ACCOUNTS PAYABLE

Interests:

Deposits and financial claims $ 37,689.0 $ 38,325.7

Interbank Funds Purchased - 36.6

Bank loans 2,357.7 2,449.5

Investment securities outstanding 6,574.6 21,619.0

Others 1,561.4 1,572.5

48,182.7 64,003.3

Commissions and fees 2,859.8 1,717.3

- 67 -

December 31, 2013

June 30, 2013

Others:

Lease fees payable 17.4 23.0

Taxes 2,090.4 790.6

Dividends payable 76.8 82.1

Contributions on financial transactions 5,430.5 4,435.6

Sales tax 2,678.6 2,633.6

Promissory purchasers 70.1 251.6

Suppliers 53,776.2 45,260.1

Withholdings 14,683.2 12,404.3

Miscellaneous:

Payroll 6.2 6.2

Checks drawn not collected 3,792.2 5,283.0

Values to be reimbursed - 164.3

Special collections (1) 18,139.2 79,295.8

University agreement 303.8 461.6

Balances in favor of Visa 1,105.6 1,042.6

Entities with no account 52.5 72.6

Debtors’ Group Life insurance 1,431.1 1,313.6

MasterCard compensation 62.4 142.3

Surety bonds 3,838.4 3,854.8

Surplus payments to revolving loan 13,029.1 6,156.0

Unprocessed payments and deposits 3,465.8 12,280.0

Electron card compensation 10,777.8 14,980.2

Remittances negotiated 9.1 31.9

Prepayment Redeban cards 17,532.6 15,708.3

Prepayment Visa cards 3,886.1 3,884.6

National Fund of Guaranties 2,967.3 1,431.1

Payments to be applied 2,277.1 2,507.7

Cardif insurance 1,372.5 1,278.6

Automatic PSE payments 1,236.0 8,104.7

Automatic JPAT payments 1,102.5 796.4

Portfolio payments and disbursements 1,070.8 1,357.2

Others payable in local currency 2,024.9 5,217.3

Other miscellaneous accounts payable (2) 4,946.6 3,391.4

94,429.6 168,762.2

$ 224,295.3 $ 300,363.7

(1) As of December 31, 2013 it corresponds to revenues collected through official receipt of $5,692.3, Income

withholdings for $306.8 and revenues from custom taxes for $7,338.1 mainly. As of June 30, 2013, it

corresponds to revenues collected through official payment receipt for $30,078.5, Income withholdings for

$13,111.4 and revenues from custom taxes for $8,368.4, chiefly.

- 68 -

(2) As of December 31, 2013 it mainly corresponds to: Accounts payable for $717.8, leasing insurance for

$714.8, electronic transfers for $438.8, gift certificates for $370.0, payment order rejects for $360.7, balances

in favor of MasterCard for $336.9, life insurance of agreements for $276.5, electronic services agreement for

$272.5, insurance payable for $610.6, Credicash balances for $219.0, Visa compensation for $161.5,

remittances in transit for $103.3, employee loan discounts for $10.7, parafiscal contributions and

complementary plan for $2.5, miscellaneous leasing fees for $6.3 and others for $344.7. As of June 30, 2013

it corresponds to: Gift certificates for $292.6, balances in favor of MasterCard for $278.8, Visa compensation

for $226.9, various insurance payable for $1,009.5, electronic service agreement for $213.7, electronic

transfers for $468.4, employees loan discounts for $5.2, Credicash balances for $202.5, remittances in transit

for $47.6, accounts payable for $250.5, complementary health plan for $20.4, other accounts payable for

$360.7 and others for $14.6.

As of December 31 and June 30, 2013, the share of the Bank is 95% and 93.5%, respectively, in

the consolidated accounts payable.

17. LONG-TERM DEBT

December 31, 2013

June 30, 2013

Issuance Helm Bank S.A. $ 687,716.2 $ 902,767.3

Issuance Helm Leasing S.A. 45,147.0 45,147.0

$ 732,863.2 $ 947,914.3

As of December 31, 2013, the detail of long-term debt is as follows:

December 31, 2013

Payment Method Payment Method Payment Method

Total amount

issued: $300.0 $400.0 $300.4

Bonds offered: 200.0 400.0 400

Nominal value: 1,000 1,000 1,000

Current amount: 200,247.0 184,740.0 302,729.2

Effective interest

rate: Series B60 CPI + 4.03% or 4.6% AV

Series B36 CPI + 3.0% or

3.2% AV


3.2% AV

Series B120 CPI + 5.04% or 5.7% AV


3.7% AV


3.7% AV

Series D36 fixed rate 6.19% or

6.6% TV

Series B84 CPI 4.12% or

4.3% AV


4.3% AV

Series E36 IBR 1.29% or 1.9% MV

Series E36 IBR 1.64% or

1.7% MV


1.7% MV

Redemption

term: Between 36 and 120 Between 36 and 84 Between 36 and 84

Guaranty. Backed by issuer Backed by issuer Backed by issuer

Payment: Negotiable. Transfer by

endorsement

Negotiable. Transfer by

endorsement


endorsement

- 69 -

The following is the detail of the bonds assumed by Helm Bank with the merger of Helm

Leasing:

December 31, 2013

Eleventh Issue I Eleventh Issue II Twelfth Issue I

Authorized 100,000 47,311 140,000

Nominal value 1,000 1,000 1,000

Current default 15,898 19,801 9,448

Effective interest rate

Series A60 DTF + 3.10%

Series B84 CPI + 7.10%

Series D60 FT + 12.95%









Series D60 FT + 11.50.%


Payment method DTF – TV, TF TV, CPI AV DTF - TV, CPI AV DTF - TV, CPI TV- TF TV

Redemption terms

Minimum 24 and maximum 84

months


months

Minimum 36 and maximum

84 months

Guarantee No specific guaranty other than

the issuer’s support

No specific guaranty other than the

issuer’s support

No specific guaranty other

than the issuer’s support

Payment


endorsement


endorsement


endorsement

As of June 30, 2013, the detail of long-term debt is as follows:

June 30, 2013

Payment Method Payment Method Payment Method

Total amount

issued: $300.0 $400.0 $300.4

Bonds offered: 200.0 400.0 400

Nominal value: 1,000 1,000 1,000

Current amount:

200,247.0 400,000.0 302.520,3

Effective interest

rate: Series B60 CPI + 4.03% or 4.6% AV


3.2% AV


3.2% AV

Series B120 CPI + 5.04% or 5.7% AV


3.7% AV


3.7% AV

Series D36 fixed rate 6.19% or

6.6% TV


4.3% AV


4.3% AV

Series E36 IBR 1.29% or 1.9% MV


1.7% MV


1.7% MV

Redemption

term: Between 36 and 120 Between 36 and 84 Between 36 and 84

Guarantee. Backed by issuer Backed by issuer Backed by issuer

Payment: Negotiable. Transfer by

endorsement


endorsement


endorsement

- 70 -

The following is the detail of the bonds assumed by Helm Bank with the merger of Helm

Leasing:

June 30, 2013

Eleventh Issue I Eleventh Issue II Twelfth Issue I

Authorized 100,000 47,311 140,000

Nominal value 1,000 1,000 1,000

Current amount 15,898 19,801 9,448

Effective interest rate












Series D60 FT + 11.50.%


Payment method DTF – TV, TF TV, CPI AV DTF - TV, CPI AV DTF - TV, CPI TV- TF TV

Redemption terms


months


months

Minimum 36 and maximum

84 months

Guarantee No specific guaranty other than

the issuer’s support

No specific guaranty other than the

issuer’s support

No specific guaranty other

than the issuer’s support

Payment


endorsement


endorsement


endorsement

Securities were registered at their nominal value with no premium or discount.

18. OTHER LIABILITIES

December 31, 2013

June 30, 2013

Consolidated labor obligations (1) $ 11,317.1 $ 9,327.1

Revenues received in advance 20,891.8 18,877.6

Deferred installments 4,460.3 7,807.0 Retirement pensions 83.1 78.5 Deferred income tax 36,006.7 26,314.9 Cancelled accounts 95.2 109.8 Installments to be applied to obligations 15,182.1 13,969.6 Cash surplus 119.9 113.0 Surplus in exchange 1.0 1.0 Consortia or joint ventures 255.7 325.4 $ 88,412.9 $ 76,923.9 (1) Labor obligations

Severance pay $ 4,206.9 $ 2,098.1

Interest on severance pay 492.4 124.4

Vacations 5,893.3 6,378.4

Vacation bonus 724.6 726.2

$ 11,317.1 $ 9,327.1

- 71 -

As of December 31 and June 30, 2013, the share of the Bank is 99% and 98.7%, respectively, in

other consolidated liabilities.

