The boards ofTotens Sparebank andSpareBank 1 Østlandet have today signed a letter of intent to merge the two banks. The merger will contribute to an increased focus on the Inland region, with strengthened local presence, proximity to customers and growth capacity. The letter of intent regulates a number of matters that the banks have agreed on in the negotiations. The main features of the agreement are reproduced here. The final decision on the merger is taken by the banks' general meeting and supervisory board. Approval from the authorities will then be applied for. Strengthened local presence A merger of the two largest banks in the Inland region will create an even stronger bank for both customers and the region. The merged bank will be more competitive and have larger credit capacity. The bank will continue to contribute to growth and development in the area around Lake Mjøsa and in communities where the bank is represented. The merger will also contribute to more skilled jobs, ensuring that customers are offered relevant financial products and services from a bank with a strong local foothold. Increasingly challenging to be a medium-sized Norwegian bankTotens Sparebank is a well-run and profitable bank. However, increased regulatory requirements in more areas mean that the bank will need more resources in the future. The merger will provide a good basis for further profitable growth in the bank's market. Overall, the merged bank will have an even greater ability to be a strong local bank in an important region inEastern Norway . - The merger supports our vision to contribute to growth and development in the region. At the same time, the merger will increase our ability to meet future challenges. Together we will provide good solutions for customers, create local jobs, and healthy local communities, says CEO ofTotens Sparebank ,Rolf Endre Delingsrud. Security for employees, customers, owners, and societyTotens Sparebank has nearly 170 years of banking history, and is today located in Lena, Raufoss, Gjøvik, Hamar and Råholt, with around 90 employees.SpareBank 1 Østlandet has, through its almost 180 years of operations in the Inland region,Oslo and Akershus, become an important bank in centralEastern Norway , with 1,150 employees spread over 37 locations. Jointly,SpareBank 1 Østlandet andTotens Sparebank will as a large and important part of the regional community, strengthen its presence as a solid, safe, and forward-looking bank for owners, customers, employees, and society. Both banks believe that proximity to customers combined with good digital solutions, are key factors in the face of increasing competition. - The merger will contribute to us becoming an even stronger partner for both businesses and local communities in the future. Our logo will be new, but our employees are the same as before and our customers continue to meet us in the same locations as before. Our strength will continue to be local presence, proximity to decisions and personal advice to customers, says Delingsrud. We want all employees to stay on board The merged bank will need all its current employees. In addition, employees ofTotens Sparebank - including support functions at Lena - will be able to continue working where they do today. - We welcome all employees ofTotens Sparebank . Everyone is needed and employees will be able to work from their current workplace also after the merger is completed. By joining forces, we can realize our common ambition to remain the leading bank in the region. Our most important task in society is to be a solid and stable source of funding for people and companies in the region, says CEO ofSpareBank 1 Østlandet,Richard Heiberg . CEO of Totens Sparebank Rolf Endre Delingsrud, will join as a member ofSpareBank 1 Østlandet's group management with primary responsibility for the integration process betweenTotens Sparebank andSpareBank 1 Østlandet. Other members of the management team ofTotens Sparebank will be offered key positions in the merged bank. Employee representatives on the boards have voted in favor of the letter of intent. The chief employee representatives in both banks will be closely involved in the merger process. A stronger regional financial center The merger will lay the foundation for developing a stronger center for skilled jobs in the financial services sector in the region around the city of Gjøvik. The bank branch structure will remain largely the same as today, but operations in Gjøvik will be strengthened through the establishment of a large regional office for the former county of Oppland (now part of the Inland region). Region Oppland inSpareBank 1 Østlandet will consist of the offices in Lena, Raufoss, Gjøvik, Råholt and Lillehammer. Offices where both banks have operations, that is in Hamar, Gjøvik and Råholt, will naturally be merged. Same «home market» The area around Lake Mjøsa with its surrounding municipalities, is a common home market for the two banks. The area includes attractive city centers, interesting and innovative industries and companies, agriculture, educational and research centers, as well as attractive retail customers who want to live and work near villages, cities, and nature. The banks share the same geography and a similar set of values, they are involved in society, have local roots and a burning desire to contribute to the benefits of living and working in the Inland region. Both are major sponsors and financial supporters, sharing profits for good causes. A merger will provide the banks with