THE LIBERIAN BANK FOR DEVELOPMENT & INVESTMENT

2014 ANNUAL REPORT

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TABLE OF CONTENTS Page 1. LETTER OF TRANSMITTAL 4 2. MESSAGE FROM THE CHAIRMAN 5 3. BANK GOVERANCE STRUCTURE 8 4. BOARD OF DIRECTORS 9 5. ORGANIZATIONAL CHART 16 6. SHAREHOLDING 17 7. MANAGEMENT ACTIVITIES REPORT: CEO’S REPORT 18 8. OPERATIONS DIVISION 21 9. FINANCE DIVISION 25 10. HUMAN RESOURCES 31 11. CREDIT DIVISION 37 12. INTERNAL AUDIT AND COMPLIANCE 47 13. RISK MANAGEMENT 49 14. EXTERNAL AUDITORS & LEGAL COUNSELS 51 15. ANNEXTURE: 2014 AUDITED FINANCIAL STATEMENTS 52

TABLE OF CONTENTS:

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The Annual General Meeting: Pursuant to Section 1000 of the Bank’s Charter and in keeping with other statutory and prudential regulations, the Board of Directors of the Liberia Bank for Development and Investment (LBDI) herewith submits the 2014 Annual Report and Accounts of the Bank. The Annual Report and Accounts outlining the Bank’s activities and financial results for the period ended 2014.

LETTER OF TRANSMITTAL

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Greetings: I am honored to welcome you to the Annual General Meeting for the year ended 2014.

During the period, the competition amongst actors in the sector proved challenging but exciting. In spite of these challenges, I am delighted to report to you that the Liberian Bank for Development and Investment sailed well with an appreciable level of stability in its operations. The performance as at December 31, 2014 records an equivalent net profit of US$ 2.41M compared to a loss of US$0.282M in 2013. The Bank’s financial performance is consistent with budgeted expectations. We herein report that the year 2014 was impacted by a debilitating health crisis, the Ebola Virus Disease. Over four thousand (4000) of our compatriots lost their lives due to the challenge the virus posed to our health sector. The economy of Liberia experienced a decline in growth projections to -0.4 percent from pre-crisis projection of 5.9 percent. The Mining and

BOARD CHAIRMAN’S MESSAGE

HON. AMARA M. KONNEH CHAIRMAN OF THE BOARD

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Agriculture sectors were the worst affected in the country. In the Mano River Basin, the Ebola Virus also adversely impacted the economies of Sierra Leone and Guinea. GDP Expectations have therefore been revised downwards and will continue to decline in the short run with agriculture amongst the worst affected sectors. Global Economic Review: 2014 was characterized by diverse events impacting global economies notwithstanding the Ebola Impact:

• During the year, Global economic activity was strengthened and is expected to improve further in 2015. Much of the impetus for growth came from advanced economies; but the recovery was uneven and weak. Growth remained frail and job creation for millions of people unemployed remains a challenge. However, policy actions during the year have helped to stabilize the global economy. It is worth mentioning that global financial stability faced new challenges from the slowdown in emerging markets and the risk of very low inflation in Europe.

• The global growth projection for 2014 has been marked down by 0.3 percent to 3.4; with anticipated stronger growth expected in some advanced economies in 2015. The global growth projection for 2015 remains at 4 percent.

• In some major emerging market economies, the negative growth effects of supply-side constraints and the tightening of financial conditions over the past year could be more protracted.

• In many advanced and emerging market economies, structural reforms are urgently needed to close infrastructure gaps, strengthen productivity, and lift potential growth; Liberia not excluded.

Conclusion: Distinguished Shareholders, as we underscore the significant constraints the Ebola epidemic has imposed on the banking industry and the country, the Board, during the period under review remained engaged with the management and ensured that it took the necessary measures to deal with the crises. Significant measures amongst actions taken include:

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• Approval of emergency crises funding to protect staff and customers from the threat of infection during utility of bank premises;

• Payment of additional allowances to bank staff as assistance to cover family preventive measures; and

• Placing a temporary hold on selective capital and revenue expenditures duly approved for the second half of the year 2014.

We applaud the management for ensuring that our internal control procedures and practices remain vigilant and in adherence with prudential regulations. On the overall, the Bank's performance exceeds industry averages in several respects including growth in assets, deposits and profitability. We are herewith pleased to report that the Bank’s ability to deal with current risks challenges is increasingly improving.

The Board of Directors expresses its gratitude to the Government of Liberia through the Ministry of

Finance and Central Bank of Liberia for the many Fiscal and other Prudential Regulations created to ensure a viable banking sector and improve liquidity. Further, we extend our warmest gratitude to our many shareholders, customers, multilaterals, and other partners for the confidence they continue to repose in the Liberian Bank for Development and Investment during the period under review.

