1Q11 Presentation

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1Q11 Presentation

  1. 1. The financial information contained herein is consolidated, and includes the financial statements of the Bank and its subsidiaries JMalucelli Seguradora, JMalucelli Seguradora de Crédito, JMalucelli Re., JMalucelli Agenciamento, JMalucelli Distribuidora de Títulos e Valores Mobiliários, and Paraná Administradora de Consórcio. All information, except where otherwise indicated, is expressed in Brazilian currency (Reais) and was prepared based on the accounting principles pursuant to the Brazilian Corporate Law, the regulations and instructions issued by the Brazilian Monetary Council (CVM), the Central Bank of Brazil (BACEN), the Brazilian Securities and Exchange Commission (CVM), the Brazilian Private Insurance Council (CNSP), the Brazilian Private Insurance Authority (SUSEP), and the Brazilian Accounting Standards Board (CPC), as applicable.► 1Q11 HIGHLIGHTS► NET INCOME In 1Q11, net income totaled R$33.5 million, an increase of 50.0% year-over-year and of 7.3% compared to the adjusted net income recorded in 4Q10.► INSURANCE OPERATIONS In 1Q11, the insurance segment accounted for 48.8% of the consolidated result, driven by the good performance of JMalucelli Seguradora and JMalucelli Resseguradora. The amount of premiums retained by both companies in the quarter was 13.4% higher than in 1Q10.► LOANS In March 2011, the loan portfolio totaled R$1,625.9 million, an increase of 4.8% compared to 4Q10 and of 21.5% from 1Q10. Our loan portfolio has been growing but at the same time the quality of our assets has been maintained. The delinquency rate measured by level H loans was 1.9% in the period, unchanged from 4Q10. Paraná Banco does not assign loans to fund its operations; the last time it assigned a portfolio was at the end of 2008. The balance of the assigned portfolio represented only 1.2% of the overall portfolio at the end of March. IR Contact Cristiano Malucelli Mauricio Fanganiello Marianne C. Baggio IR Director IR Manager IR Specialist (+55 41) 3351-9950 (+55 41) 3351-9765 (+55 41) 3351-9645 www.paranabanco.com.br/ri | ri@paranabanco.com.br 1
  2. 2. ► KEY INDICATORS Balance Sheet (R$ thousand) 1Q11 4Q10 1Q11 X 4Q10 1Q10 1Q11 X 1Q10 Total Assets 3,188,486 3,073,980 3.7% 2,929,431 8.8% Loan Operations 1,625,870 1,551,918 4.8% 1,338,195 21.5% Allowance for Doubtful Accounts (PDD) 51,198 50,714 1.0% 57,769 (11.4%) Total Deposits 1,458,285 1,301,842 12.0% 1,062,649 37.2% Term Deposits 1,249,335 1,068,022 17.0% 935,334 33.6% Shareholders Equity 854,713 827,660 3.3% 805,585 6.1% Income Statement (R$ thousand) 1Q11 4Q10 1Q11 X 4Q10 1Q10 1Q11 X 1Q10 Net interest income 61,746 64,974 (5.0%) 49,476 24.8% Personnel Expenses 14,830 10,530 40.8% 9,723 52.5% Administrative Expenses 22,643 25,302 (10.5%) 18,237 24.2% Operating Results 51,312 47,031 9.1% 31,298 63.9% Net Income 33,541 33,748 (0.6%) 22,360 50.0% Performance Indicators (% ) 1Q11 4Q10 1Q11 X 4Q10 1Q10 1Q11 X 1Q10 ROAE - Return on Average Shareholders’ Equity (p.a.) 16.9 17.5 (0.5 p.p.) 11.7 5.2 p.p. ROAA - Return on Average Assets (p.a.) 4.4 4.5 (0.1 p.p.) 3.3 1.1 p.p. Net Interest Margin - NIM (Bank exclusively) 11.8 10.6 1.2 p.p. 12.9 (1.1 p.p.) Efficiency Ratio 45.1 46.1 (1.0 p.p.) 50.4 (5.3 p.p.) Combined Ratio (JMalucelli Seguradora) 65.1 66.4 (1.3 p.p.) 77.7 (12.5 p.p.) Amplified Combined Ratio (JMalucelli Seguradora) 47.3 55.0 (7.7 p.p.) 64.9 (17.6 p.p.) Loan Portfolio Quality (% ) 1Q11 4Q10 1Q11 X 4Q10 1Q10 1Q11 X 1Q10 Allowance for Doubtful Accounts (PDD)/Loan Portfolio 3.2 3.3 (0.1 p.p.) 4.3 (1.1 p.p.) NPL (overdue > 60 days / loan portfolio) 3.9 4.1 (0.2 p.p.) 4.9 (1.0 p.p.) Delinquency Index (> 90 days / loan portfolio) 3.2 3.4 (0.2 p.p.) 4.5 (1.3 p.p.) Delinquency Index (> 180 days / loan portfolio) 1.9 1.9 0.0 p.p. 2.7 (0.9 p.p.) Coverage Index (PDD / > overdue 60 days) 81.4 80.6 0.7 p.p. 87.3 (5.9 p.p.) Coverage Index (PDD / > overdue 90 days) 101.6 99.1 2.5 p.p. 106.9 (5.4 p.p.) Coverage Index (PDD / > overdue 180 days) 175.4 185.7 (10.2 p.p.) 180.0 (4.6 p.p.) Loss coverage (written-off credits / consolidated portfolio) 0.5 0.5 0.0 p.p. 1.4 (0.9 p.p.) JMalucelli Seguradora (R$) 1Q11 4Q10 1Q11 X 4Q10 1Q10 1Q11 X 1Q10 Direct premiuns (DPVAT + surety bond) 70,447 102,161 (31.0%) 54,258 29.8% Retained premiums (DPVAT + surety bond) 29,351 25,512 15.0% 25,179 16.6% Insurance claims (DPVAT + surety bond) (10,224) (5,672) 80.3% (9,937) 2.9% Shareholders Equity 161,341 149,885 7.6% 118,950 35.6% JMalucelli Resseguradora (R$) 1Q11 4Q10 1Q11 X 4Q10 1Q10 1Q11 X 1Q10 Direct premiuns 36,028 68,517 (47.4%) 22,745 58.4% Retained premiums 8,839 13,172 (32.9%) 8,496 4.0% Shareholders Equity 109,274 104,372 4.7% 91,447 19.5% Performance per Share (R$) 1Q11 4Q10 1Q11 X 4Q10 1Q10 1Q11 X 1Q10 Total Number of Shares 88,209,532 88,209,532 0.0% 93,830,032 (6.0%) Treasury Shares 0 0 n.d. 2,056,100 (100.0%) Free Float 22,684,972 22,684,972 0.0% 26,137,289 (13.2%) Net Earnings per Share 0.38 0.38 (0.6%) 0.24 56.1% Book Value per Share 9.69 9.38 3.3% 8.78 10.4% Market Value per Share 11.97 13.49 (11.3%) 10.53 13.7% Dividends/ Net Interest on Equity per Share 0.07000 0.25000 (72.0%) 0.06000 16.7% Supplementary Information 1Q11 4Q10 1Q11 X 4Q10 1Q10 1Q11 X 1Q10 Number of Employees (Consolidated) 693 695 (0.3%) 626 10.7% Number of Franchises in Operation 85 85 0.0% 86 (1.2%) Payroll-Deductible Loan Origination (R$ million) 302,073 277,929 8.7% 233,602 29.3% 2
  3. 3. ► LETTER FROM THE MANAGEMENTThe macro-prudential measures adopted by the Central Bank of Brazil show credit tightening is a key factor to holdback inflation pressures that threaten the economy. Central Banks circular letter No. 3,515, of December 2010,raised the capital requirement for certain financial transactions, placing us at a privileged position in the market. Ourcapitalization allows us to continue to originate new businesses in a very sustainable manner. We believe this is ascenario of opportunities. In this quarter, we reached R$302 million in payroll-deductible loan origination, resulting ina growth of 4.8% in our credit portfolio.We are completing the structuring of our middle market division, aligning this structure to our strategy to grow inParaná and São Paulo. We are now adapting our middle market structure and processes with the support of aconsulting firm, which has helped us reposition this business. We strongly believe that as soon as we have theappropriate structure, we will be able to achieve important and diversified volumes, with limited exposure to amountsrelative to the size of the borrower.In our insurance business, JMalucelli Seguradora posted a good result