AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 04, 2007
================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   ----------

                                   FORM 20-F/A

                                   ----------

                                 AMENDMENT NO 1

(Mark One)

[ ]  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                                       OR

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                   For the fiscal year ended December 31, 2005

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

          For the transition period from ______________ to ______________

                                       OR

[ ]  SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

        Date of event requiring this shell company report ______________

                         Commission file number: 1-32535

                                BANCOLOMBIA S.A.
             (Exact name of Registrant as specified in its charter)

                                       N/A
                 (Translation of Registrant's name into English)

                              REPUBLIC OF COLOMBIA
                 (Jurisdiction of incorporation or organization)

                               CALLE 50 NO. 51-66
                               MEDELLIN, COLOMBIA
                    (Address of principal executive offices)

 SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT.



    TITLE OF EACH CLASS                NAME OF EACH EXCHANGE ON WHICH REGISTERED
    -------------------                -----------------------------------------
                                    
AMERICAN DEPOSITARY SHARES                      New York Stock Exchange
PREFERRED SHARES                                New York Stock Exchange*


----------
*    Bancolombia's Preferred Shares are not listed for trading directly, but
     only in connection with its American Depositary Shares, which are evidenced
     by American Depositary Receipts, each representing 4 Preferred Shares.

 Securities registered or to be registered pursuant to Section 12(g) of the Act.
                                 Not applicable
                                (Title of Class)

        Securities for which there is a reporting obligation pursuant to
                            Section 15(d) of the Act.
                                 Not applicable
                                (Title of Class)

        Indicate the number of outstanding shares of each of the issuer's
        classes of capital or common stock as of the close of the period
                          covered by the annual report.


                                                                  
Common Shares ....................................................   509,704,584
Preferred Shares .................................................   218,122,421


        Indicate by check mark if the registrant is a well-known seasoned
              issuer, as defined in Rule 405 of the Securities Act.

                                 Yes  X  No
                                     ---    ---

If this report is an annual or transition report, indicate by check mark if the
  registrant is not required to file reports pursuant to Section 13 of 15(d) of
                       the Securities Exchange Act of 1934

                                 Yes     No  X
                                     ---    ---

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
   the preceding 12 months (or for such shorter period that the registrant was
     required to file such reports), and (2) has been subject to such filing
                       requirements for the past 90 days.

                                 Yes  X  No
                                     ---    ---

   Indicate by check mark whether the registrant is a large accelerated filer,
       an accelerated filer, or a non-accelerated filer. See definition of
      "accelerated filer and large accelerated filer" in Rule 12b-2 of the
                           Exchange Act. (check one):

   Large accelerated filer  X  Accelerated filer     Non-accelerated filer
                           ---                   ---                       ---

    Indicate by check mark which financial statement item the registrant has
                               elected to follow.

                             Item 17     Item 18  X
                                     ---         ---

If this is an annual report, indicate by check mark whether the registrant is a
        shell company (as defined in Rule 12b-2 of the Exchange Act) Yes

                                 Yes     No  X
                                     ---    ---

================================================================================



                                EXPLANATORY NOTE

     This Amendment No. 1 on Form 20-F/A (this "Amendment No. 1") to our annual
report on Form 20-F for the year ended December 31, 2005, filed with the
Securities and Exchange Commission (the "SEC") on June 23, 2006 (the "original
filing"), is filed to correct inadvertent errors in the disclosure of effects of
the Conavi/Corfinsura Business Combinations in the Supplemental Consolidated
Condensed Statements of Operations and in the Supplemental Consolidated
Condensed Statements of Cash Flow for the year ended December 31, 2005, and the
reclassification of cash flows related to trading securities from investing
activities to operating activities in the Supplemental Consolidated Condensed
Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003,
prepared in accordance with accounting principles generally accepted in the
United States of America ("U.S. GAAP"). There is no impact on the Consolidated
Net Income and Stockholders' Equity for any of the years presented under U.S.
GAAP as reported in the original filing and the effects of these corrections and
reclassifications are being presented as restatements in Note 32 to the
financial statements.

     Furthermore, this Amendment No. 1 amends Item 15 within the original filing
to clarify the opinion of our President Jorge Londono Saldarriaga and Finance
Vice-President Jaime Alberto Velasquez Botero with respect to the effectiveness
of our internal controls over financial reporting as of December 31, 2005 as a
result of the corrections mentioned above.

     Accordingly, we hereby replace Item 15 beginning on page 217 of the
original filing with the amended Item 15 included in Part II of this Amendment
No. 1.

     Also, amounts included in Item 18, Financial Statements and Item 19,
Exhibits have been restated, in each case, solely as a result of, and to
reflect, the correction of the error, by amending only the following pages:

ITEM 18. FINANCIAL STATEMENTS

     Page F-2 (Report of independent registered public accounting firm);

     Page F-86, F-87 and F-88 (Supplemental Consolidated Financial Statements
     under U.S.GAAP); and

     Page F-131 (Note 32 Restatement to Supplemental Consolidated Financial
     Statements under U.S.GAAP)

     In addition, the Bank has attached hereto the exhibits required as a result
     of this Amendment No. 1 and accordingly amended the following page:

ITEM 19. EXHIBITS

     Page 220 (Exhibit index)

12.1   CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
       2002, dated May 04, 2007.

12.2   CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
       2002, dated May 04, 2007.

13.1   CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
       2002, dated May 04, 2007.

13.2   CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
       2002, dated May 04, 2007.



     Except for the certifications, this Amendment No. 1 speaks as of the filing
date of the original filing. Other than as set forth above, this Amendment No. 1
does not, and does not purport to, amend, update or restate any other
information or disclosure included in the original filing or reflect any events
that have occurred after the filing date of the original filing. This amendment
should be read in conjunction with the Bank's filings made with the SEC
subsequent to the original filing, as information in such reports and documents
may update or supersede certain information contained in this amendment. This
amendment retains the page numbering of the original filing for ease of
reference.



                                     PART II

ITEM 15. CONTROLS AND PROCEDURES

     An evaluation has been carried out, under the supervision and with the
participation of BC's management, including President Jorge Londono Saldarriaga
and Finance Vice-President Jaime Alberto Velasquez Botero, of the effectiveness
of the design and operation of our "disclosure controls and procedures" as
defined in Exchange Act Rules 13a-15(e). Our disclosure controls and procedures
are designed to ensure that the financial and non-financial information required
to be disclosed in reports that we file or submit under the Exchange Act, is
recorded, processed, summarized and reported within the time periods specified
in SEC rules and forms. Based upon that evaluation, our management, including
President Jorge Londono Saldarriaga and Finance Vice-President Jaime Alberto
Velasquez Botero, concluded that our disclosure controls and procedures are
effective as of December 31, 2005.

     In connection with this evaluation and given the nature and cause of the
restatement, BC's management, including President Jorge Londono Saldarriaga and
Finance Vice-President Jaime Alberto Velasquez Botero, has concluded that the
restatement of our Supplemental Consolidated Condensed Income Statement and the
Supplemental Consolidated Condensed Statements of Cash Flow under U.S.GAAP for
the year ended December 31, 2005, did not impact the conclusion that our
disclosure controls and procedures are effective as of December 31, 2005.

     Changes in Internal Controls. On July 30, 2005 Conavi (Conavi Banco
Comercial y de ahorros S.A.) and Corfinsura (Corporacion Financiera Nacional y
Suramericana S.A.) merged with and into Bancolombia as surviving entity (for
more information please see Item 4 - Information on the Company, A - History and
Development of the Company). As of December 31, 2005, a full transition of the
Conavi and Corfinsura's systems into Bancolombia's systems, including, but not
limited to, core processing of transactions and certain policies and procedures
was not complete. In connection with this transition process, additional
controls and procedures were put in place during the second semester of 2005.
Achievement of a full transition is ongoing and is expected to be completed by
the second semester of 2006. Until the full transition has occurred, BC's
management will continue adding internal control measures to reasonably ensure
that controls pertaining to financial reporting and safeguarding of assets are
effective.



                                    PART III

ITEM 18. FINANCIAL STATEMENTS

     Reference is made to pages F - 1 through F - 132.

ITEM 19. EXHIBITS

     The following exhibits are filed as part of this Annual Report.

     12.1.  CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act
            of 2002, dated May 04, 2007.

     12.2   CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act
            of 2002, dated May 04, 2007.

     13.1   CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act
            of 2002, dated May 04, 2007.

     13.2   CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act
            of 2002, dated May 04, 2007.



                                    SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this Amendment No. 1 on its behalf.

Dated: May 04, 2007

BANCOLOMBIA S.A.


By: /s/ JAIME ALBERTO VELASQUEZ BOTERO
    ----------------------------------
Name: Jaime Alberto Velasquez Botero.
Title: Vice President, Finance.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                            Page
                                                                            ----
                                                                         
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                      F-2

CONSOLIDATED BALANCE SHEETS
Year Ended December 31, 2004 and 2005                                        F-3


CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31, 2003, 2004 and 2005                                  F-5


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Year Ended December 31, 2003, 2004 and 2005                                  F-7


CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31, 2003, 2004 and 2005                                  F-8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                  F-10





(DELOITTE(R) LOGO)                         Deloitte & Touche Ltda.
                                              Edificio Corfivalle
                                              Calle 16 Sur No 43A-49 Piso 9 y 10
                                              A.A. 404
                                              Nit. 860.005.813-4
                                              Medellin
                                              Colombia
                                              Tel. +57(4) 3138899
                                              Fax: +57(4) 3133225
                                              www.Deloitte.com.co

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of directors and shareholders of Bancolombia S.A.:

We have audited the accompanying consolidated balance sheets of Bancolombia S.A.
and subsidiaries (the "Bank") as at December 31, 2005 and 2004, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 2005. These financial
statements are the responsibility of the Bank's management. Our responsibility
is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Bank is not required to have,
nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the internal control over financial reporting. Accordingly, we
express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Bank as at
December 31, 2005 and 2004, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31, 2005
in conformity with accounting principles generally accepted in Colombia and the
regulations of Superintendency of Finance in Colombia, collectively Colombian
GAAP.

Colombian GAAP varies in certain significant respects from accounting principles
generally accepted in the United States of America ("U.S. GAAP"). Information
relating to the nature and effect of such differences is presented in Note 31 to
the consolidated financial statements.

As discussed in Note 32, the Supplemental Consolidated Condensed Statements of
Operations for the year ended December 31, 2005 and Statement of Cash Flows for
the three years ended December 31, 2005 under U.S.GAAP and presented in Note 31
have been restated.

Our audits also comprehended the translation of Colombian pesos amounts into
U.S. dollar amounts and, in our opinion, such translation has been made in
conformity with the basis stated in Note 2 c). Such U.S. dollar amounts are
presented solely for the convenience of readers in the United States of America.

By: /s/ Deloitte & Touche Ltda.
    ---------------------------
        Deloitte & Touche Ltda.

Medellin, Colombia, January 28, 2006, except for Notes 30 and 31 as to which the
date is June 20, 2006 and for Note 32 as to which the date is May 04, 2007.

Auditoria. Impuestos. Consultoria. Finanzas Corporativas.

                                                               Una Firma miembro
                                                                   de Deloitte &
                                                                 Touche Tohmatsu



                                      F-2



                        BANCOLOMBIA S.A. AND SUBSIDIARIES

                           Consolidated Balance Sheets

                           December 31, 2004 and 2005

           (Stated in millions of pesos and thousands of U.S. Dollars)



                                                                 Notes        2004            2005          2005 (1)
                                                                ------   -------------   --------------   -------------
                                                                                                           U.S. Dollar
                                                                                                           (Unaudited)
                                                                                            
ASSETS

Cash and cash equivalents:
   Cash and due from banks                                           4   Ps    768,514   Ps   1,241,435   US$   543,483
   Overnight funds                                                             480,846          488,587         213,897
                                                                         -------------   --------------   -------------
         TOTAL CASH AND CASH EQUIVALENTS                                     1,249,360        1,730,022         757,380
                                                                         -------------   --------------   -------------
Investment securities:                                               5
   Debt securities:                                                          4,922,792        8,264,885       3,618,253
      Trading securities                                                     2,245,756        5,400,950       2,364,461
      Available for sale                                                     1,943,685        1,842,556         806,646
      Held to maturity                                                         733,351        1,021,379         447,146
   Equity securities                                                           393,044          268,286         117,452
      Trading securities                                                       129,964           50,805          22,242
      Available for sale                                                       263,080          217,481          95,210
   Market value allowance                                                      (65,625)         (73,468)        (32,164)
                                                                         -------------   --------------   -------------
         TOTAL INVESTMENT SECURITIES                                         5,250,211        8,459,703       3,703,541
                                                                         -------------   --------------   -------------
Loans and financial leases:                                       6,29
   Commercial loans                                                          7,353,956       11,949,501       5,231,326
   Consumer loans                                                            1,655,066        2,437,727       1,067,203
   Small business loans                                                         90,000          115,031          50,359
   Mortgage loans                                                               56,107        1,463,437         640,673
   Financial leases                                                            880,110        2,660,556       1,164,755
   Allowance for loans and financial leases losses                   7        (434,378)        (705,882)       (309,025)
                                                                         -------------   --------------   -------------
         LOANS AND FINANCIAL LEASES, NET                                     9,600,861       17,920,370       7,845,291
                                                                         -------------   --------------   -------------
   Accrued interest receivable on loans and financial leases:
   Accrued interest receivable on loans and financial leases                   125,879          206,921          90,587
   Allowance for accrued interest losses                             7          (4,603)          (8,655)         (3,789)
                                                                         -------------   --------------   -------------
         INTEREST ACCRUED, NET                                                 121,276          198,266          86,798
                                                                         -------------   --------------   -------------
Customers' acceptances and derivatives                               8          43,894          133,420          58,409
Accounts receivable, net                                          9,29         173,875          590,313         258,431
Premises and equipment, net                                         10         346,243          623,729         273,060
Operating leases, net                                               11           8,311          143,974          63,030
Foreclosed assets, net                                              15          12,206           31,360          13,729
Prepaid expenses and deferred charges                               12          15,950           26,898          11,776
Goodwill                                                            14          73,607           50,959          22,309
Other assets                                                        13         315,394          563,588         246,731
Reappraisal of assets                                               16         267,941          330,915         144,870
                                                                         -------------   --------------   -------------
         TOTAL ASSETS                                                    Ps 17,479,129   Ps  30,803,517   US$13,485,355
                                                                         =============   ==============   =============
MEMORANDUM ACCOUNTS                                                 25   Ps 78,232,437   Ps 138,595,535   US$60,675,213
                                                                         =============   ==============   =============



                                      F-3



                        BANCOLOMBIA S.A. AND SUBSIDIARIES

                           Consolidated Balance Sheets

                           December 31, 2004 and 2005

           (Stated in millions of pesos and thousands of U.S. Dollars)



                                                                 Notes       2004            2005          2005 (1)
                                                                ------   ------------   -------------   -------------
                                                                                                         U.S. Dollar
                                                                                                         (Unaudited)
                                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits                                                            29
   Non-interest bearing:                                                 Ps 2,690,679   Ps  3,530,279   US$ 1,545,507
      Checking accounts                                                     2,523,505       3,171,182       1,388,299
      Other                                                                   167,174         359,097         157,208
   Interest bearing:                                                        9,171,437      14,854,703       6,503,184
      Checking accounts                                                     1,275,618       1,068,409         467,735
      Time deposits                                                         4,361,206       6,259,800       2,740,454
      Savings deposits                                                      3,534,613       7,526,494       3,294,995
                                                                         ------------   -------------   -------------
         TOTAL DEPOSITS                                                    11,862,116      18,384,982       8,048,691
                                                                         ------------   -------------   -------------
Overnight funds                                                               616,494       1,329,913         582,218
Bank acceptances outstanding                                                   66,593          63,126          27,636
Interbank borrowings                                                17        246,282       1,705,468         746,630
Borrowings from domestic development banks                          18        857,919       2,222,083         972,797
Accounts payable                                                              729,448       1,250,084         547,270
Accrued interest payable                                                      109,164         182,292          79,805
Other liabilities                                                   19        232,932         459,968         201,368
Long-term debt                                                      20        552,531       1,648,312         721,608
Accrued expenses                                                    21         71,649         130,859          57,288
Minority interest in consolidated subsidiaries                                 43,278          49,140          21,513
                                                                         ------------   -------------   -------------
          TOTAL LIABILITIES                                                15,388,406      27,426,227      12,006,824
                                                                         ------------   -------------   -------------
Stockholders' Equity (2)                                         22,24
   Subscribed and paid in capital:                                            355,119         430,684         188,548
      Nonvoting preference shares                                             101,579         121,422          53,157
      Common shares                                                           253,540         309,262         135,391
   Retained earnings:                                                       1,589,159       2,712,879       1,187,661
      Appropriated                                                  23      1,010,481       1,765,998         773,130
      Unappropriated                                                          578,678         946,881         414,531
   Reappraisal of assets                                            16         42,237         110,479          48,366
   Gross unrealized net gain or loss on investments                           104,208         123,248          53,956
         STOCKHOLDERS' EQUITY                                               2,090,723       3,377,290       1,478,531
                                                                        -------------  --------------   -------------
         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     Ps 17,479,129  Ps  30,803,517   US$13,485,355
                                                                        =============  ==============   =============
MEMORANDUM ACCOUNTS                                                 25  Ps 78,232,437  Ps 138,595,535   US$60,675,213
                                                                        =============  ==============   =============


----------
The accompanying notes, numbered 1 to 30, form an integral part of these
Consolidated Financial Statements

(1)  See note 2 (ff)

(2)  A summary of significant adjustments to stockholders' equity that would be
     required if U.S. GAAP had been applied is disclosed in Note 31.


                                      F-4


                        BANCOLOMBIA S.A. AND SUBSIDIARIES

                      Consolidated Statements of Operations

                  Years ended December 31, 2003, 2004 and 2005

           (Stated in millions of pesos and thousands of U.S. Dollars,
                             except per share data)



                                                 Notes       2003          2004        2005(2)       2005 (1)
                                                 -----   -----------   -----------   -----------   ------------
                                                                                    
                                                                                                    U.S. Dollar
                                                                                                    (Unaudited)
   Interest income and expenses:
   Interest on loans                                     Ps  918,791  Ps 1,140,955  Ps 2,050,274   US$  897,582
   Interest on investment securities                         546,207       549,328       824,709        361,046
   Overnight funds                                            14,046        18,375        33,629         14,722
   Leasing                                                    58,774        94,450       291,472        127,602
                                                         -----------   -----------   -----------   ------------
      TOTAL INTEREST INCOME                                1,537,818     1,803,108     3,200,084      1,400,952
                                                         -----------   -----------   -----------   ------------
Interest expense
   Checking accounts                                          11,622        13,505        20,311          8,892
   Time deposits                                             249,911       267,558       449,367        196,727
   Saving deposits                                           113,968       141,288       241,889        105,896
                                                         -----------   -----------   -----------   ------------
      TOTAL INTEREST ON DEPOSITS                             375,501       422,351       711,567        311,515
                                                         -----------   -----------   -----------   ------------
Interbank borrowings                                           5,293         7,389        54,630         23,916
   Borrowings from domestic development banks                 58,456        73,549       156,509         68,517
   Overnight funds                                            38,423        41,215        73,910         32,357
   Bonds                                                       2,840        41,239       153,658         67,269
                                                         -----------   -----------   -----------   ------------
      TOTAL INTEREST EXPENSE                                 480,513       585,743     1,150,274        503,574
                                                         -----------   -----------   -----------   ------------
      NET INTEREST INCOME                                  1,057,305     1,217,365     2,049,810        897,378
                                                         -----------   -----------   -----------   ------------
Provision for loan and accrued interest
   losses, net                                      7       (162,057)     (110,455)     (185,404)       (81,167)
Recovery of charged-off loans                                 31,701        49,032        61,829         27,068
Provision for foreclosed assets and other
   assets                                                    (68,892)      (33,127)      (63,969)       (28,005)
Recovery of provisions for foreclosed assets
   and other assets                                           16,949        27,926        56,504         24,737
                                                         -----------   -----------   -----------   ------------
      TOTAL NET PROVISIONS                                  (182,299)      (66,624)     (131,040)       (57,367)
                                                         -----------   -----------   -----------   ------------
      NET INTEREST INCOME AFTER PROVISION FOR
         LOANS AND ACCRUED INTEREST LOSSES                   875,006     1,150,741     1,918,770        840,011
                                                         -----------   -----------   -----------   ------------
Commissions from banking services                             39,363        53,082       101,355         44,372
Electronic services and ATMs fees                             29,873        39,163       101,299         44,347
Branch network services                                       28,594        37,929        48,984         21,445
Collections and payments fees                                 25,604        38,654        56,670         24,809
Credit card merchant fees                                     29,533         8,251        10,076          4,411
Credit and debit card annual fees                             62,158        80,290       205,606         90,011
Checking fees                                                 46,910        49,391        54,846         24,011
Warehouse services                                            42,705        49,072        62,155         27,211
Fiduciary activities                                          39,469        50,425        60,131         26,325
Brokerage fees                                                 5,687         8,669        68,231         29,871
Check remittance                                              12,877        10,850        10,579          4,631
International operations                                      23,860        23,997        36,484         15,972
                                                         -----------   -----------   -----------   ------------
      FEES AND OTHER SERVICE INCOME                      Ps  386,633   Ps  449,773   Ps  816,416   US$  357,416
                                                         ------------  -----------   -----------   ------------
      FEES AND OTHER SERVICE EXPENSES                        (32,361)      (40,715)      (48,087)       (21,052)
                                                         -----------   -----------   -----------   ------------
      TOTAL FEES AND INCOME FROM SERVICES, NET               354,272       409,058       768,329        336,364
                                                         -----------   -----------   -----------   ------------



                                       F-5



                        BANCOLOMBIA S.A. AND SUBSIDIARIES

                      Consolidated Statements of Operations

                  Years ended December 31, 2003, 2004 and 2005

           (Stated in millions of pesos and thousands of U.S. Dollars,
                             except per share data)



                                                 Notes       2003          2004        2005(2)       2005 (1)
                                                 -----   -----------   -----------   -----------   ------------
                                                                                    
                                                                                                    U.S. Dollar
                                                                                                    (Unaudited)
Other operating income:
   Net foreign exchange gains (expenses)                      36,287       (100,925)     (53,361)       (23,361)
   Forward contracts in foreign currency                       9,672        149,381      141,055         61,752
   Gains (losses) on sales of investments on
      equity securities                                        5,878           (27)        8,097          3,545
   Dividend income                                            30,734        30,546        42,731         18,707
   Revenues from commercial subsidiaries                      76,445        78,973        45,020         19,709
   Communication, postage, rent and others                     2,037         7,447        10,406          4,556
                                                         -----------   -----------   -----------   ------------
      TOTAL OTHER OPERATING INCOME                           161,053       165,395       193,948         84,908
                                                         -----------   -----------   -----------   ------------
      TOTAL INCOME                                         1,390,331     1,725,194     2,881,047      1,261,283
                                                         -----------   -----------   -----------   ------------
   Operating expenses
   Salaries and employee benefits                            320,886       363,557       615,121        269,292
   Bonus plan payments                                        22,423        32,923        26,826         11,744
   Compensation                                               22,959        15,169         8,030          3,515
   Administrative and other expenses               27        350,517       393,592       793,179        347,243
   Deposit security, net                                      31,877        22,945        55,050         24,100
   Donation expenses                                           1,708        11,060           615            269
   Depreciation                                    10         40,625        46,872        87,633         38,365
   Merger expenses                                                --            --        45,703         20,008
   Goodwill amortization                                      59,773        26,303        22,648          9,915
                                                         -----------   -----------   -----------   ------------
      TOTAL OPERATING EXPENSES                               850,768       912,421     1,654,805        724,451
                                                         -----------   -----------   -----------   ------------
      NET OPERATING INCOME                                   539,563       812,773     1,226,242        536,832
                                                         -----------   -----------   -----------   ------------
Non-operating income (expense)
   Other income                                               33,822        51,514       109,770         48,055
   Minority interest                                             330        (2,425)       (6,496)        (2,844)
   Other expense                                             (41,696)      (44,374)     (105,120)       (46,020)
                                                         -----------   -----------   -----------   ------------
      TOTAL NON-OPERATING INCOME (EXPENSE)                    (7,544)        4,715       (1,846)          (809)
                                                         -----------   -----------   -----------   ------------
Income before income taxes                                   532,019       817,488     1,224,396        536,023
                                                         -----------   -----------   -----------   ------------
   Income tax expense                              21        (62,635)     (238,810)     (277,515)      (121,492)
                                                         -----------   -----------   -----------   ------------
      NET INCOME(3)                                      Ps  469,384   Ps  578,678   Ps  946,881   US$  414,531
                                                         -----------   -----------   -----------   ------------
EARNINGS PER SHARE                                       Ps      814   Ps    1,003   Ps    1,301   US$     0,57
                                                         ===========   ===========   ===========   ============


----------
The accompanying notes, numbered 1 to 30, form an integral part of these
Consolidated Financial Statements

(1)  See accompanying notes to consolidated financial statements - See Note 2
     (ff).

(2)  The consolidated statement of operations for the year ended December 31,
     2005 includes Conavi's and Corfinsura's results since the beginning of the
     year.

(3)  A summary of significant adjustments to net income that would be required
     if U.S. GAAP had been applied is disclosed in Note 31.


                                       F-6


                        BANCOLOMBIA S.A. AND SUBSIDIARIES

                 Consolidated Statements of Stockholders' Equity

                  Years ended December 31, 2003, 2004 and 2005

       Expressed in terms of the purchasing power of Colombian pesos as of
                                December 31, 2005

 (Stated in millions of pesos and thousands of U.S. Dollars, except share data)



                                 Non Voting Preference
                                        Shares              Voting Common Shares
                               ------------------------   ------------------------




                                  Number      Par Value      Number      Par Value
                               -----------   ----------   -----------   ----------
                                                            
BALANCE AT DECEMBER 31, 2002   178,435,787   Ps 101,579   398,259,608   Ps 253,540
Net income                              --           --            --           --
Transfer to appropriated
   retained earnings                    --           --            --           --
Valuation of investment                 --           --            --           --
Dividends declared                      --           --            --           --
Other                                   --           --            --           --
                               -----------   ----------   -----------   ----------
BALANCE AT DECEMBER 31, 2003   178,435,787      101,579   398,259,608      253,540
Net income                              --           --            --           --
Transfer to appropriated
   retained earnings                    --           --            --           --
Valuation of investment                 --           --            --           --
Dividends declared                      --           --            --           --
Other                                   --           --            --           --
                               -----------   ----------   -----------   ----------
BALANCE AT DECEMBER 31, 2004   178,435,787      101,579   398,259,608      253,540
Net income                              --           --            --           --
Transfer to appropriated
   retained earnings                    --           --            --           --
Issuance of preference and
   common shares                39,686,634       19,843   111,444,976       55,722
Valuation of investment                 --           --            --           --
Merger effect                           --           --            --           --
Dividends declared                      --           --            --           --
Other                                   --           --            --           --
                               -----------   ----------   -----------   ----------
BALANCE AT DECEMBER 31, 2005   218,122,421   Ps 121,422   509,704,584   Ps 309,262
                               ===========   ==========   ===========   ==========
BALANCE AT DECEMBER 31, 2005
   (UNAUDITED)(1)              218,122,421   US$ 53,157   509,704,584   US$135,391
                               ===========   ==========   ===========   ==========



                                   Retained Earnings                   Surplus                  Total
                               -------------------------   ------------------------------   -------------
                                                                         Gross unrealized
                                                                          gain or loss on
                                                                            investments
                                  Appro-       Unappro-    Reappraisal       available      Stockholders'
                                  priated       priated     of assets        for sale           equity
                               ------------   ----------   -----------   ----------------   -------------
                                                                             
BALANCE AT DECEMBER 31, 2002   Ps   566,187   Ps 210,380   Ps   37,368      Ps 115,294      Ps 1,284,348
Net income                               --      469,384            --              --           469,384
Transfer to appropriated
   retained earnings                210,380     (210,380)           --              --                --
Valuation of investment                  --           --        (7,282)        (20,858)          (28,140)
Dividends declared                  (76,124)          --            --              --           (76,124)
Other                                39,911           --            --              --            39,911
                               ------------   ----------   -----------      ----------      ------------
BALANCE AT DECEMBER 31, 2003        740,354      469,384        30,086          94,436         1,689,379
Net income                               --      578,678            --              --           578,678
Transfer to appropriated
   retained earnings                469,384     (469,384)           --              --                --
Valuation of investment                  --           --        12,151           9,772            21,923
Dividends declared                 (156,861)          --            --              --          (156,861)
Other                               (42,396)          --            --              --           (42,396)
                               ------------   ----------   -----------      ----------      ------------
BALANCE AT DECEMBER 31, 2004      1,010,481      578,678        42,237         104,208         2,090,723
Net income                               --      946,881            --              --           946,881
Transfer to appropriated
   retained earnings                578,678     (578,678)           --              --                --
Issuance of preference and
   common shares                    160,646           --            --              --           236,211
Valuation of investment                  --           --      (179,033)         31,690          (147,343)
Merger effect                       193,673           --       247,275         (12,650)          428,298
Dividends declared                 (216,838)          --            --              --          (216,838)
Other                                39,358           --            --              --            39,358
                               ------------   ----------   -----------      ----------      ------------
BALANCE AT DECEMBER 31, 2005   Ps 1,765,998   Ps 946,881   Ps  110,479      Ps 123,248      Ps 3,377,290
                               ============   ==========   ===========      ==========      ============
BALANCE AT DECEMBER 31, 2005
   (UNAUDITED)(1)              US$  773,130   US$414,531   US$  48,366      US$ 53,956      US$1,478,531
                               ============   ==========   ===========      ==========      ============


The accompanying notes, numbered 1 to 30, form an integral part of these
Consolidated Financial Statements

(1)  See Note 2 (ff).


                                      F-7


                        BANCOLOMBIA S.A. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

                  Years ended December 31, 2003, 2004 and 2005

           (Stated in millions of pesos and thousands of U.S. Dollars)



                                                              2003           2004          2005(1)         2005(2)
                                                          ------------   ------------   ------------   -------------
                                                                                                        (Unaudited)
                                                                                           
Cash flows from operating activities:

   Net income (loss)                                      Ps   469,384   Ps   578,678   Ps   946,881   US$   414,531

   Adjustments to reconcile net income to net
      cash provided (used) by operating activities:
      Depreciation                                              40,625         46,872         87,633          38,365
      Amortization                                              86,010         39,377         77,111          33,759
      Minority interest                                         (9,577)         1,719          5,862           2,566
      Provision for loan, accrued interest and accounts
         receivable losses                                     305,673        191,207        395,369         173,087
      Provision for foreclosed assets                           32,458         23,002         44,665          19,554
      Provision for losses on investment securities and
         equity investments                                     29,381          2,821         10,317           4,517
      Provision for premises and equipment                       5,665          2,223            302             132
      Provision for other assets                                   723          4,953          1,825             799
      Reversal of provision for investments                     (8,400)        (4,500)        (5,330)         (2,333)
      Reversal of provision for loans and accounts
         receivable                                           (143,615)       (85,152)      (220,224)        (96,411)
      Reversal of provision for foreclosed assets               (5,493)       (17,239)       (45,445)        (19,895)
      Reversal of provision for other assets                       (41)           (38)        (3,943)         (1,726)
      Reversal of provision for premises and equipment          (3,016)        (6,149)        (1,787)           (782)
      Loss (gain) on sales of premises and equipment               393           (839)            --              --
      Loss (gain) on sales on investments securities            (5,878)            27             --              --
      Realized and unrealized loss (gain) on derivative
         financial instruments                                   5,409       (129,616)       (67,180)        (29,410)
      Loss (gain) on sales on foreclosed assets                  2,867          3,433             --              --
      Valuation gain (loss) on investment securities          (246,871)      (266,428)      (476,139)       (208,447)
      Foreclosed assets donation                                 1,029         10,854             45              20
      (Increase) in accounts receivable                        (11,724)       (28,454)      (514,867)       (225,402)
      Decrease (increase) in other assets                      (63,752)      (161,362)        92,256          40,388
      Increase in accounts payable                             116,060        293,293        593,764         259,942
      Increase in other liabilities                              3,745         58,614        227,036          99,393
      (Increase) in loans                                   (1,941,055)    (1,565,627)    (8,521,859)     (3,730,752)
                                                          ------------   ------------   ------------   -------------
      Other                                                      1,069         15,476         59,210          25,921
                                                          ------------   ------------   ------------   -------------
       Net cash provided by operating activities            (1,338,931)      (992,855)    (7,314,498)     (3,202,184)
                                                          ------------   ------------   ------------   -------------
Cash flows from investing activities:

      Decrease (increase) in customers' acceptances       Ps   (17,827)  Ps   118,021   Ps   (25,813)  US$   (11,301)
      Proceeds from sales of property, plant and
         equipment                                              35,737         48,454         92,815          40,633



                                      F-8



                        BANCOLOMBIA S.A. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

                  Years ended December 31, 2003, 2004 and 2005

           (Stated in millions of pesos and thousands of U.S. Dollars)



                                                              2003           2004          2005(1)         2005(2)
                                                          ------------   ------------   ------------   -------------
                                                                                                        (Unaudited)
                                                                                           
      Proceeds from sales of foreclosed assets                 10,384         16,315          98,090          42,942
      (Purchases) of property, plant and equipment           (290,947)       (96,333)       (589,212)       (257,949)
      (Purchases) sales of investment securities               96,942       (635,634)     (2,719,300)     (1,190,472)
      Proceeds from sales of long term investments            120,702             --              --              --
                                                          -----------    -----------    ------------   -------------
      Net cash used in investing activities                   (45,009)      (549,177)     (3,143,420)     (1,376,147)
                                                          -----------    -----------    ------------   -------------

Cash flows from financing activities:

   Dividends declared                                         (76,124)      (156,861)       (216,838)        (94,929)
   Increase in deposits                                     1,443,839      1,630,119       6,522,866       2,855,620
   Increase in long-term debt                                   9,036        480,713       1,095,781         479,718
   Increase (decrease) in overnight funds                     507,981       (501,645)        713,419         312,325
   Increase (decrease) in interbank borrowings and
      borrowings from domestic development banks               94,580       (107,395)      2,823,352       1,236,025
                                                          -----------    -----------    ------------   -------------
      Net cash provided by financing activities             1,979,312      1,344,931      10,938,580       4,788,759
                                                          -----------    -----------    ------------   -------------

Increase (decrease) in cash and cash equivalents              595,372       (197,101)        480,662         210,428
Cash and cash equivalents at beginning of year                851,089      1,446,461       1,249,360         546,952
                                                          -----------    -----------    ------------   -------------
Cash and cash equivalents at end of year                  Ps1,446,461    Ps1,249,360    Ps 1,730,022   US$   757,380
                                                          ===========    ===========    ============   =============

Supplemental disclosure of cash flows information:
   Cash paid during the year for:
      Interest                                            Ps  459,893    Ps  173,846    Ps 1,033,420   US$   452,417
                                                          ===========    ===========    ============   =============
      Income taxes                                        Ps    5,988    Ps  207,856    Ps   190,014   US$    83,185
                                                          ===========    ===========    ============   =============


The accompanying notes, numbered 1 to 30, form an integral part of these
Consolidated Financial Statements

----------
(1)  The consolidated statements of operations for the year ended December 31,
     2005, includes Conavi and Corfinsura's result since the beginning of the
     year.

(2)  See Note 2 (ff).


                                      F-9


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

(1)  ORGANIZATION AND BACKGROUND

     Bancolombia S.A., the "Bank" previously known as Banco Industrial
Colombiano S.A. is a private commercial bank incorporated under Colombian law on
January 24, 1945. On April 3, 1998, Banco Industrial Colombiano S.A. merged with
Banco de Colombia S.A. and the surviving entity was renamed Bancolombia S.A. The
registered office and business address of the Bank is in Medellin.

     On July 30, 2005, Conavi Banco Comercial y de Ahorros S.A. ("Conavi") and
Corporacion Financiera Nacional y Suramericana S.A. (post-spin off)
("Corfinsura") were merged into the Bank (the "Merger"). The Merger was approved
at the Bank's Ordinary Shareholders' Meeting held on March 28, 2005 and was also
duly approved by the Annual Shareholder Meetings of Conavi and Corfinsura,
respectively. The Superintendency of Banking (now the Superintendency of
Finance) also approved the transaction by means of Resolution No. 1050 dated
July 19, 2005. The Merger was formalized through Public Deed No. 3947, executed
before Notary Public No. 29 of the Circuit of Medellin, and registered in the
Commercial Registry of the Medellin Chamber of Commerce on August 1, 2005. By
virtue of this Merger, the Bank acquired the entire property, rights and
obligations of Conavi and Corfinsura, entities which were dissolved without
being liquidated.

     In order to proceed with the exchange of shares resulting from the Merger
and for the purpose of facilitating the future growth of the Bank, a partial
amendment to the Bank's by-laws was recorded in the Commercial Registry of the
Medellin Chamber of Commerce on July 26, 2005, by virtue of which the Bank's
authorized capital was increased from Ps 335,000 to Ps 500,000 and the Bank's
Corporate Governance policies were modified.