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BOARD OF DIRECTORS

ASSETS & LIABILITY

COMMITTEE

RISK COMMITTEE

AUDIT & COMPLIANCE COMMITTEE

EXECUTIVE COMMITTEE

CREDIT COMMITTEE

BOARD GOVERNANCE STRUCTURE

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BOARD OF DIRECTORS Name Position Profile

Hon. Amara M. Konneh Nationality: Liberian

Chairman

Hon. Amara M. Konneh is the Minister of Finance and Development Planning. He holds a Master Degree in Public Administration from the JFK School of Government at Harvard University, a Master in Management from Penn State University and a B.Sc. in Information Systems from Drexel University. Hon. Konneh has served as the Minister of Planning and Economic Affairs, Deputy Chief of Staff to the Office of the President of the Republic of Liberia, Chaired the ICT4D steering committee whose efforts led to Africa Coast to Europe fiber optic high speed internet cable in Liberia. As Alternate Governor to the World Bank, he played a key role in HIPC initiative resulting in the waiver of $4.6 billion external debt; he led the efforts in Liberia receiving a US$15 million grant from the US Millennium Challenge Corporation.

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S. T. Eugene Peabody Nationality: Liberian

Member He holds a Masters of Business Administration with emphasis in Finance from the Atlanta University Graduate School of Business, USA in 1975. Prior, he earned a Bachelors of Arts in Economics from the Cuttington College, Liberia in 1969 Mr. Peabody is currently the second representative of the Government of Liberia. Mr. Peabody has been a financial specialist for many years covering areas including development banking with the African Development Bank and fiscal operations at the Ministry of Finance.

Hon. Dewitt vonBallmoos Nationality: Liberian

Member

Mr. vonBallmoos is the current Director General of the National Social Security & Welfare Corporation. He holds a Master of Science (MSc) degree from the Virginia State University in 1989 and a Bachelor of Business Administration (BBA) Management from the University of Liberia in 1984. He currently chairs the Credit Committee of the Board

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Dr. James S. P. Cooper Nationality: Liberian

Member James S. P. Cooper is a graduate of the University of Liberia and Columbia University, USA. He is presently the Vice Chairman of Magus Investment Corporation. He has also served as a Director of Liberia Hotels Inc, Monrovia Transit Authority, Liberia Broadcasting System, National Housing Authority, and Liberian Finance and Trust Company. He was also Chairman of Small Enterprise Financing Organization. James S. P. Cooper was employed in 1973 as a Project Analyst in LBDI and rose up the ranks to Comptroller in 1981, General Manager in 1987, and President in 1992. He left LBDI in 1995 having worked with the Bank for 20 years.

Mrs. Elizabeth Gadegbeku-Anthony Nationality: Liberian

Member Elizabeth Gadegbeku-Anthony studied Biology at the Essex County College, Newark, NJ in 1983 and also earned a degree in Nursing from the Hennepin Technical College Minnesota, Minneapolis in 2007. She has had vast experience in administration. Between 2002 and 2004, she served as Manager of the Universal Health Care and Rehabilitation Center West Orange, NJ. As Proprietor of the Atlantic Construction Company, East Orange, 25 Clifton Avenue, NJ. 07104, she managed the rehabilitation of homes. She is an accomplished Social Worker and Humanitarian.

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Mr. David Johnson Nationality: British

Chairman, Credit / Risk Committees

David C. Johnson is a Fellow of the Chartered Institute of Banking of the U. K. and Ghana and has a BA in Banking and Finance. He is presently Managing Director of West African Banking Consultants Ltd, Freetown, Sierra Leone, and is an Associate of the following U. K. based banking consultancy companies – GBRW Ltd, and Pan African Associates Ltd. He has over 50 years banking experience in Africa and the Middle East having been at different times Managing Director/CEO of EcoBank-Ghana, EcoBank- Nigeria, the Trust Bank-Ghana and New Capital Bank (Zambia). He worked for Citibank in Nigeria and Saudi Arabia, Commercial Bank (Malawi) and DCEO for Barclays in Sudan, the Congo, Sierra Leone and Cameroun.

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Paarock VanPercy is a graduate of the University of Ghana and a fellow of the Institute of Chartered Accountants in England and Wales. He is presently the Managing Director of Afri-Invest Management Company Ltd and Principal Associate of AfriCapital Associates. He was previously the Country Director of Commonwealth Development Corporation (Ghana), General Manager of Venture Fund Management Company, Head of Corporate Finance of Merchant Bank (GH) Ltd. and Audit Manager for Unilever Ghana Ltd.

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Mr. Isaac O. A. Olagunju Nationality: Nigerian

Member Isaac Ojo Akinkuolie Olagunju currently serves as Director of the Department of Finance at the Ecowas Bank for Investment and Development (EBID), Lome’ Togo. He has had extensive graduate training in Accountancy. In 2011, he obtained a Postgraduate Certificate in Business Administration from the University of Leicester in the United Kingdom. He holds a BSc in Accounting from the University of Benin State, Nigeria. He is also a fellow of the Chartered Institute of Bankers of Nigeria (April 2002) and the Institute of Chartered Accounts of Nigeria (Feb. 1990) respectively. He was admitted as Associate Member of the Institute-ACIB (June 2003) and the Institute- ACA in February 1990.

Mr. Ashton Towler Nationality: British

Chairman Asset & Liability Committee

Ashton Towler is a graduate from the University of Manchester and a member of the Institute of Chartered Accountants in England and Wales. He is currently the Financial Advisor to Africa Business with services focused on capital raising and financial restructuring. He previously worked as an Investment Principal of Actis Capital LLP; Director of CDC Capital Partners an Director of CDC Assets. He is currently the Chairman of the Asset Liability Committee of the Board of Directors.