in the first quarter of 2011, with an increaseof 34.9% in the volume of surety bond premiums compared to the year-ago quarter. This increase in premiums addsto the expectation that the market will grow fueled by large investments in infrastructure in the upcoming years inBrazil. The RDC (Public Procurement Special Regime) is expected to be passed, and it will change the rules forpublic bids in Brazil, consequently expanding the potential of the surety bond market.Ultimately, the transaction with Travelers represents the beginning of a very productive and promising partnership.We have also moved our insurance and reinsurance offices to a larger building, and started structuring our Property& Casualty team, which will join our existing surety bond team and will be located in São Paulo. Two executiveofficers appointed by Travelers have already started working at our insurance holding, one in the strategic planningarea and the other as the holdings CFO. We are optimistic about Paraná Bancos insurance division, and our goal isto keep our leading position in the surety bond market while at the same time starting our Property & Casualty (P&C)operations side-by-side with Travelers. 3
  4. 4. ► PROFITABILITY► Net Income, Adjusted Net Income, ROAE, ROAA and Net Interest Margin (NIM) Net income (R$ thousand) ∆% YoY ∆% QoQ 50.0% 33,748 (0.6%) 33,541 22,360 48.8% 39.1% 45.5 1T10 4Q10 1Q11 Participation of insurance sectorIn 1Q11, consolidated net income totaled R$33.5 million, unchanged compared to 4Q10, and 50.0% higher than theresult recorded in the first quarter of 2010. This increase is mostly due to a higher interest income and income fromtransactions with securities, along with the good performance of the insurance and reinsurance operations in theperiod. Insurance company JMalucelli and reinsurance company JMalucelli Re accounted for 48.8% of our earningsfor the quarter.With net equity of R$854.7 million, our consolidated ROAE reached 16.9% in 1Q11, a decrease of 0.5pp over 4Q10and an increase of 2.1pp over 1Q11. ROAA remained stable compared to 4Q10, but 1.1pp above the result recordedin 1Q10, and closed the first quarter of the year at 4.4%. Total assets amounted to R$3,188.5 million in the quarter.Adjusted to extraordinary events in 4Q10 (changes in the accounting for the provision for payroll-deductible loans,commission advances, and profit-sharing advances to the management of the JMalucelli insurance companies) andin 1Q10 (closing of FIDC Paraná Banco II), net income totaled R$32.5 million, an increase of 7.3% over 4Q10 and of35.1% over 1Q10. Adjusted ROAE reached 16.4% for the quarter, while ROAA was 4.2%. 1Q11 4Q10 1Q10 Accounting Net Income 33,541 33,748 22,360 Extraordinary Events (998) (3,430) 1,737 (-) Premium fiscal effects (998) (998) (998) (+) Change in provisions - (6,282) - (+) Advance of commissions - 1,748 - (+) Allowance drag-along for losses - - 1,045 (+) Losses with Marketable securities (FIDC II) - - 1,690 (+) Provisions of profit-sharing of JMalucelli Seguradora - 2,102 - Ajusted net income 32,543 30,318 24,097The Net Interest Margin (NIM) for the quarter was 11.8% compared to 10.6% in 4Q10. This increase reflects areduction of 22.3% in the expense with derivative financial instruments. 4
  5. 5. Bank (exclusively) 1Q11 x 1Q11 x 1Q11 4Q10 1Q10 Net Interest Margin (NIM) 4Q10 1Q10 Net interest income before Allowance for Doubtful 60,882 54,555 11.6% 55,021 10.7% Accounts (PDD) Average performing assets 2,149,079 2,130,552 0.9% 1,783,509 20.5% Interbank funds invested (average) 12,784 23,728 (46.1%) 90,471 (85.9%) Initial balance 7,229 40,226 (82.0%) 47,856 (84.9%) Final balance 18,338 7,229 153.7% 133,085 (86.2%) Marketable securities and derivatives (average) 518,162 541,678 (4.3%) 364,577 42.1% Initial balance 511,218 572,138 (10.6%) 317,487 61.0% Final balance 525,106 511,218 2.7% 411,666 27.6% Loan operations (average) 1,618,134 1,565,146 3.4% 1,328,462 21.8% Initial balance 1,582,140 1,548,152 2.2% 1,299,643 21.7% Final balance 1,654,127 1,582,140 4.5% 1,357,280 21.9% Annual Net Interest Margin - before allowance 11.8% 10.6% 1.2 p.p. 12.9% (1.1 p.p.)► FINANCIAL PERFORMANCE► Net interest income 1Q11 x 1Q11 x R$ thousand 1Q11 4Q10 4Q10 1Q10 1Q10 Interest Income 121,992 117,314 4.0% 90,574 34.7% Loan operations 95,140 89,755 6.0% 77,610 22.6% Result from marketable securities operations 26,852 27,559 (2.6%) 12,964 107.1% Interest Expenses (60,246) (52,340) 15.1% (41,098) 46.6% Funding operations in the market (45,376) (43,486) 4.3% (27,041) 67.8% Funding operations expenses in the market (45,376) (43,486) 4.3% (27,041) 67.8% Expenses with deposits (40,500) (38,358) 5.6% (22,348) 81.2% Expenses with securities issued abroad (4,876) (5,128) (4.9%) (4,693) 3.9% Result from derivative financial instruments (3,715) (7,570) (50.9%) (1,606) 131.3% SWAP Contracts (8,785) (11,302) (22.3%) (7,799) 12.6% Exchange variation 5,070 3,732 35.8% 6,193 (18.1%) Allowances for doubtful loans (11,155) (1,284) 768.8% (12,451) (10.4%) Net Interest Income 61,746 64,974 (5.0%) 49,476 24.8%The table above shows the net interest income and a reclassification of the accounts under interest expenses. Thisreclassification by our management does not affect the net interest income and its purpose is to make it easier tounderstand the accounting for swap contracts, interest expense on securities issued abroad, and expenses withforex variations.Interest income amounted to R$122.0 million in 1Q11, an increase of 4.0% over 4Q10 and of 34.7% compared to theyear-ago quarter. This increase derives from a positive performance in income from loans, which contributed 78.0%of the interest income for the quarter, totaling R$95.1 million. This result represents an increase of 6.0% compared to4Q10 and of 22.6% over 1Q10. Our income from transactions with securities totaled R$26.9 million, more than twicethe amount recorded in 1Q10, and 2.6% lower compared to 4Q10.Interest expense amounted to R$60.2 million, up 15.1% from R$52.3 million in 4Q10. Excluding the provisionexpense—extraordinarily affected by a change in the provision for payroll-deductible loans in 4Q10—interestexpense was 3.8% lower in 1Q11 compared to 4Q10. Compared to the year-ago quarter, interest expense increased 5