a solid foundation for strengthening their corporate social responsibility work in the region.SpareBank 1 Østlandet shares the bank's profits with customers in the form of customer dividends, which will also be made available to customers ofTotens Sparebank . - We are proud to be able to create an even bigger and better bank based in the Inland region. We are confident that the merger will benefitTotens Sparebank , both its employees, customers, equity capital certificate holders and local communities, saysGeir Stenseth , Board chair inTotens Sparebank . - This is an exciting and important merger from a structural perspective. We look forward to being able to invest further in one ofNorway's prime regions together with talented colleagues fromTotens Sparebank . The goal is to further develop a profitable business by combining the best of the two banks and becoming even stronger together, says Siri J. Strømmevold, Board chair ofSpareBank 1 Østlandet. Further strengthening innovation, jobs, and community involvement in the regionSpareBank 1 Østlandet wishes to develop a center of excellence in the bank for innovation and business development based in Gjøvik, drawing in part on existing external professional communities.SpareBank 1 Østlandet has for a long time collaborated with theNorwegian University of Science and Technology (NTNU), including by supporting the establishment of both bachelor's and master's studies in information security. In addition,SpareBank 1 Østlandet will be a driving force forSparebankstiftelsen Hedmark to establish a branch of the "Innlandet Science Park " in connection with NTNU in Gjøvik, preferably together with the foundation to be established byTotens Sparebank . In the event,SpareBank 1 Østlandet will contributeNOK 20 million to such an establishment.Totens Sparebank to create a savings bank foundation which becomes a major owner in the merged bank In connection with the merger, a savings bank foundation will be established which will own the converted primary capital inTotens Sparebank in the form of equity certificates in the merged bank. Totens Sparebankstiftelse will become a significant owner in the merged bank, with an ownership stake of 8.6 per cent, to the benefit of local communities in the traditional market areas ofTotens Sparebank . The foundation will be managed locally from Toten with Stig Håvard Blikseth as intended general manager. The foundation will continue with - and increase - the significant amounts thatTotens Sparebank already donates to good causes. The merged bank will then have two strong savings bank foundations as owners. - The board ofSparebankstiftelsen Hedmark is positive to the merger, says Tore Anstein Dobloug, director ofSparebankstiftelsen Hedmark . This foundation currently owns 52.1 percent of the equity certificates inSpareBank 1 Østlandet. - We look forward to working with the new savings bank foundation, says Dobloug. The merged bank will be part of the SpareBank 1 Alliance As a result of the merger withSpareBank 1 Østlandet, the operations ofTotens Sparebank will become part of the SpareBank 1 Alliance.SpareBank 1 isNorway's largest banking alliance and is owned by 12 independent savings banks across the country. This will give employees and customers inTotens Sparebank advantages in the form of a broad product range, user-friendly digital solutions, and a strong common brand. Employees inTotens Sparebank will also become part of larger, specialized working environments inSpareBank 1 Østlandet and in the alliance. This will help make current tasks even more interesting for individual employees and provide greater opportunities for career development. Exchange ratio and merger consideration The exchange ratio and merger consideration were determined after negotiations between the banks and were based on a process that emphasized book equity of capital and an assessment of surplus and deficit values of assets and liabilities, expected normalized profits, as well as identified synergies. As of30 September 2023 , the book value of equity wasNOK 18,947 million inSpareBank 1 Østlandet andNOK 2,505 million inTotens Sparebank (excluding hybrid capital and minority interests). Looking at identified surplus and deficit values in the banks' balance sheets, profit analyzes (including adjustment for, among other things, one-off effects), the banks have agreed on a total consideration whereSpareBank 1 Østlandet pays a merger consideration corresponding to 1.80 equity capital certificates inSpareBank 1 Østlandet per equity capital certificate inTotens Sparebank , with the addition of a cash consideration ofNOK 7.7880 per equity capital certificate inTotens Sparebank , which gives a total merger consideration equivalent to 1.86 equity capital certificates inSpareBank 1 Østlandet per equity capital certificate inTotens Sparebank . The cash consideration was determined based onSpareBank 1 Østlandet's closing price on2 January 2024 . Total cash consideration for the equity inTotens Sparebank is calculated toNOK 98.4 million , where the primary capital inTotens Sparebank is theoretically converted to share capital when calculating the cash consideration. The total merger consideration corresponds to an exchange ratio of 87.52 per cent toSpareBank 1 Østlandet and 12.48 per cent toTotens Sparebank .SpareBank 1 Østlandet andTotens Sparebank currently have a capital structure consisting of primary capital and equity capital. The equity capital certificate ratio inSpareBank 1 Østlandet was 70.0 per cent as