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Mr. John B. S. Davies, III Nationality: Liberian

Chairman of the Executive Committee

John B. S. Davies, III, is the President/CEO of LBDI. He holds a MAcc (Master of Accountancy) from Belmont University, Nashville, Tennessee, USA and a diploma in Public Financial Management from Duke University. Mr. Davies previously served as Accountant General of the Republic of Liberia from May of 2010 to Jan-2012. Prior, he served in various capacities including Chief Accounting/Assistant Comptroller from 2000 – 2006; CFO and EVP for Finance Administration from 2007 to 2010. Other posts held include; Advanced level Accounting Instructor at the University of Liberia to present; Board of Trustee, AMEU; Member, Board of Directors for Center for Transparency (CENTAL).

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THE BANK’S ORGANOGRAM

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CLASS

Shareholders

No. Shares % Shares

A 419,785 54.37% Government of Liberia (GOL)

152,172

19.71%

National Social Security & Welfare Corporation (NSSWC) 125,000 16.19% Private Shareholding

49,079 6.36%

Treasury 93,534 12.12 CLASS

Shareholders

352,238

45.63% B

AIMAC (Afri-Investment Management Co. Ltd.)

123,273

15.97% ECOWAS Bank for Investment & Development (EBID)

100,000

12.95%

Private Individual shareholding(JSPC, AbiJaoudi)

47,160

6.11%

Group Agence Francaise de Development (GAFD)

31,059

4.02%

Magus Trust Corporation (MIC)

24,439

3.17%

IEE Holding S. A.

14,162

1.83%

Firestone Plantation Company (FPCO)

8,381

1.09%

Treasury 3,764 0.49 GRAND TOTAL

670.725 100.00%

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It is with esteem gratitude to God for sustaining our lives that we once again welcome you to this 2015 Annual General Meetings. We also like to express our gratitude for the enormous support and prayers provided this Management by everyone during the Ebola crisis which has although ravished our nation, Liberia, but showcase our resilience as a people. 2014 witnessed very strong performance on all the major indicators especially in the first half of the year. The prevalence of the Ebola Viral Disease (EVD) which has imposed significant constraints on the economy slowed the Bank's Growth, and threw a few speed bumps in our tracks. We are pleased to report in spite of these challenges that our partnership with the Government of Liberia, the Central Bank of Liberia, Development Partners, Customers and Shareholders ensured that we sailed and achieved significantly the expectations of the Board and shareholders. We are a key local partner with the Government of Liberia in the implementation of the Agenda for Transformation and will continue to do so with commitment.

MANAGEMENT ACTIVITIES REPORT: 2014 AT A GLANCE

JOHN B.S. DAVIES, III PRESIDENT/CEO

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2.0 THE EBOLA CRISIS: During the period July to December 2014, all sectors of our economy including the banking sector suffered the debilitating effects of the Ebola crisis. At the LBDI, while measures intended to safeguard the workplace were instituted with the approval of the Board, we are sad to report to you that the Bank suffered 3 confirmed Ebola fatalities and 1 suspected case amongst its staff. The Management with approval of the Board instituted the following measures to prevent further fatalities and to forestall the spread of the epidemic through the Enterprise:

• Prevention methods: the Government of Liberia’s Ebola prevention rules on the use of touch less temperature thermometers and washing of hands were enforced and are strictly observed;

• Opening hours were adjusted from 8am to 3pm Mondays thru Fridays; Saturday 10am to 12 noon.

• All Board approved hazard pay to the employees and contributions to the fight against the Ebola menace were implemented.

• A total of 36 staff members were quarantined for making contacts with suspected cases of the EVD. They all completed their 21 days of quarantine and have since resumed work.

• One of the staff confirmed with the Ebola virus survived and has since resumed duties.

• Our Robertsport branch was also completely quarantined and underwent continuous disinfection. All staff has since returned to work.

3.0 LIQUIDITY:

The Central Bank of Liberia reported that though the banking system remains generally sound, there have been declines in key balance sheet indicators. Total assets, which have been on the rise, declined by 2.7 percent between June and October 2014; total deposits by 2.8 percent; While total loans and advances decreased by 7.2 percent; and total capital by 4.2 percent during the same period. This situation is partly due to the decline in the value of Liberian Exports. However, with the new intervention, we wish to thank the Government of Liberia through the Ministry of Finance and Development Planning and the Central Bank of Liberia for instituting the requisite measures to ensure its stability.

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The Ebola health crisis adversely impacted the operations of banks and non bank institutions during the year under review. Despite the many challenges confronting the sector in 2014, we are pleased to report that the Audited financial position of LBDI is strong. The performance as at December 31, 2014 records an equivalent net profit of US$ 2.41M compared to a loss of US$0.282M in 2013. The total revenue section of the bank’s performance is slightly above budgeted figure by US$82K except for few revenue line items which underperformed against the approved 2014 budget. One of the key performance drivers is control and the resultant reduction in G&A. The Bank’s enhanced managerial ALCO reviews have resulted into more stringent budgetary control and prudent fiscal management. Commission on transfer, service charges, FX and Western Union underperformed as a consequence of the Ebola crisis.