     Once shares in Conavi and Corfinsura had been exchanged for Bancolombia
shares as a result of the Merger, as of November 30, 2005 Bancolombia's
subscribed and paid-in capital totaled Ps 430,684 reflecting the new shares
issued by the Bank in exchange for shares of Conavi and Corfinsura.

     The Bank's purpose of business is to carry out all operations,
transactions, acts and services inherent to the banking business, by means of
the banking establishment that carries its name and according to all applicable
legislation.

     The Bank, on a non-consolidated basis, has 11,571 employees and operates
through 678 branches.

     The attached financial statements consolidate the assets, liabilities,
earnings, contingent accounts and memorandum accounts of the Bank and
Subsidiaries in which it holds, directly or indirectly, 50% or more of the
outstanding voting shares (the "Subsidiaries"). The consolidated Subsidiaries
are:


                                      F-10



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



                                                                                      PARTICIPATION  PARTICIPATION
                                                                                        PERCENTAGE     PERCENTAGE       DATE OF
                ENTITY                         LOCATION               BUSINESS           DEC-2004       DEC-2005       CREATION
                ------                  ----------------------  --------------------  -------------  -------------  --------------
                                                                                                     
Almacenes Generales de Deposito
   Mercantil S.A. ALMACENAR(5)                 Colombia         Warehousing and           98.25          98.25       February 1953
                                                                logistics
Fiducolombia S.A.                              Colombia         Trust                     96.16          98.81        January 1992
Bancolombia Panama S.A.                         Panama          Banking                     100            100        January 1973
Bancolombia Cayman                          Cayman Islands      Banking                     100            100         August 1987
Leasing Colombia S.A. (6)                      Colombia         Leasing                   99.99            100       December 1978
Compania Suramericana de
   Financiamiento Comercial S.A.
   SUFINANCIAMIENTO                            Colombia         Financial services        99.99          99.99       November 1971
Colcorp S.A. Corporacion Financiera            Colombia         Investment Banking          100            100           July 1994
Comisionista de Colombia S.A.(2)               Colombia         Securities Brokerage      99.99             --       December 1991
Abocol S.A. (3)                                Colombia         Chemical                  92.32             --          March 1960
                                                                Various Commercial
Valores Simesa S.A.                            Colombia         Investments               71.75          71.75       December 2000
Inmobiliaria Bancol S.A.                       Colombia         Real estate broker        98.95          99.09           June 1995
Fundicom S.A.                                  Colombia         Metals engineering        79.87          79.90            May 2000
Unicargo de Colombia S.A. (5)                  Colombia         Freight service           98.35          98.35         August 1994
Sistema de Inversiones y Negocios S.A.          Panama          Commercial entity           100            100      September 1975
Sinesa Holding Company                  British Virgin Islands  Commercial entity           100            100           June 1988
Todo UNO Colombia S.A.                         Colombia         E-commerce                53.92          89.55           June 2001
Future Net Inc.                                 Panama          E-commerce                60.02          99.58       November 2000
Compania Metalurgica
   Colombiana S.A.  COMECOL(1)                 Colombia         Metals engineering        39.65          40.51       December 1996
Sociedad Portuaria Mamonal S.A. (4)            Colombia         Customs office            92.69             --         August 1991
                                                                Chemical products
Abocol Costa Rica S.A. (4)                    Costa Rica        commercial                92.43             --       December 2001
                                                                Chemical products
Fertillanos Ltda. (4)                          Colombia         commercial                55.39             --        October 2001
Ditransa S.A. (5)                              Colombia         Freight service              --          52.69      September 1994
Compania Suramericana de Arrendamiento
   Operativo S.A.Surenting                     Colombia         Operating leasing            --          75.50        October 1997
Suleasing Internacional S.A.                    Panama          Leasing                      --             76         August 1993
Suleasing Internacional Inc.                     USA            Leasing                      --             76           July 2003
Inversiones CFNS Ltda.                         Colombia         Comercial entity             --            100          April 1998
Compania Suramericana de Valores S.A.
   Suvalor                                     Colombia         Securities Brokerage         --            100            May 1991
Suvalor Panama                                  Panama          Securities Brokerage         --            100          April 2005
Banco Corfinsura Internacional Inc.          Puerto Rico        Banking                      --            100       December 1997
Multienlace S.A.                               Colombia         Contact Center               --          98.20          March 1997
3001 S.A. (in the process of being
    wound up)                                  Colombia         E-commerce                   --          98.96       December 2000



                                      F-11


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

(1)  Controlled through other subsidiaries (Valores Simesa S.A. and Colcorp
     S.A.)

(2)  On October 1, 2005, Comisionista de Colombia S.A Comicol merged with and
     into Compania Suramericana de Valores S.A. Suvalor Comisionista de Bolsa as
     surviving entity.

(3)  On December 30, 2005 Colcorp S.A., sold its position in Abonos Colombianos
     S.A. - Abocol S.A, to V. International Ventures Inc. The sell price was US$
     20,070,843.

(4)  Were affiliates of Abonos Colombianos S.A. - Abocol S.A.

(5)  On November 22, 2005, the Bank entered into a preliminary agreement with
     Incorbank Banqueros de Inversion, Inversiones en Logistica y Seguridad de
     Transporte Ltda. Inverloset, Equity Investment S.A, Rodriguez Azuero
     Asociados S.A. and other individuals to being negotiations relating to
     proposed purchase agreement, by which the Bank would sell all of the
     shares it holds in Almacenar S.A.

(6)  On November 30, 2005 Suleasing S.A. merged with and into Leasing Colombia
     S.A. as surviving entity.

          Chapter XVII of 1995 External Circular 100 issued by the
     Superintendency of Banking (now Superintendency of Finance) establishes
     that the goodwill will amortize in proportional monthly installments
     affecting the statement of operations during the time in which it is
     reasonably expected that future benefits will be obtained and that, in any
     case, such term may not exceed ten (10) years. Notwithstanding, in
     consideration that results allow, management amortized one hundred percent
     of the value of this goodwill in the statement of operations of 2003, in
     this way avoiding affecting future results. This fact was made known in a
     timely manner to the Superintendency of Banking (now Superintendency of
     Finance).

(2)  MAIN ACCOUNTING POLICIES

     (A) BASIC ACCOUNTING AND CONSOLIDATION POLICY

          Accounting practices and the preparation of financial statements of
     the Bank and its Subsidiaries follow the special regulations of the
     Superintendency of Finance (before Superintendency of Banking), or, in the
     absence of such regulations, generally accepted accounting principles in
     Colombia.

          For consolidation purposes, financial statements of foreign
     Subsidiaries were adjusted as required by Colombian regulations with regard
     to investments, loans and leased assets. The Bank also unified accounting
     policies related to inflation adjustments with the Superintendency of
     Finance (before Superintendency of Banking).

          The Bank consolidates companies in which it holds, directly or
     indirectly, 50% or more of outstanding voting shares. Some of these
     Subsidiaries also consolidate subsidiaries of their own. The Bank's
     Subsidiary Bancolombia Panama S.A. consolidates Bancolombia Cayman, Sistema
     de Inversiones y Negocios S.A., Sinesa Holding Company and Future Net Inc.
     The Bank's Subsidiary Almacenar S.A. consolidates Unicargo de Colombia S.A.
     and Ditransa S.A. The Subsidiary Colcorp S.A. consolidates Inmobiliaria
     Bancol S.A., Inversiones CFNS, Comecol S.A., Valores Simesa S.A., Fundicom
     S.A. and Todo Uno Colombia. The Bank's subsidiary Leasing Colombia S.A.
     consolidates Surenting S.A., Suleasing Internacional S.A. and Suleasing
     Internacional Inc. The Bank's subsidiary Suvalor S.A. consolidates Suvalor
     Panama S.A..


                                      F-12



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          The consolidated financial statements are prepared for presentation to
     the stockholders, but are not taken as a basis for the distribution of
     dividends or appropriation of profits.

          Intercompany transactions and balances are eliminated upon
     consolidation.

     (B) INFLATION ACCOUNTING

          From January 1, 1992 to December 31, 2000, the consolidated financial
     statements were adjusted for inflation based on the variation in the CPI
     (Consumer Price Index) for middle-income earners. The adjustment was
     applied monthly to non-monetary assets, equity (except for the reappraisal
     of assets and exchange adjustment), contingent accounts and memorandum
     accounts. No adjustment was made to income, costs or expenses, and the
     financial statements for the preceding period did not have to be
     reamesured.

     (C) CONVERSION OF FOREIGN CURRENCY TRANSACTIONS AND BALANCES

          As an authorized exchange dealer, the Bank and its Colombian
     Subsidiaries are authorized by the Superintendency of Banking (now
     Superintendency of Finance) to make direct foreign exchange purchases and
     sales on the exchange market.

          Operations in foreign currencies other than U.S. dollars are converted
     into U.S. dollars using the rate of exchange published by Reuters and then
     reamesured in (Ps) at the Representative Market Rate (RMR) calculated on
     the last business day of the month and certified by the Superintendency of
     Finance (before Superintendency of Banking). The Representative Market Rate
     at December 31, 2004 and 2005 was Ps 2,389.75 and Ps 2,284.22,
     respectively.

          The foreign currency position is the difference between assets and
     liabilities denominated in foreign currency, recorded in and out of the
     balance, realized or contingent, including those that are settled in
     Colombian local currency, which correspond to the financial statements that
     include operations within the national territory.

          The spot foreign currency position is the difference between assets
     and liabilities, denominated in foreign currency, based on the unique chart
     of accounts; investments available for sale in equity and debt securities,
     held to maturity and capital contributions in foreign branches and derivate
     arrangements (i.e., forward contracts, futures contracts, swaps and profit
     or loss in option valuation). Operations that can be settled in local
     currency are not included in this position.

          The maximum amount of the Bank's position in any currency that is not
     Pesos cannot exceed the equivalent in foreign currency of twenty percent
     (20%) of the technical capital and the minimum amount may be negative,
     without exceeding the equivalent in foreign currency of five per cent (5%)
     of the Bank's technical capital.

          The maximum amount corresponding to the Bank's spot foreign currency
     position cannot exceed fifty percent (50%) of the technical capital and
     cannot be negative.


                                      F-13



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          The assets and liabilities in foreign currency of the Subsidiaries
     abroad included in the consolidated financial statements were converted
     into Colombian Pesos using the Representative Market Rate calculated the
     last business day of the month.

          The equity accounts were converted into Colombian Pesos using
     historical exchange rates.

          The income accounts were converted at an average rate of Ps 2,626.22
     and Ps 2,320.77 per Dollar for the years 2004 and 2005, respectively. Said
     rates correspond to the average value of the representative market exchange
     rate on the business days in the period from January 1 to December 31 of
     each year.

     (D) COMPARABILITY

          The consolidated financial statements for the year ended December 31,
     2004 include the financial information of the parent company and its
     subsidiaries. These however, do not include any effects of the Merger of
     the Bank, Conavi and Corfinsura (spun-off corporation), which was completed
     on July 30, 2005. The consolidated financial statements for the year ended
     December 31, 2005 includes the financial information of the parent company
     and its subsidiaries, which includes all additional subsidiaries acquired
     as a result of the Merger with Conavi and Corfinsura (spun-off
     corporation). For this reason, financial statements for 2004 and 2005
     should be read taking into account the impacts of the Merger.

     (E) CASH AND CASH EQUIVALENTS

          The statement of cash flows was prepared using the indirect method.
     These cash flows were calculated by taking the net differences in the
     balances shown on the consolidated balance sheet on December 31, 2005 and
     December 31, 2004, not taking into account independently the effect of the
     Merger with Conavi and Corfinsura. Overnight funds sold with reselling
     agreements are considered to be cash equivalents for the purposes of this
     statement.

     (F) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

          The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities at
     the date of financial statements and the reported amounts of revenues and
     expenses during the reporting period. The most significant estimates are:
     allowance for loans, accrued interest losses, allowance for foreclosed
     assets and valuation of investments and derivatives. Actual results could
     differ from those estimates.


                                      F-14



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     (G) REAL VALUE UNIT RATE (UVR)

          The main operations that the Bank carries out with regard to mortgage
     loans are linked to the Unidad de Valor Real (Real Value Unit, the "UVR")
     and adjusted on a daily basis according to the daily value of the UVR, as
     published by the Central Bank.

          The values assigned by the Central Bank to the UVR, in Colombian
     pesos, on December 31, 2004 and December 31, 2005, were Ps 145.9324 and Ps
     153.4858, respectively.

          The UVR rate corresponds to the monthly variance in the CPI(10) during
     the calendar month immediately prior to the month for which the UVR rate is
     being calculated. In light of the above, the annualized UVR rate at
     December 31, 2004 and December 31, 2005 was 1.66% and 2.04%, respectively.

     (H) OVERNIGHT FUNDS SOLD AND RESELLING AGREEMENTS

          This represents the funds directly placed by the Bank and its
     subsidiaries in other financial institutions with or without investment
     collateral, using surplus liquidity, with or without a commitment to
     resell, at terms of up to 30 days. The account also includes overnight
     deposits with banks abroad using Bank funds deposited outside Colombia.

          Transactions not repaid within 30 days are reclassified as
     investments, loans or financial lease operations, as the case may be.

          The difference between present value (cash received) and future value
     (resale price) is income booked to financial yields.

     (I) INVESTMENTS

          This includes investments acquired by the Bank and its Subsidiaries to
     maintain secondary liquidity, investments in companies that Bancolombia has
     less than 50% of outstanding shares, to satisfy requirements of law or
     regulation, or simply to eliminate or significantly reduce market risks to
     which assets, liabilities or other balance sheet items are exposed.

     1. CLASSIFICATION

          The investments are classified as "trading investments", "investments
     available for sale" and "investments held to maturity". The first two of
     these groups may include investments in debt or equity securities. The
     third shall only include investments in debt securities.

----------
(10) CPI - Consumer Price Index, or inflation, is certified by Departamento
     Administrativo Nacional de Estadistica (National Administrative Department
     of Statistics, or "DANE").


                                      F-15



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          Debt securities are those which make the holder the creditor of the
     issuer, whereas equity investments are those which make the holder a
     part-owner of the issuer.

     TRADING SECURITIES

          Trading investments are those acquired for the main purpose of
     obtaining profits from fluctuations in short-term prices.

     HELD TO MATURITY

          Investments "held to maturity" are debt securities acquired with the
     stated purpose and legal, contractual, financial and operational capacity
     to hold them until maturity or redemption. They may not be used for
     liquidity operations unless they are mandatory investments entered into on
     the primary market and provided that the counter party for the operation is
     the Colombian Central Bank, the General Treasury Direction of Colombia,
     institutions overseen by the Superintendency of Finance (before
     Superintendency of Banking and the Securities Superintendency) or in the
     exceptional cases that the Superintendency of Finance may determine.

     AVAILABLE FOR SALE

          These are the investments which do not fall into either of the other
     two classifications, for which the investor has the stated intention and
     legal, contractual, financial, and operational capacity to hold them for at
     least one year from the date of this classification.

          This classification covers equity investments with low exchange
     turnover or which are unquoted and those held as parent or controlling
     stockholder of the issuer. There is no one-year minimum holding period
     required for the purposes of sale.

          One of the Bank's subsidiaries, Bancolombia Panama S.A., classifies
     the investments it holds for the purpose of exercising control as permanent
     in accordance with Panama Superintendency of Banking Order 7 of 2000.

     2. VALUATION

          The purpose of valuation is to record the fair market value for a
     given investment as of a determined date.

     2.1 DEBT SECURITIES

          Debt securities are valued daily and the result is recorded daily. The
     procedures are defined in 1995 External Circular 100, Chapter I, numeral
     6.1 issued by the Superintendency of Banking (now Superintendency of
     Finance).


                                      F-16



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          The Bank determines the market value of trading debt securities and
     available for sale debt securities by using the prices, reference rates and
     margins that the Bolsa de Valores de Colombia (the "Colombian Stock
     Exchange") calculates and publishes daily.

          Investments in debt securities held to maturity are valued
     exponentially as of the internal rate of return calculated on the purchase
     date.

     2.2 EQUITY SECURITIES

          Equity investments are valued monthly and the results of such
     valuations are recorded monthly. They are valued based on the level of
     exchange volume at the time of valuation, as follows:

          -    High-volume: They are valued based on the daily weighted average
               trading price published by the exchange.

          -    Medium-volume: They are valued based on the average price
               published by the exchange, being the weighted average trading
               price on the last five days on which securities are traded.

          -    Low volume and unquoted: They are valued based on the increase or
               decrease according to the investor's share of the variations in
               equity value calculated based on the most recent audited
               financial statements that cannot be older than six months since
               valuation date, or more recent statements, if available.

     2.3 SECURITIES DENOMINATED IN FOREIGN CURRENCY, IN UVR OR IN OTHER UNITS

          The Bank determines the market value of the respective security in its
     original currency or unit before converting it into U.S. dollars.

          As of January 2004, pursuant to 2004 External Circular 003 issued by
     the Superintendency of Banking (now the Superintendency of Finance), if the
     security is denominated in a currency other than the U.S. dollar, the value
     of the security determined in its original currency is converted into U.S.
     dollars using the foreign exchange translation rates published on the
     valuation date on the European Central Bank web page. The value thus
     obtained is multiplied by the Representative Market Rate effective on the
     valuation date (which is the current rate for the next day) and certified
     by the Superintendency of Finance or by the effective unit for the same
     day, as the case may be.


                                      F-17



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     3. RECORDING

     3.1 TRADING INVESTMENTS

          The difference between current and previous market value is used to
     adjust the value of the investment and is credited or charged to earnings
     as income or expense, respectively.

     3.2 INVESTMENTS HELD TO MATURITY

          The present value corresponds to the exponential valuation using the
     internal rate of return calculated at the time of purchase and its updated
     value is recorded as the greater of the investment value and its offsetting
     entry is recorded as income in the fiscal period operations statement.

          These investments are recorded at amortized cost and interest accruals
     are recorded in earnings.

     3.3 INVESTMENTS AVAILABLE FOR SALE

     3.3.1 DEBT SECURITIES

          Changes in the values of these securities are recorded using the
     following procedure:

          The difference between the present value on the valuation date and the
     previous present value increases or decreases the value of the investment
     and is credited to earnings. The present value is arrived at by applying an
     exponential calculation based on an internal rate of return established at
     the time of purchase.

          The difference between the market value and the present value of the
     investment increases or decreases its value and is recorded in the equity
     account as unrealized earnings or loss account.

     3.3.2 EQUITY INVESTMENTS

          The changes found in these securities have accounting entries made
     according to the investment trading volume, as follows:

     3.3.2.1 INVESTMENTS IN SECURITIES WITH LOW VOLUME OR UNQUOTED SECURITIES

          If the investment value based on the investor's shares of the equity
     of the investee is greater than the value at which the investment is
     registered, the difference will affect, in the first


                                      F-18



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     place, the provision or devaluation until it runs out, and the excess is
     registered as a surplus for valuation in stockholders' equity against
     reappraisal of the assets account.

          If the investment value based on the investor's shares of the equity
     of the investee is less than the value at which the investment is
     registered, the difference will affect, in the first place, the surplus for
     valuation of the corresponding investment until it runs out, and the excess
     is registered as devaluation of said investment within equity, against
     devaluation of the assets account.

          When the dividends or profits are distributed in kind, including those
     from capitalizing the equity revaluation account, the portion recorded as
     the surplus for valuation must be recorded as income, charged against the
     investment and the surplus must be reversed. When the dividends or profits
     are distributed in cash, the value recorded as surplus for valuation must
     be recorded as income, the surplus reversed and the excess amount of the
     dividends must be recorded as a lesser investment value.

     3.3.2.2 HIGH OR MEDIUM - VOLUME

          The update of the market value of these securities is recorded as an
     accumulated unrealized gain or loss, within the equity accounts, crediting
     or debiting the investment.

          Dividends or profits distributed in kind or in cash, including those
     from capitalizing the equity revaluation account, must be recorded as
     income up to the amount corresponding to the investor of profits or equity
     revaluation that the issuer has recorded since the investment acquisition
     date, charged to accounts receivable.

          Before External Circular 049 dated November 30, 2004 issued by
     Superintendency of Banking (now Superintendency of Finance) became
     effective, dividends or profits distributed in kind or in cash, including
     those from capitalizing the equity revaluation account, had to be recorded
     up to the amount that had been recorded as accumulated unrealized gains,
     during the fiscal year to which the profits and equity revaluation
     distributed corresponded, and were charged to the latter. The collection of
     the dividends in cash had to be recorded as a lesser value of the
     investment.

     4. PROVISIONS OR LOSSES DUE TO CREDIT RISK CLASSIFICATION

          The prices of trading and available for sale debt securities that do
     not have fair exchange prices, those classified as held to maturity as well
     as the price for equity securities with low or minimum volume or that are
     unquoted must be adjusted on each valuation date, based on the credit risk
     classification.

          Internal or external debt securities issued or guaranteed by the
     Republic of Colombia or the Colombian Guarantee Fund for Financial
     Institutions ("Fogafin" for its Spanish initials) or issued by the Central
     Bank are not subject to this adjustment.


                                      F-19



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     4.1 SECURITIES ISSUED ABROAD OR WITH FOREIGN RANKING

          Securities that are rated by a rating firm acknowledged by the
     Superintendency of Finance (before Securities Superintendency) or
     securities issued by entities that are rated by those rating firms cannot
     be registered for an amount that exceeds the following percentages of their
     nominal net amortization value made up to the valuation date:



  LONG TERM    MAX. AMOUNT   SHORT TERM   MAX. AMOUNT
   RANKING          %          RANKING         %
  ---------    -----------   ----------   -----------
                                 
BB+, BB, BB-    Ninety (90)       3       Ninety (90)
B+, B, B-      Seventy (70)       4        Fifty (50)
CCC              Fifty (50)     5 y 6        Zero (0)
DD, EE             Zero (0)


          Provisions for investments classified as held to maturity, for which
     it is possible to establish a fair exchange value, correspond to the
     difference between the recorded value and the fair exchange value.

     4.2 SECURITIES FROM ISSUES OR ISSUERS WITHOUT ANY FOREIGN RATING AND EQUITY
     SECURITIES

          These securities are rated and classified according to the methodology
     defined by the Bank and its Subsidiaries. The maximum value, as defined by
     the Superintendency of Finance (formerly Superintendency of Banking), at
     which these investments are posted, according to their category is:



                         MAX.
                      REGISTERED
     CATEGORY        AMOUNT %(1)             INVESTMENT CHARACTERISTICS
     --------        -----------   ---------------------------------------------
                             
B Acceptable risk,   Eighty (80)   Present factors of uncertainty that could
  greater than                     affect the capacity to continue adequately
  normal                           fulfilling debt service and weaknesses that
                                   could affect their financial situation.

C Appreciable risk   Sixty (60)    Present medium-high probabilities of
                                   non-fulfillment of timely payments of capital
                                   and interest in their financial situation
                                   that may compromise the recovery of the
                                   investment.

D Significant risk   Forty (40)    Present non-fulfillment of agreed terms of
                                   the security and material deficiencies in
                                   their financial situation, the probability of
                                   recovering the investment is highly doubtful.

E Unrecoverable      Zero (0)      Recovery highly improbable.


----------
(1)  On the net nominal amortization values made up to the valuation date for
     debt securities or the acquisition cost less allowances for equity
     securities.


                                      F-20


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
          (Stated in millions of pesos and thousands of U.S. dollors)

     (J)  LOANS AND FINANCIAL LEASE OPERATIONS

          These accounts record loans and financial leases made by the Bank and
     its Subsidiaries in the various modalities permitted. They are funded by
     the Bank's own capital, public deposits and other internal and external
     sources of funds.

          Loans are recorded at face value, except for acquisition of accounts
     receivable (factoring operations) which are recorded at cost, and foreign
     currency operations, which are converted into local currency.

          The Subsidiary Bancolombia Panama S.A., authorized by the Panama
     Superintendency of Banking, includes participating credit loans in its loan
     portfolio. These are loans for which the subsidiary assumes no credit risk,
     which, in spite of having been sold and 100% paid up, are not taken out or
     omitted from the portfolio group. The profit in this business activity is
     seen in the net interest margin between the loan participation portfolio
     and the original loan portfolio.

          External Circular 040 dated October 23, 2003 modified the treatment of
     financial leases. Since January 1, 2004, they have been included as part of
     the loan portfolio. For additional information see Note 2 (q).

          The institutions overseen by the Superintendency of Finance (before
     Superintendency of Banking) must have a Credit Risk Administration System
     that puts in place policies, processes, models, and control mechanisms to
     enable risk identification, mitigation and measurement.

          Credit risk evaluation is done pursuant to effective regulations,
     using an ongoing monitoring process and periodical portfolio classification
     as described below.

          For provisions, the Bank applies Superintendency of Finance
     regulations as described below; in addition, the Bank calculates probable
     expected losses and tests estimating provisions using this methodology.

          During the month of December 2004, External Circular 052 modified 1995
     External Circular 100 Chapter II issued by the Superintendency of Banking
     (now Superintendency of Finance), which sets forth guidelines for credit
     risk administration. This Circular defines the basic elements of the system
     for the management of credit risk (SARC, for its initials in Spanish) and
     introduces reference models and a time schedule for submitting the internal
     models to the Superintendency of Finance, among others. The Bank has
     adopted all required modifications and will continue its in-depth develop
     of the proposed schemes as described below.


                                      F-21



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
          (Stated in millions of pesos and thousands of U.S. dollors)

1. CLASSIFICATION

          Loans and financial lease contracts are classified as follows:

     MORTGAGE LOANS

          These are loans, no matter what their value, made to individuals for
the purchase of new or used housing or to build a home, all in accordance with
Law 546 of 1999. Such loans include: those denominated in UVR or local currency,
that are guaranteed by a senior mortgage on the property and that are financed
with a total repayment term of at least 5 and up to 30 years.

     CONSUMER LOANS

          These are loans and financial leases, no matter what their value,
granted to individuals for the purchase of consumer goods or to pay for
non-commercial or business services.

     SMALL BUSINESS LOANS

          These are loans and financial leases granted to microbusinesses, whose
total balance outstanding with the Bank does not exceed twenty-five (25) times
the effective legal minimum monthly salaries ("SMLVs").

          "Microbusiness" means any economic exploitation unit owned by an
individual or corporate entity, in entrepreneurial, farming and livestock,
industrial, commercial or service activities, whether rural or urban, whose
staff does not exceed ten (10) workers and whose total assets are under five
hundred one (501) effective legal minimum monthly salaries ("SMLVs").

     COMMERCIAL LOANS

          Commercial loans are those that are granted to individuals or
companies in order to carry out organized economic activities. These are
different from those granted as microcredit loans.

          Loan-related commissions and other receivables are classified within
the accounts for the type of loan to which they are related.

2. EVALUATION FREQUENCY

          The Bank and its Subsidiaries make continuous evaluations of their
lending and financial lease operation risk, making all necessary modifications
to the respective classifications when there are new analysis or data to justify
such changes.

          As a part of the previous process, in the months of May and November,
the Bank and


                                      F-22



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
          (Stated in millions of pesos and thousands of U.S. dollors)

its Subsidiaries evaluate all loans and financial leases that are past due after
having been restructured and that at the time of the evaluation exceed
three-hundred (300) effective SMLVs, as well as loans from debtors whose debt
from the different loan types exceeds this same amount.

3. EVALUATION CRITERIA

          The Bank and its Subsidiaries evaluate loans and financial leases
using the following criteria required by the Superintendency of Finance (before
Superintendency of Banking):

          They evaluate the ability to pay of the debtor/co-debtors/guarantors
or any other person directly or indirectly unconditionally liable for the debt,
and project the cash flow for such entities, if any. The following is the
minimum information required from the debtor: income and outgoing cash flows,
economic solvency, information on its current and past compliance with its
obligations as well as the financial and credit history of debtors in risk
centers, the number of times loans have been restructured, possible financial
risks to cash flow, legal, operational and strategic risks, and the possibility
of contagion.

4. CLASSIFICATION

          The Bank and its Subsidiaries classify loans and financial leases on
the basis of the above criteria into the following credit risk categories:



             CATEGORY                            COMMERCIAL                              CONSUMER
             --------               ------------------------------------   ------------------------------------
                                                                     
"A" Normal Risk                     current - and up to 1 month past due   current - and up to 1 month past due
"B" Acceptable Risk, Above Normal          1-3 months past due                     1-2 months past due
"C" Appreciable Risk                        3-6 months past due                     2-3 months past due
"D" Significant Risk                        6-12 months past due                    3-6 months past due
"E" Risk of Unrecoverability              over 12 months past due                 over 6 months past due




             CATEGORY                       SMALL BUSINESS LOANS                         MORTGAGE
             --------               ------------------------------------   ------------------------------------
                                                                     
"A" Normal Risk                     current - and up to 1 month past due   current - and up to 2 months past due
"B" Acceptable Risk, Above Normal            1-2 months past due                    2-5 months past due
"C" Appreciable Risk                         2-3 months past due                    5-12 months past due
"D" Significant Risk                         3-4 months past due                   12-18 months past due
"E" Risk of Unrecoverability               over 4 months past due                 over 18 months past due



                                      F-23



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
          (Stated in millions of pesos and thousands of U.S. dollors)

RULES OF ALIGNMENT

          A Bank and/or Subsidiary classification of B, C, D or E for any loan
or financial lease would automatically classify all of that debtor's accounts in
the same category, unless it can be shown to the Superintendency of Finance
(before Superintendency of Banking) that the Bank has sound reasons for a lower
risk classification.

          Under the terms of the Colombian Commercial Code Articles 260-262,
financial institutions that are related will receive the same classification as
the parent institution unless the Superintendency of Finance is shown that there
are good reasons for maintaining such entities in a lower risk category.

          The Superintendency of Finance requires that entities align their
classifications with other financial institutions when at least two of them have
classified the debtor into a higher risk category, where the debt represents at
least 20% of the debtor's total indebtedness according to the most recent
information available from credit bureaus. In this event, there may not be more
than one level of difference in risk classification.

          The Superintendency of Finance can order reclassifications and
reranking of the classifications assigned by financial institutions. It can also
order loan portfolio reclassifications for an economic sector, geographical zone
or for one debtor or a group of debtors, whose borrowings must be accrued
pursuant to rules on individual debt limits.

5. SUSPENSION OF ACCRUALS

          The Superintendency of Finance (before Superintendency of Banking)
established that interest, UVR, lease payments and other items of income cease
to be accrued in the statement of operations and begin to be recorded in
memorandum accounts until effective payment is collected, after a loan is in
arrears for more than a certain time:



                           ARREARS
    TYPE OF LOAN       IN EXCESS OF:
    ------------       -------------
                    
Mortgage                  2 months
Consumer                  2 months
Small business loans      1 month
Commercial                3 months


          Until December 31, 2004, the suspension of accruals for mortgage and
small business loans were applied after a credit is in arrears for more than 4
months and 2 months, respectively.

          The Bank and its subsidiaries adopted a policy, according to which all
loans and financial leasing operations of any type, with the exception of
mortgage loans, that are more than 30 days past due, cease to accumulate
interest on the statement of operations and instead are recorded in the
memorandum accounts until such time the client proceeds with their payment.


                                      F-24


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          Those loans that become past due and that at some point have stopped
accruing interest, UVR, leave payments or other items of income, will stop
accruing said income from their collection. Their entries will be recorded in
memorandum accounts until such loans are collected.

6.   PROVISIONS

          The Bank makes provisions against earnings for each period as follows:

     General Provision:

          Until September 30, 2005, the Bank and its subsidiaries used to set up
a general provision corresponding to one per cent (1%) of the total value of the
gross loan portfolio.

          In accordance with External Circular 035 issued in October 2005, the
Superintendency of Banking (now Superintendency of Finance) implemented a
methodology of monthly aliquots, therein stipulated, allowing for the percentage
provision to be increased by an additional one per cent (1%) during 21 months .
In this way, by July 1, 2007, there would be a general provision of 2% totally
set up on the total value of the gross loan portfolio.

          However on, December 30, 2005, the Superintendency of Finance enacted
External Circular 004, decreasing the general provision to the original one per
cent (1%) of the value of the total gross loan portfolio. Also, the aliquots
corresponding to the months of October and November were required to be applied
to the individual provisions for Categories "A" and/or "B".

          As a result of the above, the general provision continues to be one
per cent (1%) of the value of the total gross loan portfolio. Said provision,
however, may be increased if approved by the General Shareholders Meeting, and
is updated on a monthly basis according to the increases or decreases in the
loan portfolio.

     Individual Provisions:

          Until December 30, 2005, the Bank set up individual provisions on its
portfolio, according to rules and regulations issued by the Superintendency of
Finance, corresponding to percentages calculated according to the different
ratings on the net unpaid balance net of guarantees, while the internal
methodology was implemented for the calculation of the provisions considering
the expected losses in the case of default.

          Considering the impact that will be caused by the change in provisions
once the MRC (Reference Model for Commercial Portfolio) enters into effect as
well as the dynamics shown in different types of loans, and the gradual
convergence between the default classification system and the models of expected
losses, the Superintendency of Finance by means of External Circular 004, issued
on December 30, 2005, which increased its provision percentages on "A" and "B"
rated loans to 1% and 3.2%, respectively.


                                      F-25



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          To cover the additional value that this increase represents with
respect to the individual provisions, the institutions regulated by the
Superintendency of Finance will have a total period of nineteen (19) months
beginning as of December 2005, to follow the aliquot methodology according to
instructions contained in Subsections 2.1.1 and 2.1.2 of Exhibit 1 of Chapter II
of Circular 100 issued by the Superintendency of Banking (now Superintendency of
Finance).

          Furthermore, in compliance with instructions given by means of
External Circular 004 of 2005, the Bank applied the total amount of aliquots
generated in the form of general provision in the months of October and
November, on the "B" rated loan portfolio pertaining to the Commercial Category.

          Increases in the individual provisions for the "A" and "B" rated
loans, as provided for by External Circular 004 of December 2005, must be set up
without deducting the value of the corresponding guarantees, carried out on the
balance of the gross portfolio.

          Based on the regulations issued by the Superintendency of Finance
minimum allowances for loans and financial leases must correspond to the
following percentages:



                                          COMMERCIAL                  CONSUMER             SMALL BUSINESS LOANS
                                   ------------------------   ------------------------   ------------------------
                                   Capital   Interest/Other   Capital   Interest/Other   Capital   Interest/Other
                                   -------   --------------   -------   --------------   -------   --------------
                                                                                 
A- Normal Risk                         1                          1                          1
B- Acceptable Risk, Above Normal     3.2            1           3.2             1          3.2           100
C- Appreciable Risk                   20          100            20           100           20           100
D- Significant Risk                   50          100            50           100           50           100
E- Risk of Unrecoverability          100          100           100           100          100           100







      HOME MORTGAGE %                      CAPITAL
                              ---------------------------------
                              ON GUARANTEED   ON NON-GUARANTEED
                                 PORTION           PORTION        INTEREST/OTHER
                              -------------   -----------------   --------------
                                                         
A- Normal Risk                      1                  1                 --
B- Acceptable Risk, Above
   Normal                          3.2               100                  1
C- Appreciable Risk                 10               100                100
D- Significant Risk                 20               100                100
E- Risk of Unrecoverability         30               100                100



                                      F-26



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          In the case of the mortgage portfolio, if the loan has remained in
Category E for 2 consecutive years the provision for the guaranteed portion is
increased to 60% and if it remains for another year in this category, the
provision to be set up is for 100%, unless there is any indication of a possible
recoupment by means of actions previously taken by the Bank.

          Notwithstanding, until the new methodology set forth through External
Circular 052, issued by the Superintendency of Banking (now Superintendency of
Finance) on December 30, 2004, is implemented, the Bank administration, seeking
to anticipate the effects of calculating expected losses, decided to maintain
the decision taken in March 2004 of setting up provisions corresponding to 30%
for the loan and financial leasing portfolios, net of guarantees, pertaining to
the "B" rated consumer and small business categories, as follows:



                                            Consumer %                         Small Business Loans %
                              --------------------------------------   --------------------------------------
                                        CAPITAL                                  CAPITAL
                              --------------------------               --------------------------
                                                ON NON-                                  ON NON-
                              ON GUARANTEED   GUARANTEED   INTEREST/   ON GUARANTEED   GUARANTEED   INTEREST/
                                 PORTION        PORTION      OTHERS       PORTION        PORTION      OTHERS
                              -------------   ----------   ---------   -------------   ----------   ---------
                                                                                  
A - Normal Risk                      1              1                         1              1
B- Acceptable Risk, Above
   Normal                          3.2             30          30           3.2             30         100
C- Appreciable Risk                                50         100                           60         100
D- Significant Risk                               100         100                          100         100
E- Risk of Unrecoverability                       100         100                          100         100


          However, the Bank and its Subsidiaries set up additional provisions
based on an analysis of loss and probabilities of recoupment.

