Terra BoligKreditt AS

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• Terra BoligKreditt AS
• Investor Presentation
• August 2009

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Introduction
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Norwegian Economy Stable outlook

• After a modest fall in mainland GDP this year,
  the Central Bank expects normal growth in 2010.
• Unemployment will rise and wage growth will
  return to normal next year.

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Real GDP growth rate - Growth rate of GDP volume
- percentage change on previous year
Source EuroStat
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• Norway Strong government finances and
  macroeconomic fundamentals
• Rock solid economy, benefiting from strong oil
  and gas revenues
• GDP per capita of NOK 534,440 in 2008
• Government pension fund NOK 2,385 bn as of
  30.06.2009
• Stable outlook for Norwegian property market
• (sources Statistics Norway, Norwegian Central
  Bank)

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Governmental stimulus actions
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Norwegian Covered Bond legislation Role of
Covered bonds in Norway
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Norwegian Covered Bond framework

• Special banking principle
• Covered Bonds may only be issued by specialised
  credit institutions supervised by the Norwegian
  FSA
• Eligible collateral
• Mortgage assets
• Residential property 75 LTV
• Commercial property 60 LTV
• Derivative agreements
• Substitution assets, max 20 of cover pool
• Monitoring of collateral value
• In case of significant value impairment, a new
  prudent value has to be established. The part of
  the loan exceeding LTV 75 (residential) and LTV
  60 (commercial) are not to be included when
  calculating the value of the pool
• ALM requirements
• Matching requirements to control interest rate
  and FX risk and payment ability

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Norwegian Covered Bond framework

• Supervision by an Independent Inspector
• An independent inspector, appointed by the
  Norwegian FSA, supervises assets and liabilities,
  and the compliance with the requirement laid down
  in legislation
• Bankruptcy proceedings
• Covered pool, covered bonds and secured
  derivatives are separated from the bankruptcy
  estate
• Holders of covered bonds and secured derivatives
  have a preferential claim on the cover pool
• Timely payment assured for covered bond holders
  and secured derivatives counterparts
• Risk weighting and ECB eligibility
• Covered bonds are 10 risk weighted in Norway and
  comply with CRD
• Eligible for 10 risk weight in EU member states
• ECB eligible

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Role of the regulator

• Only a specialised mortgage credit institution
  with governmental licence is entitled to issue
  Norwegian covered bonds.
• This licensed credit institution is supervised by
  the Norwegian FSA, which also appoints an
  independent inspector.
• The inspectors role is, on a regularly basis, to
  oversee that the register (cover pool and covered
  bonds) is correctly maintained, and to review
  compliance with the requirement concerning the
  balance principle.
• The inspector shall regularly inform the FSA of
  his observations and assessments.
• Both the FSA and the inspector are entitled to
  receive all relevant information about the
  business, and may conduct investigations at the
  premises of the institution.

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Covered bonds are systemically important

• Covered bonds are the main driver for the
  norwegian governments financial rescue plan
  Swap agreement of CBs for Governmental
  certificates with the Central Bank
• Central bank and secretary of finance encourages
  the use of CBs as funding instruments.
• As opposed to Sweden, Norwegian firms can access
  third party liquidity

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Terra Gruppen and its member banks
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• Terra is a banking alliance in Norway
• Terra is a strategic alliance of local Norwegian
  savings banks
• Terra is also a finance group
• The shareholder banks in Terra-Gruppen AS will
  distribute the groups financial products

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• The Terra banks are the third largest financial
  group by number of clients
• Strong support from 78 owner banks and OBOS with
  strong capital base
• OBOS Nordic's largest housing cooperatives and
  condominium association, 9.9 stake in TBK and 2
  stake in terra group holding company.