19. ESTIMATED LIABILITIES AND PROVISIONS

December 31,

2013 June 30,

2013 Severance pay $ - $ 149.9 Interest on severance pay - 9.0 Vacations 30.6 247.0 Legal bonus 10.30 34.4 Extra-legal bonus - 261.7 Bonuses 9,062.40 4,773.2 Seniority bonus 830.00 1,382.9 Other benefits 1,511.80 1,414.7 11,445.10 8,272.8 Taxes: Income and supplementary 57,853.30 76,606.9 Industry and commerce 3,815.10 3,239.2 Other taxes 116.3 116.3 61,784.7 79,962.4 Others: Interest 28.2 21.2 Contributions and affiliations 1,182.1 1,335.3 Penalties and fines 14,219.2 13,582.2 Miscellaneous 15,381.1 16,165.7 Minority interest 8.1 - 30,810.6 31,104.4 $ 104,048.5 $ 119,339.6 As of December 31 and June 30, 2013, the share of the Bank is 98% and 94.6% in consolidated

estimated liabilities and provisions, respectively.

20. EQUITY

Capital Stock- The capital of the Parent Company as of December 31, 2013 and June 30, 2013

is represented by 4,625,826,141 subscribed and paid-up shares, with a nominal value of $50

pesos, amounting to a total of $231,296.6.

In December 2007, the Bank conducted the public issuance of non-voting preferential shares

totaling $265,647.5, equivalent to 565,207,483 shares at an award price of $470 per share.

As of December 31 and June 30, 2013, the Bank has not repurchased its own shares.

- 72 -

Premium on paid-in capital- Corresponds to the difference between the value paid for the share

and its nominal value.

The shares’ placement premium for common shares is composed as follows:

December 31, 2013

June 30, 2013

Premium on paid-in capital for common shares $ 307,711.8 $ 307,711.8

Number of common shares 1,116,767,542 1,116,767,542

There was no increase for the second half of 2013

Thus Premium on paid-in capital for preferred shares consists of the following:

Premium on paid-in capital for preferred stock $ 226,387.9 $ 226,387.6

Number of preferred shares 571,749,459 571,749,459

The increase in the second half of 2013 was generated by the payment of dividends in shares

from the profits of June 2013, the subscription value of which was $538.67 pesos with a

nominal value of $50 pesos, generating $488.67 pesos per share over 469 shares.

Legal reserve - In accordance with legal provisions, the Bank and local Subordinated

companies must establish a legal reserve of 10% of liquid profits of each year up to 50% of the

subscribed capital, when intending to cover losses in excess of undistributed earnings. The

reserve cannot be used to pay dividends or to cover expenses or losses during the time in which

the entities have undistributed profits.

Other reserves – The increase in the first half of 2013 was generated by the payment of

dividends in shares from the profits of December 2012, the subscription value of which was

$500 pesos with a nominal value of $50 pesos, producing $450 pesos per share over $132,721

shares.

For tax positions $ 9,599.2 $ 2,785.9

For the protection of investments - 22,660.5

For the payment of dividends 14,346.8 168,350.2

$ 23,946.0 $ 193,796.6

Other reserves - Statutory and occasional reserves are available to the Shareholders’ Meeting of

the Bank and Subordinate Companies as appropriate.

- 73 -

21. CONTINGENT ACCOUNTS

Contingent accounts debit-

December 31, 2013

June 30, 2013

Loan portfolio interest $ 11,122.4 $ 14,444.4

Financial leasing interest 1,092.2 4,766.5

Securities handed over in closed and simultaneous

repo operations 205,212.3 164,254.1

Options rights – speculation 145,603.7 265,997.8

Fees and penalties in leasing agreements 440.8 1,608.3

Contributions pending 1.8 1.9

Fees receivable 3,755,478.6 3,615,266.4

Purchase options 159,998.2 161,368.0

Other contingencies 1,909.9 2,104.1

$ 4,280,859.9 $ 4,229,811.5

Contingent accounts- credit

Guaranties $ - $ -

Securities received from simultaneous repo

operations

503.1 30,456.2

Bank guaranties 418,719.7 353,036.8

Credit letters denominated in local currency 9,434.5 16,456.3

Credit letters denominated in foreign currency 65,411.9 110,964.0

Credit letters confirmed in local currency 59,643.9 39,924.7

Credit letters confirmed in foreign currency 3,577.4 103.0

Credit openings 996,074.1 894,179.4

Obligations from options 95,370.6 139,431.5

Other contingencies from creditors 26,916.0 26,916.0

$ 1,694,550.6 $ 1,611,467.9

22. MEMORANDUM ACCOUNTS

Debit:

Assets and securities handed over in custody $ 11,914.0 $ 10,422.7

Fair exchange price of primary covered long

positions 188,419.1 194,183.3

Assets and securities handed over as guaranty 2,370.0 783.1

Valuation of foreclosed assets 3,119.2 1,319.1

Remittances and/or other effects of payment 1,190.3 1,417.2

Assets written off 368,591.1 313,632.3

Bonds not placed 500,000.6 500,000.6

- 74 -

December 31, 2013

June 30, 2013

Inflation adjustment - assets 4,437.5 5,336.2

Distribution of subscribed and paid-up capital 231,291.3 231,296.6

Completely depreciated properties and equipment 43,469.8 35,086.7

Tax value of assets 351,441.7 351,294.5

Allowance for debtors in settlement processes 40.8 40.0

Marketable debt securities 348,110.8 345,984.2

Held to maturity investments 399,072.8 354,312.1

Investments available for sale 671,687.5 822,489.3

Other memorandum accounts – debit 298,469.4 204,046.4

$ 3,423,625.9 $ 3,371,644.3

Credit:

Assets and securities received in custody $ 1,317,871.9 $ 1,745,773.3

Assets and securities received over as security for

future loans 249,686.1 201,096.1

Guaranties pending payment 122,894.7 119,773.6

Assets and securities received as suitable guaranty 2,020,794.1 1,800,724.6

Assets and securities received as other guaranties 767,541.4 759,996.0

Payments received 16,639.6 69,563.4

Recoveries of assets 8,305.3 5,528.3

Adjustments due to mark to market of equity 83,107.7 83,107.7

Capitalization due to mark to market of equity 83,107.7 83,107.7

Return of negotiable fixed income investment 73,173.3 30,622.3

Tax value of equity 1,057,763.7 1,057,763.7

Rating of financial leasing agreements 2,519,130.6 2,485,058.2

Rating of operating leasing agreements 203,151.5 187,828.2

Rating of housing portfolio 28,155.9 18,962.1

Rating of consumer portfolio – suitable guaranty 72,155.7 45,231.5

Rating of consumer portfolio – other guaranties 1,485,306.0 1,392,337.5

Rating of commercial portfolio – suitable guaranty 167,478.0 133,904.4

Rating of commercial portfolio – other guaranties 6,570,742.0 6,661,657.3

Other memorandum accounts credit 4,278,697.1 4,088,778.5

$ 21,125,702.3 $ 20,970,814.4

23. TRANSACTIONS WITH RELATED PARTIES

The main shareholders, members of the Board of Directors and the companies where the Bank

holds investments over 10% or there are administrative, financial or economic interests, are

considered related parties. In addition, the companies where the shareholders or members of the

Board of Directors have an interest above 10% are also considered related parties.

The following is the detail of the operations with the related parties of Helm Bank S.A.

- 75 -

Operations held with shareholders - The following is the detail of the balances and payments

made to shareholders with a share greater than 10%:

December 31, 2013

June 30, 2013

Assets:

Loan portfolio $ 3.7 $ -

Treasury operations-swaps 481.7 -

Liabilities:

Deposits and financial claims $ - $ 6,0

Operations with Affiliates – As of June 30, 2013 and December 31, 2012, the following is the

detail of the assets and liabilities in operations held among the affiliates where the Bank has a

share of over 50%:

The operations held with the affiliates were carried out under the general conditions ruling in

the market for similar transactions.

Helm Comisionista de Bolsa S.A.: Liabilities: Deposits and financial claims $ 820.9 $ 3,743.2 Accounts payable 1.2 1.7 $ 822.1 $ 3,744.9 Helm Fiduciaria S.A.: Liabilities: Deposits and financial claims $ 2,701.0 $ 2,862.0 Accounts payable 1.2 1.2 $ 2,702.2 $ 2,863.2 Helm Bank Panama S.A.:

Assets:

Cash $ 366.5 $ 1,311.5

Helm Bank Cayman:

Liabilities:

Assets from market transactions $ - $ -

Helm Comisionista de Bolsa S.A.