7.   THE EFFECT OF SECURITY ON PROVISIONS

          In the case of mortgage loans, the value of the corresponding
guarantees to be considered in order to calculate the provisions is 100% of
their value. Comercial, consumer and small business categories are valued at no
more than 70% of their value. Notwithstanding, depending on whether the security
is a mortgage or not and on the length of time the loan has been in arrears, the
Bank only take into consideration the percentages of the total security value
indicated below.



                            TIME ELAPSED FROM DEFAULT DATE TO
                                 SECURITY NON-EXECUTION
                      --------------------------------------------
                      APPROPRIATE MORTGAGE
% COVER OF SECURITY     SECURITY/ESCROW      NON-MORTGAGE SECURITY
-------------------   --------------------   ---------------------
                                       
         70                0-18 months            0 - 12 months
         50               18-24 months             12-24 months
         30               24-30 months                 --
         15               30-36 months                 --
          0              Over 36 months          Over 24 months



                                      F-27


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          However, increases in individual provisions for the "A" and "B"- rated
portfolio, as provided for by External Circular 004 of December 2005, must be
set up without deducting the value of the corresponding guarantees.

          The security is admissible when it is formalized and if it has a
professionally-established and objective value to provide effective legal
backing to repayment of the secured loan, giving the lender or creditor
preferential or prior rights to obtain payment, and if it is reasonably
marketable.

APPRECIATION OF MORTGAGE COLLATERAL

          The value of the collateral posted by the Bank is established based on
parameters set out in External Circular 034 of 2001 issued by the
Superintendency of Banking (now Superintendency of Finance) and listed below:

          -    In the case of mortgage collateral consisting of property to be
               used for housing purposes, the market value shall be the initial
               appraisal value of the collateral duly adjusted according to the
               housing price index published by the National Planning
               Department. The value shall be updated on at least a quarterly
               basis, based on the aforementioned index.

          -    In the case of mortgage collateral consisting of property
               different from housing, the market value shall be the appraisal
               value of the property given over in guarantee when the loan is
               issued or the new appraisal value as subsequently calculated on a
               periodic basis.

          For the purpose of calculating provisions, the value of the collateral
pledged on the debtor's commercial or industrial establishments is not taken
into account. Also, the property which forms part and the respective
establishment or mortgages on property where the establishment operates or
functions, are not taken into account.

          The Bank and its Subsidiaries do not base their lending decisions on
the amount and/or type of collateral offered, since they understand that the
source of payment of the loan or financing arrangement is provided by the
capacity of the beneficiary of the loan to generate cash flows, whether this is
an individual or a company. However, in the case of new projects and/or mid to
long-term financing, alternative sources are required, as a matter of prudence,
in order to recoup the loan. Bearing in mind that the Bank has made inroads on
the SME segment, its policy is to take out coverage with the Fondo Nacional de
Garantias and the Fondo Agropecuario de Garantias.


                                      F-28



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

8.   MORTGAGE DEBT RELIEF

          Mortgage relief originates from the large-scale process of
reliquidating mortgage loans as a result of the change in the housing financing
system, introduced by Law 546 of 1999. Credit institutions carried out this
reliquidation process based on the difference between the DTF and the UPAC
rates, this for the purpose of comparing how the UPAC rate is performing with
regard to the UVR rate, so that these might be accorded the same reduction as
that corresponding to the UPAC-linked credit. The Colombian Government, for its
part, proceeded to credit to the value of the obligations the total amount of
the difference produced by this reliquidation process and for the purpose of
paying the amounts credited issued UVR-denominated Treasury Bonds (TES).

          On the other hand, Decree 712 of 2001, which amended Decree 2221 of
2000, establishes in its Article One the following grounds for returning the
debt relief applied for credit institutions, to the Republic of Colombia via the
Ministry of Finance and Public Credit.

DUE TO DEFAULT ON THE PART OF THE BENEFICIARY OF THE CREDITED AMOUNT

          When the beneficiary of the credited amount, according to the
provisions of Law 546 of 1999, defaults on more than twelve (12) successive
monthly payment installments, as of the date on which the amount is credited to
the individual long-term mortgage loan.

DUE TO FAILURE TO PAY THE INDIVIDUAL MORTGAGE LOAN ON THE PART OF THE
BENEFICIARY OF THE CREDITED AMOUNT

          If the credit institution has started collection proceeding against
the mortgagor prior to the expiry of the term of default established in the
prior section.

DUE TO PAYMENT OF MORTGAGE CREDITS FOR MORE THAN ONE DWELLING PER PERSON

          The amounts credited on mortgage loans for more than one dwelling per
person must be returned.

DUE TO WAIVING THE AMOUNT CREDITED

          Should the mortgagor have selected the loan for which he or she wishes
the credited amount to be applied, as provided for by Article 40 of Law 546 of
1999, the mortgagor should provide written notification of his or her intent to
waive the credit on other loans, if applicable. If the credit to which the
mortgagor is waiving should have been made prior to the waiver made, the
corresponding entity must review the credited amount applied to the loan and
make the corresponding refund to the Nation.

DUE TO AMOUNTS CREDITED BEING HIGHER THAN THOSE DUE

          When amounts higher than those due are credited, the excess amount
must be refunded to the Nation together with the corresponding interest paid up
to the date on which the refund is made.


                                      F-29



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

9.   LOANS TO REGIONAL AUTHORITIES

          The evaluation of loans to regional authorities includes not only the
criteria applicable to regular borrowers but also the provisions set forth in
Law 358 of 1997 and Law 617 of 2000.

10.  RESTRUCTURED LOANS

          A "restructured loan" is a loan for which a legal agreement exists
whose purpose or effect is to modify some of the terms of the loan for the
debtor's benefit and at its request. This includes informal or non-moratorium
agreements, Law 550 of 1999 agreements, Law 617 of 2000 agreements, and special
restructuring as defined in the Superintendency of Banking (now Superintendency
of Finance) Circular 39 of 1999.

          Restructured loans shall not be considered to include the credit
relief stipulated by law, as was the case of the relief stipulated in Law 546 of
1999, for the housing loan portfolio.

          For the loans restructured as indicated above or using other
restructuring modes which include the capitalization of interest recorded in
memorandum accounts or balances written off, including capital, interest and
other items, the amounts capitalized are recorded as deferred income and they
are amortized in proportion to the amounts actually collected.

11.  CHARGE OFFS

          The Bank writes off debtors classified as "unrecoverable", following
the criteria given below, at the latest at the close of the half-year in which
that classification was made, provided they meet the following conditions:

          -    Provision of 100% of all amounts past due (capital, interest and
               other items)

          -    One hundred eighty (180) days past due for consumer and small
               business loans

          -    Three hundred sixty (360) days past due for commercial loans

          -    One thousand six hundred twenty (1620) days past due for mortgage
               loans

          All write-offs must be approved by the Board of Directors. Even if a
loan is charged off, management remains responsible for its decisions in respect
of the loan, and neither the Bank nor its Subsidiaries are relieved of their
obligations to pursue recovery as appropriate.


                                      F-30



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     Charge-offs in Bancolombia Panama S.A.

          In the case of the subsidiary in Panama, the Bank takes into account
the Republic of Panama Superintendency of Banking Order 6-2000, dated June 28,
2000, which requires that Bancolombia Panama charge off all loans classified as
unrecoverable at the latest by the end of the fiscal period in which they were
so classified.

12.  SECURITIZED NON-PERFORMING LOANS

          The non-performing mortgage loan portfolio was securitized by the Bank
for the following purposes:

          -    To reduce the level of overdue loans, and as a result reduce the
               systemic risk presented given the concentration of long-term
               assets vs. short-term liabilities.

          -    Improve upon the Bank's financial indicators.

          -    Mobilize and free up resources from the economy to the production
               system based on a non-performing asset which would otherwise not
               afford this benefit.

          -    Involve the Bank in the process of making the capital market more
               sophisticated.

          The securitization process carried out on the mortgage loan portfolio
was made in accordance with subsection one of Article 12 of Law 546 of 1999. The
Bank proceeded to completely separate and isolate from its equity the total
amount of underlying assets that were securitized, forming part of a
Universality, according to that indicated in Article 2 of Resolution 775 of 2001
issued by the Superintendency of Banking (now Superintendency of Finance)
issuing A, B and C-rated credit securities to finance the building and purchase
of housing. A- rated securities were sold to the Securitizing Party and the B-
and C- rated securities were recorded as - Trust Rights - Investments - pursuant
to instructions received from the Superintendency of Finance. All expenses
incurred in taking possession of the guarantee are paid for by the Bank; in
exchange the Bank receives the amount remaining after paying out the total
amount of principal and interest on said securities.

(K)  ACCEPTANCES AND DERIVATIVES

     ACCEPTANCES

          The Bank issues local currency bank acceptances for up to 180 days for
import or export operations or for local purchases of merchandise, pursuant to
legal provisions.

          They are treated as active loans and may not exceed the Bank's paid in
capital and legal reserve. The asset and liability are initially recorded at the
same time.


                                      F-31



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          If unpaid at maturity, the asset is reclassified to a loan account and
the liability to "past due bank acceptances" until it is paid, and as of
maturity, these acceptances are subject to reserve requirements for on demand
liabilities for payment within 30 days.

          The term granted by the beneficiary abroad to the client in Colombia
to pay for the goods is governed by International Chamber of Commerce rules and
may exceed 180 days under the internationally-accepted deferred credit mode for
up to one year. The ledgers may therefore contain foreign currency acceptances
for more than 180 days.

     DERIVATIVES

          The Bank and its Subsidiaries record the amount of agreements between
two or more parties to purchase or sell assets at a future date, whose
compliance or settlement is agreed upon more than two business days following
the operation initiation date, in order to provide or obtain hedging, in the
terms defined by competent authorities. Therefore, these agreements create
reciprocal and unconditional rights and obligations. Operations are formalized
by contract or letter of intent. The Bank has contracts for forwards, for
options, swaps and futures.

          Currency derivatives are designed to cover exchange exposure risks on
structural or traded open positions by setting up a reciprocal operation or
synthetic coverage for up to the maximum exposures allowed by the regulation and
control agencies.

          The difference between rights and obligations is recorded as income or
expense, as the case may be.

     NEXT DAY OPERATIONS

          These include all agreements or contracts entered into by two parties
and to be fulfilled within two business days immediately following the date on
which the agreement or contract is made.

     FORWARD CONTRACTS

          A forward contract is any agreement or contract that meets the needs
of two parties acting outside the market for the purpose of accepting or
delivering a specific quantity of a product or underlying asset with defined
specifications regarding price, date, place and means of delivery.

     FUTURE CONTRACTS

          These are standard contracts for future delivery, specifying due date,
quantities, amounts, qualities, etc. The valuation is calculated pursuant to the
stock market practices where the securities are traded.


                                      F-32



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          Futures may be liquidated in cash, by a reciprocal operation prior to
the due date, by physical delivery of a product or by liquidating against an
index.

     SWAP CONTRACTS OR FINANCIAL EXCHANGE CONTRACTS

          A swap contract or financial exchange contract is a contract between
two parties that agree to exchange flows of money within the time set forth in
the obligations, which is financially similar to a series of Forward Contracts
whose objective is to reduce costs and risks due to variations in exchange rates
or in interest rates.

     SIMULTANEOUS OPERATIONS

          Simultaneous operations are those that are set up as a result of
purchase and sale agreements by virtue of which a person (original seller) sells
fixed-income securities to another (original buyer), with the undertaking that
the latter shall sell back to the former, at a later date and at a price
established at the beginning of the operation, securities equivalent to those
originally handed over. Likewise, the original seller is obliged to purchase the
securities handed over to the original buyer, according to the terms and
conditions that were expressly stipulated in the agreement or contract.

     OPTION CONTRACTS

          In option contracts, the holder of an option has the right, but not
necessarily the obligation, to purchase or sell a specific quantity of an asset
at a given price on a given date or during a determined period. The Bank has
established an accepted technique for valuing these operations, taking into
account market risks, operational risks and legal risks.

          Derivatives are accounted for at fair value on a daily basis and
results of the valuation are recorded on the same basis.

(L)  FORECLOSED ASSETS

          The Bank and its Subsidiaries record the adjusted value of assets
received in payment of unpaid loans in this account.

          The following criteria apply to the recording of foreclosed assets:

          -    The initial value recorded is the value specified in the court
               award or the one agreed upon by the debtors.

          -    If the property received in payment is not in a sellable
               condition, its book value is increased by the expenses the Bank
               and its Subsidiaries incur to put it into a sellable condition.


                                      F-33



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          -    If the proceeds of the sale are more than the settlement value
               agreed upon with the debtor, that difference is recorded as an
               account payable to the debtor. If the proceeds of sale are
               expected to be insufficient to cover the outstanding debt, the
               difference must be immediately recorded on the income statement.

          -    Moveable assets received in payment corresponding to investment
               securities are valued by applying the criteria indicated in this
               note in letter (i) Investments, but taking into account provision
               requirements for the periods referred to below.

          -    When the commercial value of the property is lower than its book
               value, a provision must be made for the difference.

     LEGAL TERM FOR THE SALE OF FORECLOSED ASSETS

          Institutions must sell the goods that have been transferred in payment
of debts previously contracted in the course of business or that have been
adjusted at public auction due to mortgages in their name no later than two
years after the foreclosing date, except when upon the Board of Directors'
request, the Superintendency of Finance (before Superintendency of Banking)
extends the term. However, in no case may the extension exceed an additional
period of two years.

     PROVISIONS FOR FORECLOSED ASSETS

          With the issuance of the Superintendency of Banking (now
Superintendency of Finance) External Circular 034 of August 2003, (Current since
October 2003) supervised banks must design and adopt their own internal models
for the calculation of provisions for foreclosed assets, by means of which
expected losses for all types of assets are estimated. The Bank and its
Subsidiaries do not have their own internal model for calculating provisions for
foreclosed assets through which expected losses are estimated by type of asset
and approved by the Superintendency of Finance (before Superintendency of
Banking).

          Until such model is presented and approved by the Superintendency of
Finance (before Superintendency of Banking), provisions will be made following
the parameters set forth below.

     Real estate

          A provision equal to 30% of the value of the asset at the time of
receipt must be made in proportional monthly installments within the first year
following receipt. This provision will increase an additional 30% in
proportional monthly installments within the second year following receipt of
the asset. Once the legal term for sale has expired without authorization to
extend, the provision must be 80% of the value upon receipt. In case the term
extension is granted, the remaining 20% of the provision may be constituted
within said term.


                                      F-34



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     Moveable Assets

          A provision equal to 35% of the value of the asset at the time of
acquisition must be made in proportional monthly installments within the first
year following receipt. Said provision must be increased an additional 35% in
proportional monthly installments within the second year following receipt of
the asset. Once the legal term for sale has expired without authorization to
extend, the provision must be 100% of the book value of the asset prior to
provisions. If the term extension is granted, the remaining 30% of the provision
may be constituted within said term.

          Based on individual analysis related to the feasibility of realizing a
return on some foreclosed assets, the Bank records provisions for them, which
are higher than the provisions that the Superintendency of Finance (before
Superintendency of Banking) requires.

(M)  LOAN FEES

          Loan origination and commitment fees, as well as direct loan
origination and commitment costs, are recorded in the consolidated statement of
operations as collected or incurred.

(N)  PROPERTY, PLANT AND EQUIPMENT

          This account records tangible assets acquired or leased assets,
constructed or in the process of importation or construction and permanently
used in the course of the Bank's business which useful life exceeds one year.
Property and equipment is recorded at the cost of acquisition, including direct
and indirect costs and expenses incurred up to the time that the asset is in a
usable condition.

          Additions, improvements and non-routine repairs that significantly
prolong the useful life of an asset are capitalized. Payments for routine
maintenance and repairs are charged to expense in the period in which they are
incurred.

          Depreciation is calculated on a straight-line basis over the estimated
useful life of the asset. The annual depreciation rates for each asset item are:


                                 
Buildings                            5%
Equipment, furniture and fittings   10%
Computer equipment                  20%
Vehicles                            20%


          The individual net book value of real estate (cost less accumulated
depreciation) is compared against market values taken from independent
professional appraisals. If the market value is higher, a reappraisal is
recorded; otherwise, the difference is charged to expenses for the period.
Valuations must be made at least every three years.


                                      F-35



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          At December 31, 2004 and 2005, the Bank had insurance cover for
fidelity and financial risks and civil liability cover for risks inherent to its
business. Other policies protect assets against fire, earthquake, explosion,
civil disturbance, riot, terrorism, damage to computers and vehicles.

     Maintenance policy:

          Corrective maintenance provides for the immediate replacement of
parts, accessories or elements that may affect safety or proper operation.
Preventive maintenance consists of regular checks of architectural and
electrical items, conducted twice a year and the maintenance of equipment,
furniture and fittings is done three to four times a year.

(O)  BRANCHES AND AGENCIES

          This account records the operations between the Bank's branches and
agencies.

          Balances are reconciled monthly and pending items are adjusted within
thirty (30) calendar days. On the date of the financial statements, the Bank
reclassifies net balances representing branch and agency transactions to asset
or liability accounts and the respective income or expense is recorded.

(P)  PREPAID EXPENSES AND DEFERRED CHARGES

          Prepaid expenses are payments made by the Bank and its Subsidiaries in
the normal course of business, the benefits of which are recovered over more
than one period and are recoverable assuming continuous delivery of services.
Deferred charges are goods and services received, for which the Bank expects to
obtain future economic benefits.

          Amortization of prepaid expenses and deferred charges is calculated
from the date which they contribute to the generation of income, considering the
following factors:

     Prepaid Expenses

          Prepaid expenses include mainly the following monetary items:
interest, amortized monthly during the period prepaid; insurance, over the life
of the policy; rent, over the period prepaid; equipment maintenance, over the
life of the contract; and other prepaid expenses over the period in which
services are received or costs and expenses are incurred.


                                      F-36



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     Deferred Charges

          Deferred charges are non-monetary items:

          -    Software is amortized over a maximum of three years.

          -    The goodwill is amortized based on due authorization granted by
               the Superintendency of Finance and arises from the difference
               between the value paid and the intrinsic value of investment at
               the moment of purchase.

          -    Stationery is amortized as and when consumed.

          -    Bonuses under the voluntary retirement plan are amortized as
               permitted by the Superintendency of Finance (before
               Superintendency of Banking).

          -    Contributions and affiliations are amortized over the period
               prepaid.

          The Bank does not record deferred charges corresponding to renovations
and improvements on leased property, studies and projects, institutional
advertising and publicity. The value of the disbursements made regarding these
items are recorded directly on the statement of operations.

(Q)  LEASED ASSETS

          Subsidiaries Leasing Colombia S.A., Suleasing Internacional, Suleasing
Internacional Inc, Sufinanciamiento S.A., Banco Corfinsura Internacional and
Bancolombia Panama S.A. record the value of assets delivered under financial
leases.

          The loans and financial leasing agreements issued by the companies are
recorded according to the different methods authorized. The resources used in
granting the loans are provided by the entity's own funds, public funds in the
form of time deposits and other internal and external sources of financing.

          On October 23, 2003, the Superintendency of Banking (now the
Superintendency of Finance) through its External Circular 040 modified the
treatment of financial leases. Starting January 1, 2004, instead of recording
financial leases as property, plant and equipment, companies must account for
them in their loan portfolio.

          Financial leasing agreements that were formerly recorded in the
account titled "Leased Assets" were reclassified in the account titled
"Portfolio of Financial Leasing Operations and Loans", by virtue of which the
policies governing the Loan and Financial Leasing Portfolio shall be applied to
said agreements. The operating leasing agreements entered into by the Companies,
upon signing said documents, provide the user for his or her use the
corresponding leased assets, which shall henceforth be recorded under Leased
Assets.

          Financial leases that were recorded in an independent line were
reclassified to loan portfolio line.


                                      F-37



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          Operational leases entered into by the Companies, are accounted for as
assets given in operational lease, after the respective contract is entered into
by the parties and the leased asset is given to the user.

          Depreciation will be recorded for the lesser of the useful life of the
good and the lease contract term. The Companies use the depreciation methodology
that requires that the depreciation expense is recorded for each month or
fraction thereof.

(R)  REAPPRAISALS

          This account records reappraisals of available for sale investments
with low exchange volume or which are unquoted, property and equipment, real
estate and works of art and culture.

          Valuations are subject to the accounting policy for each type of
asset.

(S)  INTERBANK FUNDS PURCHASED AND REPURCHASE AGREEMENTS

          This account records funds obtained by the Bank from other financial
institutions to satisfy transient liquidity needs. These transactions have a
maximum term of thirty (30) calendar days, except the operations with the
Colombian Central Bank. Purchases not repaid within that term are reclassified
as bank loans and other financial obligations.

          The difference between present value (cash received) and future value
(repurchase price) is a financial expense.

(T)  DEFERRED INCOME

          This account records deferred income and income received in advance in
the course of business. Amounts recorded in this account are amortized over the
period to which they relate or in which the services are rendered.

          The capitalization of yields on restructured loans that have been
recorded in memorandum accounts or as charge - off loan balances is included
here as indicated in Note 2 (j).

(U)  BONDS

          Credit institutions are authorized by the Superintendency of Finance
(before Superintendency of Banking) to issue or place ordinary bonds or general
collateral bonds. In any case, every time a new issue is planned, the
Superintendency of Finance must be informed of the total value, series, number
of bonds, date of issue, term and frequency of payment, the corresponding
return, the place and form of payment of said return as duly provided for by
applicable legislation.


                                      F-38



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          The bonds issued are recorded in the National Register of Securities
for all legal effects and may be subject to a public offer without any need for
further authorization from the Superintendency of Finance.

          The term for repaying the bonds issued, either partially or totally,
may not be less than one (1) year and these shall cease to yield a return as of
the date established for collecting said payment.

          At December 31, 2001, Conavi, having been duly authorized by FOGAFIN -
the Colombian Guarantee Fund for Financial Institutions, issued convertible
bonds, subscribed in their entirety by FOGAFIN, for the purpose of strengthening
Conavi's equity, as provided for by Article 6 of Resolution 006 of 2001 issued
by FOGAFIN. Conavi's shareholders undertook to repurchase such bonds, upon
paying off the loan made by FOGAFIN in full. The financial cost, on December 31,
2005 was 9.35% (Effective Annual Rate - E.A.R.). At December 31, 2004 this came
to 10.73% (E.A.R.).

(V)  DEFERRED CREDIT TAX

          This is a tax that is deferred due to the temporary differences
between commercial income and taxable income. This tax is canceled upon
reverting the differences giving rise to said tax.

(W)  RETIREMENT PENSIONS

          The Bank and its Subsidiary Almacenar S.A. apply the provisions in
Decree 1517 of 1998, which requires a distribution of charges to amortize the
actuarial calculation by 2010. As of December 31, 2005, the Bank has amortized
the total actuarial calculation.

(X)  ACCRUALS AND PROVISIONS

          The Bank and its Subsidiaries record provisions to cover estimated
liabilities, such as fines, sanctions, litigations and lawsuits where:

          -    The Bank has acquired a right, and therefore an obligation

          -    Payment may be demanded or is probable, and

          -    The provision is justifiable, quantifiable and verifiable

          This account also records estimates for taxes.


                                      F-39



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

(Y)  RECOGNITION OF INTEREST REVENUE

          Interest revenue is recognized in current earnings as it accrues.
Interest is suspended when due and there is a doubt regarding its
collectibility.

(Z)  CONTINGENT ACCOUNTS

          These accounts record operations in which the Bank and its
Subsidiaries acquire rights or assume obligations conditioned by possible future
events with varying degrees of probability, such as definite, possible or
remote. Likewise, they include financial yields as of when loan portfolio and
financial lease interest entry into the statement of operations is suspended.
Contingent accounts are included in the caption memorandum accounts of the
balance sheet.

(AA) MEMORANDUM ACCOUNTS

          These accounts record third party operations whose nature does not
affect the financial situation of the Bank. They also include tax memorandum
accounts that record the figures used in preparing tax returns, internal control
or management information and reciprocal operations between the Bank and its
Subsidiaries.

(BB) NET INCOME PER SHARE

          To determine net income per share, the Bank uses the weighted average
of the number of shares outstanding during the accounting period. For the
periods ended December 31, 2004 and 2005, the weighted average of the Bank's
outstanding shares was 576,695,395 and 652,882,756, respectively.

(CC) ASSET AND LIABILITY MANAGEMENT

          The Bank evaluates asset and liability management and
off-balance-sheet positions, estimating and controlling the level of exposure to
major market risks, in order to provide protection against losses due to
possible variations in asset or liability values.

(DD) CAPITAL ADEQUACY

          Capital Adequacy for Banks is required to be not less than 9% of their
total credit risk weighted assets and credit contingencies. Under Decree 1720 of
2001 calculation of capital adequacy must incorporate market risk in addition to
the credit risk. This new risk for capital adequacy requirement was covered 100%
in 2004 and 2005. Calculations are made each month on an unconsolidated basis
and in June and December on consolidated accounts which include the Bank's
financial Subsidiaries in Colombia and abroad.


                                      F-40



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          As of June 2004 when Decree 2061 was issued, modifications to Decree
1720 of 2001 were set forth that provide new rules for calculating mandatory
convertible bonds and currency-linked bonds in the additional equity of credit
institutions, as well as modifications to the classification and weighting of
mortgage loans, derivative operations and securities from securitization
processes.

          As of December 31, 2004 and 2005 the capital adequacy ratio was 13.44%
and 10.93%, respectively.

(EE) LEGAL RESERVE

          According to Colombian law, credit institutions must constitute a
legal reserve that will amount to at least fifty percent (50%) of the subscribed
capital, formed with ten percent (10%) of the net income of each period.

(FF) CONVENIENCE TRANSLATION TO U.S. DOLLARS

          The Bank maintains its accounting records and prepares its financial
statements in Colombian pesos. The U.S. dollar amounts presented in the
financial statements and accompanying notes have been converted from peso
figures solely for the convenience of the reader at the exchange rate of Ps
2,284.22 per US$ 1, which is approximately the exchange rate, in effect at
December 31, 2005. This translation may not be construed to represent that the
Colombian peso represents or has been or could be converted into U.S. dollars at
that or any other rate.

(GG) INCOME TAX

          The income tax is determined as follows: from the ordinary and
extraordinary income realized in the period, that being susceptible of produce
net increase of shareholders' equity in the moment they incurred and, that have
not been excepted, are reduced returns, reductions and discounts to obtain net
income. As appropriated, realized costs that have a direct relation with income
are reduced to determine income before taxes. Deductions are applied to income
before taxes to obtain the taxable income for the ordinary system.

          For purposes of income tax, it is presumed that the taxable income is
not lower than 6% of shareholder's equity at the last day of the immediately
previous taxable period. The excess of taxable income determined under the
ordinary system over presumed income becomes taxable income to which the
statutory tax rate applies.

          When income tax is paid on presumed income, the difference between
this and the income tax calculated under ordinary system can be adjusted in the
following five years.

          Deferred income taxes are generally recognized for timing differences
for commercial and manufacturing subsidiaries. For financial companies, the
Superintendency of Finance (before Superintendency of Banking) has restricted
inclusion of timing differences related to the


                                      F-41



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

amortization of fiscal losses and the excess of presumed income over ordinary
income as a deferred tax asset.

(HH) BUSINESS COMBINATION

          Upon a business combination, the purchase method of accounting
requires that (i) the purchase price be allocated to the acquired assets and
liabilities on the basis of their book value, (ii) the statement of income of
the acquiring company for the period in which a business combination occurs
include the income of the acquired company as if the acquisition had occurred on
the first day of the reporting period and (iii) the costs directly related to
the purchase business combination not be considered as a cost of the
acquisition, but deferred and amortized over a reasonable period as determined
by management.

          The pooling of interest method of accounting requires the aggregate of
the shareholder's equity of the entities included in the business.

          Conavi and Corfinsura acquisition was accounted for using the pooling
of interests method in accordance with the methodology suggested by the
Superintendency of Finance. Sufinanciamiento acquisition was accounted for using
the purchase method under Colombian GAAP.

          The line merger effect in the consolidated statement of stockholder's
equity under Colombian GAAP includes the difference between the issuance of
shares and the carring amount of the net asset acquired from Conavi and
Corfinsura.

(3)  TRANSACTIONS IN FOREIGN CURRENCY

          The Superintendency of Banking (now Superintendency of Finance) sets
limits on the amount of foreign-currency assets and liabilities. The Bank was in
compliance with the subject rules as of December 31, 2004 and 2005.

          Substantially all foreign currency holdings are in U.S. dollars. The
consolidated foreign currency assets and liabilities of the Bank at December 31,
2004 and 2005 were as follows:



                                                 2004           2005
                                             ------------   ------------
                                                      
ASSETS:
Cash and due from banks                       US$  73,391   US$   81,327
Overnight funds                                   180,720        213,897
Investment securities                             562,723        786,733
Loans                                             825,371      1,734,049
Customers' acceptances                           (203,714)      (500,176)
Accounts receivable                                13,574         47,351
Premises and equipment, net                         2,433         21,625



                                      F-42



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



                                                 2004           2005
                                             ------------   ------------
                                                      
Other assets                                        3,379         40,933
                                             ------------   ------------
   TOTAL FOREIGN CURRENCY ASSETS             US$1,457,877   US$2,425,739
                                             ------------   ------------
LIABILITIES:
Deposits                                        1,176,207      1,155,250
Bank acceptances outstanding                       21,121         21,071
Borrowings from domestic development banks            815         90,234
Interbank borrowings                              103,058        746,630
Other liabilities                                  12,682        243,266
                                             ------------   ------------
   TOTAL FOREIGN CURRENCY LIABILITIES           1,313,883      2,256,451
                                             ------------   ------------
   NET FOREIGN CURRENCY ASSET POSITION       US$  143,994   US$  169,288
                                             ============   ============


          The Bank's unconsolidated net foreign currency asset position amounted
to US$ 209,513 and US$ 308,272 at December 31, 2004 and 2005, respectively. The
Bank has the required net foreign currency position within the legal terms.

          At December 31, 2004 and 2005, the Subsidiaries Bancolombia Panama
S.A. and Bancolombia Cayman had 67.85% and 51.09% of the consolidated assets in
foreign currency and 83.31% and 48.15% of the consolidated liabilities in
foreign currency, respectively.

(4)  CASH AND DUE FROM BANKS

          The balances of cash and due from banks at December 31, 2004 and 2005
consisted of the following:



                                                          2004         2005
                                                      ----------  ------------
                                                             
COLOMBIAN PESO DENOMINATED:
Cash                                                  Ps 492,243   Ps  740,615
Due from the Colombian Central Bank                       52,830       279,909
Due from domestic banks                                   25,770        15,237
Remittances of domestic negotiated checks in transit      22,625        19,991
Provision                                                   (339)          (86)
                                                      ----------  ------------
   TOTAL LOCAL CURRENCY                                  593,129     1,055,666
                                                      ----------  ------------
FOREIGN CURRENCY:
Cash                                                      77,304        20,999
Due from the Colombian Central Bank                        8,514         5,379
Due from foreign banks                                    85,465       153,106
Remittances of foreign negotiated checks in transit        4,276         6,299
Provision                                                   (174)          (14)
                                                      ----------  ------------
   TOTAL FOREIGN CURRENCY                                175,385       185,769
                                                      ----------  ------------
   TOTAL CASH AND DUE FROM BANKS                      Ps 768,514  Ps 1,241,435
                                                      ==========  ============



                                      F-43


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          Reserves against transactions and time deposits with the Colombian
     Central Bank amounted to Ps 516,648 and Ps 1,098,712 at December 31, 2004
     and 2005, respectively. The restriction, which is prescribed by the
     Colombian Central Bank, is based on a percentage of deposits maintained at
     the Bank by its customers.

(5)  INVESTMENT SECURITIES

          Investment securities at December 31, 2004 and 2005 consisted of the
     following:



                                            2004          2005
                                       ------------  ------------
                                                
TRADING SECURITIES
COLOMBIAN PESO DENOMINATED:
Colombian government                   Ps 1,223,762  Ps 3,305,131
Colombian Central Bank                          261            15
Government entities                          65,478        44,674
Financial institutions                      564,115     1,044,838
Corporate bonds                              19,930        64,228
Other marketable equity securities           68,316       192,535
                                       ------------  ------------
   TOTAL COLOMBIAN PESO DENOMINATED       1,941,862     4,651,421
                                       ------------  ------------
FOREIGN CURRENCY DENOMINATED:
Colombian government                        282,897       136,111
Government entities                         150,961            --
Financial institutions                           --       664,223
   Total foreign currency denominated       433,858       800,334
                                       ------------  ------------
   Total trading securities               2,375,720     5,451,755
                                       ------------  ------------
Allowance for trading securities                (53)       (1,100)
                                       ------------  ------------
   TRADING SECURITIES, NET             Ps 2,375,667  Ps 5,450,655
                                       ============  ============


          The foreign currency denominated securities issued or secured by the
     Colombian government are bonds denominated in U.S. dollars, purchased at
     par value, with annual average interest rates of 4.60% and 5.68% for 2004
     and 2005, respectively.

          The Bank had pledged investments securities of Ps 787,957 and Ps
     1,723,109 as collateral to secure lines of credit at international banks,
     domestic development banks and other financial institutions as of December
     31, 2004 and 2005, respectively.

          The Bank sold Ps 118,823,601 and Ps 234,428,554 of investment
     securities during the years ended December 31, 2004 and 2005, respectively.


                                      F-44



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



                                                    2004          2005
                                               ------------  ------------
                                                        
   AVAILABLE FOR SALE - DEBT SECURITIES
COLOMBIAN PESO DENOMINATED:
Colombian government                           Ps 1,279,564   Ps  897,155
Financial institutions                               14,687        27,655
Other marketable equity securities                       --         3,434
                                               ------------  ------------
   TOTAL LOCAL CURRENCY DENOMINATED               1,294,251       928,244
                                               ------------  ------------
FOREIGN CURRENCY DENOMINATED:
Colombian government                                289,584       496,726
Financial institutions                              114,322       339,633
Other marketable equity securities                  245,528        77,953
                                               ------------  ------------
   TOTAL FOREIGN CURRENCY DENOMINATED               649,434       914,312
                                               ------------  ------------
   TOTAL AVAILABLE FOR SALE - DEBT SECURITIES  Ps 1,943,685  Ps 1,842,556
                                               ------------  ------------




                                               PARTICIPATION                   PARTICIPATION
                                               PERCENTAGE AT                   PERCENTAGE AT
                                             DECEMBER 31, 2004      2004     DECEMBER 31, 2005      2005
                                             -----------------   ---------   -----------------   ---------
                                                                                     
   AVAILABLE FOR SALE - EQUITY SECURITIES
"Conavi" Banco Comercial y de Ahorro               28.52%        Ps 88,681            --          Ps    --
Todo Uno Services                                  39.05%           52,152         38.86%           49,849
Corporacion Financiera Suramericana S.A.
   Corfinsura                                       4.61%           55,749            --                --
Urbanizacion Chico Oriental No. 2 Ltda             24.37%            7,848         24.37%            7,848
Carreteras Nacionales del Meta S.A.                 8.44%            5,615          8.44%            5,509
Sociedad Administradora de Fondos de
   Pensiones y de Cesantias Proteccion S.A.         7.42%            7,014         23.44%           19,481
Sociedad de Servicios Tecnicos y
   Administrativos Multienlace S.A.                48.60%            6,957            --                --
Fideicomiso  Devinorte                             10.31%            5,277         10.31%            5,277
Concesiones CCFC S.A.                              25.50%            4,358         25.50%            4,358
Venrepa C.A.                                       99.62%            2,697         99.62%            2,578
Banco Latinoamericano de exportaciones
   BLADEX S.A.                                      0.20%            2,183          0.20%            2,131
Deposito Centralizado de Valores de
   Colombia Deceval S.A.                            6.98%            1,527         11.38%            2,954
Compania de Inversiones Bogota S.A.                13.00%              653            --                --
3001 S.A. in the process
   of being wound up)                               5.85%              955            --                --
Urbanizacion Sierras del Chico Ltda                 0.55%              203          0.55%              203
Concesiones Urbanas S.A.                           33.32%            8,446         33.32%            8,449
Titularizadora Colombia S.A.                          --                --         21.25%           11,162
Promotora la Alborada                                 --                --         25.81%           14,001
Compania Suramericana de Inversiones
   S.A. Surainversiones                               --                --          0.73%           64,672
Redeban Red Multicolor                                10%              700         20.36%            4,396



                                      F-45


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



                                               PARTICIPATION                   PARTICIPATION
                                               PERCENTAGE AT                   PERCENTAGE AT
                                             DECEMBER 31, 2004      2004     DECEMBER 31, 2005      2005
                                             ----------------- -----------   -----------------  ----------
                                                                                     
Terminal Maritimo Muelles El Bosque                 7.01%            3,390          7.01%            3,390
Muelles El Bosque Operadores Portuarios             7.93%            1,242          7.93%            1,242
Sutecnologia                                          --                --         49.00%              343
Cadenalco S.A. Titularizacion                       3.33%            2,490          3.33%            2,490
Bolsa de Valores de Colombia                          --                --          8.54%            2,628
Other                                                                4,943                           4,520
                                                                ----------                      ----------
   TOTAL EQUITY SECURITIES                                         263,080                         217,481
Allowance for other-than-temporary
   impairment in value                                             (60,685)                        (67,532)
                                                                ----------                      ----------
   EQUITY SECURITIES, NET                                       Ps 202,395                      Ps 149,949
                                                                ==========                      ==========


          Dividends received from equity investments amounted to Ps 30,734, Ps
     30,546 and Ps 42,731 for the years ended December 31, 2003, 2004 and 2005,
     respectively.