  6. 6. by 46.6%. This increment was due to the rise in the cost of funding, which follows the increase in the prime rate (CDIof 2.64% in 1Q11 from 2.02% in 1Q10), and an increment of 37.2% in the deposit portfolio. Deposit expensesincreased by 81.2% in the quarter, from R$22.3 million in 1Q10 to R$40.5 million in 1Q11.With regard to derivative financial instruments, the reclassification presented in the table above shows the expenseitems for swap contracts and foreign exchange variation—which for accounting purposes offset each other—recorded under “income (expense) from derivative financial instruments.” The principal of the USD 100 million issueis fully hedged against foreign exchange variations, whereas the principal and interest of the USD 35 million tranchedue in August are fully hedged.Net interest income totaled R$61.7 million in 1Q11, an increase of 24.8% compared to the R$49.5 million recorded in1Q10, reflecting the increase in income from loans and the return of the provision expense to regular levels.Compared to 4Q10, net interest income decreased by 5.0%, but increased by 10.0% when the effect of the provisionexpense in 4Q10 is excluded.► Efficiency ratio 1Q11 x 1Q11 x Efficiency Ratio (R$ thousand) 1Q11 4Q10 4Q10 1Q10 1Q10 Personnel expenses (14,830) (10,530) 40.8% (9,723) 52.5% Other administrative expenses (22,643) (25,302) (10.5%) (18,237) 24.2% Tax expenses (4,765) (4,401) 8.3% (3,884) 22.7% Net interest income 61,746 64,974 (5.0%) 49,476 24.8% Other operating income/expenses 6,253 4,919 27.1% (384) (1728.4%) Service fee income 2,276 1,995 14.1% 1,055 115.7% Other insurances income* 23,393 15,376 52.1% 12,995 80.0% Efficiency Ratio 45.1% 46.1% (1.0 p.p.) 50.4% (5.3 p.p.)* Sum of insurance premiums, co-insurance premiums and reinsurance underwriting, changes in the insurance technical provision and retained claimsThe efficiency ratio reached 45.1% in 1Q11, 0.1pp lower than in 4Q10. This improvement in the ratio was driven bythe insurance division. The ratio improved by 5.3pp in 1Q11 compared to the year-ago quarter, fueled by theinsurance division and by an increase in net interest income.Paraná Banco has adopted a strict control of expenses, and monitors all of the Companys departments on amonthly basis. This control is part of employees goals and it has proven to be a very effective tool, since itencourages the Company as a whole to strive for a unique goal. 6
  7. 7. ► Expenses – Personnel, Administrative, and Commissions 1Q11 x 1Q11 x Expenses Consolidated – in R$ thousands 1Q11 4Q10 1Q10 4Q10 1Q10 Personnel Expenses (14,830) (10,530) 40.8% (9,723) 52.5% Other Administratives Expenses (22,643) (25,302) (10.5%) (18,237) 24.2% Commission Expenses - Payroll and Consumer (7,301) (13,139) (44.4%) (6,700) 9.0% Reinsurance Commission Revenues / Brokerage 2,367 7,087 (66.6%) 6,686 (64.6%) Specialized Technical Services (7,244) (5,510) 31.5% (9,770) (25.9%) Others (10,465) (13,740) (23.8%) (8,453) 23.8%Personnel expenses totaled R$14.8 million in 1Q11, an increase of 40.8% from 4Q10. This increase was due topersonnel expenses in the amount of R$2.8 million at JMalucelli Participações em Seguros e Resseguros,recognized under "other administrative expenses" in the consolidated statement for 4Q10. An analysis enabled bythe reclassification of this effect to personnel expenses in 4Q10 shows the actual quarterly variation of this item wasof 11.3%, deriving from the increase in the number of employees in Paraná Bancos insurance division. Someemployees have already been hired during the structuring of the P&C operations, and more employees are expectedto be hired up to the end of 2011. The P&C business will be based in São Paulo, and the new structure will be addedto the existing surety bond infrastructure.Other administrative expenses amounted to R$ 22.6 million in 1Q11, an increase of 10.5% compared to 4Q10.Excluding the effect of R$2.8 million in 4Q10, other administrative expenses increased by 0.6% in 1Q11 from 4Q10.Commission expenses dropped by 44.4% in 1Q11, mostly due to the exceptional advance of R$2.9 million incommissions of level H payroll-deductible loans in 4Q10, in addition to the year-end bonus program the Companyoffers to its correspondents. The commission expense recorded in 1Q11 is recurrent and follows its regular course.► Income taxThe tax credit derived from the payment of interest on equity, the amortization of goodwill, and expenses with socialand cultural programs sponsored by the Company are excluded from profit or loss for purposes of calculation of taxpayable. Income tax and social contribution payable in 1Q11 totaled R$17.5 million. 1Q11 X Income Tax and Social Contributions on Result (R$ thousand 1Q11 1Q10 1Q10 Income before tax on earnings and interest* 50,870 31,303 62.5% Income Tax - current (20,348) (12,521) 62.5% Permanent deduction (additions) 2,867 3,584 (20.0%) Interest on Equity 2,470 2,203 12.1% Goodwill amortization 998 - n.d. Others (601) 1,381 (143.5%) Income tax and social contributions on result (17,481) (8,937) 95.6%* After interest in subsidiaries and net of expense with interest on equity 7
  8. 8. ► INSURANCE AND REINSURANCE OPERATIONS► Net IncomeJMalucelli Seguradora’s net income increased by 25.1% to R$11.5 million, whereas JMalucelli Resseguradora’s netincome went up by 35.6% to R$4.9 million compared to 4Q10. JMalucelli Seguradora de Crédito remains inactive incredit insurance, and currently operates the DPVAT insurance (Mandatory Personal Injury caused by all types ofMotor Vehicle). This company represents a strategic value for the Company, because it is an insurance companyauthorized by the SUSEP to start up its operations at any time. We intend to make JMalucelli Seguradora de Créditoan insurance company specializing in Property & Casualty (P&C) products through the partnership with Travelers.Together, the JMalucelli insurance operations reported net income of R$16.4 million in 1Q11, contributing 48.8% ofthe Company’s consolidated income for the period. This share has been growing, and we believe it will be even moresignificant in the future since its performance is to tied to investments in infrastructure in the country. The suretybond market remained stable in 2010 compared to 2009 because several public investments were postponed. Webelieve the resumption of investments starting this year will have a positive effect on our surety bond operations.The partnership with Travelers Companies also paves the way for our growth and creates many businessopportunities. We expect to start our P&C operations in the second half of the year. We intend to explore the needsof our customers in the short term, and offer surety bond-related products, such as engineering risks and Directors &Officers (D&O). We also want to increase the market share of JMalucelli Resseguradora in the reinsurance market inLatin America. We will also have the chance to explore, in the medium term, the demand for products by more thantwo thousand insurance brokers in our base. Our new operating structure will be developed through the partnershipwith Travelers, taking advantage of the know-how this renowned insurer can offer us.