The Bank remained compliant with key regulatory ratios as at December 31st 2014. Liquidity ratio is 48%; while Capital Adequacy Ratio (CAR) is 22%.

Distinguished Members of the AGM and Board of Directors, as a strategy for the sustenance of the gains made in 2014, Management institutionalized

the Business Development Department and restructured the Banking Operations Department to ensure efficiency at the branches. Under this program, the Heads of the branches assumed marketing functions, while the normal operational and administrative functions of the branches were devolved to other senior personnel of the branches destined as “Head of Operations” (HOPs).

It is our anticipation that this new strategic mechanism shall ensure better customer capital adequacy ratio and resultantly improve deposit mobilization with the aim of enhancing profitability. Further, the establishment of an Electronic Banking Department to cater to the operation of the automatic teller machines (ATM) and other electronic products such as SMS banking is also a factor in our capital mobilization strategy.

Thank you for your support to and confidence reposed in this Management Team. We whole

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heartedly welcome you to the AGM. PRESIDENT/CEO

In 2014 LBDI continued the path of strong deposit mobilization and stability, customer care and service branding. These efforts were reciprocated by renewed customer loyalty and deposit growth. The Bank’s diversified customer base has guaranteed its position and rank in the banking sector as it remains second in terms of assets size and first in respect of savings deposit in Liberia. The increased growth in savings deposits has not only supported our lending program but provided liquidity for our treasury operations.

LBDI’s dedicated service to prestige customers has attracted deposits and business opportunities from several high net worth companies and clients which has culminated into profitable banking relationships. Our Business Development Department has innovated products that are tailored to meet the needs of our diverse customer base. The Bank completed feasibility studies for the rollout of its electronic banking products to include Automated Tellers Machines (ATMs). The required operational, risk and regulatory infrastructures are being assessed for approval by the Central Bank of Liberia and

OPERATIONS DIVISION

GLORIA Y. MENJOR GENERAL MANAGER/DCEO

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commissioning is expected soon. The importance of effectively providing e-banking services gave birth to the establishment and full staffing of an E-Banking Department and a Customer Call Center. Management signed a memorandum of understanding with an overseas counterpart for the provision of training to the employees of the E-Banking Department. In fostering corroboration and expansion of our services, the Bank entered and now executes several memoranda of understanding with private institutions, Government Ministries and agencies, and concessionaires to provide Direct Deposit payroll services for their staff members. This partnership has proven to be mutually beneficial and satisfactory.

Operational results for 2014 depict growth in new accounts by 5.8% or 21,421 of which 52.8% or 11,302 and 0.9% or 186 represents Liberian dollar savings accounts and Liberian dollar checking accounts, respectively; while 36.8% or 7,879 and 9.6% or 2,054 represents United States dollars savings accounts and checking accounts, respectively.

The Bank processed a total of 1,206,252 in 2014; 63% of which were processed by four Metro-Branches with Central Monrovia accounting for 20% followed closely by Sinkor, Paynesville and Savings Annex. Currency-wise, United States Dollars transactions account for 52% of total transactions, 47% for Liberian dollars and the balance 1% accounting for Euros and British Pounds.

0%20%40%60%80%

100%

LRD USD

2014 NEW ACCOUNTS

Checking

Savings

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LBDI deposit concentration remains satisfactory with deposit balances on new accounts totaling L$242M and US$9M by December 31, 2014. Of total Liberian dollar deposits recorded as at December 31, 2014, 74.6% accounted for savings. This depicts an increase over 2013 Liberian dollar savings deposits by a 1.9 percentage points. By value, United States dollars checking and savings accounts were evenly matched in 2014 recording 48.3% and 48.6%, respectively with the remainder accounting for time deposits. Overall deposits in USD equivalent showed growth by 5.8% from US$103.3M in 2013 to US$109.3M in 2014.

Banking Operations Department in 2014 adopted a new approach to branch management which underscores marketing as a core branch managerial

Central Monrovia

20%

Sinkor 15%

Paynesville11%

Savings Annex

11%

Others43%

Transaction Count

-

50.00

100.00

150.00

1-Jan-13 1-Jan-14EQV.

USD

(MIL

LIO

NS)

DEPOSITS

DEPOSIT BY CURRENCY

USD

LRD

0.00

50.00

100.00

150.00

Checking Saving Time Dep.

USD

EQ

V.(M

ILLI

ON

S)

DEPOSIT GROWTH BY CATEGORY

2014 USD EQV. 2013 USD EQV.

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function. This approach entails the use of the Branch Operations Officer as the substantive supervisor of the Branch whilst the Branch heads are performing their marketing duties. Results from this model are indicative of the contribution made by the branches to deposit growth and profitability.

The Banking Operations Division was successful in its fight against the deadly Ebola virus as prompt and compulsory measures were instituted including the contracting of medical support staff to monitor

incidence, and suspicion of the virus and for daily routing temperature checks for staff and customers of the Bank.