          Most of the equity investments were classified as Category "A". The
     following investments are classified in categories other than "A":



                                                  2004                   2005
                                          --------------------   --------------------
                                                     VALUATION              VALUATION
                                          CATEGORY   ALLOWANCE   CATEGORY   ALLOWANCE
                                          --------   ---------   --------   ---------
                                                                
Todo Uno Services                             D      Ps 48,153       D      Ps 45,872
Urbanizacion Chico Oriental No. 2 Ltda.       E          7,848       E          7,848
Urbanizacion Sierras del Chico Ltda.          E            203       E            203
Industria Colombo Andina Inca S.A.            E            300       E            300
Venrepa C.A.                                  E          2,697       E          2,578
3001 S.A. (in the process of
   being wound up)                            E            955      --             --
Sociedad Portuaria San Andres                 E              3       E              3
Sociedad Promotora Siderurgica
   Colombiana E.U.                            E            387       E            534
Tesicol                                       E              4      --             --
Promotora La Alborada                        --             --       E          9,897




                                             2004         2005
                                         ----------   -----------
                                                
HELD TO MATURITY SECURITIES
COLOMBIAN PESO DENOMINATED:
Colombian government                     Ps 424,731   Ps 873,679
Government entities                           3,719           --
Financial institutions                       47,276       55,757
Other                                         2,999       16,147
                                         ----------   ----------
   TOTAL HELD TO MATURITY SECURITIES        478,725      945,583



                                      F-46



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



                                             2004         2005
                                          ---------   -----------
                                                
FOREIGN CURRENCY DENOMINATED:
Colombian government                        233,040        34,876
Financial institutions                        6,195         5,955
Other                                        15,391        34,965
                                          ---------   -----------
   TOTAL FOREIGN CURRENCY DENOMINATED       254,626        75,796
                                          ---------   -----------
                                            733,351     1,021,379
                                          ---------   -----------
Allowance for other-than-temporary
   impairment in value                       (4,887)       (4,836)
                                          ---------   -----------
   TOTAL HELD TO MATURITY SECURITIES,
      NET                                 Ps728,464   Ps1,016,543
                                          =========   ===========


(6)  LOANS AND FINANCIAL LEASES

          The following represents the classification of the total loan
     portfolio and financial lease contracts as of December 31, 2004 and 2005 in
     accordance with the provisions of the Superintendency Banking (now
     Superintendency of Finance):

                                DECEMBER 31, 2004



                                                                                          FINANCIAL
           CLASSIFICATION             MORTGAGE    COMMERCIAL     CONSUMER    SMALL LOAN     LEASES        TOTAL
           --------------             --------   -----------   -----------   ----------   ---------   ------------
                                                                                    
"A" Normal Risk                       Ps56,067   Ps6,803,951   Ps1,560,599    Ps81,859    Ps824,922   Ps 9,327,398
"B" Acceptable Risk                          3       251,638        36,752       2,979       29,587        320,959
"C" Appreciable Risk                        --        58,548        14,719       1,208       18,700         93,175
"D" Significant Risk                        --       176,448        21,804         864        5,228        204,344
"E" Unrecoverable                           37        63,371        21,192       3,090        1,673         89,363
                                      --------   -----------   -----------    --------    ---------   ------------
   TOTAL LOANS AND FINANCIAL
      LEASES(1)                       Ps56,107   Ps7,353,956   Ps1,655,066    Ps90,000    Ps880,110   Ps10,035,239
                                      ========   ===========   ===========    ========    =========   ============


----------
(1)  On October 23, 2003, the Superintendency of Banking (now Superintendency of
     Finance) through its External Circular 040, modified the treatment of
     financial leases. Since January 1, 2004 it is accounted for as part of the
     loan portfolio.

                                DECEMBER 31, 2005



                                                                                               FINANCIAL
           CLASSIFICATION               MORTGAGE     COMMERCIAL     CONSUMER     SMALL LOAN      LEASES        TOTAL
           --------------             -----------   ------------   -----------   ----------   -----------   ------------
                                                                                          
"A" Normal Risk                       Ps1,359,428   Ps11,099,403   Ps2,286,217    Ps106,654   Ps2,507,379   Ps17,359,081
"B" Acceptable Risk                        62,670        400,804        58,154        2,650       113,853        638,131
"C" Appreciable Risk                       23,846        125,473        26,963        1,242        25,410        202,934
"D" Significant Risk                        5,158        206,023        33,638          869         6,947        252,635
"E" Unrecoverable                          12,335        117,798        32,755        3,616         6,967        173,471
                                      -----------   ------------   -----------    ---------   -----------   ------------
   TOTAL LOANS AND FINANCIAL LEASES   Ps1,463,437   Ps11,949,501   Ps2,437,727    Ps115,031   Ps2,660,556   Ps18,626,252
                                      ===========   ============   ===========    =========   ===========   ============



                                      F-47


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

               Promissory notes by means of which loans amounting to Ps
     1,129,825 and Ps 1,352,071 at December 31, 2004 and 2005, respectively,
     have been documented were duly endorsed to domestic development banks, as
     required for laws regulating such type of loans.

               The following represents a summary of restructured loans as of
     December 31, 2004 and 2005:



                                          2004         2005
                                      -----------   ----------
                                              
Ordinary restructurings               Ps 406,964    Ps 424,781
Extraordinary restructurings              13,060         8,526
Under law 550                             61,255        74,558
Under law 617                            156,617       184,317
Creditor agreement proceedings             9,793        12,472
Performance Agreement                      3,420         2,844
Interest and other receivable items        9,767         8,726
                                      ----------    ----------
                                         660,876       716,224
Allowances for loan losses              (205,074)     (256,041)
                                      ----------    ----------
   NET OF RESTRUCTURED LOANS          Ps 455,802    Ps 460,183
                                      ==========    ==========


(7)  ALLOWANCE FOR LOANS, FINANCIAL LEASES AND ACCRUED INTEREST LOSSES

               An analysis of the activity in the allowance for loans and
     financial leases losses during the years ended December 31, 2003, December
     31, 2004 and December 31, 2005 is as follows:



                                                                        2003        2004         2005
                                                                     ----------   ---------   ----------
                                                                                     
Balance at beginning of year                                         Ps  332,324  Ps387,263   Ps 434,378
Balance at beginning of year (Conavi, Corfinsura and subsidiaries)            --          --      236,013
Balance at beginning of year (Sufinanciamiento)                           11,854         --           --
Allowance for financial lease reclassification (1)                           --       7,002           --
Provision                                                                286,170    186,480      374,744
Charge-offs                                                            (112,393)    (55,032)    (115,455)
Effect of changes in exchange rate                                         (284)    (12,751)      (3,955)
Decrease on allowance for securitization                                     --          --      (11,947)
Recoveries                                                             (130,408)    (78,584)    (207,896)
                                                                     ----------   ---------   ----------
Balance at end of year                                               Ps 387,263   Ps434,378   Ps 705,882
                                                                     ==========   =========   ==========
Ratio of charge-offs to average outstanding loans                          1.61%       0.62%        0.66%
                                                                     ==========   =========   ==========


----------
(1)  On October 23, 2003, the Superintendency of Banking (now Superintendency of
     Finance) through its External Circular 040, modified the treatment of
     financial leases. Since January 1, 2004 they are accounted for as part of
     the loan portfolio.


                                      F-48



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

               The activity in the allowance for accrued interest losses during
     the year ended December 31, 2003, 2004 and 2005 is as follows:



                                                                        2003       2004       2005
                                                                     ---------   --------   ---------
                                                                                   
Balance at beginning of year                                         Ps 15,074   Ps 5,170   Ps  4,603
Balance at beginning of year (Conavi, Corfinsura and subsidiaries)          --         --       9,609
Balance at beginning of year (Sufinanciamiento)                            769         --          --
Allowance for financial lease reclassification (1)                                    473          --
Provision                                                                5,316      4,483      12,379
Charge-offs                                                             (4,089)    (2,072)     (4,657)
Recoveries                                                             (11,897)    (3,332)    (13,267)
Effect of changes in exchange rate                                          (3)      (119)        (12)
                                                                     ---------   --------   ---------
Balance at end of year                                               Ps  5,170   Ps 4,603   Ps  8,655
                                                                     =========   ========   =========


----------
(1)  On October 23, 2003, the Superintendency of Banking (now Superintendency of
     Finance) through its External Circular 040, modified the treatment of
     financial leases. Since January 1, 2004 they are accounted for as part of
     the loan portfolio.

(8)  CUSTOMER ACCEPTANCES AND DERIVATIVES

               The Bank's rights and commitments from derivatives operations as
     of December 31, 2004 and December 31, 2005 were as follows:



                                                                2004         2005
                                                             ----------   ---------
                                                                    
CUSTOMER ACCEPTANCES
Current                                                      Ps  64,515   Ps 62,282
Overdue                                                           1,979         704
                                                             ----------   ---------
TOTAL                                                            66,494      62,986
                                                             ----------   ---------
DERIVATIVES
(Fair value of derivatives instruments)
NEXT DAY OPERATIONS
Foreign exchange rights contracts to buy                         94,891         296
Foreign exchange rights contracts to sell                         9,122       1,630
Financial instruments rights to buy (local currency)              2,451      14,805
Financial instruments rights to sell (Local currency)                         3,010
                                                             ----------   ---------
   Total rights                                                 106,464      19,741
                                                             ----------   ---------
Foreign exchange commitments contracts to buy                   (95,133)       (295)
Foreign exchange commitments contracts to sell                   (9,102)     (1,614)
Financial instruments commitments to buy (local currency)        (2,448)    (14,756)
Financial instruments commitments to sell (local currency)           --      (3,006)
                                                             ----------   ---------
   Total obligations                                           (106,683)    (19,671)
                                                             ----------   ---------



                                      F-49


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



                                                                 2004           2005
                                                             ------------   ------------
                                                                      
   TOTAL NEXT DAY OPERATIONS                                         (219)            70

FORWARD CONTRACTS
Foreign exchange rights contracts to buy                        2,988,149      2,284,278
Foreign exchange rights contracts to sell                       4,142,648      3,304,346
Financial instruments rights to buy (local currency)              338,543        956,244
Financial instruments rights to sell (local currency)             273,656        821,967
Other rights                                                        2,385             --
                                                             ------------   ------------
   Total rights                                                 7,745,381      7,366,835

Foreign exchange commitments contracts to buy                  (3,078,485)    (2,372,882)
Foreign exchange commitments contracts to sell                 (4,076,909)    (3,184,882)
Financial instruments commitments to buy (local currency)        (336,544)      (950,569)
Financial instruments commitments to sell (local currency)       (275,713)      (824,432)
                                                             ------------   ------------
   Total obligations                                           (7,767,651)    (7,332,765)
                                                             ------------   ------------
   TOTAL FORWARD CONTRACTS                                        (22,270)        34,070
                                                             ------------   ------------

FUTURES CONTRACTS
Foreign exchange rights contracts to buy                     Ps    14,578   Ps    14,860
Foreign exchange rights contracts to sell                          52,723          9,151
Financial instruments rights to buy (local currency)                   --          9,394
Financial instruments rights to sell (local currency)                  --          9,412
                                                             ------------   ------------
   Total rights                                                    67,301         42,817
                                                             ------------   ------------

Foreign exchange commitments contracts to buy                     (14,578)       (14,860)
Foreign exchange commitments contracts to sell                    (52,723)        (9,151)
Financial instruments commitments to buy (local currency)              --         (9,394)
Financial instruments commitments to sell (local currency)             --         (9,412)
                                                             ------------   ------------
   Total obligations                                              (67,301)       (42,817)
                                                             ------------   ------------
   TOTAL FUTURE CONTRACTS                                              --             --
                                                             ------------   ------------

SWAPS
Foreign exchange right contracts                                       --        765,046
Interest rate rights contracts                                      8,227         33,248
Foreign exchange commitments contracts                                 --       (729,238)
Interest rate commitments contracts                                (8,338)       (32,633)
                                                             ------------   ------------
   TOTAL SWAPS                                                       (111)        36,423
                                                             ------------   ------------

OPTIONS
Foreign exchange call options                                          --            (18)
Foreign exchange put options                                           --           (111)
                                                             ------------   ------------
   TOTAL OPTIONS                                                       --           (129)
                                                             ------------   ------------
                                                             ------------   ------------
      TOTAL CUSTOMER ACCEPTANCES AND DERIVATIVES             Ps    43,894   Ps   133,420
                                                             ------------   ------------



                                      F-50



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          The Bank currently has an investment portfolio in local and foreign
     currencies that allows it to offer foreign exchange and interest rate
     coverage to its clients. By using derivatives, the Bank hedges exchange
     risk and protects its foreign-currency investment portfolio. These
     derivatives help protect the Bank against exchange-rate fluctuation and
     increase the predictability of the Bank's yield on foreign-currency
     investments.

          The Bank derivatives' policy is to maintain active and passive
     positions with clients with the intent to reduce interest rate and exchange
     rate risk as much as possible. Within the amount of credit granted to the
     Bank's clients there is a portion for the management of derivatives.

          For this reason, the Bank never carries out any operation of this type
     unless the client has the capacity to obtain a credit from the Bank.

          Under the rules of the Superintendency of Banking, the Bank's
     derivatives portfolio is marked to market daily. Unrealized gains and
     losses are expressed in the statement of operations.

          For forward contracts as of December 31, 2005, the average cost of
     rights and commitments relating to the purchase of financial instruments is
     8.73% with an average maturity of 8 days and the average yield from rights
     and commitments relating to the sale of financial instruments is 6.79% with
     an average maturity of 2 days.

          The average yield from rights and commitments relating to the sale of
     foreign currency as of December 31, 2005 is 2.38% annually with an average
     maturity of 101 days. The average yield from rights and commitments
     relating to the purchase of foreign currency is 1.57% annually with an
     average maturity of 72 days.

          The rates and the maturities indicated for forward contracts are the
     same for futures contracts.

          The average value of hedging portfolio during the year 2005 was US$
     3,578 and the average yield was 1.03%.

(9)  ACCOUNTS RECEIVABLE

          As of December 31, 2004 and 2005, accounts receivable consisted of the
     following:



                                       2004        2005
                                     --------   ---------
                                          
Credit card compensation             Ps90,417   Ps242,225
Overnight funds sold                      668         836
Commissions                             8,875      17,561
Sierras del Chico y Chico Oriental      3,098       3,462
REFCO                                      --      53,036
Sale of Abocol and Subsidiaries            --      27,770
Renting                                   448         727



                                      F-51


                        BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



                                                                2004        2005
                                                             ---------   ---------
                                                                   
Advances to contractors and honoraries                          12,923      81,064
Commitment seller                                                3,183      10,639
Warehousing services                                             9,135       8,134
Dividends                                                          632       1,319
Services and properties sells                                   34,102      58,250
Employee advances                                                  273         267
Banco de Comercio Exterior de Colombia ("Bancoldex")               900         900
Fondo de Garantias de Instituciones Financieras ("Fogafin")      8,139      26,167
Other receivables                                               15,922      88,940
                                                             ---------   ---------
   TOTAL ACCOUNTS RECEIVABLE                                   188,715     621,297
Allowance for accounts receivable losses                       (14,840)    (30,984)
                                                             ---------   ---------
   ACCOUNTS RECEIVABLE                                       Ps173,875   Ps590,313
                                                             =========   =========


          The activity in the allowance for accounts receivable during the years
     ended December 31, 2003, 2004 and 2005 is as follows:



                                                    2003       2004       2005
                                                  --------   --------   --------
                                                               
Balance at beginning of year                      Ps 7,140   Ps15,367   Ps14,840
Provision for uncollectible amounts                 13,303      6,923     25,121
Charge-offs                                         (1,474)    (2,292)    (7,851)
Balance at beginning of year (Sufinanciamiento)        593         --         --
Effect of exchange rate                                 --         --       (163)
Reversal of provision and recoveries (1)(2)         (4,195)    (5,158)      (963)
                                                  --------   --------   --------
Balance at end of year                            Ps15,367   Ps14,840   Ps30,984
                                                  ========   ========   ========


----------
(1)  Includes lease reclassification required by Superintendency of Banking (now
     Superintendency of Finance) by External Circular 048 of 2004 and
     liquidation of CTI Cargo Company.

(2)  For 2005, includes addition of Conavi, Corfinsura and Suleasing, in this
     way includes reversal of Abocol, Sociedad Portuaria Mamonal, Fertillanos
     and Abocol Costa Rica.

(10) PREMISES AND EQUIPMENT

          At December 31, 2004 and December 31, 2005 premises and equipment
     consisted of the following:



                                       2004          2005
                                    ----------   -----------
                                           
PREMISES AND EQUIPMENT
Land                                Ps  49,357   Ps   65,750
Buildings                              212,036       305,895
Warehouses                              29,663        18,352
Furniture, equipment and fixtures      126,099       191,189



                                      F-52



                        BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



                                       2004          2005
                                    ----------   -----------
                                           
Computer equipment                     199,196       370,532
Vehicles                                 4,281         7,231
Construction in progress                17,415            54
Machinery and equipment                 70,070        14,956
Equipment in - transit(1)               38,113       210,920
                                    ----------   -----------
Total                                  746,230     1,184,879
Less accumulated depreciation         (375,069)     (537,454)
Allowance                              (24,918)      (23,696)
                                    ----------   -----------
   PREMISES AND EQUIPMENT, NET      Ps 346,243   Ps  623,729
                                    ==========   ===========


----------
(1)  Includes goods being imported to be allocated to leasing.

          Premises and equipment depreciation expense for the years ended
     December 31, 2003, December 31, 2004 and December 31, 2005, amounted to
     Ps37,738, Ps42,832 and Ps79,293 respectively.

(11) OPERATING LEASES

          At December 31, 2004 and 2005 operating leases consisted of the
following:



                                      2004        2005
                                    --------   ---------
                                         
OPERATING LEASES
Machinery and equipment             Ps 1,358   Ps  1,989
Vehicles                               2,273     172,745
Furniture, equipment and fixtures         --       3,428
Computer equipment                    10,396      27,550
Real goods                                --       1,505
                                    --------   ---------
   TOTAL                              14,027     207,217
Rents                                    243       4,229
Less accumulated depreciation         (5,878)    (66,169)
Allowance                                (81)     (1,303)
                                    --------   ---------
   OPERATING LEASES, NET            Ps 8,311   Ps143,974
                                    ========   =========


          Operating lease depreciation expense for the years ended December 31,
     2003, 2004 and 2005, amounted to Ps2,887, Ps4,040 and Ps8,340
     respectively.


                                      F-53


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

(12) PREPAID EXPENSES AND DEFERRED CHARGES

          At December 31, 2004 and December 31, 2005, prepaid expenses and
     deferred charges consisted of the following:



                                                   2004       2005
                                                 --------   --------
                                                      
PREPAID EXPENSES:
Insurance premiums                               Ps 5,242   Ps13,677
Interest                                               59         30
Other                                               1,199        913
                                                 --------   --------
   TOTAL PREPAID EXPENSES                           6,500     14,620
                                                 --------   --------
DEFERRED CHARGES:
Studies and projects                                  204      1,669
Computer programs                                   6,726      5,971
Remodeling                                            593          7
Leasehold improvements                                815      1,017
Deferred taxes non-banking entities                   240        958
Stationery and supplies                               239        424
Contributions                                           5         --
Other                                                 628      2,232
                                                 --------   --------
   TOTAL DEFERRED CHARGES                        Ps 9,450   Ps12,278
                                                 --------   --------
   TOTAL PREPAID EXPENSES AND DEFERRED CHARGES   Ps15,950   Ps26,898
                                                 ========   ========


(13) OTHER ASSETS

          At December 31, 2004 and December 31, 2005 other assets consisted of
     the following:



                                                      2004        2005
                                                   ---------   ---------
                                                         
OTHER ASSETS:
Value added tax deductible and withholding taxes   Ps111,532   Ps 37,708
Investment in Trust                                   53,349      70,764
Deposits                                              20,543      89,564
Assets to place in lease contracts                    70,746     352,079
Inventory                                             52,202       5,295
Other                                                  7,022       8,178
                                                   ---------   ---------
   TOTAL OTHER ASSETS                              Ps315,394   Ps563,588
                                                   =========   =========



                                      F-54



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

(14) GOODWILL

          The activity of the goodwill during the years ended December 31, 2003,
     December 31, 2004 and December 31, 2005 is as follows:



                                                     2003        2004        2005
                                                  ---------   ---------   ---------
                                                                 
Balance at beginning of year                      Ps118,903   Ps 99,910   Ps 73,607
Balance at beginning of year (Sufinanciamiento)       4,433          --          --
Additions                                            36,347          --          --
Amortization (2)                                    (59,773)    (26,303)    (22,648)
                                                  ---------   ---------   ---------
Balance at end of year (1)                        Ps 99,910   Ps 73,607   Ps 50,959
                                                  =========   =========   =========


----------
(1)  In the Annual Report of year 2003, goodwill was included in the line
     "prepaid expenses, deferred charges and other assets" of the consolidated
     balance sheet. For year 2004, goodwill is disclosed independently.

(2)  As of December 31, 2003, included the amortization of the goodwill derived
     from: merger with Banco de Colombia, the acquisition of Sufinanciamiento
     and the increase in the participation on Fiducolombia.

(15) FORECLOSED ASSETS

          At December 31, 2004 and December 31, 2005, foreclosed assets
     consisted of the following:



                                     2004         2005
                                  ----------   ----------
                                         
Equity securities                 Ps  54,866   Ps  52,273
Real estate                           95,637      179,498
Other assets                           2,568        4,765
                                  ----------   ----------
   TOTAL                             153,071      236,536
Allowance                           (140,865)    (205,176)
                                  ----------   ----------
   TOTAL FORECLOSED ASSETS, NET   Ps  12,206   Ps  31,360
                                  ==========   ==========


          The following is a summary of equity securities classified as
     foreclosed assets:



                                        2004       2005
                                      --------   --------
                                           
Urbanizacion Sierras del Chico Ltda   Ps11,567   Ps11,567
Chico Oriental Numero 2 Ltda.           14,053     14,053
Pizano S.A.                              3,663      3,663
Convertible Securities Pizano S.A.       3,221      3,221
Lineas Agromar trust                     1,399      1,547
Emcocables 2 Santa Ana trust               837      1,752



                                      F-55


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



                         2004       2005
                       --------   --------
                            
Pagos Procampo trust      7,044      7,044
Textiles Fabricato        4,313        297
Conconcreto S.A.          2,622      2,622
Holguines Cali               --      1,485
Other                     6,147      5,022
                       --------   --------
   TOTAL               Ps54,866   Ps52,273
                       ========   ========


          The activity of the valuation allowance for foreclosed assets during
     the years ended December 31, 2003, December 31, 2004 and December 31, 2005
     is as follows:



                                                     2003        2004        2005
                                                  ---------   ---------   ---------
                                                                 
Balance at beginning of year                      Ps107,871   Ps135,090   Ps140,865
Balance at beginning of year (Conavi,
   Corfinsura and subsidiaries)                          --          --      65,814
Balance at beginning of year (Sufinanciamiento)         222          --          --
Provision                                            32,458      23,002      44,665
Charge-offs                                              --          --        (772)
Recoveries                                           (5,461)    (17,227)    (45,445)
Reclassifications                                        --          --          52
Effect of changes in exchange rates                      --          --          (3)
                                                  ---------   ---------   ---------
Balance at the end of year                        Ps135,090   Ps140,865   Ps205,176
                                                  =========   =========   =========


(16) REAPPRAISAL OF ASSETS

          The following describes reappraisals of assets at December 31, 2004
     and December 31, 2005:



                                            2004        2005
                                         ---------   ---------
                                               
Asset revaluations                       Ps267,941   Ps330,915
Less: proportional equity revaluations    (198,072)   (196,159)
Less: minority interests                   (27,632)    (24,277)
                                         ---------   ---------
   TOTAL EQUITY REVALUATIONS             Ps 42,237   Ps110,479
                                         =========   =========


          The proportional equity revaluations refer to the acquisition of
     investments in Colcorp S.A., Almacenar S.A., Leasing Colombia S.A.,
     Fiducolombia S.A., Suvalor S.A., Sufinanciamiento S.A., Banco Corfinsura
     Internacional Inc, Multienlace S.A., 3001 S.A. (in the process of being
     wound up) and affiliates calculated on acquisition date. Consolidation
     rules require this value to be unchanged while the investment is held or
     no new acquisitions are made.


                                      F-56



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

(17) INTERBANK BORROWINGS

          Interbank borrowings, primarily denominated in U.S. dollars, at
     December 31, 2004 and 2005 are summarized as follows:



                   2004        2005
                ---------   -----------
                      
FOREIGN BANKS
Short-term      Ps137,965   Ps1,381,696
Long-term         108,317       323,772
                ---------   -----------
   TOTAL        Ps246,282   Ps1,705,468
                =========   ===========


          Short-term interbank borrowings, obtained from other banks for
     liquidity purposes, are unsecured and generally have maturities ranging
     from 90 to 180 days.

          Interest rates on U.S. dollar denominated short-term borrowings from
     foreign banks averaged 2.65% and 3.62% in 2004 and 2005, respectively.

          For long term interbank borrowings, the average interest rate was
     2.26% and 3.70% in 2004 and 2005, respectively, and maturities at December
     31, 2005 were as follows:



          2005
       ---------
    
2006   Ps196,566
2007      67,273
2008      59,933
       ---------
       Ps323,772
       =========


(18) BORROWINGS FROM DOMESTIC DEVELOPMENT BANKS

          The Colombian government has established programs to promote the
     development of specific sectors of the economy. These sectors include
     foreign trade, agriculture, tourism and many other industries. These
     programs are under the administration of the Colombian Central Bank and
     various government entities.

          Under such programs, the Bank receives a loan request from an
     applicant operating in a designated economic sector. The Bank then performs
     a full credit analysis of the applicant based upon its normal credit
     criteria. If such criteria are met, the Bank applies to the appropriate
     government agency for funding. The government agency reviews the loan
     application to determine its compliance with policy objectives and may also
     perform an independent credit analysis of the applicant. Upon approval, the
     agency disburses funds to the Bank. The Bank, in turn, disburses the loan
     to its customer and assumes all credit risk.


                                      F-57



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          These loans generally bear interest from 3% to 6% above the average
     rates paid by domestic banks on short-term time deposits. Loan maturities
     vary depending on the program (ranging from one to ten years). The Bank
     funds approximately 0% to 15% of the total loan balance, with the remainder
     being provided by the respective government agencies. Loans to customers
     are in the same currency and maturities as the borrowings from the
     agencies.

          As of December 31, 2004 and December 31, 2005, borrowings from
     domestic development banks received from certain Colombian government
     agencies consisted of the following:



                                                          2004         2005
                                                       ---------   -----------
                                                             
Fondo para el Financiamiento del Sector Agropecuario   Ps216,631   Ps  383,904
Banco de Comercio Exterior de Colombia ("Bancoldex")     334,855       957,511
Findeter                                                 220,820       612,297
Other                                                     85,613       268,371
                                                       ---------   -----------
   TOTAL                                               Ps857,919   Ps2,222,083
                                                       =========   ===========


          Interest rates on borrowings from domestic development banks averaged
     8.38% and 7.03% in 2004 and 2005, respectively, in local currency and 7.45%
     and 5.12% in 2004 and 2005, respectively, in foreign currency. Maturities
     at December 31, 2005 were as follows:


                   
2006                  Ps  448,774
2007                      286,707
2008                      424,452
2009                      318,946
2010                      377,837
2011 and thereafter       365,367
                      -----------
   TOTAL              Ps2,222,083
                      ===========


(19) OTHER LIABILITIES

          As of December 31, 2004 and December 31, 2005, other liabilities
     consisted of the following:



                                                                 2004      2005
                                                               -------   --------
                                                                   
Unearned income                                                Ps8,760   Ps15,373
Accrued severance Law 50, net of advances                        5,033     14,453
Accrued severance pre-Law 50, net of advances to employees
   of Ps 11,652 and Ps 11,354 in 2004 and 2005, respectively    12,378     13,259
Accrued payroll and other severance benefits                    23,413     37,707



                                      F-58


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



                                                      2004        2005
                                                   ---------   ---------
                                                         
Accrued pension obligations net of deferred cost      86,353      88,682
Negative goodwill                                      1,426       9,959
Deferred interest on restructured loans               45,286      56,974
Deferred tax liability                                 1,112     100,353
Advances                                              42,080     103,213
Other                                                  7,091      19,995
                                                   ---------   ---------
   TOTAL                                           Ps232,932   Ps459,968
                                                   =========   =========


               Unearned income consists of prepayments of interest by customers.
     Terms for the prepayment of interest are established when the loan is
     originated. Unearned income is generally amortized on a straight-line basis
     over the term for which interest has been prepaid.

               Colombian labor regulations entitle each employee hired before
     January 1, 1991 to severance pay in an amount equal to such employee's last
     monthly salary multiplied by the number of years in service. The Bank
     increases the accrued liability for such severance benefits whenever an
     employee's salary is increased. To allow greater flexibility in labor
     contracts, the Colombian government enacted Law 50 in 1990, which, among
     other things, permits companies to negotiate a waiver of the retroactivity
     component of severance pay with their employees. In August 1994, the Bank
     and its executive employees agreed on a plan, which waived the
     retroactivity component of severance pay.

               In accordance with the Colombian Labor Code, employers must pay
     retirement pensions to employees who fulfill certain requirements as to age
     and time of service. However, the Social Security Institute and other
     private funds have assumed a large portion of this obligation.

     Pension obligation

               The following is an analysis of the Bank's pension obligations
     for the years ended December 31, 2003, December 31, 2004 and December 31,
     2005:



                                            PROJECTED
                                             PENSION
                                            LIABILITY   DEFERRED COST      NET
                                            ---------   -------------   ---------
                                                               
BALANCE AT DECEMBER 31, 2002                Ps 78,563     Ps(10,241)    Ps 68,322
                                            =========     =========     =========
Adjustment per actuarial valuation             10,120       (10,120)           --
Benefits paid                                  (9,245)           --        (9,245)
Pension expense                                    --        19,501        19,501
                                            ---------     ---------     ---------
BALANCE AT DECEMBER 31, 2003                Ps 79,438     Ps   (860)    Ps 78,578
                                            =========     =========     =========
Adjustment per actuarial valuation             17,064       (17,064)           --
Benefits paid                                  (9,364)           --        (9,364)
Pension expense                                    --        17,139        17,139
                                            ---------     ---------     ---------



                                      F-59



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



                                            PROJECTED
                                             PENSION
                                            LIABILITY   DEFERRED COST      NET
                                            ---------   -------------   ---------
                                                               
BALANCE AT DECEMBER 31, 2004                Ps 87,138     Ps   (785)    Ps 86,353
                                            =========     =========     =========
Balance at beginning of year (Corfinsura)         356            --           356
Decrease for Abocol sale                       (5,292)          785        (4,507)
Reclassification                                  (51)           --           (51)
Adjustment per actuarial valuation             16,715       (16,715)           --
Benefits paid                                 (10,184)           --       (10,184)
Pension expense                                    --        16,715        16,715
                                            ---------     ---------     ---------
BALANCE AT DECEMBER 31, 2005                Ps 88,682     Ps     --     Ps 88,682
                                            =========     =========     =========


          The present value of the obligation for pensions as of December 31,
     2003, 2004, and 2005 was determined on the basis of actuarial calculations
     in conformity with Colombian law. The significant assumptions utilized in
     the actuarial calculations for the years ended December 31, 2003 2004 and
     2005 were as follows:



                            2003    2004    2005
                           -----   -----   -----
                                  
Discount rate              23.03%  21.23%  19.06%
Future pension increases   15.33%  13.72%  12.01%


(20) LONG TERM-DEBT

          The scheduled maturities of long term-debt at December 31, 2005 are as
follows:


                   
2006                  Ps  675,001
2007                      457,396
2008                      195,622
2009                      203,282
2010                      105,281
2011 and thereafter        11,730
                      -----------
                      Ps1,648,312
                      ===========


          Long term debt consists of bonds issued by Bancolombia
     (unconsolidated), Leasing Colombia S.A., Fundicom S.A., Sufinanciamiento
     S.A. and by Surenting S.A. bearing interest at the following rates:


                                      F-60



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



         BANCOLOMBIA S.A.
----------------------------------
Issue Date   Maturity Date    Rate
----------   -------------   -----
                       
  1997(1)      03-Sep-07     13.38%
  2000(1)      30-Nov-02      8.96%
  2001(1)      04-Apr-07      8.96%
  2001         20-Dec-10      9.35%
  2002(1)      21-Jun-10      8.59%
  2004         11-Feb-06      8.31%
  2004         11-Feb-07      9.14%
  2004         11-Feb-07      8.64%
  2004         11-Feb-09      9.98%
  2004         11-Feb-09      9.03%


(1)  Each of this issues has a different nominal rate; for this reason annual
     rates showed above are calculated based on the interest accrued in 2005.

                             LEASING COLOMBIA S.A.



Issue Date       Maturity Date                         Rate
----------       -------------                         ----
                              
   2001      From 18 to 60 months    Up to an annual rate of the DFT plus 3%
   2002      From 18 to 72 months    Up to an annual rate of the DFT plus 3%
   2003      From 12 to 60 months   Up to DFT annual rate + 5.00% annual rate
                                     Up to CPT - 12.00% annual effective rate
   2004      From 18 to 60 months                   DTF or CPI
   2004      From 18 to 60 months                   DTF or CPI


                                 FUNDICOM S.A.



Issue Date   Maturity Date   Rate
----------   -------------   ----
                       
 10-Aug-03     10-Aug-15      CPI


                             SUFINANCIAMIENTO S.A.



Issue Date   Maturity Date     Rate
----------   -------------   -------
                       
 11-Mar-04     11-Mar-14     CPI + 2%
 29-Nov-05     06-Dec-15     CPI + 2%


                                 SURENTING S.A.


Issue Date   Maturity Date      Rate
----------   -------------   ----------
                       
 30-Aug-00     30-Aug-07     CPI + 9.49%
 28-Jan-03     28-Jan-08     CPI + 7.25%
 28-Jan-03     28-Jan-06      DTF + 2.5%
 28-Jan-03     28-Jan-07        DTF + 3%
 28-Jan-03     28-Jan-09      CPI + 6.7%


----------
DTF: Average weekly rate of time deposits (issued by commercial and mortgage
     banks and commercial finance companies) with a maturity of 90 days.

CPI: Consumer price index


                                      F-61


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

(21) ACCRUED EXPENSES

          As of December 31, 2004 and December 31, 2005, accrued expenses
     consisted of the following:



                            2004        2005
                          --------   ---------
                               
Interest payable          Ps 1,046   Ps     --
Income tax payable          10,547      41,125
Fines and sanctions (1)     38,829      64,486
Labor obligations            7,617       9,643
Other                       13,610      15,605
                          --------   ---------
   TOTAL                  Ps71,649   Ps130,859
                          ========   =========


----------
(1)  See Note 26(d) as it refers to the Bank.

          For 2003, 2004 and 2005 the statutory income tax was 37% for
     Bancolombia unconsolidated, Leasing Colombia S.A., Colcorp S.A. and
     Fiducolombia S.A. according to an agreement of tax stability and 38.5% for
     the other Subsidiaries, respectively.

          The Bank's tax liability is calculated based on the greater of (i) net
     taxable income and (ii) presumed income, which, in 2004 and 2005 is 6% of
     stockholders' equity.

          The following is a reconciliation of taxable income before income
     taxes for the years ended December 31, 2003, December 31, 2004 and December
     31, 2005:



                                                          2003         2004          2005
                                                       ----------   ----------   -----------
                                                                        
Income before income taxes                             Ps 532,019   Ps 817,488   Ps1,224,396
Adjustments for consolidation purposes, net               (26,722)     209,987        37,032
Difference between net operating loss
   carry-forwards and presumed income                      16,404     (134,715)        8,149
Non-deductible provisions, costs and expenses             107,926      176,454       130,528
Non-taxable or exempt income                              (71,559)    (350,338)     (364,663)
Difference between monetary correction for
   tax purposes and for financial reporting purposes      (40,040)     (47,484)      (38,028)
Excess of accrued income over valuation income            (50,514)     (20,905)     (130,265)
Amortization of excess of presumed income over
   ordinary income                                       (298,180)      (9,242)      (94,562)
Valuation derivatives effect                                   --      (11,788)     (100,495)
Other                                                          --           --      (156,122)
                                                       ----------   ----------   -----------
Taxable income                                         Ps 169,334   Ps 629,457   Ps  515,970
                                                       ----------   ----------   -----------
Statutory tax rate                                          36.84%       37.75%        34.69%
                                                       ----------   ----------   -----------
Estimated current income tax                           Ps  62,391   Ps 237,620   Ps  178,992
Deferred income tax expense (benefit)                         244        1,190        98,523
                                                       ----------   ----------   -----------
   TOTAL                                               Ps  62,635   Ps 238,810   Ps  277,515
                                                       ==========   ==========   ===========



                                      F-62



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          Income taxes for the years ended December 31, 2004 and 2005 are
     subject to review by the tax authorities. The Bank management and its legal
     advisors believe that no significant liabilities in addition to those
     recorded will arise from such a review.