► Premiums issuedJMalucelli Seguradora issued premiums in the amount of R$70.5 million in the quarter, an increase of 29.8% over1Q10. With regard specifically to surety bonds, the volume of premiums issued by JMalucelli Seguradora increasedby 39.4% from 1Q10 to 1Q11, whereas the market recorded an increase of 12.6% over the same period.Engineering, Procurement & Construction (EPC) insurance for the the construction of the Belo Monte hydropowerplant, the third largest hydropower plant in the world, stood out in the quarter, along with the participation of theJMalucelli insurance companies in smaller policies, which add volume and diversify the insurance portfolio.JMalucelli Seguradoras expertise in and procedures for the underwriting of surety bond policies have allowed thecompany to maintain its leading position in this market since 1997. JMalucelli Seguradoras market share in directpremiums was of 34.1% in the quarter, an increase of 5.8pp over 1Q10, according to data from the SUSEP.Direct reinsurance premiums issued by JMalucelli Resseguradora totaled R$36.0 million in 1Q11. JMalucelliResseguradora recorded a market share of 18.1% in February 2011 in the financial risks market, which includessurety bonds and credit insurance. 8
  9. 9. Market share - direct premiums (R$ thousand) 726,400 694,787 499,334 346,089 192,364 167,452 172,654 32.6% 40.4% 50.4% 43.0% 37.0% 42.3% 34.1% 2005 2006 2007 2008 2009 2010 mar/11 JMalucelli Seguradora Market Market Share - reinsurance premiums Financial risk category 0,2% IRB BRASIL RESSEGUROS S/A 17,8% MUNICH RE DO BRASIL 28,7% RESSEGURADORA S.A. J. MALUCELLI RESSEGURADORA S.A. 25,1% MAPFRE RE DO BRASIL CIA DE RESSEGURO 28,1% AUSTRAL RESSEGURADORA S.A.► Loss ratioJMalucelli Seguradora’s loss ratio (retained loss/ earned premium) was -0.2% for the quarter, which represents areversal of provisioned loss, while the markets loss ratio, excluding JMalucelli Seguradora, was 22.4%. The goodrelationship JMalucelli Seguradora maintains with international reinsurers, which is paramount for the underwriting oflarge policies, is backed by its capacity to maintain its loss ratio at much lower levels than the markets. These lowloss ratios come from the expertise inherited from the JMalucelli Group—which started as a company specializing inheavy construction—its excellence in credit and risk analysis, and its specializing in the surety bond market.JMalucellis focus on this market allows for these insurance companies to keep a specialized team of 218 employeeswho work focused in this product.In a smaller proportion, JMalucelli Seguradora also has operations in the DPVAT insurance market, but it maintainsno administrative or selling structure for this product. JMalucelli Seguradora participates in this agreement on an opt-in basis, and every year it chooses to participate or not. Even though the DPVAT has a high loss ratio, as the tablebelow indicates, this product offers a positive result for the insurance group with no need for sales or analysis efforts.DPVAT insurance operations contributed R$0.7 million to JMalucelli Seguradora’s income for 1Q11. 9
  10. 10. 1Q11 x 1Q11 xR$ million 1Q11 4Q10 1Q10 4Q10 1Q10Direct Premiums JM Seguradora 70,447 102,161 (31.0%) 54,258 29.8% DPVAT 11,782 5,724 105.8% 10,783 9.3% Surety Bond 58,665 96,437 (39.2%) 43,475 34.9%Retained Premiums JM Seguradora 29,351 25,512 15.0% 25,179 16.6%Insurance Claims JM Seguradora (10,224) (5,672) 80.3% (9,937) 2.9% DPVAT (10,249) (5,010) 104.6% (9,445) 8.5% Surety Bond 25 (661) (103.8%) (492) (105.1%)Retained Premiums JM RE 8,839 13,172 (32.9%) 8,496 4.0%Retained Premiums JM Seguradora + JM RE 38,190 38,684 (1.3%) 33,675 13.4%► Combined ratioJMalucelli Seguradora closed the quarter with a combined ratio of 65.1%, demonstrating the companys excellentoperating efficiency. The companys amplified combined ratio—which is the combined ratio considering financialresults—was 47.3% in the quarter. These ratios increased by 1.3pp and 7.7pp respectively over 4Q10. Even thoughit is not listed among the largest insurance companies in terms of net equity in Brazil, JMalucelli Seguradorarecorded the second best combined ratio of the market in 2010 and 2009, according to data from the SISCORP(Sistemas Corporativos). 1Q11 x 1Q11 xR$ million 1Q11 4Q10 1Q10 4Q10 1Q10Policies Written JM Seguradora 12,101 16,121 (24.9%) 11,680 3.6%Policies Written JM Resseguradora 12,047 16,038 (24.9%) 11,455 5.2%Combined Ratio JM Seguradora (%) 65.1 66.4 (1.3 p.p.) 77.7 (12.5 p.p.)Amplified Combined Ratio JM Seguradora (%) 47.3 55.0 (7.7 p.p.) 64.9 (17.6 p.p.)Net Income JM Seguradora 11,456 9,158 25.1% 6,894 66.2%Shareholders Equity JM Seguradora 161,341 149,885 7.6% 118,950 35.6%ROAE JM Seguradora 32.9% 27.7% 0.1 p.p. 26.1% 0.1 p.p.Net Income JM Resseguradora 4,902 3,616 35.6% 2,885 69.9%Shareholders Equity JM Resseguradora 109,274 104,372 4.7% 91,447 19.5%ROAE JM Resseguradora 19.7% 14.9% 0.0 p.p. 13.5% 0.1 p.p.► Geographic dataIn 1Q11, 25.6% of the written premiums by JMalucelli Seguradora were for clients located in the state of Rio deJaneiro, 24.3% in São Paulo, and 24.0% in Pará, and the remainder was distributed among the other states of thecountry. 10
  11. 11. Premium per region 2.7% 8.3% 3.1% RIO DE JANEIRO 3.2% 25.6% SAO PAULO PARA 3.7% MINAS GERAIS 5.2% BAHIA PERNAMBUCO PARANA 24.0% 24.3% SANTA CATARINA Others► Investment policyThe balance of financial investments of JMalucelli Seguradora, JMalucelli Resseguradora, and JMalucelliSeguradora de Crédito was R$460.4 million in March 2011, up 6.8% from December 2010. Of that amount, 70.4%was invested in fixed income assets, 11.0% in a FENASEG exclusive investment fund, 7.6% in government bonds,6.6% in multi-market funds, and 4.4% in variable income assets. Income from this investment portfolio amounted toR$12.8 million in 1Q11. Average return on these investments reached 107.1% of the CDI in the quarter. The fundsinvested in variable income are fully allocated to an equity fund whose portfolio primarily consists of shares ofcompanies that have paid a dividend yield of more than 6% per year, for at least three years.The purpose of the investment policy of Paraná Bancos insurance division is to set goals, limits and methodologiesfor the management of investments in order to maximize returns under the applicable law in force. This policyrequires, for example, that a minimum of 20% of technical reserves be invested in government bonds. Up to 100% ofoverall financial investments may be allocated to low-risk investments (that is, institutions rated AAA, Time DepositsSecured by the Brazilian Credit Guarantee Fund, and federal government bonds), up to 20% may be invested infixed income at institutions rated above AA-, and up to 10% may be invested in fixed income at institutions ratedabove BBB-. The policy further determines that a maximum of 8% of investments be invested in multi-market funds,and 5% in variable income funds. 11
