Quarterly report for first quarter of 2009 for Fionia Bank Holding group

Announcement no. 11/2009.

Loss of DKK 228.4 million after provisions of DKK 345.1 million 

Results for the quarter:
• After-tax loss of DKK 228.4 million.
• Core result before provisions of DKK 56.8 million compared with last year's
figure of DKK 133.2 million. In the first quarter of 2009 the total
extraordinary costs is DKK 48 million and DKK 29.2 million in the first quarter
of 2008  as one-off income from the sale of the bank's stake in Totalkredit. 
• Total costs for Det Private Beredskab of DKK 31.1 million.
• Profit on holdings of DKK 8.5 million, as compared with last year's figure of
DKK -29.1 million. 
• Provisions on loans and allocations for guarantees of DKK 345.1 million, as
against DKK 21.2 million in the prior year. Provision requirement of around DKK
350 million anticipated in stock exchange announcement No. 8 on 31 March 2009. 
• Group capital adequacy ratio at end of March was 6.1 percent, with a core
capital ratio of 3.1 percent. Finansiel Stabilitet will provide capital to the
new Fionia A/S according to the framework agreement.

The core result before provisions was DKK 56.8 million, as compared with last
year's figure of DKK 133.2 million. The result for first quarter is influenced
by extraordinary costs of DKK 33.1 million related to redundancy payments to 70
employees, plus a further DKK 4.9 million for Management Board changes. In
addition, a total of approximately DKK 10 million was paid for consultants'
fees in connection with the restructuring of the bank. The total adjustment for
the first quarter of 2009 was DKK 48 million. The first quarter of 2008 was
influenced by one-off income from the sale of the bank's stake in Totalkredit
of DKK 29.2 million. 

Provisions on loans, excluding DKK 6.5 million for Det Private Beredskab, were
DKK 338.6 million. Part of the supplementary risk of DKK 1,022 million stated
in the 2008 annual report has now been translated into provisions, due to
continuing negative trends in the property sector in particular. Further
exposures were placed in this category in the first quarter, and accordingly
the supplementary risk at end of March remains on a par with the figure at year
end 2008. 

The profit on holdings of DKK 8.5 million includes provisions of DKK 9.2
million on holdings of structured products. The result on other holdings is
satisfactory, particularly in light of the bank's very low market risk during
the first quarter. 

The effects of the financial crisis will probably continue to be felt during
2009, and profits will depend on developments in the general economy and the
capital markets. On the basis of the general financial situation and trend,
there is considerable uncertainty associated with estimating the level of
provisions on loans. Provisions in the remainder of 2009 are expected to remain
high. Net interest income will continue to be affected by a downturn in lending
volumes and the growth in accounts in suspense due to the high provisions. 

Total costs were affected by the restructuring of the bank, disbursements to
the Danish state's guarantee scheme, and expenses arising from the planned
strengthening of the capital base. 

Transfer of assets in Fionia Bank Holding to a new company
Fionia Bank A/S signed a framework agreement with Finansiel Stabilitet on 22
February 2009. Under that agreement, all assets and liabilities of Fionia Bank
A/S (company reg. number 14669000) apart from equity and tier 2 capital are to
be transferred to a new operating company, Fionia Bank A/S (company reg. number
31934745). The name of the former company (company reg. number 14669000) will
then be changed to Fionia Holding. 

The transfer is expected to take place in the second half of May 2009, cf.
stock exchange notification No. 10 of 22 April 2009. At the time of the
transfer Finansiel Stabilitet will bring in capital base funding. 

The future activity of the holding company will be confined to owning shares in
the new operating company. Under the framework agreement, these shares are to
be pledged to Finansiel Stabilitet for such time as Finansiel Stabilitet has
provided loans as hybrid core capital, tier 2 capital or senior loans
(funding). 

The holding company will not have decision-making authority over its subsidiary
Fionia Bank, and accordingly consolidated financial statements will no longer
be prepared for the holding company and the subsidiary following the transfer. 

The holding company will still be listed on NASDAQ OMX Nordic Exchange
Copenhagen. The new bank Fionia Bank A/S will not be listed. 

This quarterly report is a consolidated report for the current Fionia Bank A/S.
The new structure will be reflected in the accounts only after the
restructuring operation has taken place. 

Any questions concerning this announcement should be addressed to the bank's
General Manager, Jørgen Bast, phone +45 65 20 40 60. 

Quarterly report 
The breakdown of the after-tax loss of DKK 228.4 million between core result
and profit on holdings is as follows: 

Trading earnings comprises primary transactions in securities, foreign exchange
and the money market, including returns from associated holdings, after funding
costs. 