          The following table presents, for the fiscal years cited, which
     amortizations of losses can be recorded and the excess of presumed income
     over ordinary income:

                            FISCAL LOSSES TO AMORTIZE



       INMOBILIARIA
        BANCOL S.A.   FUNDICOM S.A.   COMECOL S.A.    TOTAL
       ------------   -------------   ------------   -------
                                         
2006       Ps--          Ps  267         Ps  154     Ps  421
2007         --               --             915         915
2008         --            2,378             550       2,928
2009         91               --             497         588
2010         --               --              --          --
          -----         --------        --------    --------
          Ps 91         Ps 2,645        Ps 2,116    Ps 4,852
          =====         ========        ========    ========


                EXCESS OF PRESUMED INCOME OVER ORDINARY INCOME



       BANCOLOMBIA                  INMOBILIARIA   FUNDICOM   COMECOL   ALMACENAR   SURENTING
           S.A.      COLCORP S.A.    BANCOL S.A.     S.A.       S.A.       S.A.        S.A.       TOTAL
       -----------   ------------   ------------   --------   -------   ---------  ----------  ----------
                                                                        
2006     Ps    --       Ps   --         Ps --       Ps  669   Ps   --    Ps   --     Ps   --    Ps    669
2007       25,554            --            --           153       461         --          --       26,168
2008       29,795         3,667            --           894       390      1,621          --       36,367
2009       35,931         4,430            63           535       335      2,403       1,718       45,415
2010           --            --            99            --        --      2,354          --        2,453
        ---------      --------        ------      --------  --------   --------    --------   ----------
        Ps 91,280      Ps 8,097        Ps 162      Ps 2,251  Ps 1,186   Ps 6,378    Ps 1,718   Ps 111,072
        =========      ========        ======      ========  ========   ========    ========   ==========



          As a result of the Merger, amortization of the excess of presumed
     income over ordinary income originated in Conavi and Corfinsura for
     Ps 25,266 and Ps 66,014 respectively, can be recorded by Bancolombia.

(22) SUBSCRIBED AND PAID-IN CAPITAL



           Subscribed and paid-in capital consisted of the following:



                                                          2003          2004           2005
                                                      -----------   -----------   -------------
                                                                         
AUTHORIZED SHARES                                     670,000,000   670,000,000   1,000,000,000
                                                      ===========   ===========   =============
ISSUED AND OUTSTANDING:
Common shares with a nominal value of 500 pesos       398,259,608   398,259,608     509,704,584
Preference shares with a nominal value of 500 pesos   178,435,787   178,435,787     218,122,421
                                                      ===========   ===========   =============



                                      F-63



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          Non-voting shares with a preferred dividend will be entitled to
     receive a minimum preferred dividend equal to one percent (1%) of the
     initial offering price per preferred share for each fiscal year the bank
     reports profits after the Bank deducts an amount to compensate for any
     losses that affected its capital and any necessary contribution to a
     reserve account that must be made by law, and in compliance with Colombian
     regulation, but before the Bank creates or increases any other reserve. In
     addition, the dividend per share paid on preferred stock cannot be less
     than the dividend per share paid on ordinary stock (and will be increased
     if a higher dividend on ordinary stock is declared).

          Each non-voting share with preferred dividend confers on its holder
     the right to participate in the shareholders' meetings and to vote solely
     on the matters provided for by law and in the By-laws.

          A foreign capital institutional investment fund in Colombia has been
     constituted to hold certain non-voting preferred shares issued by the Bank
     as custodian and American Depositary Shares (ADSs) related to those
     non-voting preferred shares have been issued abroad.

(23) APPROPRIATED RETAINED EARNINGS

          Pursuant to Colombian law, 10% of the net income of the Bank and its
     Colombian Subsidiaries in each year must be appropriated with a credit to a
     "legal reserve fund" until its balance is equivalent to at least 50% of the
     subscribed capital. This legal reserve may not be reduced to less than the
     indicated percentage, except to cover losses in excess of undistributed
     earnings.

          The component "other" in the consolidated statements of stockholders'
     equity corresponds to the Subsidiaries' retained earnings that are not
     eliminated in the consolidation process, because the investment in the
     subsidiaries is accounted for at cost.

          Appropriated retained earnings consist of the following:



                                  2003         2004          2005
                               ---------   -----------   -----------
                                                
Legal reserve                  Ps497,075   Ps  638,716   Ps  886,159
Additional paid - in capital     107,359       107,359       268,005
Other reserves                   135,920       264,406       611,834
                               ---------   -----------   -----------
   TOTAL                       Ps740,354   Ps1,010,481   Ps1,765,998
                               =========   ===========   ===========


          In addition, paid-in capital of Ps 107,359 at December 31, 2003, 2004
     and Ps 268,005 at December 31, 2005 was recorded as part of the legal
     reserve, as required by the Superintendency of Finance (before
     Superintendence of Banking).


                                      F-64


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

(24) DIVIDENDS DECLARED

          The Bank's shareholders declared common stock dividends with respect
     to the preceding year's earnings of the Bank to be payable during 2004,
     2005 and 2006 as indicated below:



                                               2004                          2005                          2006
                                   ---------------------------   ---------------------------   ---------------------------
                                                                                      
Preceding  year's unconsolidated
   earnings (losses)                                 Ps309,772                    Ps 430,807                     Ps737,389

                                   272 pesos per share payable   376 pesos per share payable   508 pesos per share payable
                                   in four quarterly             in four quarterly             in four quarterly
                                   installments of 68 pesos      installments of 94 pesos      installments of 127 pesos
Dividends in cash                  per share from April 2004     per share from April 2005     per share from April 2006
                                   on 398,259,608 and            on 398,259,608 and            on 509,704,584 and
                                   178,435,787 common and        178,435,787 common and        218,122,421 common and
                                   preferred shares,             preferred shares,             preferred shares,
                                   respectively.                 respectively.                 respectively.

Total dividends declared                             Ps156,861                    Ps 216,838                     Ps369,736

Dividends payable at December 31                     Ps 44,099                      Ps73,478


(25) MEMORANDUM ACCOUNTS

          At December 31, 2004 and 2005, memorandum accounts consisted of the
     following:



                                                2004           2005
                                            ------------   ------------
                                                     
TRUST:
   Investment trusts                        Ps14,551,133   Ps31,845,679

COMMITMENTS:
   Unused credit card limits                   1,721,090      2,287,359
   Civil demands against the Bank              1,982,256      2,148,018
   Issued and confirmed letters of credit        421,643        493,220
   Uncommitted lines of credit                   347,833        549,161
   Bank guarantees                               137,375        347,556
   Approved credits not disbursed                 17,824        408,949
   Nation account payable (546 law)                   --        105,459
   Other                                           1,250         12,201
                                            ------------   ------------
      TOTAL                                 Ps19,180,404   Ps38,197,602
                                            ============   ============



                                      F-65



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

OTHER MEMORANDUM ACCOUNTS:



                                                           2004            2005
                                                       ------------   -------------
                                                                
MEMORANDUM ACCOUNTS RECEIVABLE:
   Tax value of assets                                 Ps12,383,426   Ps 25,950,846
   Assets and securities given in custody                 3,985,019       6,837,310
   Assets and securities given as a collateral              934,208       2,209,380
   Negotiable investments in debt securities              2,143,814       5,199,740
   Written-off assets                                       638,654         935,438
   Quotas of leasing to receive                           1,082,024       3,030,656
   Investments held to maturity                             767,261       1,113,369
   Adjustments for inflation of assets                      217,785         181,512
   Accounts to receive yields trading investments
      in debt titles                                        165,073         214,358
   Investments available for the sale in debt titles      1,672,536       1,587,299
   Remittances sent for collection                           27,259          28,869
   Amortized debt securities investment                          --       2,209,254
   Other memorandum account receivable                    1,265,149       2,998,143
                                                       ------------   -------------
      TOTAL                                            Ps25,282,208   Ps 52,496,174
                                                       ------------   -------------

MEMORANDUM ACCOUNTS PAYABLE:
   Assets and securities received as collateral        Ps 8,406,554   Ps 17,714,293
   Qualification commercial loans                         7,459,747      12,113,735
   Assets and securities received in custody              1,776,613       1,867,850
   Tax value of shareholders' equity                      2,205,064       4,333,289
   Qualification consumer loans                           1,653,473       2,449,782
   Adjustment for inflation of equity                       490,297         897,280
   Qualification small loans                                 91,168         116,508
   Merchandise in owned warehouses                           66,339          61,545
   Merchandise in third-party warehouses                     47,026          48,048
   Underwriting                                                  --          25,000
   Qualification financial leasing                          887,669       2,684,627
   Qualification operating leasing                            8,392         145,277
   Qualification mortgage loans                                 291       1,415,812
   Other memorandum account payable                      10,677,192       4,028,713
                                                       ------------   -------------
      TOTAL                                            Ps33,769,825   Ps 47,901,759
                                                       ------------   -------------
      TOTAL MEMORANDUM ACCOUNTS                        Ps78,232,437   Ps138,595,535
                                                       ============   =============



                                      F-66



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

(26) COMMITMENTS AND CONTINGENCIES

     THE BANK

     A)   CONTINGENCIES COVERED BY FOGAFIN:

          During the privatization process of Banco de Colombia (which merged
     with and into the Bank in 1998), completed on January 31, 1994, the Fogafin
     made a commitment to assume the cost of contingent liabilities resulting
     from events that occurred before the date when the stock was sold, that
     should be claimed within the five (5) subsequent years. Fogafin's guarantee
     covers eighty percent (80%) of the first Ps 10,000, discounting allowances,
     and thereafter, one hundred percent (100%), all annually adjusted according
     to the consumer price index.

          As established in the guarantee contract, Banco de Colombia committed
     to transfer to the Fogafin all the rights that it then had in Sierras del
     Chico Ltda. and Chico Oriental Numero Dos Ltda. for an amount no lesser
     than the book value as of December 31, 1993, including inflation
     adjustments and excluding any valuations. A judicial process was initiated
     questioning the validity and binding effect of the commitment to transfer
     these rights to Fogafin, but no final ruling has been made.

          At December 31, 2004 and 2005, the civil contingencies covered by the
     guarantee amounted to approximately Ps 12,185 and Ps 11,167, respectively,
     with allowances at the same dates amounting to Ps 1,370 and Ps 957. Labor
     contingencies amount to Ps 305 and have allowances of Ps 153 respectively;
     these figures show no variation with respect to 2004.

     B)   LEGAL PROCESSES

          At December 31, 2004 and 2005, other than the litigation discussed
     under (a) above, there were labor-related claims against the Bank amounting
     to approximately Ps 10,015 and Ps 11,885, respectively (the final result of
     such litigation is not predictable due to the controvertible nature of the
     obligations). The allowances for contingencies on those dates amounted to
     Ps 4,911 and Ps 5,938, respectively.

          At December 31, 2004 and 2005, there were ordinary civil lawsuits,
     group actions, and civil actions within criminal and executive processes
     against the Bank with total claims of approximately Ps 301,823 and Ps
     369,452, respectively and with allowances on the same dates of Ps 4,327 and
     Ps 16,729, respectively.

          Allowances are recorded when processes are ruled in the first instance
     against the Bank or based on the opinion of the attorneys handling the
     litigations.

          At December 31, 2005, the Superintendency of Finance (before
     Superintendency of Banking) has imposed fines on the Bank amounting to Ps
     1,738, for which complete allowances have been created.


                                      F-67



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          At December 31, 2005, Bancolombia (unconsolidated) contingencies in an
     amount over Ps 5,000 was:



                                                                             ACTUAL
                                                                           EXPOSURE AT
                                                              INITIAL     DECEMBER 31,
                          PROCESS                             EXPOSURE        2005       ALLOWANCE   LIKELIHOOD
                          -------                            ----------   ------------   ---------   ----------
                                                                                         
Arbitration process Jaime Gilinski and Others against
   Bancolombia and some of its administrators                US$675,000   US$720,000            --     Remote
Felix Gaitan Cendales and others. Civil Court 29 of Bogota   Ps 187,045   Ps 187,045            --     Remote
Popular action Carlos Julio Aguilar and Other
   Administrative Tribunal of the Department
   of Valle                                                      22,040       22,040            --     Remote
Rodrigo Garavito and others against Bancolombia
   Administrative Tribunal of the Department of Cundimarca       20,000       20,000            --     Remote
Class action Luis Alberto Duran (1)                             421,080       21,469        21,469    Probable
Vizcaya Centro Comercial S.A.                                    14,000       14,000            --     Remote
Pavicon                                                          11,166       12,552            --     Remote
Inversiones C.B. S.A.                                            12,468       12,468            --     Remote
Editorial Oveja Negra Ltda. and Jose Vicente Katerain
   Velez                                                         10,240       10,240           512     Remote
Murgueitio and Santander                                          8,000        8,000            --     Remote
Invico Ltda. Processes. Civil Court 9 of Bogota                   5,000        6,601            --     Remote
Costrucc.Rojas Jimenez & CIA. S. EN C.                            6,277        6,277           628    Probable
Julio Enrique Olaya. Civil Court 14 of Bogota                     1,523        5,594         5,594    Probable
Constructodo against Corvivienda. Civil Court 18 of Bogota        3,500        5,070            --     Remote
Jaime Augusto Rueda Angel. Civil Court 29 of Bogota               1,706        8,660            --     Remote
Income and complementary taxes 1996                               2,409        7,332         7,332    Probable
Income and complementary taxes 1996                               2,341        6,087         3,044    Probable


----------
(1)  The allowance correspond to principal and interest


                                      F-68


                        BANCOLOMBIA S.A. AND SUBSIDIARIES
                  Notes to Consolidated Financial Statements
         (Stated in millions of pesos and thousands of U.S. dollars)

     C)   CONTINGENCIES RELATED TO THE PURCHASE OF 51% OF FORMER BANCO DE
          COLOMBIA S.A. ("BANCO DE COLOMBIA") STOCK AND LATER MERGER WITH BANCO
          INDUSTRIAL COLOMBIANO ("BIC", NOW BANCOLOMBIA)

     The Gilinski Case

     Contingency guarantee, former Banco de Colombia

          With respect to the arbitration process filed by Bancolombia against
     Jaime Gilinski, as joint and several debtor, discovery is soon expected,
     addressing the claims presented by the Bank regarding the contingencies of
     former Banco de Colombia, and putting into effect the trust guarantee set
     up for this purpose, covering a value of up to US$ 30,000. The total amount
     claimed in this arbitration process is of approximately Ps 50,614,
     excluding monetary adjustment and interest.

     Criminal Investigation

          On December 26, 2003, the Special Unit for Crime against Public
     Administration attached to the Public Prosecutor's Office formally rejected
     grounds for a criminal investigation against Jorge Londono Saldarriaga and
     Federico Ochoa Barrera, President and Vice-president of Bancolombia,
     respectively; this criminal investigation arose as a result of a complaint
     filed by the Gilinski family. This decision was subsequently confirmed in
     the second instance by the Delegated Unit before the Supreme Court of
     Justice of the Public Prosecutor's Office on July 8, 2004.

          The Public Prosecutor's Office found that the alleged crimes of fraud,
     unauthorized operations with shareholders and the illegal use of public
     funds had not been committed and consequently the Bank was fully exonerated
     from the indemnity claims filed by the plaintiffs.

          In 2005, Messrs. Jaime and Isaac Gilinski filed before the Civil
     Division of the Supreme Court of Justice, a writ for the protection of
     rights against the Public Prosecutor's Office, the Delegated Prosecutor's
     Office before the Supreme Court of Justice and the National Unit of
     Prosecutors Specialized in Crimes Against Public Administration, with a
     view to reopening the investigation arguing that certain evidence,
     collected abroad, was not taken into consideration when first pronouncing
     upon this case, thereby constituting a de facto prevention of due process.

          By means of a final court ruling issued on August 25, 2005, the Civil
     Appeal Division of the Court rejected this writ for protection of rights,
     considering that the Public Prosecutor's Office, upon resolving this point
     in the second instance, considered that the evidence requested by the
     Public Ministry was not relevant to the investigation, which was precisely
     what was being alleged by the plaintiffs' attorney. The plaintiffs
     therefore lodged an appeal against this decision before the Labor Division
     of the Supreme Court, who upheld the original decision given the fact that
     a writ for the protection of rights cannot be filed against court rulings.

          The writ of protection was selected by the Constitutional Court for
     review and a decision in this respect remains pending.


                                      F-69



                        BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     Arbitration

          With regard to the arbitration resorted by Jaime Gilinski and Isaac
     Gilinski and some foreign successor companies of Bancol y cia S. en C.
     against the Bank and some of its administrators, in which charges similar
     to those previously filed with various administrative and judicial agencies
     were alleged, relating to the acquisition process of the majority share of
     the former Banco de Colombia by BIC, and the later merger of these two
     institutions. The period for producing evidence ended on November 22, 2005,
     after which the final arguments were heard. A decision is now pending.

          The cause of action consists of the declaration of the inefficacy of
     BIC's acquisition of the majority share in the capital of the former Banco
     de Colombia, and as secondary causes of action, the declaration that the
     contract with the commitment to purchase and sell entered into by and
     between the parties is absolutely null and void and does not even exist,
     that the acquisition of the Banco de Colombia GDS's and Notes is absolutely
     null and void, the declaration of the Bank liability regarding the damages
     caused by alleged fraudulent operations and fraudulent representations
     regarding the above-mentioned contract; and the last secondary cause of
     action if none of the above should prosper was the declaration that the
     Bank had defaulted on the above-mentioned contract.

          The Bank considers that the possibility of incurring any liability
     from this proceeding is remote, given the fact that the legal action lacks
     legal and probatory support, and considering that there have been prior
     court pronouncements that have exonerated the Bank and its administrators
     from similar petitions or petitions related to the petitions made in this
     proceeding.

     Class Action Luis Alberto Duran Valencia

          As of December 31, 2005, the Bogota Supreme Court decision is still
     pending on the special appeal for annulment filed by the Bank regarding
     reviewing the effective regulations on the decision proffered by
     arbitration following the class action filed by Luis Alberto Duran Valencia
     and other shareholders of the former Banco de Colombia.

          The appeal solely seeks to annul the portion of the award that is
     questioned, and that has to do with the court order to pay Ps 19,214, since
     with respect to the rulings regarding the rest of the claims, the award
     carries a res judicata status.

          The Bank considers that a liability to be incurred by the Bank, is
     unlikely given the existence of serious arguments that may lead to a
     decision that would acknowledge some of the grounds invoked in the appeal
     for annulment. The Bank has an allowance in the amount of Ps 21,470, as it
     awaits the definitive decision regarding this matter.


                                      F-70



                        BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     Popular Action Maximiliano Echeverri M

          With respect to the popular action filed by the attorney Maximiliano
     Echeverri against the Bank and the Superintendency of Banking and
     Securities Superintendency (now known as the Superintendency of Finance)
     before the Contentious-Administrative Tribunal in the Department of
     Cundinamarca, a final ruling was produced on August 10, 2005, rejecting the
     claims of the plaintiff.

          The cause of action of this legal action is the declaration of
     violation of the group interests for administrative morality and free
     economic competition, due to alleged omissions by the Colombian state
     supervision and control agencies in the acquisition process of the former
     Banco de Colombia and the later merger with BIC, and alleged Bank maneuvers
     to prevent the shareholders of the first institution from having all of the
     information they required to make the decisions at hand. The appeal filed
     by the plaintiff shall be heard by the Council of State, and the
     contingency is considered to be somewhat remote, since the merger and
     purchase process was carried out in full compliance with all applicable
     legislation and following the highest business ethics.

     D) NATIONAL TAX AND CUSTOMS AGENCY ("DIAN")

     Income and complementary taxes corresponding to 1993 - Conavi

          Conavi filed a tax return on April 15, 1994 for the fiscal year of
     1993, showing a tax figure of Ps 6,233 and prepayments of Ps 5,194 for a
     total of Ps 11,427. In answer to an official notification received from
     DIAN, Conavi proceeded to correct its tax return, showing a tax figure of
     Ps 6,233 and prepaid tax of Ps 5,929 for a total of Ps 12,162, this being
     Ps 735 higher than that initially calculated.

          Subsequently DIAN notified Conavi of an order to pay Ps 257, including
     interest and bringing the amount in arrears up to date, to which Conavi
     proposed an exception from payment, which was declared as having no grounds
     by the Collection Division.

          Conavi then proceed to file an appeal for reversal. The suit filed by
     Conavi for the purpose of annulling the order to pay was rejected by the
     Administrative Tribunal of the Department of Antioquia, a decision that was
     confirmed on appeal before the Council of State, by means of a ruling
     issued November 23, 2005, ordering its return to the tribunal. The sum in
     dispute totals Ps 940, including the tax in question plus default interest.
     A provision has been set up for this entire amount.


                                      F-71



                        BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     Industry and Commerce Tax corresponding to 1995 - Conavi

          On April 9, 1996, Conavi filed its Industry and Commerce Tax return on
     the basis of 1995, for the fiscal year of 1996 and subsequent payment in
     this same period. The Medellin City Council, by means of Settlement Review
     Note No. 586 dated May 22, 1998, modified said return on the basis that the
     discount totaling Ps 30,200 from the monetary correction account was not
     legally authorized. Conavi filed a motion to annul this decision and
     reestablish its right, since the aforementioned discount was authorized by
     Article 20 Subsection 7 of the Municipal Agreement 061/89 and in Article
     212 of Decree 1333 of 1986. The provision of Ps 363 was set up for this tax
     contingency, which is considered probable.

     Income and complementary taxes corresponding to 1996 former Banco de
     Colombia

          For the taxable year 1996, when determining the income tax and
     complementary taxes, the former Banco de Colombia requested that donations
     to universities be considered deductions and a tax discount at the same
     time. DIAN proceeded to reject the deduction of the mentioned donations,
     arguing that this constituted dual benefit on one sole economic item, and
     it deemed that was not allowed pursuant to applicable law.

          On April 4, 2000, the Bank filed with the Honorable Cundinamarca
     Administrative Court a legal action to declare null and reestablish the
     right against administrative acts that modify private liquidation. On April
     26, 2001, the Honorable Court proffered its decision not granting the
     Bank's petitions. Due to the above, an appeal was filed with the Honorable
     Council of State on September 18, 2001. On August 9, 2002, the Honorable
     Council of State revoked the first instance sentence; it annulled the
     sanction due to inaccuracy and confirmed the greater tax officially
     settled, not because of the simultaneous nature of the benefits, but
     because of the destination of the resources that the Bank had donated. On
     September 24, 2002, a special petition for reconsideration against the
     sentence was filed with the Open Court of the Honorable Council of State.
     This sentence is still pending pronouncement.

          On July 30, 2003 the Bank reached a conciliation agreement with DIAN,
     under the terms in 2002 Law 788 Article 98, and paid the sum of Ps 2,538,
     but on February 26, 2004, the Honorable Council of State rejected the
     request to approve the conciliation agreement entered into by the parties,
     and that unfavorable decision was later confirmed for a regular petition
     for reconsideration.

          The allowance that was constituted is Ps 7,332. The contingency is
     deemed probable because the Honorable State Council Open Court seldom
     revokes sentences that its regional courts proffer.


                                      F-72



                        BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     Income and complementary taxes corresponding to 1996 - Conavi

          On April 11, 1997, Conavi filed a tax return for fiscal year of 1996,
     and included under the heading "Discounts and Requested Deductions" a sum
     of Ps 9,568 corresponding to donations to non-profit institutions dedicated
     to providing education, based on the provisions of Article 125 and in
     keeping with standards set out in the Tax Code. After a thorough
     discussion, DIAN accepted the donation discount but rejected the deductions
     and fined Conavi for not providing precise information. Conavi filed a
     motion to annul this decision and reestablish its right before the
     Administrative Tribunal of Antioquia, who ruled in favor of Conavi. The
     Legal Tax Division attached to the National Tax Administration of Medellin
     filed an appeal against this ruling, which is currently being heard by the
     Council of State for subsequent ruling.

          A provision of Ps 3,044 was set up for this tax contingency, which is
     considered remote.

     Industry and Commerce Tax corresponding to 1997 - Conavi

          Conavi filed its Industry and Commerce Tax return in Medellin on the
     basis of 1997 (for the fiscal year of 1998 for subsequent payment in this
     same period) and included figures for taxable operating income which
     coincided with the information reported by the Superintendency of Banking
     (now Superintendency of Finance) to Medellin City Council. The Municipal
     Tax Division notified Conavi of a special requirement, by means of which it
     intended to increase its tax base by Ps 233 given income from other towns
     as well as Ps 45,981 corresponding to the value of nontaxable monetary
     correction. Subsequently the Division accepted the explanations regarding
     the increase in the tax base but maintained its position with regard to
     tax-exempt monetary correction and proceeded to issue a Settlement Review
     Note. Conavi filed a motion to annul the decision and reestablish its
     right, with regard to which the Administrative Tribunal of Medellin
     abstained from hearing the motion, considering that an appeal to government
     authority must be filed beforehand. Conavi then filed an appeal to be heard
     by the Council of State. A provision of Ps 444 was set up for this tax
     contingency, which is considered probable.

     Income and complementary taxes corresponding to 1999

          The petition for reconsideration filed by the Bank against the
     Official Revised Settlement of the income tax and complementary taxes for
     the year 1999, through which the deduction for incentives from collecting
     customers' taxes in the amount of Ps 4,263 was disregarded, was decided
     against the Bank on April 30, 2004 and the Official Revised Settlement was
     confirmed. The dispute pending represents Ps 3,421, which includes the tax
     in dispute plus late payment interests, and there is a 100% allowance for
     it. On September 9, 2004, a legal action was filed with the Antioquia
     Administrative Court, which was admitted on November 23, 2004.


                                      F-73



                        BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     Industry and Commerce Tax corresponding to 2001 - Conavi

          The Administrative Tribunal of Antioquia is currently ruling on a
     motion to annul a decision and reestablish rights filed by Conavi and
     admitted in May 2005, against the Settlement Review Note issued by Medellin
     City Council with regard to the Industry and Commerce Tax corresponding to
     the fiscal year of 2001. The Medellin City Council wished to include in
     Conavi tax base the income from UVR monetary correction that used to apply
     to the former savings and loan corporations.

          A provision of Ps 99 was set up for this tax contingency, which is
     considered remote.

     Financial Flows Tax (GMF)

          At December 31, 2005, Bancolombia S.A. had received from DIAN
     (National Tax and Customs Agency) 39 special notifications formally
     advising of a tax of Ps 18,113 due on the same number of weeks in 2003, by
     virtue of which it proposed that the Bank modified its weekly tax returns
     corresponding to the Financial Flows Tax (4x1000) with regard to Repos,
     drafts and foreign exchange operations carried out by Bancolombia with its
     customers. Out of these special notifications, 17 have been subject to an
     official settlement review note on the part of DIAN, amounting to Ps 11,930
     in tax payable and a Ps 9,800 fine for lack of precision in the
     information.

          In the opinion of the tax authorities, the Bank must withhold the
     aforementioned tax from its customers and proceed to pay this, whilst the
     Bank considers that these are operations that it pays for itself, and are
     therefore exempt from taxes by virtue of the tax stability benefit that
     Bancolombia currently enjoys.

          With regard to these official settlement reviews, Bancolombia filed
     motions to reconsider the decision, without having obtained a definite
     response from DIAN to date.

          About this matter, the Bank's legal advisors believe that the Bank has
     acted in accordance with all applicable legislation and that the
     possibility of any adverse effect is indeed remote.

     Taxes Collection DIAN & DDI

          At December 31, 2005, DIAN and the DDI (Direccion Distrital de
     Impuestos de Bogota, District Tax Direction of Bogota) have imposed fines
     on the Bank amounting to Ps 3,896 for tax collection. The Bank has filed
     the pertinent appeals and legal actions and has made provisions in the
     amount of Ps 2,130 for such fines.


                                      F-74



                        BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     FIDUCOLOMBIA S.A.

          Executive processes have been filed against the Bank's Trust
     subsidiary (Fiducolombia), which in the opinion of management and attorneys
     handling the litigations are not likely to result in an unfavorable ruling
     or to affect the Trust Company.

     Carlos Paz Mendez Process

          At December 31, 2005, there is a proceeding underway against Banco de
     Colombia (currently, the Bank) and the Trust Company at Civil Court 12 of
     Bogota. The plaintiff is Mr. Carlos Paz Mendez, and the proceedings
     commenced on July 16, 1993. On November 5, 1998, the tribunal issued a
     ruling favorable to Fiducolombia and ordered the plaintiff to pay costs.
     The defendant's appeal was accepted on December 14, 1998. On appeal, the
     Bank's and Fiducolombia's lawyer requested an audience under Article 360 of
     the Civil Procedural Code, and that audience was held on May 9, 2001. By
     means of the decision dated March 25, 2003, proceeding for annulment was
     admitted which has been decided and the pronouncement confirmed the first
     instance sentence in favor of the Trust Company and the Bank. At present,
     the appeal for reversal filed by the plaintiff's attorney against the
     sentence proffered by the Bogota Judicial District High Court on December
     19, 2002, and the pronouncement confirming the first instance sentence in
     favor of the Trust Company and the Bank, is pending.

          This process is expressly covered by the contract of liability
     contingencies subscribed with Fogafin, contained in Public Deed No. 0182 of
     January 18, 1994 of Notary Two of Bogota D.C., according to protocol
     relationship in the aforementioned public document named Annex No. 1. The
     Trust Company's management and attorneys consider that the likelihood of
     obtaining a favorable ruling is high. By virtue of the above, Fiducolombia
     has not made any allowances for this concept.

     Silvana Trust

          Seven proceedings are underway in the civil courts of the Bogota
     Circuit and in an Arbitration Court which ruled in favor of the Trust
     Company. All of the proceedings arise from Fiducolombia S.A.'s role as
     trustee in the guarantee mercantile trust agreement entered into on
     December 1, 1993, with Gallego Inmobiliaria S.A. and the appraisal Vector
     (appraisal company) made of the property.

          Two of the aforementioned proceedings terminated because of
     expiration. However, on December 11, 2003, a new ordinary proceeding was
     initiated against Fiducolombia, following a legal action filed during the
     month of September 2003. The Circuit Civil Court Nine ordered for all of
     the proceedings to be consolidated into the Tarazona Bermudez Proceeding,
     in order to ensure one sole legal proceeding, and it is currently in the
     discovery stage. Except in the case of the action filed by Guillermo Acosta
     in which a favorable ruling was obtained in the second instance from the
     Superior Court of Bogota.

          As indicated by the Trust Company's attorneys, management considers
     that there will be no liability based on the facts established in the
     processes. The plaintiffs claim amounts to approximately Ps 718.



                                      F-75



                        BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     Grancolombiano Group

          The "Grupo Grancolombiano" Trust that was managed by Banco de Colombia
     S.A. and liquidated on June 29, 1990, is subject to contingencies, among
     them, labor contingencies. For that purpose, a sum of money has been
     reserved through the "Contingency Fund" Trust managed by Fiducolombia.
     These sums were contributed by former trustors of the "Grupo
     Grancolombiano" trust with the purpose of covering such contingencies. As
     recommended by the lawyer for, and in compliance with the purpose
     established in the Minutes of Liquidation of the "Grupo Grancolombiano", 24
     of the 29 proceedings filed were reconciled before a judge. Five more
     reconciliations occurred outside court with charge to the funds of the
     Contingency Fund of Grupo Grancolombiano. In the proceedings of Jorge
     Euclides Garcia Prado, on December 4, 2003, the fourth proceeding took
     place to be followed next by a decision. The proceedings of Jose del Carmen
     Racero Toribio, Pedro Antonio Alvarez Serpa and David Salcedo Mejia were
     not reconciled because the employment relationship ended when the building
     in which they worked was the property of the Compania Nacional de
     Chocolates S.A. The plaintiff integrated the litis consorcio with this
     company. In one case, the Court of Law in a first instance ruling limited
     the payment of a retirement pension, with the possibility of repeating
     against Nacional de Chocolates S.A. In two cases, it declared that the
     exception of petition before time was proven. In the remaining case, the
     court absolved the Bank of any liability. An appeal was filed by the
     parties, as a result of which the Antioquia High Court confirmed the
     sentence proffered by the Caucasia Circuit Civil Court. Several legal
     actions were filed in 2003 and 2004 that were subsequently consolidated
     into the Dagoberto Tulio Correa proceeding, which is being decided by the
     Caucasia Circuit Civil Court in which an exception to res judicata was
     declared at the first hearing.

          The Trust Company's management and legal advisors do not believe that
     these cases will result in any additional liabilities. If any liability
     does result, it will affect the trust's reserve fund but not Fiducolombia
     itself.

     Comerintegral Ltda. Process

          The Arbitration Court summoned by Comerintegral Ltda., against
     Fiducolombia, proffered a decision on June 25, 2004 in favor of the Trust
     Company.

     Invico Ltda. Processes

          Invico Ltda. has a suit pending against the Bank and Fiducolombia S.A.
     in Civil Court 6 of Bogota. The plaintiff seeks a ruling declaring that the
     Bank and Fiducolombia S.A. must exercise the alternate right contained in
     Article 1948 of the Civil Code, in reference to the land lot denominated
     "Granjita", pursuant to the trust mandate contracted claims amount to Ps
     4,000. Proceedings began on November 9, 2001, and on January 17, 2002, the
     court issued a ruling dismissing the claim and ordering the plaintiff to
     pay costs. By means of writ dated July 16, 2002, a settlement hearing was
     ordered for November 5, 2002. The diligence of reconciliation was declared
     a failure. At present, this case is in the discovery stage and Fiducolombia
     is waiting for the expert appointed who has agreed to give his expert
     decision. However, it is still premature to give any views regarding said
     proceeding.


                                      F-76



                        BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          Invico has also pursued "Accountability" proceedings against the Bank
     and Fiducolombia S.A. in Civil Court 9 of Bogota. In these proceedings
     Invico seeks to hold the Bank and Fiducolombia S.A. accountable for their
     time as trustees of its property, as a result of the appointment and choice
     that the former and its creditors made. The amount sought is Ps 3,000.
     Settlement hearings on December 4, 2001, failed. The case went to trial on
     November 27, 2001, beginning with the collection of evidence. On November
     19, 2002, the edict dated the 25th of the same month proffered a sentence
     in favor of the trust company and the Bank. The sentence was appealed by
     the plaintiff, to which the Court confirmed the ruling given in the first
     instance.

     LEASING COLOMBIA S.A.

          Leasing Colombia S.A. has fifty-one (51) litigations against it, out
     of which forty-six (46) correspond to extra-contractual civil liability
     proceedings, as a result of damages caused by company-owned vehicles and
     leased vehicles. There are court precedents and evidence in favor of
     Leasing Colombia S.A., to the extent that no leasing company has ever been
     found guilty of the alleged claims.

          The five remaining proceedings involve contractual liability claims by
     virtue of alleged Leasing Colombia S.A. default; these will probably be
     ruled in Leasing Colombia favor as the claims lack legal support.

          The economic amount of such contingencies represents the sum of Ps
     13,042. This sum has not been provisioned, by virtue of the above
     considerations.

     SUFINANCIAMIENTO

          Actions filed against this company total an estimated amount of Ps
     6,799. According to the Company's attorneys, none of these actions
     represent a probable loss for the Company, and therefore Company Management
     does not consider it necessary to set up the corresponding provision.

     ALMACENAR S.A.

          At December 31, 2004 and 2005, labor and civil proceedings against
     Almacenar S.A. were underway. Due to the debatable nature of the
     obligations, they are difficult to quantify.

          At December 31, 2004 and 2005, there are allowances amounting to Ps
     509 and Ps 1,036, respectively, to cover any liability resulting from these
     proceedings.


                                      F-77



                        BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     SULEASING INTERNACIONAL S.A.

          Suleasing International S.A.'s branch in Colombia faces a labor action
     filed by Mrs. Leonor Aguilar against Bancolombia S.A., Leasing Colombia
     S.A. and Suleasing Internacional S.A., involving an amount of approximately
     Ps 300.

     FUNDICOM S.A.

          At December, 31, 2005, there is one labor action filed against
     Fundicom for an estimated amount of Ps 294.

     DITRANSA S.A.

          At December 31, 2005 eleven criminal, civil and administrative actions
     have been filed against Ditransa totaling an amount of approximately Ps
     246.

     COMPANIA SURAMERICANA DE ARRENDAMIENTOS - SURENTING S.A.

          At December 31, 2005, there were twelve civil liability lawsuits filed
     against Surenting. There is no possibility of any adverse ruling being
     issued in 11 of these, since these are all lawsuits originating in the use
     customers have made of the vehicles leased to them. However, Surenting
     should be found guilty in any way, there is an insurance policy with
     Compania Suramericana de Seguros that covers the amounts at stake.