  12. 12. Portfolio of financial investments (R$ million) 50.7 460.4 30.6 324.2 20.1 6,9% Others = R$ 32.4 DPGE = R$ 259.5 69,9% 34.9 CDB = R$ 32.3 18,5% Bonds Fixed Income Equities Multimarket Investment Total Funds Profitability of investments 2.8% 2.6% 1Q11 CDI Investments JM Seguros► OPERATING PERFORMANCE► Management of assets and liabilitiesAssets amounted to R$3,188.5 million in March 2011, compared to R$2,929.4 million in the same month in 2010 andR$3,037.0 million in December 2010. ROAA was 4.4% for the quarter, an increase of 1.1pp from 1Q10 andunchanged from 4Q10. Loans represented 51.0% of the assets, securities accounted for 30.9%, and 18.1% referredto other assets in the quarter. 12
  13. 13. Evolution of Total Assets (R$ thousand) 3,073,980 3,188,486 2,929,431 576,791 630,565 814,394 985,825 942,211 776,842 1,501,204 1,625,870 1,338,195 1Q10 4Q10 1Q11 Loans Securities and Derivatives Others assetsThe securities portfolio increased by 26.9% compared to March 2010, and by 4.6% from December 2010. Thisportfolio consists mostly of repurchase agreements backed by Financial Treasury Bills maturing in over one year.The charts below show the matching between assets and liabilities maturities. An analysis of those maturities showsthat 46.4% of the loan portfolio will mature before one year, whereas 56.2% of the funding transactions will alsomature within the same period. Loan Portfolio – Operations Falling Due Funding – Operations Falling Due 16.0% 15.7% 20.8% Up to 3 months 27.1% Up to 3 months Between 3 and 12 months Between 3 and 12 months 25.6% Between 1 and 3 years 28.1% Between 1 and 3 years 37.6% Above 3 years Above 3 years 29.2%► LoansParaná Banco’s loan portfolio consists of payroll-deductible, middle-market, and Consumer Credit – Retailer (CDCLojista) transactions, according to the table below. 13
  14. 14. 1Q11 x R$ 1Q11 4Q10 4Q10 1Q10 1Q11 x 1Q10 Amplified Loan Portfolio 1,646,144 1,574,414 4.6% 1,355,018 21.5% Payroll-Deductible Loan 1,397,006 1,308,299 6.8% 1,131,592 23.5% Middle Market 175,693 212,134 (17.2%) 177,768 (1.2%) Loans Operations 155,419 189,638 (18.0%) 160,945 (3.4%) Guarantees and seruties 20,274 22,496 (9.9%) 16,823 20.5% Consumer Credit – Retailer (CDC Lojista) 34,946 35,106 (0.5%) 18,089 93.2% Others 38,499 18,875 104.0% 27,569 39.6%In March 2011, the comprehensive loan portfolio (which includes sureties and guarantees) amounted to R$1,646.1million, an increase of 4.6% from 4Q10 and of 21.5% from 1Q10. Of Paraná Bancos overall consolidated loanportfolio in March, payroll-deductible loans represented 84.9%, followed by loans to the middle market with 10.7%,Consumer Credit – Retailer (CDC Lojista) with 2.1%, and credit acquisitions and the remaining balance of theConsumer Credit – Vehicle portfolio (CDC Veículos), discontinued in 2008, with 2.3%.Part of the R$38.5 million classified as "others" in the portfolio derives from the advance of Paraná Banco in the retailconsumer finance market through agreements with retailers under which the Bank provides funding for the issuanceof credit cards especially in the states of Paraná, Santa Catarina, and Rio Grande do Sul.The Bank’s strategy is to increase the middle market portion of the consolidated portfolio by focusing on companies inParaná, where the JMalucelli Group thrives, and in São Paulo through synergies with JMalucelli Seguradora’s clients.► Loan portfolio qualityThe chart below presents the changes in the loan portfolio plus the balance of the assigned portfolio with co-obligation,and in the loan loss provision rate. This indicator decreased in 4Q10 due to a sharp decline in the provision following areclassification of payroll-deductible loans previously affected by the “drag-along effect.” Therefore, the chart shows theprovision and delinquency rates returning to regular levels, which was already expected. Evolution of the Loan Portfolio - Consolidated (R$ million) 1.800,0 7,0% 1,625.9 1.600,0 1,517.9 1,551.9 1,431.4 6,0% 1,338.2 1.400,0 5,0% 1.200,0 4.3% 4.0% 3.9% 1.000,0 4,0% 3.3% 3.2% 800,0 2.7% 3,0% 2.4% 2.4% 600,0 1.9% 1.9% 2,0% 400,0 1,0% 200,0 75.1 52.1 36.5 18.7 26.2 - 0,0% 1Q10 2Q10 3Q10 4Q10 1Q11 Balance of assignments with co-obligation Loan Operations Allowance for doubtful accounts (PDD)/Loan Portfolio LevelH/Loan Portfolio 14
  15. 15. The following chart shows an analysis of the coverage ratio of the consolidated portfolio. The provision accrued in1Q11, under Central Bank Resolution No. 2682, amounted to R$52.1 million. This results in a coverage ratio of101.6% for loans that are past due 90 days or more, and of 175.4% for loans that are past due 180 days or more.The portfolios coverage is analyzed taking into account the Bank’s consolidated portfolio and the balance of loansassigned with co-obligation, which closed March 2011 at R$18.7 million. 1Q11 x 1Q11 x R$ 1Q11 1Q10 4Q10 1Q10 1Q10 Allowance for Doubtful Accounts (PDD) 52,141 51,942 0.4% 60,520 (13.8%) Portfolio overdue (> 60 days) 64,072 64,410 (0.5%) 69,314 (7.6%) Portfolio overdue (> 90 days) 51,338 52,411 (2.0%) 56,601 (9.3%) Portfolio overdue (> 180 days) 29,721 27,974 6.2% 33,621 (11.6%) Total Portfolio* (a) 1,644,618 1,578,121 4.2% 1,413,329 16.4% Portfolio Coverage Index (PDD / > 60 days) 81.4% 80.6% 0.7 p.p. 87.3% -5.9 p.p. Portfolio Coverage Index (PDD / > 90 days) 101.6% 99.1% 2.5 p.p. 106.9% (5.4 p.p.) Portfolio Coverage Index (PDD / > 180 days) 175.4% 185.7% (10.2 p.p.) 180.0% (4.6 p.p.) Allowance for Doubtful Accounts (PDD) / Total Portfolio 3.2% 3.3% (0.1 p.p.) 4.3% (1.1 p.p.) Written-off credits (b) 8,110 7,771 4.4% 20,383 -60.2% Loss rate (b/a) 0.5% 0.5% 0.0 p.p. 1.4% (0.9 p.p.)* Includes the balance of the loan portfolio assigned with co-obligation► Payroll-Deductible LoansMost of Paraná Banco’s payroll-deductible loan portfolio was concentarted in loans to state government employees(44.9%) in March 2011, followed by loans to municipal government employees (27.6%), loans to INSS retirees andpensioners (22.4%), loans to federal entities employees (4.9%), and other agreements (0.2%). This diversificationdilutes the regulatory risk and the portfolio concentration. Payroll-Deductible Loan Portfolio Distribution 4.9% 0.2% States Municipality 22.4% INSS 44.9% Federal Entities Others 27.6% 15