Profit on holdings comprises the return on the bank's own holdings, including
associated holdings, after funding and operating costs. 

Core result
The core result before trading earnings was DKK 158.5 million, as compared with
the 2008 figure of DKK 164.9 million. 

Total lendings were DKK 20.4 billion, 2.4 percent up from the figure at 31
March 2008. The figure for the end of March 2009 includes reverse repo
transactions of DKK 4 billion. The trend after adjustment for these
transactions is a fall of 17.1 percent.  Total guarantees fell to DKK 2.7
billion, as compared with DKK 5 billion at 31 March 2008. Deposits increased by
DKK 1 billion, or 7.1 percent, to DKK 14.5 billion. Here again, after
adjustment for time deposits associated with reverse repo transactions there
was a negative trend of 18.8 percent. Net interest income was affected by the
impact of the high provisions, whereby no interest was earned on an amount of
approximately DKK 1 billion. 

Trading earnings for the first quarter of 2009 were DKK 103 million, as
compared with DKK 112.1 million in the same period in 2008. The 2008 figure
included a profit of DKK 29.2 million from the sale of the stake in
Totalkredit. After adjustment for this item, the figure is up by DKK 20.1
million, or 24 percent. 

Ongoing turbulence in the share markets led to a significant drop in customer
earnings on share trading. Portfolio management earnings have also been
trending downwards, because of lower customer portfolio values after the 2008
drop in share prices. This item also includes return on equity. This figure
fell significantly in the first quarter of 2008, owing to both lower interest
rates and lower equity. 
 
Decreased earnings in the above areas was more than offset by earnings in other
segments. It is nice to note a decent increase in earnings on trading in
fixed-interest securities. The allocation of short-term liquidity also returned
significantly better earnings, because of the steep interest curve and falling
short-term interest rates. 

Core costs and depreciation on tangible assets were DKK 204.8 million, as
compared with DKK 143.8 million in 2008. 

As stated above, the total core result before provisions was DKK 56.8 million,
as compared with DKK 133.2 million last year. The result for first quarter of
2009 is influenced by extraordinary costs of DKK 33.1 million for a reduction
of 70 employees, DKK 4.9 million for Management Board changes and DKK 10
million for consultants' fees for the restructuring of the bank, which is still
in progress. Total adjustments for the first quarter were DKK 48 million. The
first quarter of 2008 was influenced by one-off income from the sale of the
bank's stake in Totalkredit of DKK 29.2 million. 
In addition to the above extraordinary items, costs were also impacted by the
bank's general situation, leading to higher expenses than were previously
incurred for the bank's general meeting and for winding up leases, etc. 

The average number of employees in the first quarter of 2009 was 642. The
actual number of staff at the end of March 2009 was 609, down from 677 at the
end of December 2008. 

Provisions on loans, net of provisions of DKK 6.5 million for Det Private
Beredskab, were DKK 338.6 million. 

Provisions on loans for the period comprised provisions of DKK 344.5 million
(net), losses without prior individual provisioning of DKK 1.9 million and
other allocations of DKK 1 million, less income of DKK 2.3 million received on
loans previously written off. 
At 31 March 2009 accumulated provisions on individual exposures were DKK
1,120.2 million (up from DKK 157.3 million in 2008) and total portfolio
provisions were DKK 160.1 million (as compared with DKK 133.1 million in 2008). 

The balance for accounts in suspense was DKK 994.4 million. 

Profit on holdings
The profit on holdings was DKK 8.5 million, as compared with a result of DKK -
29.1 million for the same period in 2008. 

Earnings on holdings is stated as the return on holdings transactions less
funding and directly assignable costs. There was a profit on holdings of DKK
8.5 million, as compared with a loss of DKK 29.1 million in the first quarter
of 2008. This includes provisions of DKK 9.2 million on holdings of structured
products. The profit of DKK 17.7 million on other holdings is seen as
satisfactory in the light of the very low market risk during the whole of the
first quarter. 

Costs for Det Private Beredskab
Disbursements for the "bank package 1” comprised a guarantee commission of DKK
24.6 million and allocation for losses on guarantees for EBH of DKK 6.5
million. At 31 March 2009 the accumulated provisions and allocations for
Roskilde Bank and EBH were DKK 27.6 million. 

Tax
Negative deferred tax of DKK 76.0 million is recognised for the period, since
the tax loss is expected to be utilised by offsetting against future earnings. 