          One of the lawsuits has been filed directly against Surenting for
     civil liability since it involved an accident caused by an employee in a
     company car. The claim is for Ps 1,209 and this is being negotiated with
     third parties. The corresponding payment shall be covered by Compania
     Suramericana de Seguros through the insurance policy held with them for
     this purpose.

     COMPANIA SURAMERICANA DE VALORES S.A. - SUVALOR - COMISIONISTA DE BOLSA

          At December 31, 2005, the Company faced 2 actions. One is an ordinary
     civil action filed in Cali for which an unfavorable ruling has been
     pronounced in the first instance and which was subsequently appealed before
     the Superior Court. The cost of this judgment in the first instance could
     reach Ps 300.

          The other is a labor action for which a favorable ruling was obtained
     in the first instance with the corresponding court sentence pending. The
     value of this could reach approximately Ps 30.


                                      F-78



                        BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     3001 S.A. (IN THE PROCESS OF BEING WOUND UP)

          With respect to the 3001 S.A., as of December 31, 2005, there was a
     pending complaint on the part of Treasury Secretary of the Medellin City
     Council, regarding a special notification in which 3001 S.A. (in the
     process of being wound up) was ordered to pay a fine of Ps 28 for lack of
     precision in information submitted. The Municipal Authorities, by means of
     Resolution 16203 dated September 8, 2004, decided not to accept as a lower
     value of the tax base for the Industry and Commerce tax for the base year
     of 2002/taxable year of 2003, the income corresponding to the difference in
     the exchange rate on investments made by this company abroad. The company
     filed the corresponding objections within the designated term, and has not
     yet been informed of any decision.

          The other subsidiaries have not reported any other contingencies
     existing as of December 31, 2005.

(27) ADMINISTRATIVE AND OTHER EXPENSES

          Administrative and other expenses for the years ended December 31,
     2003, December 31, 2004 and December 31, 2005 consisted of the following:



                                                           2003        2004        2005
                                                        ---------   ---------   ---------
                                                                       
Public services                                         Ps 27,882   Ps 28,558   Ps 47,175
Advertising                                                17,328      20,754      50,235
Industry and trade, property, vehicle and other taxes      44,774      55,145     121,699
Communication, postage and freight                         36,937      39,564      48,254
Insurance                                                  13,724      12,224      27,446
Security services                                          17,167      18,404      29,339
Stationery and supplies                                    13,854      15,399      28,370
Amortization of deferred charges                           26,237      13,074      54,463
Rental expenses                                            14,167      16,963      56,375
Maintenance and repairs                                    38,049      49,794      99,678
Contributions and membership dues                           5,762       8,335      14,587
Temporary services                                          7,579       9,174      17,440
Travel expenses                                             9,942      10,690      17,799
Professional fees                                          17,614      29,167      56,004
Call center services                                        7,094       8,672      20,041
Information processes outsourcing                          10,722      13,420      18,218
Other                                                      41,685      44,255      86,056
                                                        ---------   ---------   ---------
   TOTAL                                                Ps350,517   Ps393,592   Ps793,179
                                                        =========   =========   =========



                                      F-79


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

(28) RELATED PARTY TRANSACTIONS

          Significant balances and transactions with related parties were as
     follows:

                                      2003



                                                                             SHAREHOLDERS WITH
                                                                               PARTICIPATING
                                                                             STOCK LOWER THAN
                              SHAREHOLDERS WITH                    BANK'S    10% OF THE BANK'S
                                PARTICIPATING                     OFFICERS   CAPITAL AND WITH
                              STOCK EQUAL TO OR       NON-       AND BOARD   OPERATIONS HIGHER
                               HIGHER THAN 10%    CONSOLIDATED       OF           THAN 5%
                              OF BANK'S CAPITAL    INVESTMENTS   DIRECTORS   TECHNICAL EQUITY
                              -----------------   ------------   ---------   -----------------
                                                                 
BALANCE SHEET
      Investment securities            --             2,355            --               --
      Loans                            --            11,061        12,246               --
      Accounts receivable              --             3,085           150               --
                                     ----           --------      --------        --------
         TOTAL                       Ps--           Ps16,501      Ps12,396        Ps    --
                                     ====           ========      ========        ========
      Deposits                          4             36,561         1,441          83,793
      Overnight funds                  --                 84            --              --
      Accounts payable                 --                141             8              --
                                     ----           --------      --------        --------
         TOTAL                       Ps 4           Ps36,786      Ps 1,449        Ps83,793
                                     ====           ========      ========        ========
TRANSACTIONS
   INCOME
      Dividends received               --             25,777            --              --
      Interest                         --              2,297         1,205              74
      Other                            --                269            24              --
                                     ----           --------      --------        --------
         TOTAL                       Ps--           Ps28,343      Ps 1,229        Ps    74
                                     ====           ========      ========        ========
   EXPENSES
      Interest                          1             12,330            61           5,883
      Other                            --              2,261            69              --
                                     ----           --------      --------        --------
         TOTAL                       Ps 1           Ps14,591      Ps   130        Ps 5,883
                                     ====           ========      ========        ========



                                      F-80



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

                                      2004



                                                                                  SHAREHOLDERS WITH
                                                                                    PARTICIPATING
                                                                                  STOCK LOWER THAN
                               SHAREHOLDERS WITH                      BANK'S      10% OF THE BANK'S
                                 PARTICIPATING                       OFFICERS     CAPITAL AND WITH
                               STOCK EQUAL TO OR       NON-         AND BOARD     OPERATIONS HIGHER
                                HIGHER THAN 10%    CONSOLIDATED         OF             THAN 5%
                               OF BANK'S CAPITAL    INVESTMENTS   DIRECTORS (1)   TECHNICAL EQUITY
                               -----------------   ------------   -------------   -----------------
                                                                      
BALANCE SHEET
      Investment securities             --             21,443              --                --
      Loans                             --              5,135          14,995                --
      Customer's acceptances
         and derivatives                --                 27              --                --
      Accounts receivable               --              9,958           3,045                --
                                     -----          ---------       ---------         ---------
         TOTAL                       Ps --          Ps 36,563       Ps 18,040         Ps     --
                                     =====          =========       =========         =========
      Deposits                           6             32,349             812           222,226
      Overnight funds                   --                106              --                --
      Accounts payable                  --                 --              --                --
      Bonds                             --             10,000              --            11,500
                                      ----           ---------        --------        ----------
         TOTAL                        Ps 6           Ps 42,455        Ps   812        Ps 233,726
                                      ====           =========        ========        ==========
TRANSACTIONS
   INCOME
      Dividends received                --             25,814              --                --
      Interest and fees                 --              2,693           1,626               153
      Other                             --                354              --                --
                                     -----          ---------        --------         ---------
         TOTAL                       Ps --          Ps 28,861        Ps 1,626         Ps    153
                                     =====          =========        ========         =========
   EXPENSES
      Interest                          --              4,762              14             6,925
      Fees                              --                 --              99                --
      Other                             --                 --              --                --
                                     -----           --------        --------         ---------
         TOTAL                       Ps --           Ps 4,762        Ps   113         Ps  6,925
                                     =====           ========        ========         =========


----------
(1)  For 2003 and 2004, includes, in addition to the Members of the Board of
     Directors, the President and the Vice-Presidents, as well as other
     employees who have legal representation of the Bank.


                                      F-81



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

                                      2005



                                                                                  SHAREHOLDERS WITH
                                                                                    PARTICIPATING
                                                                                  STOCK LOWER THAN
                               SHAREHOLDERS WITH                      BANK'S      10% OF THE BANK'S
                                 PARTICIPATING                       OFFICERS     CAPITAL AND WITH
                               STOCK EQUAL TO OR       NON-         AND BOARD     OPERATIONS HIGHER
                                HIGHER THAN 10%    CONSOLIDATED         OF             THAN 5%
                               OF BANK'S CAPITAL    INVESTMENTS   DIRECTORS (1)   TECHNICAL EQUITY
                               -----------------   ------------   -------------   -----------------
                                                                      
BALANCE SHEET
      Investment securities             --             293,073             --                --
      Loans                             --             149,889         18,802                 3
      Customer's acceptances
         and derivatives                --              43,147            306           118,362
      Accounts receivable               --                  --             --           175,095
                                     -----          ----------      ---------        ----------
         TOTAL                       Ps --          Ps 486,109      Ps 19,108        Ps 293,460
                                     =====          ==========      =========        ==========
      Deposits                         157              96,664            996           393,088
      Accounts payable                  --               1,768             --               198
      Bonds                             --               3,310             --            18,960
                                    ------          ----------       --------        ----------
         TOTAL                      Ps 157          Ps 101,742       Ps   996        Ps 412,246
                                    ======          ==========       ========        ==========
TRANSACTIONS
   INCOME
      Dividends received                --               6,403             --                --
      Interest and fees                 --              19,965          1,963                64
      Other                             --                  73            133                --
                                     -----           ---------       --------         ---------
         TOTAL                       Ps --           Ps 26,441       Ps 2,096         Ps     64
                                     =====           =========       ========         =========
   EXPENSES
      Interest                          23               3,459            629            29,667
      Fees                              --                  --            100                --
      Other                             --                  --              3                --
                                     -----           ---------       --------         ---------
         TOTAL                       Ps 23           Ps  3,459       Ps   732         Ps 29,667
                                     =====           =========       ========         =========



                                      F-82


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

(29) PURCHASE OF ASSETS AND LIABILITIES

          As part of its growth strategy, the Bank entered into certain
     transaction for the purchase and sale of assets and liabilities with the
     following companies:

          In 2004, the Bank purchased a loan portfolio in local currency from
     Sufinanciamiento for the amount of Ps926 with a discount of 45% on face
     value; from Comercia S.A. loan portfolio in local currency for the amount
     of Ps51,405; and another loan portfolio in local currency from Central de
     Inversiones S.A. (CISA) for the amount of Ps20,544, with a discount of 10%
     on face value.

          In 2005, the Bank purchased from Banco Corfinsura International a loan
     portfolio in foreign currency for the amount of US$7,718, equivalent to
     Ps18,004 on the actual date of purchase; from the Banco del Estado, a loan
     portfolio in local currency for the amount of Ps8,612; from Citibank a loan
     portfolio in local currency for the amount of Ps 483; from Suleasing, a
     loan portfolio in local currency for the amount of Ps13,657; from CISA a
     loan portfolio for the amount of Ps770, with a discount of 6% on face
     value; from Fogafin, a loan portfolio for the amount of Ps42, with a
     discount of 15% on face value; from Titularizadora Colombiana S.A., a loan
     portfolio for the amount of Ps16,190, with a discount of 8% on face value;
     from Comercia S.A., a loan portfolio for the amount of Ps26,453; and from
     Davivienda and Granbanco Bancafe, a loan portfolio for the amount of
     Ps30,151.

     SALE OF ASSETS AND LIABILITIES

          In 2004, the Bank sold a loan portfolio in local currency with funds
     from FINAGRO resources to Leasing del Valle in the amount of Ps148.

          During 2003 and 2004, the Bank made sales of its deteriorated and
     written-off farming and livestock loan portfolio in the amount of Ps1,079
     and Ps 95, respectively, pursuant to an agreement entered into with Finagro
     in October 2001, as administrator of the National Farming and Livestock
     Reactivation Program resources within the legal framework set forth in
     Ministry of Agricultural and Rural Development Decree 967 of 2000. With
     this value, the total amount of the loans is understood as paid.

          In 2005, the Bank sold a loan portfolio in foreign currency to
     Bancolombia Panama for the amount of US$38,241 which was equivalent to
     Ps88,211 on the actual selling date; a loan portfolio in local currency to
     Comercia S.A for the amount of Ps300, with a discount of 50% on face value;
     a loan portfolio in local currency to Finagro for the amount of Ps36, with
     a discount of 62% on face value; a loan portfolio in local currency to
     Sufinanciamiento, for the amount of Ps8,075,with a discount of 2% on face
     value; a loan portfolio in local currency to Suleasing for the amount of
     Ps26,243; and a loan portfolio in local currency to Colcorp for the amount
     of Ps17,159.


                                      F-83



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

(30) SUBSEQUENT EVENTS

          On March 30, 2006, the arbitration proceedings initiated by
     Bancolombia against Jaime Gilinski, as debtor, jointly and severally liable
     with the companies that sold the majority of the shares of the former Banco
     de Colombia S.A., resulted in an award. Through the arbitration
     proceedings, Bancolombia sought to gain recognition of various claims that
     it presented to ensure the effectiveness of the guaranty that was granted
     with respect to the sold shares, the value of which is now US$30,000. The
     award orders the defendant to pay Ps63,216 in favor of Bancolombia,
     including inflation adjustments and interest. The defendant filed an action
     for cancellation, which has not yet been considered.

          On May 16, 2006, the arbitration proceeding initiated by Mr. Jaime
     Gilinski against Bancolombia resulted in an award ruling in favor of
     Bancolombia on the majority of the claims. However, the Tribunal ruled that
     Bancolombia should pay Ps40,570 to the plaintiffs with respect to their
     allegations of insufficient capitalization compensated with external
     borrowings.

          The Arbitration Tribunal denied all the plaintiffs' claims against the
     senior management and exonerated them from all liability, ordering the
     plaintiffs to pay the court costs.

          On June 7, 2006, the Bank filed an extraordinary cancellation action
     before the Superior Tribunal of Bogota pursuant to Articles 163 (7), (8)
     and (9) of Decree 1818 of 1998, challenging the May 16, 2006 ruling of the
     Arbitration Tribunal. In the cancellation action, the Bank argued that the
     ruling contained mathematical mistakes, that the Arbitration Tribunal did
     not decide issues that were material to the arbitration, that the
     Arbitration Tribunal instead decided issues that were not material to the
     arbitration and that the Arbitration Tribunal improperly granted more than
     the relief requested. In addition, the Bank offered to provide security in
     accordance with the terms of the third paragraph of Article 331 of the
     Civil Procedure Code of Colombia in order to stay the award while the
     cancellation action is pending.

          After hearing a people's action filed by the lawyer Maximiliano
     Echeverri against the Bank and the Colombian Superintendencies of Banking
     and Securities (now the Superintendency of Finance), the Contentious
     Administrative Court of Cundinamarca ruled against the plaintiff's claims
     on August 10, 2005. On June 7, 2006, the Council of State upheld the
     original decision against the plaintiff in a judgment on appeal.

          These resolutions were issued after the date when financial statements
     under Colombian GAAP were approved by General Shareholders' meeting and
     therefore the Bank did not record neither the asset or the liability
     associated with them, as of December 31, 2005.

          On May 8, 2006, BC acquired 9,863,685 shares of Comercia S.A.,
     equivalent to 55.61% of its outstanding shares, from Textiles Fabricato
     Tejicondor S.A. by means of a transaction duly authorized by the
     Superintendency of Finance. The value paid by the Bank was Ps24,610. We
     currently expect to acquire an additional participation equivalent to
     38.96% of the outstanding shares of Comercia S.A., which are currently held
     by Patrimonio Autonomo Textiles Fabricato Tejicondor, administered by
     Santander Investment Trust S.A. No assurance can be given as to the timing
     of the acquisition of this additional participation.


                                      F-84



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

(31) DIFFERENCES BETWEEN COLOMBIAN ACCOUNTING PRINCIPLES FOR BANKS AND U.S. GAAP

          The Bank's financial statements are prepared in accordance with
     generally accepted accounting principles and practices prescribed by the
     Superintendency of Finance and other legal provisions ("Colombian GAAP").
     Because these principles and regulations differ in certain significant
     respects from accounting principles generally accepted in the United States
     of America ("U.S. GAAP"), this note presents a reconciliation of net income
     and stockholders' equity to U.S. GAAP.

A)   RECONCILIATION OF NET INCOME:

          The following summarizes the principal differences between accounting
     practices under Colombian GAAP and U.S. GAAP and their effects on net
     income for the years ended December 31, 2003, 2004 and 2005:



                                                                              2003         2004        2005
                                                                           ----------   ---------   ----------
                                                                                           
CONSOLIDATED NET INCOME UNDER COLOMBIAN GAAP                               Ps 469,384   Ps578,678   Ps 946,881
   a) Deferred income taxes                                                  (140,555)     49,073      121,025
   b) Employee benefit plans                                                    1,757       1,203       (1,733)
   c) Inflation adjustment                                                         --          --       (4,423)
   d) Revaluation of assets                                                        --          --           --
   e) Allowance for loans, financial leases losses and foreclosed assets       55,908        (159)     115,461
   f) Loan origination fees and costs                                          11,719       7,100        3,277
   g) Interest recognition on non-accrual loans                                   729       1,205        3,976
   h) Deferred charges                                                         31,787       9,422       (1,761)
   i) Investment securities                                                        --       1,111       27,159
   j) Investments in unaffiliated companies                                      (591)       (252)      (4,085)
   k) Investments in affiliates                                                10,168     (29,548)      18,277
   l) Lessor accounting                                                            --          --        1,931
   m) Business combinations
      m.i) Adjustment goodwill                                                (10,314)     (8,504)      (4,719)
      m.ii) Adjustment amortization                                            41,452      22,577       31,819
      m.iii) Business combinations Conavi and Corfinsura                           --          --     (366,044)
   n) Securitization non-performing loans                                          --          --        5,851
   o) Foreign currency translation adjustment                                   2,975      10,220        1,651
   p) Minority interest                                                            --          --       (3,422)
                                                                           ----------   ---------   ----------
   CONSOLIDATED NET INCOME UNDER U.S. GAAP                                 Ps 474,419   Ps642,126   Ps 891,121
                                                                           ----------   ---------   ----------
   NET INCOME FROM CONTINUING OPERATIONS                                   Ps 466,290   Ps621,342   Ps 904,351
   INCOME (LOSS) FROM OPERATIONS AND DISPOSAL OF DISCONTINUED
      OPERATIONS                                                           Ps   8,129   Ps 20,703   Ps (13,230)



                                      F-85



                        BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

B)   RECONCILIATION OF STOCKHOLDERS' EQUITY:

     The following summarizes the principal differences between accounting
practices under Colombian GAAP and U.S. GAAP and their effects on stockholders'
equity for the years ended December 31, 2003, 2004 and 2005:



                                                               2003          2004          2005
                                                           -----------   -----------   -----------
                                                                              
CONSOLIDATED STOCKHOLDERS' EQUITY UNDER COLOMBIAN GAAP     Ps1,689,379   Ps2,090,723   Ps3,377,290
   a) Deferred income taxes                                    (45,234)        6,317       135,904
   b) Employee benefit plans                                   (27,855)      (36,129)      (70,738)
   c) Inflation adjustment                                      43,216        43,216        38,793
   d) Revaluation of assets                                    (30,086)      (42,237)     (110,479)
   e) Allowance for loans, financial leases losses and
      foreclosed assets                                        102,362       102,203       217,664
   f) Loan origination fees and costs                           43,356        50,456        53,733
   g) Interest recognition on non-accrual loans                    827         2,032         6,008
   h) Deferred charges                                         (10,697)       (1,275)       (3,036)
   i) Investment securities                                        (89)           --        14,936
   j) Investments in unaffiliated companies                     (7,416)       (7,668)      (11,753)
   k) Investments in affiliates                                 41,848        12,300        30,577
   l) Lessor accounting                                             --            --         1,931
   m) Business combinations
      m.i)  Adjustment goodwill                                (31,543)      (40,047)      (44,766)
      m.ii) Adjustment amortization                             64,818        87,395       119,214
      m.iii) Business combinations Conavi and Corfinsura            --            --       368,289
   n) Securitization non performing loans                           --            --         5,851
   o) Foreign currency translation adjustment                       --            --            --
   p) Minority interest                                             --            --        (3,422)
                                                           -----------   -----------   -----------
                                                               143,507       176,563       748,706
                                                           -----------   -----------   -----------
CONSOLIDATED STOCKHOLDERS' EQUITY UNDER U.S. GAAP          Ps1,832,886   Ps2,267,286   Ps4,125,996
                                                           ===========   ===========   ===========


C)   SUPPLEMENTAL CONSOLIDATED CONDENSED FINANCIAL STATEMENTS UNDER U.S.GAAP:

     The followings are the supplemental consolidated condensed financial
statements under U.S.GAAP for years ended December 31, 2004 and 2005:


                                      F-86



                        BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

               SUPPLEMENTAL CONSOLIDATED CONDENSED BALANCE SHEETS



                                                 2004           2005
                                             ------------   ------------
                                                      
ASSETS:
Cash and cash equivalents                    Ps 1,249,360   Ps 1,730,022
Investment securities, net                      5,254,843      8,493,463
Loans and financial leases, net                 9,703,064     17,802,410
Accrued interest receivable on loans, net         126,056        207,347
Customers' acceptances and derivatives             43,894        133,420
Accounts receivable, net                          173,875        590,313
Premises and equipment, net                       389,459        707,631
Other assets                                      754,018      1,905,912
                                             ------------   ------------
TOTAL ASSETS                                 PS17,694,569   PS31,570,518
                                             ============   ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits                                       11,862,116     18,329,466
Borrowings                                      1,104,201      3,927,551
Other liabilities                               2,460,966      5,187,505
Shareholders' equity                            2,267,286      4,125,996
                                             ------------   ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   PS17,694,569   PS31,570,518
                                             ============   ============


          SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS



                                                2003          2004             2005
                                            -----------   -----------   ------------------
                                                                        Restated (Note 32)
                                                               
Total interest income                       Ps1,538,028   Ps1,803,763      Ps2,627,277
Total interest expense                         (471,899)     (577,442)      (1,032,923)
                                            -----------   -----------      -----------
Net interest income                           1,066,130     1,226,321        1,594,354
Total net provisions                           (125,832)      (66,181)         (11,822)
                                            -----------   -----------      -----------
Net interest income after provision and
   financial leasing                            940,298     1,160,140        1,582,532
Other income                                    457,106       633,681          935,738
Other expenses                                 (739,860)     (979,742)      (1,464,378)
                                            -----------   -----------      -----------
Income before income taxes                      657,544       814,079        1,053,892
Income tax expense                             (191,254)     (192,656)        (149,541)
                                            -----------   -----------      -----------
Net income before discontinued operations       466,290       621,423          904,351
                                            -----------   -----------      -----------
DISCONTINUED OPERATIONS (1)                       8,129        20,703          (13,230)
NET INCOME                                  PS  474,419   PS  642,126      PS  891,121
                                            ===========   ===========      ===========


----------
(1)  Correspond to discontinued operations of Abocol, Almacenar and their
     Subsidiaries.


                                      F-87


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS



                                                          2003                 2004                 2005
                                                   ------------------   ------------------   ------------------
                                                   Restated (Note 32)   Restated (Note 32)   Restated (Note 32)
                                                                                    
Net income (loss)                                     Ps   474,419         Ps   642,126         Ps   891,121
Adjustments to reconcile net income to net cash
   provided (used) by operating activities              (1,964,394)            (608,738)          (5,215,860)
                                                      ------------         ------------         ------------
Net cash provided by operating activities               (1,489,975)              33,388           (4,324,739)
Net cash used in investing activities                      106,035           (1,575,420)          (6,133,179)
Net cash provided by financing activities                1,979,312            1,344,931           10,938,580
                                                      ------------         ------------         ------------
(Decrease) increase in cash and cash equivalents      Ps   595,372         Ps  (197,101)        Ps   480,662
                                                      ============         ============         ============
Cash and cash equivalents at beginning of year             851,089            1,446,461            1,249,360
                                                      ------------         ------------         ------------
Cash and cash equivalents at end of year              PS 1,446,461         PS 1,249,360         PS 1,730,022
                                                      ============         ============         ============


     D)   ANALYSIS OF CHANGES IN STOCKHOLDERS' EQUITY:

               The following summarizes the changes in stockholders' equity
          under U.S. GAAP for the years ended December 31, 2003, 2004 and 2005:



                                        2003          2004          2005
                                    -----------   -----------   -----------
                                                       
Balance at beginning of year        Ps1,413,445   Ps1,832,886   Ps2,267,286
Shares issued at market value (1)            --            --     1,164,218
Net income                              474,419       642,126       891,121
Dividends declared                      (76,124)     (156,861)     (216,838)
Other comprehensive income (loss)       (18,765)       (8,469)      (19,148)
Other (2)                                39,911       (42,396)       39,357
                                    -----------   -----------   -----------
Balance at end of year              Ps1,832,886   Ps2,267,286   Ps4,125,996
                                    ===========   ===========   ===========


----------
(1)  The line shares issued for Ps 236,212 in the Consolidated Statement of
     Stockholder's Equity under Colombian GAAP, reflects the par value of
     shares, the line shares issued for Ps 1,164,218 in this table reflects the
     fair market value of shares issued under U.S. GAAP.

(2)  Correspond to the Subsidiaries' retained earnings that are not eliminated
     in the consolidation process.


     E)   STATEMENT OF COMPREHENSIVE INCOME (LOSS):



                                                               2003         2004        2005
                                                             ---------   ---------   ---------
                                                                            
Net Income                                                   Ps474,419   Ps642,126   Ps891,121
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Foreign currency translation adjustments                        (2,975)    (10,220)     (1,651)
Unrealized gain or (loss) on securities available for sale     (13,196)      7,716       2,106
Additional minimum pension liability
   offset to shareholder's equity                               (2,594)     (5,965)    (19,603)
                                                             ---------   ---------   ---------
Other comprehensive income (loss)                              (18,765)     (8,469)    (19,148)
                                                             ---------   ---------   ---------
Comprehensive income                                         Ps455,654   Ps633,657   Ps871,973
                                                             =========   =========   =========


                                      F-88


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



OTHER COMPREHENSIVE INCOME (LOSS)      2003



                                          BEFORE-TAX   (TAX EXPENSE)   NET-OF-TAX
                                            AMOUNT       OR BENEFIT      AMOUNT
                                          ----------   -------------   ----------
                                                              
Unrealized gain or (loss) on securities
   available for sale                    Ps (20,947)     Ps 7,751     Ps (13,196)
Additional minimum pension liability         (4,064)        1,470         (2,594)
Foreign currency translation adjustment      (2,975)           --         (2,975)
                                         -----------     --------     -----------
Other comprehensive income (loss)        Ps (27,986)     Ps 9,221     Ps (18,765)
                                         ===========     ========     ===========


                                      2004


                                          BEFORE-TAX   (TAX EXPENSE)   NET-OF-TAX
                                            AMOUNT       OR BENEFIT      AMOUNT
                                          ----------   -------------   ----------
                                                              
Unrealized gain or (loss) on securities
   available for sale                     Ps  8,750      Ps(1,034)     Ps  7,716
Additional minimum pension liability         (9,477)        3,512         (5,965)
Foreign currency translation adjustment     (10,220)           --        (10,220)
                                         -----------     --------     -----------
Other comprehensive income (loss)        Ps (10,947)     Ps 2,478      Ps (8,469)
                                         ===========     ========     ===========


                                      2005



                                          BEFORE-TAX   (TAX EXPENSE)   NET-OF-TAX
                                            AMOUNT       OR BENEFIT      AMOUNT
                                          ----------   -------------   ----------
                                                              
Unrealized gain or (loss) on securities
   available for sale                    Ps   6,816     Ps (4,710)    Ps   2,106
Additional minimum pension liability        (32,876)       13,272        (19,603)
Foreign currency translation adjustment      (1,651)           --         (1,651)
                                         -----------     --------     -----------
Other comprehensive income (loss)        Ps (27,711)     Ps 8,562     Ps (19,148)
                                         ===========     ========     ===========



                                      F-89


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     ACCUMULATED OTHER COMPREHENSIVE INCOME



                         ADDITIONAL     FOREIGN       UNREALIZED      ACCUMULATED
                           MINIMUM      CURRENCY    GAINS (LOSSES)       OTHER
                           PENSION    TRANSLATION         ON         COMPREHENSIVE
                          LIABILITY    ADJUSTMENT     SECURITIES         INCOME
                         ----------   -----------   --------------   -------------
                                                         
Beginning balance 2003   Ps (1,760)    Ps  4,534       Ps 71,865       Ps 74,639
Current-period change       (2,594)       (2,975)        (13,196)        (18,765)
                         ---------     ---------       ---------       ---------
Ending balance 2003         (4,354)        1,559          58,669          55,874
                         =========     =========       =========       =========
Beginning balance 2004      (4,354)        1,559          58,669          55,874
Current-period change       (5,965)      (10,220)          7,716          (8,469)
                         ---------     ---------       ---------       ---------
Ending balance 2004        (10,319)       (8,661)         66,385          47,405
                         =========     =========       =========       =========
Beginning balance 2005     (10,319)       (8,661)         66,385          47,405
Current-period change      (19,603)       (1,651)          2,106         (19,148)
                         ---------     ---------       ---------       ---------
Ending balance 2005      Ps(29,922)    Ps(10,312)      Ps 68,491       Ps 28,257
                         =========     =========       =========       =========


SUMMARY OF SIGNIFICANT DIFFERENCES AND REQUIRED U.S. GAAP DISCLOSURES

A)   DEFERRED INCOME TAXES:

          Under Colombian GAAP, deferred income taxes are generally recognized
     for timing differences (not temporary differences as in SFAS No. 109) for
     commercial and manufacturing subsidiaries. For financial companies, the
     Superintendency of Finance has restricted inclusion of timing differences
     related to the amortization of fiscal losses and the excess of presumed
     income over ordinary income as a deferred tax asset.

          Under U.S. GAAP, deferred tax assets or liabilities must be recorded
     for all temporary differences between the financial and tax bases of assets
     and liabilities. A valuation allowance is provided for deferred tax assets
     to the extent that it is more likely than not that they will not be
     realized.

          Income tax expense under U.S. GAAP is comprised of the following
     components for the years ended at December 31, 2003, 2004 and 2005:



                                           2003        2004        2005
                                        ---------   ---------   ---------
                                                       
Current income tax expense              Ps 62,391   Ps237,620   Ps178,992
Deferred income tax (benefit) expense     140,799     (47,883)    (22,502)
                                        ---------   ---------   ---------
   TOTAL                                Ps203,190   Ps189,737   Ps156,490
                                        =========   =========   =========



                                      F-90



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          Temporary differences between the amounts reported in the financial
     statements and the tax bases for assets and liabilities result in deferred
     taxes. Deferred tax assets and liabilities at December 31, 2004 and 2005
     were as follows:



                                                       2004        2005
                                                    ---------   ---------
                                                          
   DEFERRED TAX ASSETS AND LIABILITIES
DEFERRED TAX ASSETS:
   Accrual of employee benefits                     Ps 13,410   Ps 26,194
   Allowance for loan losses                               --      23,155
   Fixed assets                                        67,321     138,213
   Tax losses                                          36,357      43,496
   Forward, future and swaps effect                     8,362          --
   Allowance for foreclosed assets                     27,863       7,407
   Fiduciary assets                                     5,671          --
   Accrued expenses                                    17,110      15,336
   Business combination                                    --      50,503
   Other                                               18,248      29,462
                                                    ---------   ---------
      Total gross deferred tax assets                 194,342     333,766
      Less valuation allowance                         (5,330)     (4,440)
                                                    ---------   ---------
         NET DEFERRED TAX ASSET                     Ps189,012   Ps329,326
                                                    ---------   ---------
DEFERRED TAX LIABILITIES:
   Unrealized gain on investment securities         Ps 35,943   Ps 40,653
   Allowance for loan losses                            3,677          --
   Loan origination fees and cost                      18,707      17,766
   Forward, future and swaps effect                        --      26,862
   Intangible assets                                   26,819      80,382
   Inflation adjustments                               48,637      68,403
   Goodwill recognition                                33,012          --
   Excess of accrued income over valuation income       8,924      48,833
   Fair value of financial instruments                     --       5,674
   Other                                                7,848       4,244
                                                    ---------   ---------
      TOTAL DEFERRED LIABILITIES                      183,567     292,817
                                                    ---------   ---------
         NET DEFERRED ASSET (LIABILITY)             Ps  5,445   Ps 36,509
                                                    =========   =========


          The valuation allowance for deferred tax assets as of December 31,
     2004 and 2005 was Ps 5,330 and Ps 4,440, respectively. The net change in
     the total valuation allowance for the year ended December 31, 2004 was a
     decrease of Ps 78,254 and for the year ended December 31, 2005 was a
     decrease of Ps 890. In assessing the realizability of deferred tax assets,
     management considers whether it is more likely than not that some portion
     or all of the deferred tax assets will not be realized. The ultimate
     realization of deferred tax assets is dependent upon the generation of
     future taxable income during the periods in which those temporary
     differences become deductible. Management considers the scheduled reversal
     of deferred tax liabilities, projected future taxable income and tax
     planning strategies in making this assessment. Based upon the level of
     historical


                                      F-91



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     taxable income and projections for future taxable income over the periods
     which the deferred tax assets are deductible, management believes it is
     more likely than not the company will realize the benefits of these
     deductible differences, net of the existing valuation allowances at
     December 31, 2005. The amount of the deferred tax asset considered
     realizable, however, could be reduced in the near term if estimates of
     future taxable income during the carry forward period are reduced.

          The 37% income tax nominal rate for years 2003, 2004 and 2005 differs
     from 30%, 23% and 14.94% effective rate for years 2003, 2004 and 2005, due
     to the following:



                                             2003         2004         2005
                                          ----------   ---------   -----------
                                                          
Income before tax U.S. GAAP               Ps 677,609   Ps831,863   Ps1,047,611
                                          ----------   ---------   -----------
37% tax                                      250,716     307,789       387,616
Non-deductible items / provisions             26,946      15,433        48,225
Non-taxable income(1)                        (63,295)    (26,507)     (164,457)
Excess of accrued income over
   valuation income                          (18,690)     (7,735)      (52,793)
Amortization of excess of presumed
   income over ordinary income              (110,326)     (3,420)      (30,393)
Others                                        95,511     (17,569)      (30,818)
                                          ----------   ---------   -----------
Increase (decrease) valuation allowance       22,328     (78,254)         (890)
                                          ----------   ---------   -----------
Income tax                                Ps 203,190   Ps189,737   Ps  156,490
                                          ==========   =========   ===========


----------
(1)  For 2005, includes Off Shore subsidiaries's income tax, dividend income
     tax, gain on sales of stocks tax, interest income over mortgage securities
     tax, interest income on VIS housing loans tax and recoveries of deductible
     items tax.

          As of December 31, 2005, the Bank had the intention of capitalize the
     results from its off-shore Subsidiaries. Accordingly, no deferred income
     tax liability was recorded for the undistributed profits of Bancolombia
     Panama and its subsidiaries. The undistributed profits in such Subsidiaries
     is Ps 318,338 at December 31, 2005.

B)   EMPLOYEE BENEFIT PLANS:

          U.S. GAAP requires the recognition of pension cost based on actuarial
     computations under a prescribed methodology which differs from that used
     under Colombian GAAP. For purposes of the U.S. GAAP reconciliation, the
     transition obligation calculated at the date the Bank adopted SFAS 87 is
     being amortized from January 1, 1989, for a period of 18 years for the
     pension plan and 27 years for the severance plan.


                                      F-92


                        BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     Pension Plan

          In 1967, the Social Security Institute assumed the pension obligation
     for the majority of the Bank's employees; however, employees who had more
     than ten years of service prior to that date, continue to participate in
     the Bank's noncontributory unfounded defined benefit pension plan. Under
     this plan, benefits are based on length of service and level of
     compensation. As of December 31, 2005, there were 1,023 participants
     covered by the Plan.

          While Colombian GAAP requires calculation of the estimated liability
     using actuarial methodology given by the law, the actuarial assumptions,
     based on nominal discount, salary and pension increase rates, and the
     method of computing the net periodic pension costs differ from those
     required by U.S. GAAP.

     Severance obligation

           Under Colombian labor regulations, employees are entitled to receive
     one month's salary for each year of service. This benefit accumulates and
     is paid to the employees upon their termination or retirement from the
     Bank; however, employees may request advances against this benefit at any
     time. In 1990, the Colombian government revised its labor regulations to
     permit companies, subject to the approval of the employees, to pay the
     severance obligation to their employees on a current basis. Law 50 from
     1990, also enabled each worker freely to choose the pension fund that will
     manage the amount of his/her severance paid accrued during the year. This
     amount must be transferred by headquarters to the pension funds no later
     than the following period.

          Under U.S. GAAP, a curtailment is an event that significantly reduces
     the expected years of future service of present employees or eliminates for
     a significant number of employees the accrual of defined benefits for some
     or all of their future services. Consequently, this modification reduces,
     rather than increase, the projected benefit obligation. Such a reduction is
     used to reduce any existing unrecognized prior service cost, and the
     excess, if any, is amortized on the same basis as the cost of benefit
     increases.

          As of December 31, 2005 there were 1,855 participants remaining in the
     original severance plan.

          Until December 31, 2004 the determination of pension plan and
     severance obligation included employees from Bancolombia S.A. (the parent
     company), Almacenar S.A. and Abocol S.A.. As a result of the sale of Abocol
     S.A. dated December 29, 2005, 55 Abocol's employees who participated in the
     pension plan and 3 employees who participated in Severance plan were not
     included in the calculation. Bancolombia does not maintain any pension or
     severance obligation with Abocol's employees after the sale.