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The financial results for 2014 reflect a significant improvement in performance compared to the year ended 2013. This progress is significant predicated on its attainment during a debilitating health crisis, the Ebola Virus Disease, which ravished the Liberian

economy thus adversely impacting the growth of every sector including Banking, Mining, Agricultural, Hospitality, Infrastructure and other service sectors. The force majeure closure of major concessionaires, slowdown in investment, the migration of expatriate workforce, restrictions on cross border commerce and trade, transportation, imposition of the state of emergency, closure of schools, compulsory leave affecting Government Civil Servants, and an inconducive business climate as a consequence of the Ebola Virus Disease (EVD) also hampered the growth of the economy. In spite of these factors, our end of year results balance sheet is healthy. During the course of the year, the Bank concluded additional correspondence relationships in Europe and the United States.

Accounts: The Accounts Department delivered on its share of the Bank’s Strategic Goals. The Department was charged with the strategic target of ensuring that the Bank remains profitable in spite of the EBOLA crisis.

FINANCE DIVISION

MRS. CLAVENDA O. PAYMAN COMPTROLLER/CFO

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This goal was achieved as per the below stated results. As at December 2014, the Bank’s Balance Sheet size grew by 28% or US$61.05M from US$159.37M in 2013 to US$220.42M in 2014 December. Earning assets (Loans, Marketable Securities and Investments) for 2014 reflect US$89.77M or 41% of the balance sheet size; while 2013 show US$78.29 thus resulting to a growth of 13% or US$11.47M during the year 2014. Deposits grew by 5.8% and represent 50% of balance sheet size. The Bank realized a profit of US$2.41M.

Interest Income

The performance for 2014 is a reflection of its NPL and the used of the IFRS model. NPL ratio was maintained at 16.3% thus resulting to a profit of US$2.41M.

Interest income grew at 23% or US$US$1.14 during the year 2014 from US$5.00M earned in 2013. The growth is 2014 is attributed in earning assets. The year target was achieved at 184%. LBDI consolidated Interest Income is US$6.15M.

INTEREST INCOME

Interest expense

Interest expense decline by 1% at the year ended December 31, 2014 compared to budget assumption growth projection of 37%. This is a reflection of the CBL Stimulus Economy injection to revitalize the Liberian economy by reducing interest rate for stimulus initiative. However, interest on saving, term deposit and other borrowing remained at the same rate.

The decrease in interest expense as shown in the Bank performance contributed to the year end result thus reflecting a profit of US$2.41M. Given the

-

2,000

4,000

6,000

8,000

2012 2013 Budget 2014

2015

3,337

5,004

6,597 6,146

Actual 2014

Figures in Million

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above, interest expense is adequately covered by interest income ratio of 4.35 times at the end of December 2014 while December 2013 shows 3.51 times.

Interest Expense

Net Interest Income

Financial Position

The loans and overdraft portfolio grew at a rate of 10% in 2014 compared to 91% in 2013. The growth is due to the increase in the disbursements and approvals of infrastructure and mortgage facilities in 2013 while the 9% growth is as a result of the mortgage in 2014 and other commercial facilities granted to individuals and businesses.

-

500

1,000

1,500

2,000

2012 2013 Budget 2014

2015

1,019

1,428

1,963

1,413

Actual 2014

-

2,000

4,000

6,000

2012 2013 Budget 2014

2015

3,577

2,318

4,635 5,064

Actual 2014

Figures in Million

Figures in Million

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TOTAL ASSETS

The total balance sheet increased at a rate of 38% or US$61.05M, achieving over the target of 36%, it is largely denominated by the loans and advance resulting from the use of the impairment model which impacted the equity section on line item called “Credit Risk Reserve”. The Bank financial position amounts to US$220.42M. Long term borrowing decrease due to the early retirement of the infrastructure (Road Construction) facilities granted to LBDI by the Central Bank of Liberia.

Loans & Advances

-

50,000

100,000

150,000

200,000

250,000

2012 2013 Budget 2014

2015

134,021 159,363 162,247

220,423

Actual 2014

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2012 2013 Budget 2014

2015

31,589

60,243 52,741

66,167

Actual 2014

-10,000 20,000 30,000 40,000 50,000 60,000 70,000

2012 2013 Budget 2014

2015

31,589

60,243 52,741

66,167

Actual 2014

LBDI NET PROFIT TREND FOR THE LAST THREE

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(In USD Million)

DESCRIPTIONAUDITED

2012AUDITED

2013AUDITED

2014% Change 2014/ 2013

Gross Interst Income of Loans & Advances 3,337 5,004 6,146 22.82%Commission, fee & exchage income 5,554 4,370 5,064 15.88%Other Income 1,024 1,379 2,136 54.89%Total 9,915 10,753 13,346 24.11%General and administrative expenses (8,420) (9,608) (9,523) -0.88%Interest Expense (1,019) (1,428) (1,413) -1.05%Provision and doubtful loans expense (97) - - 0.00%Operating profit 379 (283) 2,410 -951.59%Other losses and extraordinary item - - - 0.00%Net profit/ (loss) 379 (283) 2,410 -951.59%Total deposit 97,007 103,600 109,690 5.88%**Other liabilities 14,857 30,554 83,163 172.18%Net worth 22,157 159,363 220,424 38.32%Total assets 134,021 159,363 220,424 38.32%Total portfolio loans and advances 31,589 60,243 66,168 9.84%Year-end exchange rate LD/USD 80.00 82.50 83.00 0.61%