  16. 16. Payroll-Deductible Loan Origination (R$ million) 340,4 325,1 302,1 277,9 233,6 1Q10 2Q10 3Q10 4Q10 1Q11The origination of payroll-deductible loans amounted to R$302.1 million, an increase of 8.7% compared to 4Q10 andof 37.0% compared to the year-ago quarter. In the quarter for payroll-deductible loans origination increased. Webelieve this was due to the higher capital requirement imposed by the Central Bank of Brazil for loans to individualsmaturing in more than 36 months, which placed us at a privileged position in the market as we are well capitalised.Paraná Banco also uses alternative sales channels (own stores and franchised correspondents) to offer the payroll-deductible loans, in addition to its traditional network of correspondents. Own stores and franchised correspondentswere responsible for 51.0% of the payroll-deductible loan origination in the quarter. Today, 14 own stores and 85franchised correspondents are in operation.Payroll-deductible loans to public employees, INSS retirees, and pensioners are traditionally considered low riskcredit. Therefore, given its high concentration in this market, Paraná Banco has an excellent quality loan portfolio.The table below shows the risk rating of the payroll-deductible loan portfolio according to the rules set by the CentralBank of Brazil (category A is the lowest risk and category H is the highest risk). Required Assigment Portfolio + Assigment Portfolio Assigment Balance Total Status Portfolio % of total portfolio Allowance Balance Balance Allowance Allowance Allowance A 0.5% 1,302,927 17,894 1,320,821 93.3% 6,515 89 6,604 B 1.0% 28,873 0 28,873 2.0% 289 0 289 C 3.0% 15,659 0 15,659 1.1% 470 0 470 D 10.0% 10,204 0 10,204 0.7% 1,020 0 1,020 E 30.0% 7,714 0 7,714 0.5% 2,314 0 2,314 F 50.0% 5,378 0 5,378 0.4% 2,689 0 2,689 G 70.0% 5,355 0 5,355 0.4% 3,748 0 3,748 H 100.0% 20,894 854 21,748 1.5% 20,894 854 21,748 Total 1,397,005 18,748 1,415,753 100.0% 37,940 943 38,883At the end of March, 96.4% of the bank’s payroll-deductible loan portfolio was rated AA to C, 2.2% was rated D to G,and 1.5% was rated H. While the delinquency rate (over 90 days past due) for individuals reached 5.9% in theBrazilian financial system, the delinquency rate at Paraná Banco for payroll-deductible loans was 2.8%.► Middle MarketParaná Banco started operating in the middle market segment in 2007, and today it has specialized teams operatingout of Curitiba/PR, Ponta Grossa/PR, Maringá/PR, Londrina/PR, Joinville/SC, Florianópolis/SC and São Paulo/SP.The Bank has invested in setting up this product with the objective of increasing its share in this market. 16
  17. 17. Sector Distribution - Middle Market Services 13,0% 67,5% Industry 19,5% CommerceThe balance of this portfolio, including sureties, amounted to R$175.7 million, a decrease of 17.2% from December2010 but stable from the year-ago quarter. Some important amounts were early settled in the quarter, causing areduction in the portfolio in the period. On the other hand, we are approving quality credit limits for new customerswith an average debt-to-credit ratio of 42.3% in March.We are also structuring our middle market division, and designing new products for our portfolio so we can increasethe cross-selling of products to our clients. With the new products, we will be able to explore in a more effectivemanner the potential indebtedness level of companies we extend credit to.A very positive factor is that Paraná Bancos middle market portfolio has maintained excellent quality levels. Thefollowing table shows the middle market loan portfolio broken down by risk level according to the rules of the CentralBank. Required Total Status Portfolio % of Portfolio Allowance Allowance A 0.5% 3,315 2.1% 17 B 1.0% 130,597 84.0% 1,306 C 3.0% 16,241 10.4% 487 D 10.0% 1,303 0.8% 130 E 30.0% - 0.0% 0 F 50.0% - 0.0% 0 G 70.0% - 0.0% 0 H 100.0% 3,963 2.5% 3,963 Total 155,419 100.0% 5,903Paraná Banco closed March with 2.5% of its middle market portfolio rated E to H (past due 90 days or more). Thisrate is lower than the corporate delinquency rate in the Brazilian financial system, which reached 3.6% in the periodfor loans past due 90 days or more.► Consumer Credit – Retailer (CDC Lojista)CDC Lojista is a consumer credit facility for the purchase of products and services offered by retailers. It is a productfor individual consumers intended to meet the retailers’ need to extend credit to their customers. The table belowshows Paraná Banco’s CDC Lojista portfolio broken down by risk level according to Central Bank rules. 17
  18. 18. Required Total Status Portfolio % of Portfolio Allowance Allowance A 0.5% 22,422 64.2% 112 B 1.0% 2,024 5.8% 20 C 3.0% 1,790 5.1% 54 D 10.0% 1,410 4.0% 141 E 30.0% 948 2.7% 284 F 50.0% 864 2.5% 432 G 70.0% 960 2.7% 672 H 100.0% 4,528 13.0% 4,528 Total 34,946 100.0% 6,243► Funding Funding Sources (R$ million) 1,458.3 223.7 18.7 2007 2008 2009 1Q10 2Q10 3Q10 4Q10 1Q11 FIDCs Loans Assigment MTN DepositsTime deposits are the main funding source at Paraná Banco. Deposits totaled R$1,458.3 million for the quarter, anincrease of 12.0% from December 2010 and of 37.2% from the year-ago quarter. Since its IPO in June 2007, theonly time Paraná Banco assigned credit seeking liquidity was in December 2008—at the apex of the world economiccrisis—excluding the already closed FIDC I and FIDC II credit receivables funds. The remaining balance of thisassignment is R$18.7 million.Out of total time deposits, only R$92.7 million corresponded to Time Deposits Secured by the Brazilian CreditGuarantee Fund (DPGE). The limit for DPGE funding will be progressively reduced starting in 2012, pursuant toCentral Bank resolution No. 3,931 of December 2010.The table below shows deposits broken down by type of investor and the position of existing foreign security issues.Deposits represent 86.7% of Paraná Banco’s total funding, whereas Eurobond issues represent 13.3%. The Bankcurrently has a US$300 million Eurobond program, through which it has already issued US$35 million maturing inAugust 2011 and US$100 million maturing in December 2012. Foreign security transactions are hedged againstexchange variations through swap contracts, eliminating the Bank’s exposure to foreign currency risk. 18