          Conavi and Corfinsura did not have a defined benefit plan to its
     employees and their employees are not entitled to join Bancolombia's
     defined benefit plan.


                                      F-93



                        BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     DISCLOSURE AND CALCULATION OF DIFFERENCES UNDER U.S. GAAP

          The combined costs for the above mentioned benefit plans, determined
     using U.S. GAAP, for the years ended December 31, 2003, 2004 and 2005 are
     summarized below:



                                                      2003         2004         2005
                                                   ----------   ----------   ----------
                                                                    
CHANGE IN BENEFIT OBLIGATION
Unfunded benefit obligation at beginning of year   Ps 107,257   Ps 113,715   Ps 127,629
Service cost                                            1,557        1,543        1,604
Interest cost                                          25,616       25,624       27,504
Actuarial gain (loss)                                  (1,025)       7,763        4,028
Effect of curtailments/settlements (*)                                           (4,545)
Benefits paid                                         (19,690)     (21,016)     (22,722)
                                                   ----------   ----------   ----------
Unfunded benefit obligation at end of year         Ps 113,715   Ps 127,629   Ps 133,498
                                                   ==========   ==========   ==========
Funded status                                        (113,715)    (127,629)    (133,498)
Unrecognized net transition loss                        6,541        5,493        4,388
Unrecognized net actuarial loss (gain)                 (4,872)       2,809        4,997
Unrecognized prior service cost                           860          716          559
                                                   ----------   ----------   ----------
Accrued benefit cost under U.S.GAAP                  (111,186)    (118,611)    (123,554)
                                                   ==========   ==========   ==========
Accrued benefit cost under Colombian GAAP             (90,103)     (98,731)    (101,941)
                                                   ----------   ----------   ----------
Difference to be recognized under U.S. GAAP           (21,083)     (19,880)     (21,613)
                                                   ----------   ----------   ----------
Additional minimum pension liability
      offset to Stockholders' equity                   (6,772)     (16,249)     (49,125)
                                                   ----------   ----------   ----------
      TOTAL DIFFERENCE TO BE RECOGNIZED UNDER
         U.S. GAAP STOCKHOLDERS' EQUITY            Ps (27,855)  Ps (36,129)  Ps (70,738)
                                                   ==========   ==========   ==========


----------
(*)  The effect of curtailment/settlement is related to the sale of Abocol S.A.

          The economic assumptions adopted are shown below in nominal terms.
     Those assumptions used in determining the actuarial presents value of
     pension obligation and the projected pension obligations for the plan years
     were as follows.



                                    2003    2004   2005
                                   -----   -----   ----
                                          
Discount rate                      13.94%  13.40%  8.68%
Rate of compensation increases      7.61%   7.10%  6.33%
Rate of pension increases           5.50%      5%  4.50%
                                   =====   =====   ====


          The economic assumptions used in the determination of pension
     obligation under U.S. GAAP differ from those used under Colombian GAAP
     because these are established annually by the Colombian law.


                                      F-94


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



                                                    2003       2004        2005
                                                  --------   --------   ---------
                                                               
COMPONENTS OF NET PERIODIC BENEFIT COST
Service cost                                      Ps 1,557   Ps 1,543   Ps  1,604
Interest cost                                       25,616     25,624      27,504
Amortization of prior service                          143        143         143
Amortization of unrecognized net transition
   obligation                                        1,047      1,048       1,048
Amortization of actuarial unrecognized net gain
   (loss)                                                5         82         562
                                                  --------   --------   ---------
Net periodic pension cost under U.S. GAAP           28,368     28,440      30,861
Net periodic pension cost under Colombian
   GAAP, net                                        30,125     29,643      29,128
                                                  --------   --------   ---------
Difference to be recognized under U.S. GAAP       Ps 1,757   Ps 1,203   Ps(1,733)
                                                  ========   ========   =========


     Estimated Future Benefit Payments

          The following benefit payments, which reflect expected future service,
     as appropriate, are expected to be paid:



                     PENSION     OTHER
                    BENEFITS   BENEFITS
                    --------   --------
                         
2006                 11,962     10,484
2007                 11,037      7,235
2008                 10,582      8,690
2009                 10,461     10,487
2010                 10,540      9,471
Years 2011 - 2015    52,207     88,416
                    ========   ========


C)   INFLATION ADJUSTMENT

          Since January 1, 1992, and up to December 31, 2000, the consolidated
     financial statements were adjusted for inflation based on the variation in
     the CPI for middle income-earners. The adjustment was applied monthly to
     non-monetary assets, equity (except for the revaluation surplus and
     exchange adjustment), contingent accounts and memorandum accounts. No
     adjustment was made to income, costs and expenses, and the financial
     statements for the preceding period did not have to be re-measured.

          Financial statements are adjusted for inflation under U.S. GAAP when
     an entity operates in a hyperinflationary environment. The U.S. GAAP
     adjustment represents the cumulative inflation adjustment on the Bank's
     non-monetary assets for inflation occurring prior to January 1, 2001, less
     depreciation expense.


                                      F-95



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

D)   REVALUATION OF ASSETS

          In accordance with Colombian GAAP, reappraisals of a portion of the
     Bank's premises and equipment, equity investments and other non-monetary
     assets are made periodically and recorded in offsetting accounts which are
     shown under the asset caption "reappraisal of assets" and the stockholders'
     equity caption "Surplus from reappraisals of assets". The last valuation
     was in December 2005. Under U.S. GAAP, reappraisals of assets are not
     permitted.

E)   ALLOWANCE FOR LOAN LOSSES

          The methodology for evaluating loans under Colombian GAAP, as
     discussed in Note 2 (j), is based on their inherent risk characteristics
     and serves as a basis for recording loss allowances based on loss
     percentage estimates, established by the Superintendency of Finance. Under
     both Colombian GAAP and U.S. GAAP, the loan loss allowance is determined
     and monitored on an ongoing basis, and is established through periodic
     provisions charged to operations.

          Under U.S. GAAP, allowance for loan losses represents management's
     estimate of probable losses inherent in the portfolio. Attribution of the
     allowance is made for analytical purposes only, and the entire allowance is
     available to absorb probable loan losses inherent in the portfolio
     including unfunded commitments. Additions to the allowance are made by
     means of the provision for loan losses. Loan losses are deducted from the
     allowance, and subsequent recoveries are added. Securities received in
     exchange for loan claims in debt restructurings are initially recorded at
     fair value, with any gain or loss reflected as a recovery or charge-off to
     the allowance, and are subsequently accounted for as securities
     available-for-sale.

          In the corporate portfolio, large-balances, non-homogeneous exposures
     representing significant individual credit exposures are evaluated based
     upon the borrower's overall financial condition, resources, and payment
     record; the prospects for support from any financially responsible
     guarantors; and, if appropriate, the realizable value of any collateral.
     Reserves are established for these loans based upon an estimate of probable
     losses for individual larger-balance, non-homogeneous loans deemed
     impaired. This estimate considers all available evidence including, as
     appropriate, the present value of the expected future cash flows discounted
     at the loan's contractual effective rate, the secondary market value of the
     loan and the fair value of collateral. The allowance for loan losses
     attributed to the remaining portfolio is established via a process that
     estimates the probable loss inherent in the portfolio based upon various
     statistical analysis. These analysis consider historical and projected
     default rates and loss severities; internal risk rating, industry, and
     other environmental factors. The Bank also considers overall portfolio
     indicators including trends in internally risk-rated exposures, classified
     exposures, cash-basis loans, historical and forecasted write-offs, and a
     review of industry, and portfolio concentrations, including current
     developments within those segments. In addition, the Bank considers the
     current business strategy and credit process, including credit limit
     setting and compliance, credit approvals, loan underwriting criteria, and
     loan workout procedures.


                                      F-96



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          Each portfolio of small-balances, homogeneous loans, including
     consumer revolving credit, credit cards, and most other consumer loans, is
     collectively evaluated for impairment. The allowance for credit losses
     attributed to these loans is established via a process that estimates the
     probable losses inherent in the portfolio, based upon various statistical
     analysis. These include migration analysis, in which historical delinquency
     and credit loss experience is applied to the current aging of the
     portfolio, together with analysis that reflect current trends and
     conditions. The Bank also considers overall portfolio indicators including
     historical credit losses, delinquent, non-performing and classified loans,
     and trends in volumes and terms of loans; an evaluation of overall credit
     quality and the credit process, including lending policies and procedures;
     and economic, geographical, product and other environmental factors.

          In general, commercial loans, which are 91 or more days past due and
     consumer loans, small business loans, and mortgage loans which are 61 or
     more days past due, together with certain other loans identified by
     management, are deemed to be impaired.

          The following summarizes the allowance for loan and financial lease
     losses under Colombian GAAP and U.S. GAAP at December 31, 2003, 2004 and
     2005:



                                                                2003        2004        2005
                                                             ---------   ---------   ----------
                                                                            
ALLOWANCE FOR LOANS, FINANCIAL LEASE LOSSES AND FORECLOSED
   ASSETS UNDER COLOMBIAN GAAP
Allowance for loans and financial lease losses               Ps400,838   Ps434,378   Ps705,882
Allowance for accrued interest and other receivable              5,597       4,729      10,358
Allowance for foreclosed assets                                135,121     140,865     205,182
                                                             ---------   ---------   ---------
                                                             Ps541,556   Ps579,972   Ps921,422
                                                             ---------   ---------   ---------
ALLOWANCE FOR LOAN LOSSES UNDER U.S. GAAP
Allowance for loans, financial lease, accrued interest
   losses and other related receivable
                                                               363,068     393,138     552,364
Allowance for foreclosed assets                                 76,126      84,631     151,394
                                                             ---------   ---------   ---------
                                                             Ps439,194   Ps477,769   Ps703,758
DIFFERENCE TO BE RECOGNIZED AS AN ADJUSTMENT TO
   COLOMBIAN GAAP STOCKHOLDERS' EQUITY
                                                             Ps102,362   Ps102,203   Ps217,664
                                                             =========   =========   =========


          An analysis of the activity in the allowance for loans and financial
     lease losses under U.S. GAAP during the year ended December 31, 2004 and
     2005 is as follows:



                                                2004         2005
                                             ----------   ----------
                                                    
Provision at the beginning of the period        363,068      393,138
Currency Translation and other adjustments      (12,751)      (3,955)
Charge-offs                                     (55,032)    (115,455)
Recoveries                                      (78,584)    (207,896)
Charged to profit and loss account              176,437      486,532
                                             ----------   ----------



                                      F-97



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



                                                2004         2005
                                             ----------   ----------
                                                    
Provision at the end of the period (1)          393,138      552,364
                                             ==========   ==========
Gross Loans and financial leases             10,035,239   18,626,252
Closing customers provisions as a
   percentage of gross loans                       3.92%        2.97%
Customers charges against profits as
   percentage of gross loans                       1.76%        2.61%


----------
(1)  Includes financial leases.

          At December 31, 2003, 2004, and 2005, the carrying value of loans
     considered to be impaired, under SFAS No. 114 (not including restructured
     loans) was approximately Ps 329,864, Ps 118,710 and Ps 211,423,
     respectively, and the related allowance for loan losses on those impaired
     loans totaled Ps 153,089, Ps 22,243 and Ps 92,611, respectively.

          For the years ended December 31, 2003, 2004 and 2005, the Bank
     recognized interest income of approximately Ps 5,586, Ps 6,653 and Ps
     10,918 respectively, on such impaired loans.

          The total amount of loans evaluated under a methodology different than
     SFAS 114 and SFAS 15 methodology was Ps 18,042,686.

     Foreclosed assets

          Under Colombian GAAP, the Bank must design and adopt its own internal
     models for the calculation of provisions for foreclosed assets by means of
     which the expected loss for all types of assets is estimated. For real
     estate, the provision is equal to 30% of the value of the asset at the time
     of receipt and must be constituted in proportional monthly installments
     within the first year following receipt. This provision will increase an
     additional 30% in proportional monthly installments within the second year
     following receipt of the asset. Once the legal term for sale has expired
     without authorization to extend, the provision must be 80% of the value
     upon receipt. In case the term extension is granted, the remaining 20% of
     the provision may be constituted within said term.

          For moveable assets, the provision is equal to 35% of the value of the
     asset at the time of acquisition and must be constituted in proportional
     monthly installments within the first year following receipt. Said
     provision must be increased and additional 35% within the second year
     following receipt of the asset. Once the legal term for sale has expired
     without authorization to extend, the provision must be 100% of the book
     value of the asset prior to provisions. In case the term extension is
     granted, the remaining 30% of the provision may be constituted within said
     term.

          Under U.S. GAAP, in order to assess for impairment its foreclosed
     assets, the Bank applies the methodology described by the SFAS 144 and SFAS
     15 with respect to the method to evaluate the recoverability of the assets
     and to the measurement of the impairment loss.


                                      F-98


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     Accordingly, after a troubled debt restructuring, the Bank accounts for
     assets received in satisfaction of a receivable the same as if the assets
     had been acquired for cash. The application of SFAS 15 results in the
     measurement of a new cost basis for the long-lived asset received in full
     satisfaction of a receivable. A loss is recognized for any initial or
     subsequent write-down to fair value less cost to sell. A gain is recognized
     for any subsequent increase in fair value less cost to sell, but not in
     excess of the cumulative loss previously recognized for a write-down to
     fair value less cost to sell.

F) LOAN ORIGINATION FEES AND COSTS

          Under Colombian GAAP, the Bank recognizes commissions (origination
     fees) on loans, lines of credit and letters of credit when collected and
     records related direct costs when incurred. For U.S. GAAP, under SFAS
     No.91, "Accounting for Non-refundable Fees and Costs Associated with
     Origination or Acquiring Loans and Initial Direct Costs of Leases", loan
     origination fees and certain direct loan origination cost are deferred and
     recognized over the life of the related loans as an adjustment of yield.

G) INTEREST RECOGNITION - NON-ACCRUAL LOANS

          For Colombian GAAP purposes, interest income is not accrued on (i)
     commercial loans that are more than 90 days past due, and (ii) consumer
     loans that are more than 60 days past due. From January 1, 2005, the
     Superintendency of Finance (before Superintendency of Banking) established
     that, interest income is not accrued on (i) small business loans that are
     more than 30 days past due, and (ii) mortgage loans that are more than 60
     days past due.

          Once a loan is non-performing, an allowance is established for 100% of
     the accrued interest receivable and the Bank ceases to recognize interest
     income on that loan. The Bank recognizes interest income on a cash basis
     non-accrual loans.

          Since March 25, 2003, the Bank established that commercial, consumer
     and small business loans that are past due more than thirty days will stop
     accruing interest in the statement of operations and their entries will be
     made in memorandum accounts until such time that the customer does not
     proceed to cancel.

          For U.S. GAAP purposes, all accrued interest is reversed against
     interest income once a loan becomes more than 90 days past due. U.S. GAAP
     also requires that, if the collectibility of the principal of a non-accrual
     loan is in doubt, cash payments should be applied to reduce the principal
     to the extent necessary to remove such doubt.

          For the years 2003 and 2004, interest income on past due commercial,
     consumer and small business loans between 31 and 90 days past due, was
     accounted as accrued interest.

          Additionally, for the year 2005, interest income on past due mortgage
     loans between 61 and 90 days past due, was accounted as accrued interest.


                                      F-99



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

H) DEFERRED CHARGES

          The Bank and its Subsidiaries have deferred certain pre-operating
     expenses and other deferred charges, which are expensed as incurred under
     U.S. GAAP.

I) INVESTMENT SECURITIES

          In September 2002, the Superintendency of Banking (now Superintendency
     of Finance) issued External Circular 033, which changed the classification
     of investment securities as "trading", "held to maturity", and "available
     for sale". According to this norm, an investment will be classified as
     "trading" when the Bank acquires it for the purpose of selling it in the
     near term, as "held to maturity" when the Bank has the intention and
     ability to hold it to maturity, and as "available for sale" when the
     investment is not classified as trading or held to maturity.

          Under U.S. GAAP, investment securities that have readily determinable
     market values are accounted for as follows:

          -    Debt and equity securities that are bought and held principally
               for the purpose of selling them in the short term are classified
               as "trading" securities and are reported at fair value, with
               unrealized gains and losses included in earnings.

          -    Debt securities that the Bank has the positive intent and ability
               to hold to maturity are classified as "held to maturity"
               securities and are reported at amortized cost.

          -    Debt and equity securities not classified as either "held to
               maturity" or "trading" securities are classified as "available
               for sale" securities and reported at fair value, with unrealized
               gains and losses excluded from earnings and reported net of
               taxes, as a separate component of stockholders' equity. Any loss
               in value of an investment considered other than temporary is
               recognized in earnings.

     FOREIGN EXCHANGE GAINS AND LOSSES ON SECURITIES AVAILABLE FOR SALE

          Under Colombian GAAP, movements resulting from changes in foreign
     currency exchange rates are reflected in consolidated statements of
     operations. Under U.S. GAAP, EITF 96-15, Accounting for the Effects of
     Changes in Foreign Currency Exchange Rates on Foreign-Currency-Denominated
     Available-for-Sale Debt Securities, the change in value of available for
     sale debt securities as a result of changes in foreign currency exchange
     rates is reflected in shareholders' equity.

          As of December 31, 2004 and 2005, the Bank's portfolio was classified
     as "trading", "held to maturity" and "available for sale".

          The carrying amounts, gross unrealized gains and losses and
     approximate fair value of debt securities classified as held-to-maturity
     and available for sale under U.S. GAAP are shown below:


                                     F-100



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)




                                                                       GROSS        GROSS
                                                                     UNREALIZED   UNREALIZED       COST
                                                        FAIR VALUE      GAINS       LOSSES        BASIS
                                                       -----------   ----------   ----------   -----------
                                                                                   
AVAILABLE FOR SALE - DEBT SECURITIES
DECEMBER 31, 2004
Securities issued or secured by Colombian government   Ps1,569,148    Ps67,258      Ps  385    Ps1,502,275
Securities issued or secured by government entities         19,060          34           --         19,026
Securities issued or secured by financial entities         190,261       3,130        5,506        192,637
Other investments                                          165,216         466          647        165,397
                                                       -----------    --------      -------    -----------
                                                       Ps1,943,685    Ps70,888      Ps6,538    Ps1,879,335
                                                       ===========    ========      =======    ===========




                                                                       GROSS        GROSS
                                                                     UNREALIZED   UNREALIZED       COST
                                                        FAIR VALUE      GAINS       LOSSES        BASIS
                                                       -----------   ----------   ----------   -----------
                                                                                   
AVAILABLE FOR SALE - DEBT SECURITIES
DECEMBER 31, 2005
Securities issued or secured by Colombian government   Ps1,393,881    Ps60,540      Ps  868    Ps1,334,209
Securities issued or secured by government entities          3,431         256           --          3,175
Securities issued or secured by financial entities         106,242         646        2,164        107,760
Other investments                                          339,002       1,776        2,713        339,939
                                                       -----------    --------      -------    -----------
                                                       Ps1,842,556    Ps63,218      Ps5,745    Ps1,785,083
                                                       ===========    ========      =======    ===========





                                                                       GROSS        GROSS
                                                                     UNREALIZED   UNREALIZED       COST
                                                        FAIR VALUE      GAINS       LOSSES        BASIS
                                                       -----------   ----------   ----------   -----------
                                                                                   
HELD TO MATURITY
DECEMBER 31, 2004
Securities issued or secured by Colombian government    Ps590,444     Ps17,115     Ps87,441     Ps660,770
Securities issued or secured by financial entities         20,728          235        2,085        22,578
Other investments                                          48,212          246        2,037        50,003
                                                        ---------     --------     --------     ---------
                                                        Ps659,384     Ps17,596     Ps91,563     Ps733,351
                                                        =========     ========     ========     =========





                                                                       GROSS        GROSS
                                                                     UNREALIZED   UNREALIZED       COST
                                                        FAIR VALUE      GAINS       LOSSES        BASIS
                                                       -----------   ----------   ----------   -----------
                                                                                   
HELD TO MATURITY
DECEMBER 31, 2005
Securities issued or secured by Colombian government    Ps817,008     Ps 9,251     Ps100,798   Ps  908,555
Securities issued or secured by financial entities         47,768          629         1,271        48,410
Other investments                                          61,156        1,290         4,548        64,414
                                                        ---------     --------     ---------   -----------
                                                        Ps925,932     Ps11,170     Ps106,617   Ps1,021,379
                                                        =========     ========     =========   ===========



                                     F-101



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)




                                                                       GROSS        GROSS
                                                                     UNREALIZED   UNREALIZED       COST
                                                        FAIR VALUE      GAINS       LOSSES        BASIS
                                                       -----------   ----------   ----------   -----------
                                                                                   
AVAILABLE FOR SALE - EQUITY SECURITIES
DECEMBER 31, 2004
Corfinsura                                               Ps55,749     Ps38,748        Ps--       Ps17,001
                                                         --------     --------        ----       --------
                                                         Ps55,749     Ps38,748        Ps--       Ps17,001
                                                         ========     ========        ====       ========





                                                                       GROSS        GROSS
                                                                     UNREALIZED   UNREALIZED       COST
                                                        FAIR VALUE      GAINS       LOSSES        BASIS
                                                       -----------   ----------   ----------   -----------
                                                                                   
AVAILABLE FOR SALE - EQUITY SECURITIES
DECEMBER 31, 2005
Compania Suramericana de Inversiones S.A
   Surainversiones                                       Ps64,672     Ps64,665        Ps--         Ps7
                                                         --------     --------        ----         ---
                                                         Ps64,672     Ps64,665        Ps--         Ps7
                                                         ========     ========        ====         ===


    The scheduled maturities of debt securities at December 31, 2005 were as
                                    follows:



                                       HELD TO MATURITY          AVAILABLE FOR SALE
                                   -----------------------   -------------------------
                                    AMORTIZED       FAIR      AMORTIZED        FAIR
                                       COST        VALUE         COST         VALUE
                                   -----------   ---------   -----------   -----------
                                                               
Due in one year or less            Ps   49,024   Ps 49,111   Ps  132,393   Ps  132,496
Due from one year to five years        585,142     590,530     1,475,492     1,523,357
Due from five years to ten years       387,070     286,184       172,646       181,892
Due more ten years                         143         107         4,552         4,811
                                   -----------   ---------   -----------   -----------
   TOTAL                           Ps1,021,379   Ps925,932   Ps1,785,083   Ps1,842,556
                                   ===========   =========   ===========   ===========


          Investments classified as "Held to maturity" for purposes of U.S. GAAP
     are securities issued or secured by the Colombian government, which the
     Bank has the intention and ability to hold to maturity.

          The cost of available for sale securities was determined based on its
     carrying amount plus gross unrealized losses minus gross unrealized gains.
     The cost of securities classified as held to maturity is equal to the
     carrying amount under Colombian GAAP, as these investments are not
     accounted for at fair value.

          The Bank is not required under Colombian GAAP to disclose the proceeds
     from the sale of investment securities nor gains or losses resulting from
     such sales. As a result, it is not feasible to obtain that information in a
     reasonable manner for disclosure under U.S. GAAP.


                                     F-102


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     UNREALIZED LOSSES DISCLOSURE

          Investments that have been in continuous unrealized loss position for
     less than 12 months are:



                                                                      GROSS
                                                                    UNREALIZED      COST
                                                       FAIR VALUE     LOSSES       BASIS
                                                       ----------   ----------   ---------
                                                                        
AVAILABLE FOR SALE
DECEMBER 31, 2005
Securities issued or secured by Colombian government    Ps246,622    Ps  868     Ps247,490
Securities issued or secured by financial entities         19,777         47        19,824
Other investments                                          86,754      2,513        89,267
                                                        ---------    -------     ---------
   TOTAL                                                Ps353,153    Ps3,428     Ps356,581
                                                        =========    =======     =========




                                                                      GROSS
                                                                    UNREALIZED      COST
                                                       FAIR VALUE     LOSSES       BASIS
                                                       ----------   ----------   ---------
                                                                        
HELD TO MATURITY
DECEMBER 31, 2005
Securities issued or secured by Colombian government    Ps 94,968    Ps31,077    Ps126,045
Securities issued or secured by financial entities         22,362         127       22,489
Other investments                                          10,683       4,544       15,227
                                                        ---------    --------    ---------
   TOTAL                                                Ps128,013    Ps35,748    Ps163,761
                                                        =========    ========    =========


          Investments that have been in continuous unrealized loss position for
     12 months or longer are:



                                                                      GROSS
                                                                    UNREALIZED     COST
                                                       FAIR VALUE     LOSSES      BASIS
                                                       ----------   ----------   --------
                                                                        
IMPAIRMENT AVAILABLE FOR SALE
DECEMBER 31, 2005
Securities issued or secured by financial entities      Ps17,976      Ps2,117    Ps20,093
Other investments                                         40,786          200      40,986
                                                        --------      -------    --------
   TOTAL                                                Ps58,762      Ps2,317    Ps61,079
                                                        ========      =======    ========



                                      F-103



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



                                                                      GROSS
                                                                    UNREALIZED     COST
                                                       FAIR VALUE     LOSSES      BASIS
                                                       ----------   ----------   --------
                                                                        
IMPAIRMENT HELD TO MATURITY
DECEMBER 31, 2005
Securities issued or secured by Colombian government    Ps228,802    Ps69,721    Ps298,523
Securities issued or secured by financial entities          8,848       1,144        9,992
Other investments                                           5,453           4        5,457
                                                        ---------    --------    ---------
   TOTAL                                                Ps243,103    Ps70,869    Ps313,972
                                                        =========    ========    =========


          SECURITIES ISSUED OR SECURED BY COLOMBIAN GOVERNMENT: The unrealized
     losses on this category are related to mandatory investments issued by the
     Ministry of Finance. The unrealized losses were caused by interest rate
     increases. Because the Bank has the ability and intent to hold those
     investments until a recovery of fair value, which may be maturity, the Bank
     does not consider those investments to be other-than-temporarily impaired
     at December 31, 2005.

          As of December 31, 2005, 322 investment securities presented gross
     unrealized losses.

          No other-than-temporary impairment has been recognized for the
     investment in debt securities held to maturity because the Bank has the
     ability and the positive intent to hold these securities until the
     amortized cost is recovered, there does not appear to be any credit
     deterioration, and recovery seems probable. Held to maturity investments
     that presented gross unrealized losses correspond to mandatory investments.

          The amount of unrealized holding gain or loss on trading securities
     included in earnings during 2004 and 2005 was Ps266,428 and Ps476,139,
     respectively.

          The Bank conducts regular reviews to assess whether other than
     temporary impairment exists. A number of factors are considered in
     performing an impairment analysis of securities.

          Those factors include:

          (a)  the length of time and the extent to which the market value has
               been less than cost;

          (b)  the financial condition and near-term prospects of the issuer,
               including any specific events which may influence the operations
               of the issuer (such as changes in technology that may impair the
               earnings potential of the investment, or the discontinuance of a
               segment of a business that may affect the future earnings
               potential); or


                                      F-104



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          (c)  the intent and ability of the Bank to retain its investment in
               the issuer for a period of time sufficient to allow for any
               anticipated recovery in market value.

          The Bank also takes into account changes in economic conditions
     globally, regionally, or related to specific issuers or industries that
     could adversely affect these values.

J)   INVESTMENT IN UNAFFILIATED COMPANIES. HIGH AND MEDIUM VOLUME QUOTATION
     INVESTMENT SECURITIES CLASSIFIED AS "AVAILABLE FOR SALE" UNDER COLOMBIAN
     GAAP

          For purposes of Colombian GAAP, an investment in High and Medium
     volume quotation equity securities of an investee is recorded using the
     average price published by the exchange. The result of the valuation is
     recorded as unrealized gain or loss in shareholders' equity. The investee
     also records common stock dividends as income.

          Under U.S. GAAP, an investment in non-marketable equity securities of
     an investee is recorded at cost if the investor cannot exercise significant
     influence. However, dividends paid in the form of additional shares of
     common stock are not recorded as income. Instead, the costs of the shares
     previously held are allocated equitably to the total shares held after
     receipt of the stock dividend. When any shares are later disposed of, a
     gain or loss is determined on the basis of the adjusted cost per share.

K)   INVESTMENTS IN AFFILIATES. INVESTMENTS IN LOW, MINIMUM EXCHANGE OR UNQUOTED
     EQUITY SECURITIES CLASSIFIED AS "AVAILABLE FOR SALE" FOR PURPOSES OF
     COLOMBIAN GAAP

          Under Colombian GAAP, low and minimum volume and unquoted equity
     securities are valuated pursuant the shareholders' equity comparison
     method. Under this method, the Bank accounts for increases of shareholders'
     equity of the investee as reappraisal, and decreases as devaluation. If at
     the valuation date the shareholders' equity of the investee is less than
     its previous value, and the Bank had registered a reappraisal, this
     reappraisal is affected until it runs out. Once reappraisal runs out, the
     Bank records a devaluation. Likewise, if on the valuation date the
     shareholders' equity of the investee is greater than its previous value,
     and the Bank had registered a devaluation, this reappraisal is affected
     until it runs out. Once devaluation runs out, the Bank records a
     reappraisal.

          Under U.S. GAAP, an investment in non-marketable equity securities is
     recorded using the equity method when the investor can exercise significant
     influence or the cost method when significant influence cannot be
     exercised.


                                      F-105



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

L)   LESSOR ACCOUNTING

          The Bank's Subsidiaries, Bancolombia Panama S.A., Sufinanciamiento
     S.A., Suleasing Internacional, Surenting S.A., Banco Corfinsura
     Internacional and Leasing Colombia S.A., lease certain assets to third
     parties under non-cancelable lease arrangements. These lease arrangements
     involve machinery and equipment, computer equipment, automobile and
     furniture and fixtures (with terms between three and five years).

          Under Colombian GAAP, for financial entities, leases are classified
     into financial leases and operating leases. Since January 1, 2004, goods
     given in financial lease to third parties with a purchase option are
     recorded in the loan portfolio. Goods given in operating lease are recorded
     as property, plant and equipment. For both types of leasing, the initial
     record must represent the value to be financed of the good given in leasing
     (that is, the acquisition or construction cost) and the value of the
     improvement and expenses that can be capitalized, which represent a greater
     value of the lease operation to be financed.

          Under U.S. GAAP, a net investment in direct financing leases would be
     established in an account representing the present value of the minimum
     lease payments plus the unguaranteed residual value accruing to the benefit
     of the lessor.

          Surenting applied a specific provision of Colombian GAAP for leases.
     Under this regulation, leases are classified as operating leases, even if
     the contracts were signed with a purchase option. Under U.S. GAAP some of
     their contracts classified as financial leasing after applying the criteria
     for classifying leases established in SFAS 13.

     Disclosure lessor accounting

          The following lists the components of the net investment in direct
     financial leases as of December 31, 2004 and 2005:



                                                   2004          2005
                                               -----------   -----------
                                                       
Total minimum lease payments to be received    Ps1,091,505   Ps3,033,438
Estimated residual values of leased property        55,937       174,866
Less: Unearned income                             (285,896)     (721,848)
                                               -----------   -----------
Net investment in direct financial leases      Ps  861,546   Ps2,486,456
                                               ===========   ===========


          The following schedule shows the future minimum lease payments to be
     received on direct financial leases for each of the next five years and
     thereafter.


                                      F-106


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)


                                                  
YEAR ENDED DECEMBER 31,
2006                                                 Ps  681,431
2007                                                     674,681
2008                                                     675,241
2009                                                     348,211
2010                                                     300,525
Later years, through 2011                                353,349
                                                     -----------
TOTAL MINIMUM FUTURE LEASE PAYMENTS TO BE RECEIVED   Ps3,033,438
                                                     ===========


          The following schedule shows the future minimum lease payments to be
     received on direct operating leases for each of the next five years and
     thereafter.


                                                  
YEAR ENDED DECEMBER 31,
2006                                                 Ps 59,402
2007                                                    47,138
2008                                                    28,506
2009                                                    11,278
2010                                                     4,780
Later years, through 2011                                   --
                                                     ---------
TOTAL MINIMUM FUTURE LEASE PAYMENTS TO BE RECEIVED   Ps151,104
                                                     =========


M)   BUSINESS COMBINATIONS

          Purchase method of accounting

          Upon a business combination, the purchase method of accounting under
     U.S. GAAP requires that (i) the purchase price be allocated to the
     identifiable acquired assets and liabilities on the basis of fair market
     value, (ii) the statement of operations of the acquiring company for the
     period in which a business combination occurs include the income of the
     acquired company after the date of acquisition, and (iii) the costs
     directly related to the purchase of a business combination be included as a
     cost of the acquisition and, therefore, recorded as a component of
     goodwill.

          Upon a business combination, the purchase method of accounting under
     Colombian GAAP requires that (i) the purchase price be allocated to the
     acquired assets and liabilities on the basis of their book value, (ii) the
     statement of income of the acquiring company for the period in which a
     business combination occurs include the income of the acquired company as
     if the acquisition had occurred on the first day of the reporting period
     and (iii) the costs directly related to the purchase business combination
     not be considered as a cost of the acquisition, but deferred and amortized
     over a reasonable period as determined by management.


                                     F-107



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          Conavi and Corfinsura acquisition was accounted for using the pooling
     of interests method under Colombian GAAP, in accordance with the
     methodology suggested by the Superintendency of Finance.

          Sufinanciamiento acquisition

          On December 29, 2003, the Bank and its Subsidiaries acquired 99.99% of
     the outstanding common shares of Sufinanciamiento S.A. Under U.S. GAAP, the
     results of Sufinanciamiento's operations have been included in the
     consolidated financial statements since that date. Sufinanciamiento is a
     commercial financing company, specializing in automobile loans.

          The acquisition of Sufinanciamiento will allow the Bank and its
     Subsidiaries to complement its portfolio of products improving commercial
     financing activities, more specifically automobile financing. The aggregate
     purchase price was Ps 75,016 paid in cash.

          The following table summarizes the estimated fair values of the assets
     acquired and liabilities assumed at the date of acquisition.



                                              FAIR VALUE OF ASSETS ACQUIRED AND
                                             LIABILITIES ASSUMED UNDER U.S. GAAP
                                                    FROM SUFINANCIAMIENTO
                                                   AS OF DECEMBER 31, 2003
                                             -----------------------------------
                                          
TOTAL PURCHASE PRICE, NET OF CASH ACQUIRED                Ps 63,622
                                                          ---------
Assets acquired                                             304,256
Premises and equipment, net                                   7,358
Liabilities assumed                                         269,268
                                                          ---------
NET ASSETS ACQUIRED                                       Ps 42,346
                                                          =========
EXCESS OF COST OVER THE FAIR VALUE OF
   ACQUIRED NET ASSETS                                       21,276
INTANGIBLE ASSET                                              1,562
                                                          ---------
GOODWILL                                                  Ps 19,714
                                                          =========


          The excess of purchase price amounted to Ps 21,276 and Ps 1,562 was
     assigned to a contract with Almacenes Exito (intangible assets) while the
     remaining Ps 19,714 was assigned to goodwill.

          In 2003 Sufinanciamiento S.A. signed an agreement with Almacenes
     Exito, a major retailer in Colombia, whereby the former will be the only
     financing provider to the latter's clients. Given the significance of this
     agreement to Sufinanciamiento's operations and the future benefits it will
     bring to the Bank's strategic and financial positions, this contractual
     relationship has been identified as an intangible asset and fair valued by
     the Bank.


                                     F-108



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          The following unaudited pro forma information for 2002 and 2003
     reflects the consolidated results of operations as if the acquisition had
     occurred at the beginning of each year presented and includes the
     amortization of intangibles, as appropriate. The unaudited pro forma
     financial information presented is not necessarily indicative of the
     results of operations that might have occurred had the transaction been
     completed at the beginning of the year specified, and does not purport to
     represent what the consolidated results might be for any future period.



                          2003
                       ---------
                    
U.S. GAAP Net income     481,736
Revenues               1,465,973
Earnings per share      1,088.44
                       =========


          Under Colombian GAAP, the Bank consolidated Sufinanciamiento's
     earnings since January 1, 2003, as if the acquisition had occurred at the
     beginning of the year. Accordingly, virtually all of the amounts for
     pre-acquisition periods in the primary financial statements are different
     from the amounts that would be presented under U.S. GAAP. In effect, the
     financial statements presented as the primary financial statements are of a
     different reporting entity than would be required under U.S. GAAP.

          The Bank understands that, in these circumstances, reconciliation of
     net income and stockholders' equity alone will not produce information
     content substantially similar to U.S. GAAP with respect to the
     pre-acquisition periods. However, given the insignificance of
     Sufinanciamiento's operations, the Bank decided not to present a columnar
     reconciliation removing the acquired business. The Bank also believes that
     the differences are not so pervasive that U.S. GAAP condensed income and
     cash flow statements are necessary.

          Conavi and Corfinsura acquisition

          On July 30, 2005, Bancolombia acquired 71.18 percent and 95.39 percent
     of the outstanding common shares of Conavi and Corfinsura respectively. For
     purposes of U.S. GAAP, the results of Conavi and Corfinsura's operations
     have been included in the consolidated financial statements since that
     date.