LBDI FINANCIALS STATISTICS FOR THE LAST THREE YEARS

Note: 2014 other liabilities include Fiduciary Agent Fund of $55,689M

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2014 ACTIVITIES PICTORIAL

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In 2014, the Management OF LBDI contracted DEON & NOED International, (DNI) predicated on the mandate of the Board of Directors to conduct an audit of the Human Resource of the Bank and provide mentoring services in the Human Resource Department. Consequently DNI seconded a consultant to the Human Resource Department. This engagement has proven very successful as the functions and business processes of all Departments and Units, including the Banking Operations, Credit, Treasury, Business Development and Administration/PGS Departments, have been reviewed to align with the Bank’s strategic plan. The Management, based on the recommendations have approved and commenced the restructuring the aforesaid departments to improve their business processes and core functions aimed at engendering efficiency. The Business Development Department has been expended to include the Head of Branches whose responsibility will be to ensure customer satisfaction and retention. This new shift in approaching branch

management will enhance the performance of these managers and greatly assist in the achievement of Management strategic goal of being the industry leader. They shall report to the Senior Vice President, Business Development.

During the discharge of this function and in the absence of the Head of the Branches, the Heads of Operations (HOPs) shall assume the responsibility of carrying out the operational and administrative functions of the Branches and report to the Head of the Branch.

Retirement Consistent with the Bank’s retirement program, Sixteen (16) employees qualify for retirement in 2014. Eight (8) of these employees have medical challenges that impair their ability to continue their services to the Bank. The other two categories are employees who have attained the statutory age and tenure requirements. Staff Headcount

HUMAN RESOURCE DEPARTMENT

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We commenced 2014 with a total staff of Three Hundred ten (310) permanent employees, Forty-four (44) contractors, and Three (3) consultants. Of the total permanent staff, One Hundred Seven-eight (178), or Fifty-seven Per Cent (57.0%) is male, while One Hundred Thirty-two (132), representing Forty-three Per Cent (43%) is female. More than half of the total staff is concentrated at the Sinkor and Central Monrovia Branches. There are Nine-three (93) and Ninety-six (96) employees at the Sinkor and Central Monrovia Branches, respectively. EMPLOYEES STATISTICS AS AT DECEMBER 2014

MALE/FEMALE RATIO

Honor

0

100

200

MALE FEMALE

178132

57%43%

MALE FEMALE

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During the Bank’s 49th anniversary celebration in 2014, fourteen (14) employees with tenure ranging from 10-25 years were honored and certificated for dedication to service.

DCEO Menjor ushers in honoree/CEO and Board Chair

Honorees & guests at the program

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A cross section of honorees

0.

Board Chair presents certificate & gift to honoree followed by the Ebola greeting

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Employment/Recruitment As part of Management’s drive to improve customer service and productivity, thirty-two (32) persons were recruited to augment the workforce in Audits & Compliance, Banking Operations and Procurement & General Services. Forty-seven per cent (47%) or fifteen (15) was hired as permanent staff, while the balance fifty-three per cent (53%) or seventeen (17), represents contractual employment. Seven (7) of those engaged on a permanent basis were deployed in the Internal Audits and Compliance Department, seven (7) in the Banking Operations Department and one (1) with the Procurement & General Services. Comparatively, in 2013 and 2012 a total of thirty (30) and twenty-five (25) persons were engaged on a permanent basis, respectively. Ebola Virus Disease Mitigation The outbreak of the Ebola Virus Disease prompted Management’s intervention in ensuring workplace safety to safeguard the employees against the Virus. In addition to the implementation of the Government of Liberia’s approved safety regulations, the Management contracted the services of a Medical Consultant and a Registered Nurse to provide safety and health advices. As a matter of compulsion, all

employees, including the executive Management, were required to undergo health check at the entrances of all of the Bank’s premises before being allowed entry. This measure also extended to customers and visitors. Thirty-six (36) employees were sent on compulsory twenty-one (21) days leave and quarantined who were deemed to have had any level of contact with a suspected Ebola Case. Ebola Fatality We regret to report that during height of the Ebola crisis, there were three (3) fatalities amongst the employees. We are however grateful that one staff of the Procurement & General Services survived after being held at an ETU for over a month. He has since returned to work. Training As part of management’s strategy to improve service delivery and productivity, The Human Resource Department organized several competency based training programmes in line with the Bank’s strategic goals and objectives. One of such training programmes was a four day in-house training programmes for Branch Heads and Heads of Operations at the various branches. This training was

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intended to adequately prepare them for this new paradigm shift in branch management. Under the new scheme and approach, Branch Heads are being substantially disengaged from the day-to-day operations of the branches and placed in the Business Development Department. Nine (9) employees participated in training programmes organized by the Central Bank of Liberia and the West Africa Institute for Financial and Economic Management (WAIFEM). Those offered by the CBL centered on the formation of compliance officers, WAMI SWIFT Technical Training, and ACP/ACH platforms on the technical and operational aspects of automated check processing and clearing house. In addition to these, Management convened a two day retreat during which several presentations relative to the Bank’s strategic direction were made. 2014 Also witnessed the adoption of the Peer Review Training on Prudential Standards, Guidelines and Rating System for African Development Banks.