  19. 19. 1Q11 x Deposits distribution (R$ thousand) 1Q11 4Q10 4Q10 1Q10 1Q11 x 1Q10 Funding Total (R$ thousand) 1,681,940 1,528,297 10.1% 1,305,665 28.8% Total Deposits 1,458,286 1,301,842 12.0% 1,062,649 37.2% Insttutional Investors 696,126 594,452 17.1% 484,596 43.7% Related Parties 138,252 104,718 32.0% 83,307 66.0% Individuals 189,433 181,323 4.5% 168,480 12.4% Other Companies 181,068 145,665 24.3% 164,467 10.1% Financial Institutions 253,407 275,683 (8.1%) 161,799 56.6% FIDC - - n.d. - n.d. Issue of Eurobonds 223,654 226,455 (1.2%) 243,016 (8.0%) Tranch of U$ 35 million 58,920 59,286 (0.6%) 63,031 (6.5%) Tranch of U$ 100 million 164,734 167,169 (1.5%) 179,985 (8.5%)► Shareholders’ Equity and LeverageParaná Bancos shareholders equity amounted to R$854.7 million in March 2011, up from R$816.7 million in 4Q10.The following table shows the variables that influenced the shareholders equity accounts during the period. Equity Changes (R$ thousand) 1Q11 4Q10 Initial Balance 827,660 816,726 Net Income 33,541 33,748 Interest on Equity (6,175) (22,052) Treasury shares - - Adjustment to market value - Marketable securities (313) (762) Final Balance 854,713 827,660The Capital Adequacy ratio, pursuant to Bacen (Basel II) requirements, closed March 2011 with a margin of R$512.3million. The Basel ratio achieved 32.7% in the period, showing the Bank’s great leverage potential.Capital Compliance 1Q11 4Q10 3Q10 2Q10 1Q10Basel II RulesReference Shareholders Equity 825,666 799,459 793,190 774,786 782,622Reference Shareholders Equity Required 277,326 269,205 262,830 251,621 239,001Banking Portfolio Risk (RBAN) 36,015 22,505 32,398 31,249 28,754Basel required minimum margin 512,325 507,749 497,963 455,833 514,867Basel Index 32.75% 32.67% 33.20% 33.90% 36.02%► CORPORATE GOVERNANCEParaná Banco is currently listed on BM&FBovespas Level I, an index of companies that comply with the highestCorporate Governance standards. In addition to the standards required by Level I, the Bank has been offering 100%tag-along rights to all preferred shareholders.Below is our shareholding structure as at March 31, 2011. Free float was 25.7% on that same date. 19
  20. 20. Common Preferred Shareholders Total % Shares Shares Control Group 41,121,063 7,104,863 48,225,926 54.7% Board of Directors 3,293,400 1,532,500 4,825,900 5.5% Management 740,481 162,221 902,702 1.0% Other Related Parties 11,570,032 - 11,570,032 13.1% Treasury - - - 0.0% Free-float - 22,684,972 22,684,972 25.7% Total 56,724,976 31,484,556 88,209,532 100.0% Paraná Banco has already completed eight stock buyback programs with the acquisition of 22,923,800 preferredshares, which have already been cancelled. These programs have been advantageous for shareholders, becausethey allow for an increase in the interest held by each shareholders in the capital stock and enables the payment ofhigher interest on equity per share. The Bank paid R$0.07 per share as interest on equity in 1Q11, equivalent to apayout ratio of 18.4% for the quarter.In line with the highest corporate governance standards of the Brazilian Corporate Governance Institute, ParanáBancos Board of Directors has an independent director (Mr. Wesley Motechiari Figueira), reelected for a 2-year termat the Annual General Meeting held in April 2011. On the same date, Mr. Alexandre Malucelli was elected Chairmanof the Board of Directors of Paraná Banco. He is also the Vice President of JMalucelli Seguradora, and President ofJMalucelli Resseguradora.At the same meeting, Paraná Bancos shareholders installed a new Supervisory Board with three sitting membersand three deputies in charge of overseeing the managements activities, revising the companys financial statements,and reporting its findings to the shareholders. The Supervisory Board is independent from the management and fromthe Banks external auditors.► RATINGS Rating Rating Rating / Ranking Rating A- brA- 11.42 A+ Low Credit Risk Low Credit Risk - Low Credit Risk Low Credit Risk Medium term July 2010 August 2010 January 2011 February 2011Paraná Banco is rated by four rating agencies. This attests to the Bank’s solidity and comfortable financial andeconomic situation, which is backed by the Banks sustainable growth and its conservative approach to assetmanagement and exposure to risk.International risk rating agency Riskbank disclosed a report in April 2011 based on our 2010 financials, andupgraded the Riskbank rating of Paraná Banco from 11.34 to 11.42. The agency based this upgrade on Paraná 20
  21. 21. Bancos capitalized structure, its solidity, and the stability of its indicators. RiskBank also pointed out that theCompany does not depend on credit assignment to fund its assets. Therefore, it was not impacted by the marketinstability at the end of 2010. The agency also emphasized the good performance of JMalucelli Seguradora andJMalucelli Resseguradora, which specialize in surety bonds and together contributed 48.8% of the consolidated netincome for 1Q11.► UPCOMING EVENTS1Q11 Earnings Conference CallDate: Thursday, May 12, 2011. Portuguese English 2:30 P.M. (Brasilia time) 3:30 P.M. (Brasilia time) 1:30 P.M. (New York time) 2:30 P.M. (New York time) Phone: (11) 4688-6361 Phone: Brazil: (11) 4688-6361 Access Code: Paraná Banco United States: +1 (888) 700-0802 Other countries: +1 (786) 924-6977 Access Code: Paraná Banco 21
  22. 22. ► APPENDIX I – CONSOLIDATED STATEMENT OF INCOME (R$ thousand) 1Q11 4Q10 1Q10 Interest Income 121,992 117,314 113,697 Loan operations 95,140 89,755 84,267 Income from marketable securities operations 26,852 27,559 29,430 Interest Expenses (60,246) (52,340) (57,394) Funding operations in the market (40,306) (39,753) (26,820) Income from derivative financial instruments (8,785) (11,303) (16,649) Allowance for loans losses (11,155) (1,284) (13,925) Net interest income 61,746 64,974 56,303 Other operating income (expenses) (10,434) (17,943) (14,018) Services fee income 2,276 1,995 1,248 Insurance premiums 93,608 121,619 115,212 Premiums of co-insurance and reinsurance paid (46,337) (83,543) (67,171) Change in insurance technical allowances (6,457) (12,604) (14,680) Retained losses (17,421) (10,096) (12,943) Personnel expenses (14,830) (10,530) (11,230) Other administrative expenses (22,643) (25,302) (24,734) Tax expenses (4,765) (4,401) (4,005) Other operating income 12,267 12,042 10,450 Other operating expenses (6,132) (7,123) (6,165) Operating Income 51,312 47,031 42,285 Non-operating income 152 (32) 535 Income before tax on earnings and interest 51,464 46,999 42,820 Income tax and social contribution (17,481) (6,242) (13,359) Income Tax - current (10,888) (753) (8,805) Social contribution - current (6,636) (1,470) (5,385) Deferred Income tax and social contribution 43 (4,019) 831 Profit sharing (442) (7,009) 18 Net profit for the quarter 33,541 33,748 29,479 22