After-tax profit
There was an after-tax loss of DKK 228.4 million, resulting in a net asset
value per DKK 10 share of DKK 42. 

Balance sheet
The group's total assets were DKK 34.2 billion, as compared with DKK 33.0
billion at 31 December 2008. 
 
Since 31 December 2008 loans at amortised cost (bank loans) have decreased by
DKK 1.0 billion to DKK 20.4 billion, and are part of the bank's policy in this
area. The trend after adjustment for reverse repo transactions is again a
decrease of DKK 1.0 billion. 

 
Deposits have increased by DKK 0.6 billion since the end of the year, to a
total of DKK 14.5 billion. The increase after adjustments for time deposits
relating to reverse repo transactions is DKK 1 billion. 

Risk and capital
Capital and solvency situation
At 31 March 2009 subordinate debt was DKK 843.5 million, and core capital after
deductions was DKK 1,281.2 million (after deduction of the result for the
period). 
Fionia Bank's equity capital at 31 March 2009 was DKK 760.4 million, calculated
inclusive of the after-tax profit. 

The capital adequacy ratio at 31 March 2009 according to the Basel II standard
method was 6.1, with a tier 1 ratio of 3.1. The agreement signed with Finansiel
Stabilitet imply that the new bank will be provided with required capital. 

The Danish Financial Supervisory Authority has to day granted the bank a
dispensation from statutory capital adequacy requirements until the 1 June 2009
to comply with Danish Financial Services Act Section 225. 

Credit risk
Risk spread
The structure of the bank's lending and guarantees portfolio is shown in the
table below. 

Lendings to credit, finance and insurance businesses represents approximately
30 percent of total loans and guarantees. Loans include reverse repo
transactions of slightly more than DKK 4 billion, which is on par with the end
of 2008. Reverse repo transactions are entered into as part of the bank's
liquidity sourcing process, with the bonds received providing the basis for
loans from the Danish central bank. 

Loans and guarantees in the “property management” segment are on about the same
level as at 2008 year end. This exposure is expected to be reduced in 2009 and
subsequent years. 

Exposures in all other sectors have decreased by varying amounts, but without
any major shifts in their respective proportions. 

The bank's recently adopted strategy includes an increased focus on private
customers and SMEs. As a result, we can expect some shifts in the sector
distribution of loans and guarantees in the next few years. 

Internal risk
The internal risk is an assessment of the bank's risk of loss based on the
expected exposure at the time the loss is incurred. Valuations are based on a
precautionary approach. We refer to the difference between the internal credit
risk and the book provisions as the “supplementary risk”, which is included in
our statement of the individual capital adequacy requirement. 

The individual internal risk at the end of the first quarter was assessed at
DKK 2,056 million. The total of individual provisions and allocations was DKK
1,139 million. This means that there is a supplementary risk of DKK 917
million, which is included in the bank's individual capital adequacy
requirement. There is also an internal risk on exposures of less than DKK 2
million, which according to the bank's credit models has been assessed at DKK
67 million. The total supplementary risk is therefore DKK 984 million. 
This is a decrease of DKK 38 million on the figure at 2008 year end, reflecting
a reduction in the non-provisioned portion of the exposures. 

Book provisions
The bank's accumulated provisions rose sharply in 2008, and this trend
continued during the first quarter of 2009. The balance of individual
provisions increased from DKK 818 million to DKK 1,153 million, while portfolio
provisions fell from DKK 162 million to DKK 160 million. There has therefore
been an increase of DKK 333 million in the overall provision and allocation
balance, from DKK 981 million to DKK 1,314 million. 
 
Conclusion - credit risk
The very significant losses and provisions realised by the bank in 2008 have
continued in the first quarter of 2009. The highest provisions are still on
major property and mortgage exposures and major individual exposures in the
manufacturing and commercial sectors. We have also started to see more
problematic exposures in the agricultural sector. 

Interest rate risk
As part of on-going risk management, a total interest rate risk is calculated
for both trading and other holdings. The risk is stated as the loss in the
event of an increase of one percentage point in the interest rate. The
interest-rate risk at 31 March 2009 was DKK 18.6 million, as compared with the
higher figure of DKK 35.1 million at 31 March 2008. A one percent rise in the
interest rate would result in a loss representing 2.45 percent of equity. 

Share price risk
The share price risk is managed and measured on the bank's "own" risk position
holdings, trading holdings used to support our trading function, and holdings
of unlisted shares of a more strategic character. 

The share price risk is calculated as the change in value in the event of a 10
percent fall in prices. The risk calculation includes changes in transactions
not yet completed and derivatives. 