Helm Bank S.A.:

Assets:

Cash $ 820.9 $ 3,743.2

Accounts receivable 1.2 1.6

$ 922.1 $ 3,744.8

- 76 -

December 31, 2013

June 30, 2013

Helm Bank Panama S.A.:

Assets:

Cash $ 5.5 $ 5.2

Helm Fiduciaria S.A.

Helm Bank S.A.:

Assets:

Cash $ 2,701.0 $ 2,862.0

Accounts receivable 1.2 1.2

$ 2,702.2 $ 2,863.2

Helm Bank Panama S.A.

Liabilities:

Deposits and financial claims $ 366.5 $ -

Helm Comisionista de Bolsa S.A.:

Liabilities:

Deposits and financial claims $ 5.5 $ 5.2

Helm Bank Cayman:

Liabilities:

Deposits and financial claims $ 666.8 $ 3,017.7

Helm Bank S.A.:

Assets:

Cash $ - $ -

Accounts receivable - -

$ - $ - Helm Bank Panama S.A.: Assets: Cash $ 666.8 $ 3,017.7 As of December 31, 2013 and June 30, 2012, the following is the detail of the revenues and

expenses in operations held among affiliates where the share of the Bank in each one of them is

greater than 50%:

Helm Bank S.A.

Helm Fiduciaria S.A.:

Operating revenues:

Commissions $ 4.2 $ 3.9

- 77 -

December 31, 2013

June 30, 2013

Non-operating revenues:

Leases $ 195.1 $ 174.7

Direct operating expenses:

Interest $ 83.4 $ 93.2

Commissions 6.8 5.5

Leases 116.6 118.1

$ 206.8 $ 216.8

Non-operating expenses:

Miscellaneous $ 11.8 $ -




Interest - -

Leases 35.5 10.1

$ 38.7 $ 14.5

Non-operating expenses

Leases $ 74.9 $ 73.5



Interest 38.7 53.5

$ 53.1 $ 92.5



Interest $ 1.7 $ 0.2

Helm Bank Cayman S.A.:


Interest $ - $ 1.5

Helm Fiduciaria S.A.

Helm Bank S.A.:


Interest $ 83.4 $ 93.2

Commissions 6.9 5.4

$ 90.3 $ 98.6

- 78 -

December 31,

2013 June 30,

2013


Leases $ 116.6 $ 118.1

Miscellaneous 11.8 -

$ 128.4 $ 118.1


Bank commissions $ 4.2 $ 3.9

Leases 195.1 174.7

$ 199.3 $ 178.6



Commissions $ - $ -

Helm Comisionista de Bolsa S.A.

Helm Bank S.A.:

Operating and non-operating revenues:

Returns $ 38.7 $ 53.5

Commissions 14.4 39.0

$ 53.1 $ 92.5


Leases $ 110.4 $ 83.6

Non-operating expenses

Miscellaneous-Others $ 3.2 $ 4.4

Helm Fiduciaria S.A.:

Operating expenses:

Advertising $ - $ -


Helm Bank S.A.:

Direct operating revenues:

Interest $ - $ -

Helm Bank Cayman S.A.:



- 79 -

December 31, 2013

June 30, 2013

Helm Bank Cayman S.A.

Helm Bank S.A.:


Interest $ - $ 1.5

Helm Bank Panama S.A.:



Operations with associates - then detailed balances and significant commitments to

transactions with partners:

June 30

Portfolio Deposits

Gecolsa S.A. $ 41,637.3 $ 10,568.2

Parques y Funerarias 1.6 32.2

Inversiones e Inmobiliaria - 240.3

Recordar Prevision Exequial 28.9 73.1

Colempresas S.A. 991.7 55.0

$ 42,659.5 $ 10,968.8

24. OTHER OPERATING INCOME AND EXPENSES

Other operating revenues:

Discount to suppliers $ 73.3 $ 89.8

Recoveries of portfolios 86,568.2 39,188.0

Recoveries of accounts receivable 13,716.8 5,149.4

Sale of check books 2,917.7 2,980.6

Commercial information 31.9 30.9

Wires, transportation and telephones 110.6 104.1

Joint ventures 446.8 648.2

Others 9,161.1 10,197.3

Financial component of financial leasing 162,520.2 163,872.7

$ 275,546.6 $ 222,261.0

Other operating expenses:

Taxes $ 33,254.9 $ 30,244.1 Contributions and affiliations 6,184.9 5,682.3 Insurance 18,765.5 17,165.8 Maintenance and repairs 13,325.1 11,658.4 Adaptations and installations 213.4 202.9 Cleaning and surveillance service 2,458.5 2,345.9 Temporary services 1,896.0 1,769.2 Depreciation of leasing assets 27,963.5 25,563.1

- 80 -

December 31, 2013

June 30, 2013

Advertising and publicity 3,584.9 3,029.4 Public relationships 294.9 294.9 Utilities 2,052.0 2,151.3 Electronic data processing 4,659.5 4,264.9 Travel expenses 415.6 359.9 Transportation 3,586.9 3,231.9 Supplies and stationery 1,617.9 1,559.7 Joint ventures 232.0 228.8 Donations 2.8 595.7 Administration costs for acquisition of Visa 1,014.9 841.3 Promotion - Credimillas 2,801.8 2,402.7 Administration costs of Visa issuer 3,109.7 2,610.7 Administration costs of MasterCard issuer 2,570.8 2,205.8 Costs of ATMs 510.6 496.7 Property management fees 715.8 720.2 Others 9,289.3 8,073.6 $ 140,521.2 $ 127,699.2

25. OTHER PROVISIONS

Cash $ 35.9 $ 221.3

Financial leasing assets - 161.0

Foreclosed Assets 5,832.9 4,266.0

Properties and equipment 903.4 -

Communications service 142.4 473.6

Others 349.4 232.4

$ 7,264.0 $ 5,354.3

26. NON-OPERATING INCOME AND EXPENSES

Non-operating income

Income from sale of assets foreclosed assets (1) $ 1,853.8 $ 7,238.8 Income from sale of properties and equipment 8,153.0 489.6 Income from sale of other assets 53.8 - Leases 1,518.1 1,094.2 Recoveries: Portfolio written-off (2) 8,305.3 5,528.3 Reimbursement of properties and equipment 322.1 72.4 Reimbursement of foreclosed assets 2,661.9 1,075.5 Other recoveries (3) 2,046.8 8,098.2 Stand-alone trust fund - 63.1 Consortium and Joint Ventures 311.1 - Interbank cash 62.9 1,252.0 Other revenues 576.0 10.8 $ 25,864.8 $ 24,922.9

- 81 -

(1) As of December 31, 2013 it mainly corresponds to the profits generated from the relocation and realization of

movable and immovable assets reinstated in leasing agreements amounting to $735.5 and $1,118.3,

respectively. As of June 30, 2013, it mainly corresponds to the profits generated from the relocation and

realization of properties reinstated in leasing agreements, for a value of $6,860.9.

(2) As of December 31, 2013 it corresponds to recoveries of portfolios written-off in previous periods for

products of the ordinary portfolio for $4,382.8, credit card for $1,030.8, revolving loan for $1,558.9, leasing

portfolio for $1,290.1 and overdrafts for $42.7. As of June 30, 2013 it corresponds to recoveries of portfolios

written-off in previous periods for products of the ordinary portfolio for $3,336.8, credit card for $784.0,

overdraft for $19.8, leasing operations for $444.8 and revolving loan for $942.9.

(3) As of December 31, 2013, it mainly corresponds to: VISA insurance policy payment for $625.0, payment of

account payable for $164.1, reinstatement of other provisions for $309.1, reinstatement of provision for other

assets for $44.3, recoveries from claims for $263.0 and reinstatements from prior years for $641.3. As of June

30, 2013, it mainly corresponds to: Higher value provisioned in December 2012 for the Finance

Superintendency support fee for $206.7, reinstatement of interest on refinanced leasing agreements completed

in the second half of 2012 for $531.4, legalization of reconciliatory items for the sale of assets reinstated for

$190.1, reinstatement of provisions from previous years for $196.1, recoveries from claims for $460.6,

reinstatement of provision for other assets for $223.8 and reinstatement of tax provisions for $6,289.5.

Non-operating expenses and costs:

December 31, 2013

June 30, 2013

Loss in sale of foreclosed assets $ 1,299.4 $ 714.1

Loss in sale of properties and equipment 226.1 303.5

Loss from accidents – operating risk 1,472.9 1,643.5

Penalties and fines 1,366.1 1,129.0

Interest on fines 3.4 57.6

Expenses from assets received in lieu of payment 771.5 547.9

Amortization of cost surplus 731.0 967.9

Interbank cash - -

Others 1,650.0 1,077.5

$ 7,520.4 $ 6,441.0

27. INCOME TAX PROVISION

The submission of consolidated information in income statements is not permitted by

Colombian tax rules; therefore, tax losses from a consolidated subordinate cannot be used to

offset the taxable income of another consolidated subordinate. The income tax rate for

December 31 and June 30, 2013 is 34%, for Helm Bank S.A. and other local Subordinated

companies.