of30 September 2023 , with a total of 115,829,789 equity capital certificates having been issued. InTotens Sparebank , the ECC-ratio as of30 September 2023 was 48.48 per cent, with a total of 6,124,534 equity capital certificates issued. Governing bodies The Supervisory board: The supervisory board inSpareBank 1 Østlandet consists of 40 members, of whom 14 are elected by depositors, 12 are elected by equity holders, 10 are employees and 4 are elected by the public. The total number of representatives will remain unchanged in the merged bank. The number of depositor representatives of 14 with 14 deputy representatives will be maintained. Today's electoral district Hedmarken/Oppland with 6 depositor representatives will be split into two electoral districts, Hedmarken with 4 depositor representatives and Oppland with 2 depositor representatives, with a corresponding number of deputies. In connection with the merger, depositors inTotens Sparebank will elect 2 depositor representatives and 2 deputy representatives for the electoral district of Oppland in the merged bank. Members elected by equity capital certificate holders will continue to total 12 members, to be elected in a separate election meeting for equity capital certificate holders. Employees' representation is unchanged, with 10 members and 10 deputies. Employees ofTotens Sparebank will elect one member and one deputy member, replacing one member and one deputy member ofSpareBank 1 Østlandet in connection with the merger. The number of representatives from theCounty Council of the Inland is unchanged, at 4 members and 4 deputies. All of today's representatives are from former Hedmark county. In connection with the merger, it would be preferable that one existing member and one deputy member from the county council yields their respective seats in favor of one member and one deputy member from the county council belonging to the region around Gjøvik. These changes will be taken into account in upcoming elections inSpareBank 1 Østlandet. Election committee for the equity capital certificate owners: The election committee for the equity capital certificate owners' election inSpareBank 1 Østlandet consists of 4 members and 4 deputies. The election committee will be temporarily increased by one member and one deputy member appointed by Totens Sparebankstiftelse, from the merger until the ordinary meeting of the board of representatives in the merged bank in 2026. The Board of directors: According to the articles of association, the board ofSpareBank 1 Østlandet must have seven to nine members, to be decided by the supervisory board. In connection with the merger, the current chairman of the board ofTotens Sparebank ,Geir Stenseth , is to be elected as a new board member of the merged bank for a period of two years and with the right to re-election for a further two years, regardless of legal requirements for representation beyond suitability. If Stenseth resigns or is unable to hold the board position for the entire term of office, Totens Sparebankstiftelse shall have the right to appoint a new board member to replace Stenseth for the remaining period. Once the merger is effective, the chief employee representative inTotens Sparebank will become an observer on the board ofSpareBank 1 Østlandet with the right to speak, but without the right to vote, until the next ordinary board election in 2026. From this point on, 2 members with deputies will be elected by and among employees in accordance with the ordinary election rules. Timetable and conditions for implementation The general meeting and the supervisory board ofTotens Sparebank andSpareBank 1 Østlandet respectively, will be invited to information meetings about the letter of intent to merge on 8 and10 January 2024 , respectively. The boards of the two banks then intends to sign a merger plan on15 January 2024 , which will then be considered by the banks' general meeting/supervisory board on22 February 2024 . Completion of the merger is conditional on the general meeting and the supervisory board ofTotens Sparebank andSpareBank 1 Østlandet, respectively, approving the merger plan, and necessary supervisory approvals being granted without conditions or on terms that do not significantly change the assumptions the banks have made as a basis for the merger. AdvisorsSpareBank 1 Østlandet has engagedSpareBank 1 Markets AS as financial adviser andAdvokatfirmaet Selmer AS as legal adviser in connection with the merger.Totens Sparebank has engagedABG Sundal Collier ASA as financial adviser andAdvokatfirmaet BAHR AS as legal adviser. Contact Information:Totens Sparebank : Chairman of the board:Geir Stenseth : tel. +47 930 39 707 CEO: Rolf Endre Delingsrud, tel. +47 917 28 668 Deputy CEO:Stig Håvard Blikseth , tel. +47 958 64 601 CFO: Johan Øverseth Røstøen, tel. +47 916 07 741SpareBank 1 Østlandet: Chairman of the board: Siri J. Strømmevold, tel. +47 414 44 712 CEO:Richard Heiberg , tel. +47 902 06 018 CFO:Geir-Egil Bolstad , tel. +47 918 82 071 Head of Investor Relations:Bjørn-Erik R. Orskaug , tel. +47 922 39 185 The above information is considered to be inside information pursuant to the Market Abuse Regulation (MAR) and is subject to the requirements of announcement pursuant to the Securities Trading Act section 5-12. This notice is published on behalf ofSpareBank 1 Østlandet by Bjørn-Erik R. Orskaug (Investor Relations) andTotens Sparebank byErik Evensen (financial manager) on3 January 2024 at 07.30
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