The share price risk at 31 March 2009 was DKK 43.0 million, slightly less than
the figure of DKK 45.5 million at 31 March 2008. This item comprises a
reduction on trading holdings positions and slight increases in other holdings
and strategic holdings. The share price risk primarily consists of strategic
holdings. 

Holdings of strategic shares consist mainly of unlisted shares (for example,
sector shares such as joint ownership of DLR and PBS). These shares are
recognised at market value. Since these are unlisted shares, the market price
is calculated and valued using model calculations combined with management
assessments, and, accordingly, valuations are subject to a certain level of
uncertainty. A movement of -/+ 10 percent in underlying assumptions would mean
a price-based change of approximately DKK -8.8 million / DKK +10.5 million. 

Currency risk
The currency risk is calculated on an ongoing basis, including the use of
exchange rate indicators 1 and 2. Indicator 1 shows the total exchange rate
position against Danish kroner. Indicator 2 identifies the loss risk from the
group's foreign currency positions on the basis of the historical covariation
between the individual currencies. 

Liquidity risk
The liquidity risk is the risk of the bank incurring losses through being
unable to meet its obligations to its creditors. 

Fionia Bank's primary source of funds is deposits from its customers. Other
sources are the capital markets for long-term funding, and the inter-bank
market to balance out any short-term liquidity fluctuations. 

Liquidity management is carried out in Markets. Fionia Bank is an active
participant in international money markets, in many different currencies, and
is particularly active on the domestic money market, where we are also involved
in setting the daily CIBOR rate. 

Our activities on the short-term money market are supplemented with deposits on
the short-term wholesale market (fixed-term deposits). 

The bank has been forced to redeem a large proportion of its long-term funding
in connection with the framework agreement signed with Finansiel Stabilitet and
the upcoming transfer of assets to a new company. In connection with the
framework agreement, an agreement has also been negotiated on a credit facility
to provide the bank with the required liquidity during its establishment phase. 

The bank's liquidity situation is also monitored by the Balance Management
group. 

Fionia Bank's immediate cash resources for meeting its debt and guarantee
obligations at 31 March 2009, as measured according to Section 152 of the
Danish Financial Services Act, were DKK 6.0 billion. This represents surplus
cover of 71.03 percent above the legal requirement. 

Further information
More information on the bank can be found on the Fionia Bank A/S Web site:
www.fioniabank.dk. 

Financial calendar for 2009
Half-year report for 2009				25 August 2009
Quarterly report for quarters 1-3 of 2009		10 November 2009

Board of Directors and Management Board statement
The Board of Directors and Management Board have today discussed and approved
the report for the period 1 January-31 March 2009 for the Fionia Bank Holding
group and Fionia Bank Holding A/S. 
The quarterly report has been prepared in accordance with IAS 34, presentation
of interim financial reporting, as approved by the EU, and further Danish
disclosure requirements for part-year reports of listed financial companies.
The report has not been audited or reviewed. 
We believe that the accounting policies followed are appropriate, so that the
report provides a true and fair view of the group's assets, liabilities and
financial situation as at 31 March 2009, and of the result of the group's and
parent company's activities and the group's cash flow for the period 1
January-31 March 2009. 
We believe that the management report provides a true and fair view of the
group's and parent entity's activities and business situation, the profit for
the period and the overall financial situation of the group and the parent
entity, and an accurate description of the main risks and uncertainty factors
facing the group and parent entity. 

Odense, 30 April 2009

The Management Board

Jørgen Bast				Kaj Østergaard Mortensen

The Board of Directors
Bo Stærmose			Børge Obel				Tom Foged-Pedersen


Knud Gether				Erik Granhøj Hansen		Nina Dietz Legind


Ole Madsen				Pia Lærke				Ole Rasmussen

Accounting policies
The quarterly report for the period 1 January-31 March 2009 has been prepared
in accordance with IAS 34 on the presentation of part-year reports and other
Danish requirements regarding part-year reports for listed companies. The
accounting policies for the quarterly report are the same as for the 2008
annual report, which contains a full description of those policies. 
The measurement of some assets and liabilities requires a management estimate
of the impact of future events on their value. Estimates of significant
importance for financial reporting include those required for calculating
provisions for impaired loans, the fair value of unlisted financial
instruments, and provisioned liabilities - see detailed comments in the 2008
annual report. The estimates applied in this report are based on what the
management regards as conservative assumptions. 
The Fionia Bank quarterly report has not been audited.

The entire message can be viewed at www.fioniabank.dk