  23. 23. ► APPENDIX II – CONSOLIDATED BALANCE SHEET (R$ thousand) 03/31/2011 12/31/2010 03/31/2010 Assets Current 1,378,741 1,429,298 1,489,240 Cash and equivalents 2,365 6,220 1,961 Interfinancial liquidity investments 18,237 7,128 133,085 Marketable securities 297,093 363,442 314,123 Interfinancial relations 900 55 763 Loan operations 706,929 685,144 645,631 Loan operations - private sector 753,436 731,420 697,606 Allowance for losses with loan operations (46,507) (46,276) (51,975) Other loans 183,104 195,252 120,296 Other values and assets 170,113 172,057 273,381 Long-term assets 1,729,551 1,564,368 1,368,468 Interfinancial liquidity investments 101 101 - Marketable securities 688,732 578,769 462,719 Loan operations 867,743 816,060 634,795 Loan operations - private sector 872,434 820,498 640,589 Allowance for losses with loan operations (4,691) (4,438) (5,794) Other loans 29,921 31,523 46,400 Other values and assets 143,054 137,915 224,554 Permanent 80,194 80,314 71,723 Investments 1,407 1,407 1,360 Property, plant and equipment in use 17,014 17,078 16,696 Intangible 61,773 61,829 53,558 Total 3,188,486 3,073,980 2,929,431 (R$ thousand) 03/31/2011 12/31/2010 03/31/2010 Liabilities Current 1,289,224 1,326,843 1,120,145 Deposits 820,276 717,253 579,903 Open market funding - 46,267 5,451 Proceeds from acceptances and issues of securities 4,913 59,915 - Interfinancial relations 374 - 235 Derivative financial instruments 2,208 2,228 - Other liabilities 461,453 501,180 534,556 Long-term liabilities 1,044,549 919,477 1,003,700 Deposits 638,009 584,589 482,746 Proceeds from acceptances and issues of securities 218,741 166,540 243,016 Derivative financial instruments 11,077 4,764 10,618 Other liabilities 176,722 163,584 267,320 Income from future years - - - Minority interest in net income of subsidiaries - - 1 Shareholders equity 854,713 827,660 805,585 Capital stock 763,867 763,867 763,867 Capital reserve 265 265 265 Profits reserve 63,842 63,842 45,290 Adjustments to market value - marketable securities (627) (314) (142) Accumulated earnings (losses) 27,366 - 16,854 Treasury shares - - (20,549) Total 3,188,486 3,073,980 2,929,431 23
  24. 24. ► APPENDIX III – 1Q11 SEGMENTED STATEMENT OF INCOME Other/ Bank Insurances Consolidated EliminationsInterest income 109,983 12,009 - 121,992 Loan operations 95,140 - - 95,140 Income from marketable securities operations 14,843 12,009 - 26,852Interest expenses (60,256) - 10 (60,246) Funding operations in the market (40,316) - 10 (40,306) Income from derivative financial instruments (8,785) - - (8,785) Allowance for loans losses (11,155) - - (11,155)Net interest income 49,727 12,009 10 61,746Other operating income (expenses) (9,628) 15,738 (16,544) (10,434) Services fee income 2,275 - 1 2,276 Insurance premiums - 124,398 (30,790) 93,608 Premiums of co-insurance and reinsurance paid - (77,127) 30,790 (46,337) Change in insurance technical allowances - (6,457) - (6,457) Retained losses - (17,421) - (17,421) Personnel expenses (5,305) (4,262) (5,263) (14,830) Other administrative expenses (23,333) (5,834) 6,524 (22,643) Tax expenses (2,058) (1,707) (1,000) (4,765) Income from interest in subsidiaries 16,747 - (16,747) - Other operating income 6,263 8,121 (2,117) 12,267 Other operating expenses (4,217) (3,973) 2,058 (6,132)Operating Income 40,099 27,747 (16,534) 51,312Non-operating income 167 - (15) 152Income before tax on earnings and interest 40,266 27,747 (16,549) 51,464Income tax and social contribution (6,418) (11,051) (12) (17,481) Income Tax - current (3,970) (6,901) (17) (10,888) Social contribution - current (2,476) (4,150) (10) (6,636) Deferred Income tax and social contribution 28 - 15 43Profit sharing - (313) (129) (442)Net profit for the quarter 33,848 16,383 (16,690) 33,541 24
  25. 25. ► APPENDIX IV – SEGMENTED BALANCE SHEET AS AT 3/31/2011 Other/(R$ thousand) Bank Insurances Consolidated EliminationsAssetsCurrent 837,454 763,145 (221,858) 1,378,741 Cash and cash equivalents 254 2,183 (72) 2,365 Interfinancial liquidity investments 18,237 - - 18,237 Marketable securities 29,387 267,706 - 297,093 Interfinancial relations 900 - - 900 Loan operations 720,023 - (13,094) 706,929 Loan operations - private sector 766,530 - (13,094) 753,436 Allowance for losses with loan operations (46,507) - - (46,507) Other loans 25,191 239,090 (81,177) 183,104 Other values and assets 43,462 254,166 (127,515) 170,113Long-term assets 1,445,769 418,736 (134,954) 1,729,551 Interfinancial liquidity investments 101 - - 101 Marketable securities 495,719 193,013 - 688,732 Loan operations 882,906 - (15,163) 867,743 Loan operations - private sector 887,597 - (15,163) 872,434 Allowance for losses with loan operations (4,691) - - (4,691) Other loans 16,702 13,166 53 29,921 Other values and assets 50,341 212,557 (119,844) 143,054Permanent 362,573 12,444 (294,823) 80,194 Investments 357,802 1,328 (357,723) 1,407 Property, plant and equipment in use 4,398 11,055 1,561 17,014 Intangible 373 61 61,339 61,773Total 2,645,796 1,194,325 (651,635) 3,188,486 Other/(R$ thousand) Bank Insurances Consolidated EliminationsLiabilitiesCurrent 882,588 615,810 (209,174) 1,289,224 Deposits 820,824 - (548) 820,276 Open market funding - - - - Proceeds from acceptances and issues of securities 4,913 - - 4,913 Interfinancial relations 374 - - 374 Derivative financial instruments 2,208 2,208 Other liabilities 54,269 615,810 (208,626) 461,453Long-term liabilities 875,995 287,206 (118,652) 1,044,549 Deposits 638,395 - (386) 638,009 Proceeds from acceptances and issues of securities 218,741 - - 218,741 Derivative financial instruments 11,077 - - 11,077 Other liabilities 7,782 287,206 (118,266) 176,722Income from future years - - (28,258) -Minority interest in net income of subsidiaries - - 0 0Shareholders equity 858,955 291,309 (295,551) 854,713 Capital stock 766,167 126,000 (128,300) 763,867 Capital reserve 582 15,775 (16,092) 265 Profits reserve 65,160 133,151 (134,469) 63,842 Adjustments to market value - marketable securities (627) 0 - (627) Accumulated earnings (losses) 27,673 16,383 (16,690) 27,366 Treasury shares 0 - - 0Total 2,645,796 1,194,325 (651,635) 3,188,486 25
  26. 26. ► APPENDIX V – JMALUCELLI SEGURADORAS STATEMENT OF INCOME(MANAGEMENT APPROACH)JMalucelli Seguradora (R$ thousand) 1Q11 4Q10 1Q10 Net Written Premiums 62,011 88,504 53,164 Reinsurance (32,418) (62,699) (27,984)Retained premiums 29,593 25,804 25,179 Technical Reserve Variations-Insurance (4,258) (7,505) (7,467)Net earned premiums 25,335 18,300 17,713 Retained claims (10,224) (5,672) (9,939) Selling Income/Expenses 3,283 5,150 4,779Technical Margin 18,394 17,778 12,553 Other operating income and expenses 3,537 1,705 2,364 Administrative Expenses (9,167) (8,307) (7,838) Tax expenses (1,022) (745) (542) Financial Income 7,770 7,245 4,180 Equity from participation in subsidiaries - (481) -Result before taxes and participations 19,512 17,195 10,717 Income tax (4,837) (3,557) (2,383) Social contributin (2,906) (2,533) (1,433) Profit sharing (313) (1,947) (7)Net income 11,456 9,158 6,894 26

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