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Terra-Gruppen AS - more than a holding company

• The Terra banks business is 80 retailed focused
  offering products in
• Deposit and Lending (on balance)
• Lending off balance by TBK
• Insurance
• Pension plans
• Mutual funds
• Credit- and debit card
• Etc
• All products (except own lending and deposit) are
  produced or provided by Terra-Gruppen
  subsidiaries

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Terra-Gruppen AS - more than a holding company
(II)

• All banking business, including internet banking,
  of the Terra banks is based on the Terra
  IT-platform provided by SDC (owned 19 by
  Terra-Gruppen)
• The IT-agreements with the banks are perpetual
  and may from the Terra banks side only be
  terminated with three years notice (from
  year-end)
• All the support and development resources
  (personnel) is outsourced to and employed in
  Terra Gruppen, Terra Services and Terra Call
  centre

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Summary information about the banks in the Terra
Group

• 78 smaller savings banks
• Total gross lending MNOK 150
• Total assets MNOK 181
• Geographically diversified
• Diversified management

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Historical losses on loans during the Norwegian
banking crisis 1987 - 93
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Net profit in of total assets during the
Norwegian banking crises 1987 - 93
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Terra BoligKreditt
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Terra BoligKreditt- a very low risk and
transparent covered bond issuer

• Purpose
• The purpose of Terra BoligKreditt is to provide
  the Terra savings banks with a considerable part
  of their funding needs, and to reduce the future
  liquidity risk for the groups banks.
• Strategy
• Terra BoligKreditt shall provide the Terra
  savings banks with extra value by financing a
  considerable part of their residential mortgages
  (LTV 60) by issuing covered bonds.

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Business concept - Terra BoligKreditt

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Terra BoligKreditt (II) - a very low risk and
transparent covered bond issuer
A key and integral part of the Terra
Group Covered bonds are the backbone of the
Norwegian Governments Action plan for the
financial industry puts TBK in the central
position
Prudent underwriting standards Max LTV ratio 60
(covered bond legislation allows 75
LTV) Normally mortgages is limited to 3 x yearly
income
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The Terra banks CDs and bonds
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Funding Strategy and Activity

• Temporarily changes in funding strategy due to
  the special market conditions
• Use of CBs as collateral for liquidity support
  from Norges Bank
• Terra BoligKreditt is set up to grow organically
  with the distributors demands
• expects a continuing strong growth in the
  mortgage portfolio for the next 2-3 years
• Terra BoligKreditt aims to be a frequent borrower
  both in the domestic and international market
• Goal to have a diversified investor base

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TBK based on Danish model

• Terra Boligkreditt is based on model by
  Totalkredit, Denmark.
• Representative in the board during initial stages
• Developed the concept of cover pool safety even
  further than the Danish model.

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• Cover pool consists of prime Norwegian
  residential mortgages with low loan-to-values
  no commercial real estate
• Terra distributors are encouraged by guarantees
  to pass high quality loans to Terra BoligKreditt
• Terra BoligKreditt contractually commits to
  maintain a minimum over-collateralisation at any
  time (no minimum required by Law)
• Refinancing risk is lower than in many other
  jurisdictions as floating rates can be reset and
  margin would always be retained by the pool
• Swaps structured to ensure full protection and to
  survive issuer's insolvency.

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• High quality mortgage portfolio
• No default loans or losses since start-up
• First loss guarantees on all loans from the
  distributors
• Allows only 60 LTV (covered bond legislation
  allows 75 LTV)
• 5 over-collateralisation in the cover pool
  (contractually committed)
• Publicly announced liquidity requirement of 6

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Guarantees from the banks
Moodys The members of the Terra Group are
incentivised by guarantee obligations to pass
high quality loans to the issuer.
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Underwriting criteria- The ability to repay the
loan

• Normally mortgage is limited to 3 x income
  (joint)
• All applications are income-verified

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Underwriting criteria- The collateral offered as
security

• Max LTV 60
• The value of the property offered as collateral
  must be rigorously documented
• Valuation cannot be older than 12 months at the
  date of disbursement
• The collateral of mortgage portfolio is
  re-valued on a quarterly basis

All third-party valuations need to be based on a
physical survey of the property
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Strengths of the Terra BoligKreditt programme