For the purposes of the calculation of the income tax, since 1999 it is presumed that the taxable

income will not be less than three percent of the liquid equity of the last day of the immediately

preceding year; exempt income can be deducted from this figure. Inflation-adjusted tax losses

recorded as of December 31, 2002 can also be offset.

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In accordance with Law 863/2003, the Parent Company is subject to the transfer pricing regime

for operations conducted with foreign economic related parties. No additional tax is expected as

a result of the 2012 transfer pricing study.

Tax reform – Below, the main changes to the tax system from 2013, introduced by Law 1607

of December 26, 2012 are summarized:

1. The income tax rate reduces from 33% to 25% since 2013;

2. The income tax for equity (CREE) is created since 2013. This tax is calculated based on the

gross revenues obtained, minus non-income revenues, costs, deductions, exempt income

and occasional earnings; at a rate of 9% until 2015 and 8% for the following years. For the

years 2013, 2014 and 2015 the applicable rate will be 9%. The offset of tax losses or

excesses of presumptive income are not permitted in the determination of the basis for the

liquidation of the CREE tax;

3. Legal entities subject to the income tax are exempt from the payment of parafiscal

contributions in favor of the National Learning Service – SENA and the Colombian Family

Welfare Institute - ICBF, corresponding to workers who earn, considered individually, up

to 10 minimum legal wages in force. This exemption begins from the implementation of

the income withholdings system for the collection of the income tax for equity CREE (and

in any case, before July 1, 2013);

4. It is established that solely for tax purposes, the references contained in the tax rules

relating to accounting standards will continue in force during the four years following the

entry into force of the International Financial Reporting Standards (2015);

5. The concept of permanent establishment is defined as a fixed location where a foreign

company performs its businesses in the country;

6. The procedure for calculating taxed and untaxed profits for companies that distribute

profits to their partners or shareholders is modified; and,

7. New rules concerning the transfer pricing regime in operations with economic related

parties located in trade free zones are introduced and certain operations of taxpayers with

foreign entities connected with a permanent establishment in Colombia or abroad are

regulated.

28. RATIO OF ASSETS WEIGHTED BY RISK LEVEL – TECHNICAL EQUITY

The technical equity cannot be less than 9% of assets in national and foreign currency weighted

by credit and market risk level, as stated in Article 2 of Decree 1720/2001. Compliance is

verified on a quarterly and consolidated basis with its Subordinated companies.

The classification of risk assets in each category is carried out by applying the percentages

determined by the Finance Superintendency for each of the items of assets, contingent accounts,

businesses and trust accounts established in the Sole Chart of Accounts (PUC).

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As of December 31 and June 30, 2013, the ratio achieved by the Bank and its Subordinated

companies was of 11.18% and 11.26%, respectively.

Furthermore and taking into account the new regulations for the calculation of the solvency

margin of Decree No. 1771/2012, the Management charged a total of $154,0 to the Legal

Reserve from retained earnings in the month of July 2013.

29. SUBSEQUENT EVENTS

The purchase of most of the shareholding of Helm Bank and its subsidiaries by Banco

CorpBanca Colombia was formalized on August 6, 2013.

Banco CorpBanca Colombia belongs to Grupo Saieh, one of the leading economic

conglomerates in Chile. Its founder, Alvaro Saieh, has close ties with Colombia. CorpBanca

Colombia is part of CorpBanca Chile, an entity that the Superintendency of Banks and

Financial Institutions of Chile ranks as the fourth largest private bank in that country for

placements exceeding US$20,687 million as of June 30, 2013. It is an economic agent with a

team of over 3,500 collaborators, with which it has achieved a market share of ten percent

(10%).

Helm Bank and CorpBanca Colombia will continue operating independently in terms of the

service of branches, operational and technological processes, as well as in the offering of

products and services, in respect of which no integration processes will be undertaken in the

short term.

Banco CorpBanca Colombia has already established the management team that will be

responsible for the direction of the future integrated bank.

Helm Bank S.A. and Subsidiary Companies. Notes... · Helm Bank Cayman was notified by the Monetary...

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