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Othello F. Sherman

Sr. Vice President/ Credit Division The Credit Division comprises three departments namely; Mortgage, Credit Administration and Credit Appraisal. A key component of LBDI’s mandate is the creation and provision of access to finance to various

segments and sectors of the Liberian economy to propel and sustain growth aimed at creating employment, value addition, social, economic and infrastructure development. To this end, LBDI, as a hybrid bank, strongly engaged into commercial and development lending activities, has continued it support to the Liberian economy through its various lending programs.

For the Year ended 2014, the Bank expanded its loan portfolio by 9.8% from US$60.2M to US$66.1M in contrast to the 90% portfolio growth achieved in 2013. The moderate increase was due to the decline in the Liberian economy caused by the Ebola outbreak which resulted to economic downturn over the 2nd and 3rd quarters of 2014 net of the Bank’s lending intervention into key economic sectors including rubber, road infrastructure, housing (realty), and trade.

CREDIT DIVISION

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Agriculture - Considering that Agriculture contributes about 70 percent of Liberia’s GDP, and its adverse impact on the economy should the sector experience decline, LBDI partnered with the Central Bank of Liberia (CBL) and other commercial banks to provide US$6.5m as direct stimulus intervention to local rubber farms. This intervention was a short term intervention to resuscitate the rubber sector which had experienced sharp decline in revenue owing to plummeting rubber price on the world market, and underproduction due to aging trees. By end of 2014, over half of this funding was rolled-out to 34 rubber farms across Liberia while the final disbursement of the funds is expected before end of the 1st Quarter of 2015. The use of these funds mitigated riots, vandalism and mass layoff of employees which had threatened the farms prior to the intervention.

Map depicts major plantations in Liberia collaborating with LBDI.

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Manufacturing - As a means of promoting the “Made- in-Liberia” concept necessary to improve the real sector and generate foreign exchange, LBDI financed several local manufacturers of basic household and industrial products. Financing up to 3.5M was granted to manufacturers of Soap and detergents bleach, (which is one of the agents used in the fight against the deadly Ebola virus), candles, nails, mattresses, tissues, napkins, biscuits, flour, bottled and sachet mineral water, etc. These financings aided the acquisition of machineries and raw materials, and provision of working capital for these businesses.

National Toiletries factory Financed by LBDI

Tiba Biscuit factory

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Premier Milling: producing quality flour for the Liberian Market.

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Concessionaires (Mining & Quarrying, Seaport, Airport, and Rubber) – These industries also received financing support from LBDI in 2014. Major contractors of Mining and rubber companies providing employment opportunities for Liberians were provided bridge financing to construct facilities for the operations of mining and seaport, airport and rubber concessions, while their workforces were

granted consumer (staff) loans to assist in meeting their personal development ahead of, and against salary payments. LBDI runs Apex arrangements for over 5,000 staffers of Arcelor Mittal, Firestone, Sime Darby, APM Terminal and Roberts International Airport.

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Government of Liberia (GOL) Direct Deposit Program and Apex Loan Scheme - In fostering the Government’s agenda of accountability through the payment of salaries directly to accounts of government employees at commercial banks, thereby significantly reducing the appearance of ghost names on the government’s payrolls, LBDI entered into direct deposit arrangements with various ministries and agencies of the Government Of Liberia. This arrangement mitigates the risk of salary diversion which provides opportunity for much more secured lending to Government employees. For this cause, LBDI rollout over US$2.5m in 2014 under fifteen Apex arrangements for more than 800 beneficiaries. Other Commercial Apex schemes were directed towards staff of concessions, telecommunications companies and prime corporate customers of LBDI.

Some Government of Liberia Direct Deposit Employees benefit from prime service at the LBDI.

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Infrastructure - In 2014, the Bank continued its financial intermediation responsibility by ensuring that road construction companies executing GOL contracts remain liquid through the provision of bridge financing to facilitate their continuation of road development works amidst the GOL budgetary constraints. LBDI road construction portfolio increased to over US$15m. Payments are expected in tranches beginning the 1st Quarter of 2015.

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Small Medium Enterprises (SME) - Realizing that SME constitutes the bedrock of any economy, LBDI continues to lend support to businesses in this sector irrespective of the increasing inherent risk associated with SMEs. In demonstration thereof, the Bank in collaboration with the Government of Liberia, consummated several financing schemes to assist small businesses in and around the Country. From this effort sprung financing to Nimba Sisters, a rural women business group which is tribally diversified thus fostering peace and reconciliation through business. With the Support of the Government of Liberia, through the provision of a liquid credit guarantee, the Private Sector Development Initiatives was launched with LBDI as Fund Manager. Under this scheme soft loans are granted to desirable rural businesses involved into manufacturing, service, construction and community development. By end of 2014 about US$1M had been granted to seven rural businesses, with a commitment from the GOL to further avail additional US$1M quarterly in 2015 through LBDI for this sector.

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Underwriting and Credit Administration – LBDI credit appetite and lending approaches remain consistent with approved policy guidelines, prudential regulations and best practices. In 2014, LBDI intensified the participation of the Risk Management Department in its lending activities, decisions and processes. The Commissioning of the Commercial Court and the constant engagement with recovery lawyers of the Bank have accelerated litigation and loan recovery. The involvement by the CBL in naming and shaming of delinquent borrowers has also abated recycling of bad borrowers within banking system. In 2014 the Credit Administration Department commission a housekeeping and training exercises in documents and records management and troubled debt restructuring as a response to slow payment by borrowers resulting from the effect of the Ebola Crisis on their businesses.