• Distribution of residential mortgages by
  conservative savings banks with close
  relationship to customers
• First loss guarantee from the banks on portion of
  loan gt 50 LTV
• Contractual commitment of 5.00
  over-collateralisation in the cover pool
• Origination on loan-by-loan basis in strict
  compliance with Terra BoligKreditt credit manual
• Prudent underwriting standards ensure superior
  performance on loans book
• Max LTV ratio 60 (covered bond legislation
  allows 75 LTV)
• Normally mortgages is limited to 3 x yearly
  income (joint)

• No loans ever being delinquent for more than 90
  days
• No losses ever being registered in respect of
  mortgages

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Cover Pool
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Assets

• The assets in the cover pool are geographically
  diversified throughout Norway.
• Less price volatility than urban regions

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Price development by geographical region

• Source Eiendomsverdi May update

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Summary Cover Pool (As of 30 June 2009)

• NOK EUR
• Size Cover Pool 15,660,542,987
  1,736,587,158
• Average Loan Balance 1,274,354
  141,312.26
• Number of Loans 12,289
• Residential/commercial 100 Norwegian
  residential mortgages
• Weighted Average Original LTV 47.3
• Weighted Average Current LTV
  46.9
• Weighted Average Seasoning 15 months
• Weighted Average Remaining Term 19.7
  years
• Pool Status (ie. performing) 100
• FX rate 30 June 2009 1 EUR 9.018 NOK

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12 series issued under the EMTN program- Access
to the market since debut in august 2007
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Redemtion profile
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Asset-Liability matching

• Weighted average maturity gap (30.06.2009)
• Weighted remaining time to maturity of assets
  235.96 months (19.66 years)
• Weighted maturity of liabilities 49.81 months
  (4.15 years)
• Gap 186.15 months

does not take into account repurchase of bonds
in swap agreement with Norges Bank
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CB Continuity
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Liquidity strategies

• Terra BoligKreditt shall maintain a minimum
  liquidity of 6 of the total funding balance
  (publicly announced)
• All the covered bonds issues have a soft bullet
  extension period of one year.

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Liquidity Facilities

• 1 bn NOK liquidity facility with DNB Nor Bank ASA
• 3 bn NOK liquidity facility with Terra
  BoligKreditt Distributors
• All banks and OBOS participate with pro-rata
  shares based on shareholdings and mortgage
  portfolio. Still valid in case of insolvency of
  TBK.
• TBK have in place liquidity facilities covering
  more than 30 of the mortgage book

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Alternative Management
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Alternative Management

• TBK is an own separate entity
• Own management and board
• Contractual framework and governmental licensing
  is to the TBK entity
• Computer systems
• TBK owns perpetual rights for liability
  management software (Sungard Panorama and
  FokusALM)
• Mortgage data is contained in own system from
  BanqSoft
• 12 month extendable maturities on all CBs

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Mitigation of time subordination

• Protection of all Note holders, also for extended
  maturities
• If it is not possible to make the contractual
  payments due to the Noteholders and Swap
  Providers up to the agreed redemption or
  termination date or if an imminent change would
  ensure such contractual payments is unlikely,
  then the Creditors Committee shall set a date to
  halt payments. A halt to payments shall be
  introduced even if the Cover Pool assures timely
  ongoing payments in the short term. (EMTN
  Programme)

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Contacts
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Terra BoligKreditt AS

• Tom Høiberg, CEO
• Phone direct 47 2287 8114
• Fax number 47 2287 8170
• E-mail th_at_terra.no
• Kjartan M. Bremnes, Deputy CEO
• Phone direct 47 2287 8036
• Fax number 47 2287 8170
• E-mail kmb_at_terra.no
• Odd Arne Pedersen, CFO
• Phone direct 47 2287 8144
• Fax number 47 2287 8170
• E-mail oap_at_terra.no
• www.terra.no

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Appendices
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Comparison of Covered Bond Jurisdictions
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Comparison of Covered Bond Jurisdictions
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