SADG - Profit warning for 2nd quarter 2010

As of June 1, 2010, a new Managing Director took
charge of Sandnes Sparebank.

In connection with the reporting of revised financial
statements as of June 30, 2010, a thorough review and
risk assessment was made of the Bank's Corporate and
Retail credit portfolio.

The result of this review is that the Board of
Directors and management of the Bank, means that it
is necessary to make a significant increase in
individual write-downs of some existing doubtful
loans in the major customer segment of the Corporate
Market business. The write-downs resulted in a loss
for the first half of 2010.

The Bank's liquidity situation is good. Tier-1
capital ratio for the group is expected to be 11.5%
as of the 2nd quarter 2010.

Further information about the write-downs
It should be emphasized that this only applies to
corporate loans that have been defined as doubtful
since the 4th quarter of 2008, and which have
previously been subject to individual write-downs.
The write down on one of these loans was reversed in
2nd quarter of 2009, but has now been provided for
again. This is a large customer, but only a small
part of it is regarded as doubtful.

The Bank's retail customer portfolio has been
reviewed, as already mentioned, but was not affected
by further individual write-downs.

For the 2nd quarter 2010, individual write-downs by
the Parent Bank were increased by NOK 112 million. In
total, the Bank's doubtful loans amount to NOK 1.490
million.

The reason for the increase is negative performance
by some existing doubtful corporate loans.

No negative performances have been identified with
respect to the Bank's other corporate loans.


Outlook for 2010 and commenced measures for improved
profitability
The net interest income of the Group has been under
pressure, due to increasing funding costs through the
2nd quarter, and is expected to be approximately 1.3%
in the 2nd quarter, and approximately 1.4% for the
first half of 2010 as a whole.

The Bank undertook a general rate increase effective
from June 10, 2010. In addition, a margin increase
has been implemented for the major customer segment,
effective from July 2010.

This will contribute to strengthen net interest
income during the 3rd quarter.

As of the 2nd quarter 2010, other operating income is
26% lower than for the 2nd quarter of 2009, which is
due to lower dividends on the Bank's investments and
negative fair value adjustments of the Bank's
financial instruments, primarily due to higher credit
spreads.

The Group experienced an increase in total operating
cost of 13% relative to the 2nd quarter of 2009.
This is primarily due to large individual items, the
majority of which is non-recurring items.

The financial statements for the first half of the
year have not been completed, as they are subject to
a limited audit, but profits before taxes are
expected to be in the range NOK - 55 to - 65 million.

For the next half, the Bank will, as previously
communicated, actively sharpen the focus of its
business on the retail market and the small and
medium business segment. This work has already been
commenced during the summer, and has resulted in some
of the Bank's loans to major customers having been
redeemed. We will work actively to effect a further
reduction of this exposure going forward.

The Bank is also implementing a new profitability
program focusing on both increasing income and
reducing operating costs. In addition to increased
profitability, focus will be sharpened and the
service of our various customer groups improved. The
profitability program will be presented in further
detail in 3rd quarter 2010.

Normalized profits are expected for the 3rd and 4th
quarter of 2010, which will result in small profits
for the Group on an annual basis.

2nd quarter results will be made public by Sandnes
Sparebank on Thursday 12th August.

Contact persons:
Svein Ivar Førland, CEO, telephone: 90 64 41 91
Terje Frafjord, CFO, telephone: 92 83 54 30