0.0

50.0

100.0

Dec. 31, 2013 Dec. 31, 2014USD

EQ

V.(M

ILLI

ON

S)

PORTFOLIO SIZE

USD

LRD

5%

43%

37%

5%2%6%2%

2014 PORTFOLIO SECTORAL DISTRIBUTION

Agriculture Construction Trade & ServicesManufacturing Public Sector Extractive

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REALTY (MORTGAGE) - 2014 also saw the mass rollout of the Bank’s Mortgage Loan portfolio. Back in 2013, LBDI solicited long term financing of US$7M and L$217M from the Central Bank of Liberia to curb the constraints faced by the Bank to extend medium to long-term loans to borrowers in this sector as a result of the short-term nature of lending resources (deposits). The CBL Mortgage Stimulus facility presented an opportunity to Liberians to access loans at 8% p.a. or below market cost, and for maturities of up to 10 years for the purpose of building and owning their own homes. By December 31, 2014, LBDI Mortgage portfolio had spurred to US$8M representing 80 percent rollout to 173 beneficiaries comprising low to middle income earners and commercial property owners. The remainder of the funds is expected to be disbursed in 2015.

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Internal Audit is an independent function of the governance process of the Bank’s system. It provides periodic assurance to the Board of Directors and Executive Management on the institution’s ability to achieve its objectives. Compliance is a part of the control structure of the Bank ensuring compliance with policies and statutes of the Bank, the Regulator and sovereign laws. In addition to statutory audits conducted during the year, the Department served as LBDI’s liaison during the AADFI Peer Review Process.

AADFI Peer Review Process

LBDI as a member of the Association of African Development Finance Institutions (AADFI) is required to submit to a Peer Review of the AADFI member institutions using the Association’s Prudential

Standards, Guidelines and Rating System. During the year 2014, LBDI submitted to the 4th peer review process and obtained a rating of A+, ranking 5th amongst 18 Development Finance Institution.

AUDIT AND COMPLIANCE DEPARTMENT

AADFI OFFICIALS AT PEER REVIEW PROCESS AT LBDI 9TH STREET CORPORATE HEADQUARTERS BOARD ROOM.

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During 2014, the Department structured its activities along functional lines and covered risks affecting the Bank’s operations. Major risk categories covered included:

Operational Risk Credit Risk Market Risk Liquidity Risk Legal, Regulatory and Reputational Risk

Risk Profile

Credit and Operational risks affect the banking industry in Liberia and pose threat to the achievement of LBDI’s strategic plan.

Credit risk which results from the failure of a borrower or counterparty’s to honor his obligation, poses serious challenges given that repayment defaults, if not managed well, may lead to the erosion of the bank’s capital.

During 2014, LBDI stepped up its loan monitoring activities aimed at substantially reducing the non-performing loan ratio to acceptable limit.

Operational risk: results from inadequate or failed internal processes, people and systems or external events, is also a key challenge. During the year, the Bank improved its IT infrastructure in preparation for the launch of the E-banking products. Appropriate internal controls were also enforced across the Enterprise to safeguard the bank’s assets; thus countering operational losses, fraud, waste and abuse.

Risk Assessment

During the year, we developed well tailored risk assessment programs for branches and key departmental functions within the bank including the IT audit function. We further strengthened risk analysis and reporting processes. The goal was to ensure that risk and opportunities were identified and mitigated in real time. Enterprise wide risk awareness trainings to highlight key risks affecting departments, branches and units within the bank were conducted. With the creation

RISK MANAGEMENT DEPARTMENT

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of an awareness culture of risks responsibility within functional areas of the bank, the risk management team has focused on more forward thinking approaches to issues affecting the bank.

A comprehensive risk register detailing key risks and risk management approaches to mitigating these risks affecting the bank’s operations was incorporated within the internal audit function of the bank.

In sustaining risk management framework undertaken in 2014, the Department will conduct a branch assessment and grading of all branches across the enterprise as we seek to enhance our services and image. The department will also continue to create a culture of risk awareness through training programs in financial institutions fraud and other risk disciplines.

We endeavor to further strengthen our risk management practices and enhance our staff quality by participating in several training programs. Members of staff will participate in certification programs in banking risk and regulations and acquire

affiliate memberships from the Global Association of Risk Professionals (GARP); a New Jersey based risk organization which positions itself as a not-for-profit organization and the only globally recognized membership association for risk professionals. Risk management personnel will also seek certification training as certified fraud examiners with the Association of Certified Fraud Examiners.

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External Auditors Baker Tilly Liberia Certified Public Accountants King’s Plaza, 2nd-4th Floors 80 Broad Street P.O. Box 10-0011 1000 Monrovia, 10 Liberia Tel: +231- 886514965, Fax +19054690986 Email: info@bakertillyliberia.com Web: www.bakertillyliberia.com C/o Mr. Theo Joseph Managing Partner

Legal Counsel Cooper & Togbah Law Office N. H. Cooper Building Broad Street Monrovia, Liberia C/o Cllr. Henry Reed-Cooper