          Conavi and Corfinsura were leading financial institutions in the
     Colombian market. Conavi, a bank devoted to raising resources from
     individuals through savings accounts and to mortgage banking. Conavi was
     the country's leader in mortgage lending with a market share of 19.3% as of
     the date of the Merger, according to the Superintendency of Finance.


                                     F-109


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          Corfinsura was the largest financial corporation in Colombia as of the
date of the Merger with a market share in net loans of 55.9%, according to the
Superintendency of Finance. Known for its expertise in handling large and
mid-sized corporate credit and financial services through close customer
relationships, Corfinsura also has a highly respected investment bank, as well
as a modern and diversified treasury department, focused on strucured products.
As of December 31, 2004, Corfinsura's consolidated total asset value amounted to
Ps6,396 billion.

          At the time of the Merger Corfinsura (after the spin-off) was the
holding company of Banco Corfinsura Internacional Inc. a Bank domiciled in
Puerto Rico, as well as other important financial institutions in Colombia, such
as Suvalor S.A. Comisionista de Bolsa, Colombia's leading security brokerage
firm, Suleasing S.A., one of the two leading leasing companies in the country
(together with Leasing Colombia S.A., Bancolombia's Subsidiary) as of the date
of the Merger, which was in turn the holding company of leasing companies
domiciled in Panama and Florida, United States; Surenting S.A., the leading
fleet renting in Colombia at the time of the Merger and Fiduciaria Corfinsura
S.A., a fiduciary trust company.

          With this Merger, the Bank has become the most important financial
institution in Colombia and one of the largest in Latin America, obtaining
significant advantages such as reducing operating costs in the mid term, greater
risk diversification by lessening the degree of concentration of such and
providing an integrated portfolio of services, among others. Furthermore,
overall equity has been extended with this Merger, allowing in turn for the
financing of larger scale projects, contrary to those that each of our
individual companies was able to finance in the past.

          The aggregate purchase price, net of cash was Ps 1,133,728, paid in
through the issuance of common and preferred shares in exchange for Corfinsura
and Conavi's shares. The value of the 111,444,976 common shares and the
39,686,634 preferred shares issued was determined based on the average market
price of Bancolombia's common and preferred shares over the 2-day period before
and after the terms of the acquisition were agreed to and ann The aggregate
purchase price includes merger expenses of Ps 10,524.

          For Colombian GAAP purposes the results of operations of the acquired
entities were included in the consolidated statements of operations of the
combined entity since January 1, 2005.

          In the acquisition agreement for the Merger there are not specified
contingent payments, options, or commitments.

          The following tables summarizes the estimated fair values of the
assets acquired and liabilities assumed at the date of acquisition. Bancolombia
is in the process of obtaining third-party valuations of certain intangible
assets; thus, the allocation of the purchase price is subject to refinement.


                                      F-110



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



                                                              FAIR VALUE OF ASSETS
                                                            ACQUIRED AND LIABILITIES
                                                             ASSUMED UNDER U.S. GAAP
                                                                   FROM CONAVI
                                                               AS OF JULY 31, 2005
                                                            ------------------------
                                                         
TOTAL PURCHASE PRICE, NET OF CASH ACQUIRED                         Ps  316,864
                                                                   -----------
Assets acquired                                                      2,921,925
Premises and equipment, net                                            209,535
Liabilities assumed                                                  3,006,974
                                                                   -----------
NET ASSETS ACQUIRED                                                Ps  124,486
                                                                   ===========
Excess of cost over the fair value of acquired net assets              192,378

Intangible Asset                                                       122,269
                                                                   -----------
GOODWILL                                                           Ps   70,109
                                                                   ===========




                                                              FAIR VALUE OF ASSETS
                                                            ACQUIRED AND LIABILITIES
                                                             ASSUMED UNDER U.S. GAAP
                                                                 FROM CORFINSURA
                                                               AS OF JULY 31, 2005
                                                            ------------------------
                                                         
TOTAL PURCHASE PRICE, NET OF CASH ACQUIRED                         Ps  816,864
                                                                   -----------
Assets acquired                                                      4,969,839
Premises and equipment, net                                            142,872
Liabilities assumed                                                  4,739,515
                                                                   -----------
NET ASSETS ACQUIRED                                                Ps  373,196
                                                                   ===========
Excess of cost over the fair value of acquired net assets              443,668

Intangible Asset                                                       105,294
                                                                   -----------
GOODWILL                                                           Ps  338,374
                                                                   ===========


          Of the Ps227,563 of acquired intangible assets, Ps73,134 was assigned
     to registered brands that are not subject to amortization and Ps 154,429
     was assigned to service asset, asset management and Customers
     relationships. The acquired intangible assets subject to amortization have
     a weighted-average useful life of approximately 14 years.

          The following are the descriptions for each intangible asset valued. A
     detailed breakdown of intangibles values is showed above in the goodwill
     and intangible assets section:

          Brand

          Brand intangibles are obtained from the Companies capacity to capture
     a greater market share through new customers.

          Customer relationships and contractual agreements

          Customer relationships and contractual agreements intangibles are
     obtained from the level of repeat clients, remaining with the Company and
     providing gains for a specific period of time.


                                      F-111



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          The following unaudited pro forma information for 2004 and 2005
     reflects the consolidated results of operations as if the acquisition of
     Conavi and Corfinsura had occurred at the beginning of each year presented
     and includes the amortization of intangibles, as appropriate. The unaudited
     pro forma financial information presented is not necessarily indicative of
     the results of operations that might have occurred had the transaction been
     completed at the beginning of the year specified, and does not purport to
     represent what the consolidated results might be for any future period.



                           2004
                       -----------
                    
U.S. GAAP Net income   Ps  787,778
Revenues                 5,446,198
Earnings per share     Ps 1,731.38
                       ===========




                           2005
                       -----------
                    
U.S. GAAP Net income   Ps  996,311
Revenues                 7,196,028
Earnings per share     Ps 2,189.70
                       ===========


          The following is a breakdown of the adjustments to the Stockholders'
     Equity related to Conavi and Corfinsura business combination:



                                                                2005
                                                             ----------
                                                          
Fair value of fixed and foreclosed assets                    Ps  85,545
Service asset                                                     6,023
Fair value of time deposits and long term debt                   55,516
Fair value of loans                                            (317,293)
Securitization of non performing loans                           27,503
Conavi and Corfinsura net income from January to July 2005     (113,296)
Goodwill and other intangible assets                            624,291
                                                             ----------
BUSINESS COMBINATION CONAVI AND CORFINSURA                   Ps 368,289
                                                             ==========


          FAIR VALUE OF FIXED AND FORECLOSED ASSETS

          The difference between the fair value of fixed and foreclosed assets
     and their book value is adjusted by the effect of the depreciation and by
     the effect of sales and written - offs.


                                      F-112


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          FAIR VALUE OF TIME DEPOSITS, LONG TERM DEBT AND LOANS

          The difference between the fair value of loans, time deposits and long
     term debt and their book value is adjusted by the effect of the
     amortization of the discount or the premium during the estimated average
     life of these assets and liabilities.

          SECURITIZATION OF NON PERFORMING LOANS

          Under U.S. GAAP securitization of non performing loans carried out by
     Conavi, does not meets the definition criteria of transfers of financial
     assets by sale. The adjustment correspond to the recognition of a secured
     borrowing under U.S. GAAP which under Colombian GAAP is not accounted for.

          SERVICE ASSET

          Under Colombian GAAP Conavi did not recognize any asset or liability
     associated with the service of the securitizated performing loans. For U.S.
     GAAP purposes the Bank has recognized a service asset. This asset is
     adjusted by the effect of the amortization during its estimated average
     life.

          Goodwill and intangible assets

          Under U.S. GAAP, from January 1, 2002, the Bank no longer amortizes
     goodwill, but it is subject to an annual impairment test.

          Prior to December 31, 2001, the Bank recognized an excess of fair
     value of acquired net assets over cost (commonly referred to as negative
     goodwill) on certain business combinations. Under Colombian GAAP, negative
     goodwill is recorded as a liability and it is amortized over a period of
     five years.

          Under U.S. GAAP, as explained previously, the Bank adopted SFAS No.
     141 on January 1, 2002. Upon adoption of SFAS No. 141, any unamortized
     negative goodwill related to an excess over cost arising from business
     combinations for which the acquisition date was before July 1, 2001 was
     written off and recognized as the effect of a change in accounting
     principle.

          The Bank has performed the required impairment test of each reporting
     unit's goodwill and concluded that there was no impairment of goodwill.
     Accordingly, the Bank reversed the amortization of goodwill from Colombian
     GAAP for the year ended 2005.

          The activity of the goodwill and intangible assets during the years
     ended December 31, 2003, 2004 and 2005 is as follows:


                                     F-113



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



                                  2003        2004        2005
                               ---------   ---------   ---------
                                              
GOODWILL
Balance at beginning of year   Ps141,553   Ps161,267   Ps161,267
Additions                         19,714          --     408,483
                               ---------   ---------   ---------
Balance at end of year         Ps161,267   Ps161,267   Ps569,750
                               =========   =========   =========


          Goodwill by segments was as follows:



                               DECEMBER 31,   DECEMBER 31,
                                   2004           2005
                               ------------   ------------
                                        
Commercial Banking               Ps 33,114      Ps251,703
Retail Banking                     104,443        151,420
Small Business Banking              23,710         27,784
Leasing                                 --         54,238
Trust                                   --          2,493
Offshore Commercial Banking             --         31,534
Brokerage                               --         43,722
Government Banking                      --          1,199
Builder Banking                         --          4,326
Other segments                          --          1,331
                                 ---------      ---------
Total Goodwill                   Ps161,267      Ps569,750
                                 =========      =========




                                 2004       2005
                               -------   ---------
                                   
INTANGIBLE ASSETS
Balance at beginning of year   Ps1,562   Ps  1,406
Additions                           --     227,563
Amortization                      (156)     (5,889)
                               -------   ---------
Balance at end of year         Ps1,406   Ps223,080
                               =======   =========


          Intangible assets were as follows:



                                           DECEMBER 31, 2004              DECEMBER 31, 2005
                                    -----------------------------   -----------------------------
                                    GROSS CARRYING    ACUMMULATED   GROSS CARRYING    ACUMMULATED
                                        AMOUNT       AMORTIZATION       AMOUNT       AMORTIZATION
                                    --------------   ------------   --------------   ------------
                                                                         
Non-Amortizable intangible assets       Ps   --                        Ps 73,134
Amortizable intangible assets           Ps1,562          Ps156         Ps155,991        Ps6,045
                                        =======          =====         =========        =======



                                     F-114



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          The following table shows the amortizable intangible assets, detailed
     with their respective useful lives.



                                    ESTIMATED USEFUL
                          VALUE       LIFE (MONTHS)
                        ---------   ----------------
                              
Service asset           Ps  6,206          169
Asset management           30,004          125
Loan                       77,354          201
Deposits                   20,027          166
Customer relationship      22,400          105
                        ---------
                        Ps155,991
                        =========


          Until December 31, 2004 the total amount of goodwill outstanding was
     tax deductible in accordance with tax regulations in Colombia. Accordingly,
     deferred income taxes were recorded for the difference between the
     unamortized amount of goodwill under Colombian GAAP and the balance under
     U.S. GAAP. Since January 1, 2005 under Colombian GAAP this amount is no
     longer deductible and this difference is accordingly treated as permanent
     under U.S. GAAP and not recorded as deferred tax.

N)   SECURITIZATION

          The Bank has securitized both performing and non-performing mortgage
     loans which, according to Colombian GAAP, have been accounted for as sales
     and, as such, said loans have been removed from the Bank's balance sheet.
     Upon applying the principle set out in Paragraph 9 of SFAS No. 140
     "Accounting for Transfers and Servicing of Financial Assets and
     Extinguishments of Liabilities" to the securitization operations carried
     out, the Bank finds that the securitization of non-performing loans does
     not comply with the conditions qualifying a transfer by means of sale
     according to U.S. GAAP. For this reason, and for the purposes of U.S. GAAP,
     the securitization of non-performing loans are accounted for as a secured
     borrowing.

O)   FOREIGN CURRENCY TRANSLATION ADJUSTMENT

          For Colombian GAAP, the translation adjustments resulting in the
     conversion of foreign currency statements was included in the determination
     of net income.

          Under U.S. GAAP, according to SFAS No. 52 and SFAS No. 130, the
     translation adjustments shall be reported as a component of stockholders'
     equity, in other comprehensive income.


                                     F-115


                       BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
          (Stated in millions of pesos and thousands of U.S. dollars)

P)   MINORITY INTEREST

          The minority interest corresponds to the proportional adjustments to
     the shareholders equity and net income originated by the subsidiaries where
     Bancolombia holds less than 100% of participation.

Q)   DISCONTINUED OPERATIONS

          In 2005, Bancolombia sold its business Abocol. On November 22, 2005,
     the Bank entered into a preliminary agreement with Incorbank Banqueros de
     Inversion, Inversiones en Logistica y Seguridad de Transporte Ltda.
     Inverloset, Equity Investment S.A, Rodriguez Azuero Asociados S.A. and
     other individuals to begin negotiations relating to a proposed purchase
     agreement, by which the Bank would sell all of the Almacenar S.A. shares it
     holds directly (94.33%) and through Colcorp S.A. (3.92%). Both businesses
     qualify as discontinued operations under U.S. GAAP. The results of the
     discontinued operations under U.S. GAAP were as follows:



                                                2004        2005
                                              --------   ---------
                                                   
Profit from discontinued operations
   including profit on disposal of Ps18,072   Ps20,703   Ps(13,230)
                                              ========   =========


R)   GUARANTEES

          In order to meet the needs of its customers, the Bank issues financial
     standby letters of credit and bank guarantees. At December 31, 2004 and
     2005, outstanding letters of credits and bank guarantees issued by the Bank
     totaled Ps 559,018 and Ps 838,675, respectively.

          The table below summarizes, at December 31, 2004 and 2005, all of the
     Bank's guarantees where the Bank is the guarantor. The maximum potential
     amount of future payments represents the notional amounts that could be
     lost under the guarantees if there were a total default by the guaranteed
     parties, without consideration of possible recoveries under recourse
     provisions or from collateral held or pledged. Such amounts bear no
     relationship to the anticipated losses on these guarantees and greatly
     exceed anticipated losses.



                                                                                                         MAXIMUM POTENTIAL
                                  EXPIRE WITHIN ONE       EXPIRE AFTER ONE          TOTAL AMOUNT          AMOUNT OF FUTURE
                                         YEAR                   YEAR                OUTSTANDING               PAYMENTS
                                ---------------------   --------------------   ---------------------   ---------------------
                                   2004        2005       2004        2005        2004        2005        2004        2005
                                ---------   ---------   --------   ---------   ---------   ---------   ---------   ---------
                                                                                           
Financial standby letters of    Ps402,969   Ps474,159   Ps18,674    Ps19,061   Ps421,643   Ps493,220   Ps421,643   Ps493,220
   credit

Bank guarantees                    69,104     122,280     68,271     223,175     137,375     345,455     137,375     345,455
                                ---------   ---------   --------   ---------   ---------   ---------   ---------   ---------
   TOTAL                        Ps472,073   Ps596,439   Ps86,945   Ps242,236   Ps559,018   Ps838,675   Ps559,018   Ps838,675
                                =========   =========   ========   =========   =========   =========   =========   =========



                                      F-116



                       BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
          (Stated in millions of pesos and thousands of U.S. dollars)

               Financial standby letters of credit include guarantees of payment
     of credit facilities, promissory notes and trade acceptances.

          Bank guarantees are performance guarantees that are issued to
     guarantee a customer's tender bid on a construction or systems installation
     project or to guarantee completion of such projects in accordance with
     contract terms. They are also issued to support a customer's obligation to
     supply specified products, commodities or maintenance or warranty services
     to a third party.

S)   ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

          As required by U.S. GAAP, the estimated fair value of the Bank's
     financial instruments, their carrying values and the major assumptions and
     methodologies used to estimate fair values at December 31, 2004 and 2005
     are presented hereunder. The fair value of a financial instrument is
     defined as the amount at which the instruments could be exchanged in a
     current transaction between willing parties, other than in a forced or
     liquidation sale.

          For those financial instruments with no quoted market prices
     available, fair values have been estimated using present value or other
     valuation techniques. These techniques are inherently subjective and are
     significantly affected by the assumptions used, including the discount
     rates, estimates of future cash flows and prepayment assumptions.

          In addition, the fair values presented below do not attempt to
     estimate the value of the Bank's fee generating businesses and anticipated
     future business activities, that is, they do not represent the Bank's value
     as a going concern.



                                                              DECEMBER 31, 2004             DECEMBER 31, 2005
                                                         ---------------------------   ---------------------------
                                                           CARRYING       ESTIMATED      CARRYING       ESTIMATED
                                                            AMOUNT       FAIR VALUE       AMOUNT       FAIR VALUE
                                                         ------------   ------------   ------------   ------------
                                                                                          
FINANCIAL ASSETS
   Cash and cash equivalents                             Ps 1,249,360   Ps 1,249,360   Ps 1,730,022   Ps 1,730,022
   Investment securities                                    5,250,211      5,176,244      8,459,703      8,358,209
   Loans and accrued interest receivable on loans, net      9,722,137      9,767,980     18,118,636     17,965,219
   Customers' acceptances                                      66,494         66,494         62,986         62,986
   Forward contracts                                          (22,270)       (22,270)        34,070         34,070
   Swaps                                                         (111)          (111)        36,423         57,094
   Next day operations                                           (219)          (219)            70             70
   Options                                                         --             --           (129)          (129)
   Cap                                                             --             --             10            323

FINANCIAL LIABILITIES:
   Deposits                                              Ps11,862,116   Ps12,030,870   Ps18,384,982   Ps18,505,044
   Overnight funds                                            616,494        616,494      1,329,913      1,329,913
   Bank acceptances outstanding                                66,593         66,593         63,126         63,126
   Interbank borrowings                                       246,282        246,282      1,705,468      1,705,468
   Borrowings from domestic development banks                 857,919        857,919      2,222,083      2,222,083
   Long term debt                                             552,531        564,417      1,648,312      1,709,017
                                                         ============   ============   ============   ============



                                      F-117



                       BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
          (Stated in millions of pesos and thousands of U.S. dollars)

          The following notes summarize the methods and assumptions used in
     estimating the fair values of financial instruments:

     Short-term financial instruments

          Short-term financial instruments are valued at their carrying amounts
     included in the consolidated balance sheet, which are reasonable estimates
     of fair value due to the relatively short period to maturity of the
     instruments. This approach was used for cash and cash equivalents,
     customers' acceptances, accrued interest receivable, accounts receivable,
     accounts payable, accrued interest payable and bank acceptances
     outstanding.

     Investment securities

          The fair value of these financial instruments which include time
     deposits in financial entities are calculated by the Colombian Stock
     Exchange, except for financial instruments classified "held to maturity",
     for which the fair value was determined using discounted cash flows with
     actual market rates for similar assets.

     Loans

          The Bank has estimated the fair value of the loan portfolio pursuant
     three methods depending of the type of loan being analyzed. Estimated fair
     value of the homogeneous loan portfolio, including consumer, mortgage and
     small business loans, has been determined based upon various statistical
     analysis. These include migration analysis, in which historical delinquency
     and credit loss experience is applied to the current aging of the
     portfolio, together with analysis that reflect current trends and
     conditions. Estimated fair value of loans with collateral has been
     calculated using the realizable value of collateral. Estimated fair value
     of restructured loans has been determined based on the present value of
     expected future cash flow method discounted at the loan's contractual
     effective rate.

     Derivatives

          The Bank's derivatives are recorded at fair value on a daily basis in
     conformity with the rules prescribed by the Superintendency of Finance, in
     accordance with the class of instrument, as follows:

          Foreign exchange forward contracts:

          The purchase or sale value of the exchange rate is estimated to obtain
     the net value in foreign currency at valuation day and calculate the net
     gain or loss.


                                      F-118



                       BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
          (Stated in millions of pesos and thousands of U.S. dollars)

     Financial instruments forward contracts:

          The fair value without yields is estimated to value the agreed amount
     to present value and calculate the net gain or loss.

     Balance sheet classification:

          Under Colombian GAAP, the Bank's derivative instruments are grouped
     and presented net as either an asset or a liability.

          U.S. GAAP restricts the ability to offset where the right of set off
     exists between two parties (that is, where a debtor-creditor relationship
     exists).

          Typically, under U.S. GAAP, financial assets and liabilities can be
     offset and the net amount reported in the balance sheet when (a) each of
     two parties owes the other determinable amounts, (b) the reporting party
     has the right to set off the amount owed with the amount owed by the other
     party, (c) the reporting party intends to set off and (d) the right of
     setoff is enforceable at law.

          Consequently, the relevant assets and liabilities would be increased
     by Ps144,979 as of December 31, 2005 in a U.S. GAAP balance sheet, with no
     effect on net income or shareholders' equity.

     Futures Contracts

          The fair value of futures contracts and other derivatives traded in
     stock markets are calculated by the respective stock market where the Bank
     has conducted its operation.

     Deposits

          The fair value of time deposits was estimated based on the discounted
     value of contractual cash flows using the rates currently offered for
     deposits of similar remaining maturities.

          Fair value of deposits with undefined maturities represents the amount
     payable on demand as of the balance sheet date.

     Interbank borrowings and borrowings from domestic development banks

          Short-term interbank borrowings and borrowings from domestic
     development banks have been valued at their carrying amounts because of
     their relatively short-term nature. Long-term and domestic development bank
     borrowings have also been valued at their carrying amount because they bear
     interest at variable rates.


                                      F-119


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

     Long term debt

          Long term debt are bonds issued by the Bank, Leasing Colombia S.A.,
     Fundicom S.A., Surenting S.A. and Sufinanciamiento S.A.

          The fair value of bonds issued by the Bank, Leasing Colombia S.A. and
     Surenting S.A. were estimated using quoted market prices. Bonds issued by
     Fundicom S.A. and Sufinanciamiento S.A. are non marketable. For this reason
     the carrying amounts were considered to approximate fair value.

T)   PAID-IN-CAPITAL

          In accordance with Colombian GAAP, paid-in capital in excess of par
     value of shares issued is credited to a legal reserve. Under U.S. GAAP,
     capital in excess of par value is credited to paid-in capital.

U)   UNEARNED INTEREST INCOME

          Under Colombian GAAP, unearned interest income is recorded as a
     liability in the balance sheet. For U.S. GAAP purposes, only the net
     amounts (loan amount less unearned interest) would be classified as a loan.
     Under Colombian GAAP, unearned interest is amortized on a straight-line
     basis whereas U.S. GAAP requires the use of the effective interest method.
     However, the difference does not have a material impact on the Bank's
     financial statements.

V)   EARNINGS PER SHARE

          Under Colombian GAAP, earnings per share ("EPS") are computed by
     dividing net income by the weighted average number of both common and
     preference shares outstanding for each period presented.

          U.S. GAAP requires dual presentation of basic and diluted EPS for
     entities with complex capital structures, as well as a reconciliation of
     the basic EPS computation to the diluted EPS computation. Basic EPS is
     calculated by dividing net income available to common stockholders by the
     weighted average number of common shares outstanding. Diluted EPS assumes
     the issuance of common shares for all dilutive potential common shares
     outstanding during the reporting period. For the years ended December 31,
     2003, 2004 and 2005, the Bank had a simple capital structure. Therefore,
     there was no difference between basic or diluted EPS for these years.

          The following summarizes information related to the computation of
     basic EPS for the years ended December 31, 2003, 2004 and 2005 (millions of
     pesos, except per share data):


                                      F-120



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



                                                2003         2004         2005
                                             ----------   ----------   ----------
                                                              
U.S. GAAP consolidated net income            Ps 474,419   Ps 642,126   Ps 891,121
Less preferred share dividends                   48,535       67,092      110,806
                                             ----------   ----------   ----------
Income attributable to common stockholders      425,884      575,034      780,315
                                             ==========   ==========   ==========
Income from continuing operations
   attributable to common shareholders          417,555      554,331      793,145
Income (loss) from operations and disposal
   of discontinued operations                     8,129       20,703      (13,230)
                                             ----------   ----------   ----------
Income attributable to common shareholders      425,884      575,034      780,315
                                             ==========   ==========   ==========
Weighted average number of common shares
   outstanding used in basic EPS
   calculation (in millions)                        398          398          455
Basic and Diluted earnings per share
   (U.S. GAAP):
Income from continuing operations              1,049.64     1,392.79     1,744.05
Income (loss) from operations and disposal
   of discontinued operations
                                                  20.42        52.02       (29.08)
                                             ----------   ----------   ----------
Income attributable to common shareholders   Ps1,070.06   Ps1,444.81   Ps1,714.97
                                             ==========   ==========   ==========


W)   CASH FLOW

          During 2005, reserves against transactions and time deposits with the
     Central Bank amounted to Ps 1,098,712. Under Colombian GAAP, this amount is
     classified as cash and cash equivalent, while, for U.S. GAAP purposes,
     restricted cash does not represent part of cash and cash equivalents for
     cash flow statement presentation because it cannot be withdrawn without
     prior notice or penalty.

          Also during 2005 the Bank has the following items which are non cash
     transactions: Ps 69,594 related to restructured loans were transferred to
     foreclosed assets; shares issued for Ps 75,566, Ps 27,770 related to
     accounts receivable for Abocol sale and foreign exchange loss for Ps
     51,711. Such transactions affect the Bank's balance sheet but do not result
     in cash receipts or cash payments in the period.

X)   SEGMENTS DISCLOSURE

          Operating segments are defined as components of an enterprise about
     which separate financial information is available that is regulary used by
     the Finance Vice President (the Chief Operating decision maker) in deciding
     how to allocate resources and assessing performance.

          The Bank has strategically aligned its operations into twelve major
     business segments based on its market segmentation, customer's needs and
     trading partners. Additionally, the Bank manages and measures the
     performance of its operations through these business segments using an
     internal profitability reporting system.


                                      F-121



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          The Bank does not have any individual external customer which
     represents 10% or more of the enterprises revenues.

          The following presents information about reported operating segment
     profit or loss, and segment assets:


                                      F-122


                        BANCOLOMBIA S.A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in Millions of pesos and thousands of U.S. dollars)

                                      2003



                                                                                 Governmental
                                                                     Small           And
                                         Retail      Commercial     Business    Institutional                   Corporate
                                        Banking       Banking       Banking        Banking        Treasury    Headquarters
                                      -----------   -----------   -----------   -------------   -----------   ------------
                                                                                            
Revenues from external customers      Ps  212,472   Ps   32,502   Ps   34,906     Ps 19,007     Ps       --   Ps  (30,675)
Revenues from transactions with
   other operating segments of the
   same enterprise                         34,422        22,731        19,795        24,530              --       (83,150)
Interest income                           453,975       179,113       132,127        56,075         265,720       120,332
Interest expense                          147,647        17,395        18,361        59,119         145,153        (5,293)
Net interest revenue                      306,328       161,718       113,766        (3,044)        120,567       125,625
Depreciation and amortization
   expense                                     --            --            --            --              --        33,544
Provision for loan losses                  62,068        12,781           365         1,133             330        58,822
Administrative and other expense          336,412        40,112        38,541        24,275           5,200       163,593
Income tax expense or benefit                  --            --            --            --              --        35,498
Other income or expense, net                3,354          (462)         (449)          153              --        29,576
Segment profit before distribution
   of income (expense) for treasury
   funds                                  158,096       163,596       129,112        15,238         115,037      (250,081)
Distribution of income (expense)
   for treasury  funds (1)                 96,777       (75,379)      (49,667)       50,866            (449)      (22,148)
                                      -----------   -----------   -----------     ---------     -----------   -----------
Segment profit                        Ps  254,873   Ps   88,217   Ps   79,445     Ps 66,104     Ps  114,588   Ps (272,229)
                                      ===========   ===========   ===========     =========     ===========   ===========
Segments assets                       Ps3,127,442   Ps1,838,100   Ps1,449,736     Ps665,609     Ps3,060,778   Ps1,170,020
                                      ===========   ===========   ===========     =========     ===========   ===========



                                        Offshore
                                       Commercial                                                      All other
                                        Banking       Trust     Leasing    Brokerage   Manufacturing    Segments       Total
                                      -----------   --------   ---------   ---------   -------------   ---------   ------------
                                                                                              
Revenues from external customers      Ps    7,742   Ps38,424   Ps 47,186   Ps 5,113      Ps 31,400     Ps 92,044   Ps   490,121
Revenues from transactions with
   other operating segments of the
   same enterprise                         (7,276)       773        (314)      (111)        16,555         2,249         30,204
Interest income                           150,602      5,366       8,174     10,856             (6)       13,095      1,395,429
Interest expense                           63,874        109      50,274        274          9,008        14,733        520,654
Net interest revenue                       86,728      5,257     (42,100)    10,582         (9,014)       (1,638)       874,775
Depreciation and amortization
   expense                                    882      1,032       3,377      1,059          2,747         3,203         45,844
Provision for loan losses                  50,360      2,239       3,564         --            237         7,918        199,817
Administrative and other expense            7,122     23,368      12,739     10,475         26,035        48,531        736,403
Income tax expense or benefit                  --      6,430       4,240      2,577          1,528        12,361         62,634
Other income or expense, net               89,901      1,308      11,773      2,463           (783)       12,352        149,186
Segment profit before distribution
   of income (expense) for treasury
   funds                                  118,731     12,693      (7,375)     3,936          7,611        32,994        499,588
Distribution of income (expense)
   for treasury  funds (1)                     --         --          --         --             --            --             --
                                      -----------   --------   ---------   --------      ---------     ---------   ------------
Segment profit                        Ps  118,731   Ps12,693   Ps (7,375)  Ps 3,936      Ps  7,611     Ps 32,994   Ps   499,588
                                      ===========   ========   =========   ========      =========     =========   ============
Segments assets                       Ps3,748,134   Ps73,395   Ps554,073   Ps83,218      Ps221,222     Ps513,204   Ps16,504,931
                                      ===========   ========   =========   ========      =========     =========   ============


----------
(1)  Those costs are calculated based on the funds that segments use or provide
     and do not have an impact in the final result.


                                      F-123


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

                                      2004



                                                                              Governmental
                                                                  Small           And
                                      Retail      Commercial     Business    Institutional                   Corporate
                                     Banking       Banking       Banking        Banking        Treasury    Headquarters
                                   -----------   -----------   -----------   -------------   -----------   ------------
                                                                                         
Revenues from external customers   Ps  226,318   Ps   33,013   Ps   34,582     Ps 20,277     Ps       --   Ps    5,661
Revenues from transactions with
   other operating segments of
   the same enterprise                  48,585        27,669        36,438        24,402              --      (104,324)
Interest income                        597,066       208,387       200,207        43,857         471,270        41,192
Interest expense                       138,503        29,896        20,877        81,164         152,702        (8,665)
Net interest revenue                   458,563       178,491       179,330       (37,307)        318,568        49,857
Depreciation and amortization
   expense                                  --            --            --            --              --        41,584
Provision for loan losses               51,614         3,265         4,358          (326)          4,028       (28,444)
Administrative and other expense       371,517        46,997        46,078        28,622           6,915       201,930
Income tax expense or benefit               --            --            --            --              --       200,967
Other income or expense, net            (1,121)         (528)           --            --              --       (42,172)
Segment profit before
   distribution of income
   (expense) for treasury funds        309,214       188,383       199,914       (20,924)        307,625      (507,015)
Distribution of income (expense)
   for treasury funds(1)                56,937       (46,341)      (74,825)       99,032         (18,449)      (16,354)
                                   -----------   -----------   -----------     ---------     -----------   -----------
Segment profit                     Ps  366,151   Ps  142,042   Ps  125,089     Ps 78,108     Ps  289,176   Ps (523,369)
                                   ===========   ===========   ===========     =========     ===========   ===========
Segments assets                    Ps4,064,951   Ps2,162,364   Ps2,125,485     Ps597,028     Ps4,095,094   Ps1,310,694
                                   ===========   ===========   ===========     =========     ===========   ===========



                                     Offshore
                                    Commercial                                                         All other
                                     Banking       Trust      Leasing      Brokerage   Manufacturing    Segments       Total
                                   -----------   --------   -----------    ---------   -------------   ---------   ------------
                                                                                              
Revenues from external customers   Ps    7,234   Ps49,178        88,265     Ps 7,842     Ps 42,285     Ps 90,355   Ps   605,010
Revenues from transactions with
   other operating segments of
   the same enterprise                   4,063        817          (582)         196        10,720         8,382         56,366
Interest income                        172,103      6,412        21,918        8,894           444        16,195      1,787,945
Interest expense                        47,919          2        88,676        2,923        11,191        11,332        576,520
Net interest revenue                   124,184      6,410       (66,758)       5,971       (10,747)        4,863      1,211,425
Depreciation and amortization
   expense                                 357      1,085         4,462          469           958         3,818         52,733
Provision for loan losses               36,046      1,165        20,293          148         1,735         2,504         96,386
Administrative and other expense         8,262     26,112        18,951       11,123        28,645        56,299        851,451
Income tax expense or benefit               --     10,355        10,278        3,980         4,344         8,886        238,810
Other income or expense, net            19,304      1,275        15,721        8,250          (650)        1,544          1,623
Segment profit before
   distribution of income
   (expense) for treasury funds        110,120     18,963       (17,338)       6,539         5,926        33,637        635,044
Distribution of income (expense)
   for treasury funds(1)                    --         --            --           --            --            --             --
                                   -----------   --------   -----------     --------     ---------     ---------   ------------
Segment profit                     Ps  110,120   Ps18,963   Ps  (17,338)    Ps 6,539     Ps  5,926     Ps 33,637   Ps   635,044
                                   ===========   ========   ===========     ========     =========     =========   ============
Segments assets                    Ps3,463,813   Ps91,306   Ps1,003,995     Ps24,389     Ps247,032     Ps560,357   Ps19,746,508
                                   ===========   ========   ===========     ========     =========     =========   ============


----------
(1)  Those costs are calculated based on the funds that segments use or provide
     and do not have an impact in the final result.


                                      F-124



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

                                      2005



                                                                                           Governmental
                                                                      Small                    And
                                          Retail      Commercial    Business    Builder    Institutional                Corporate
                                          Banking       Banking      Banking   Banking(2)     Banking       Treasury   Headquarters
                                        -----------  -----------  -----------  ----------  -------------  -----------  ------------
                                                                                                  
Revenues from external customers        Ps  474,916  Ps   32,652  Ps   50,724   Ps  1,104    Ps 15,092    Ps       -- Ps    19,572
Revenues from transactions with other
   operating segments of the same
   enterprise                                76,998      145,022      161,358       3,118       27,850             --      (414,894)
Interest income                           1,059,092      379,434      375,839      40,244       82,570        828,418        (3,320)
Interest expense                            245,978       87,318      127,094       1,642       38,579        358,932        33,110
Net interest revenue                        813,114      292,116      248,745      38,602       43,991        469,486       (36,430)
Depreciation and amortization expense            --           --           --          --           --             --         2,103
Provision for loan losses                    77,229        3,497       13,338       1,774        1,913         27,560        16,176
Administrative and other expense            697,565       76,472       85,086       4,763       36,397         10,895       418,951
Income tax expense or benefit                    --           --           --          --           --             --       202,362
Other income or expense, net                    193            5            5          --           --             --       (34,392)
Segment profit before distribution of
   income (expense) for treasury funds      590,427      389,826      362,408      36,287       48,623        431,031    (1,105,736)
Distribution of income (expense) for
   treasury funds(1)                        102,443      (84,480)     (87,934)    (20,556)      17,486         73,041            --
                                        -----------  -----------  -----------   ---------    ---------    -----------  ------------
Segment profit                          Ps  692,870  Ps  305,346  Ps  274,474   Ps 15,731    Ps 66,109    Ps  504,072  Ps(1,105,736)
                                        ===========  ===========  ===========   =========    =========    ===========  ============
Segments assets                         Ps7,710,861  Ps3,757,603  Ps3,730,214   Ps328,150    Ps825,460    Ps7,375,750  Ps   997,949
                                        ===========  ===========  ===========   =========    =========    ===========  ============



                                           Offshore
                                         Commercial                                                        All other
                                           Banking     Trust      Leasing    Brokerage(3)  Manufacturing   Segments        Total
                                        -----------  ---------  -----------  ------------  -------------  ----------  ------------
                                                                                                 
Revenues from external customers        Ps   12,618  Ps 58,431  Ps  308,027   Ps 67,346      Ps  3,461     Ps 83,161  Ps 1,127,104
Revenues from transactions with other
   operating segments of the same
   enterprise                                10,604        753        6,654      (2,547)          (707)       22,823        37,032
Interest income                             178,409      9,902       67,845      59,488            129        25,460     3,103,510
Interest expense                             75,422         --      210,411      29,204            362        14,579     1,222,631
Net interest revenue                        102,987      9,902     (142,566)     30,284           (233)       10,881     1,880,879
Depreciation and amortization expense           706      1,280       11,871       1,254            441        12,998        30,653
Provision for loan losses                    28,538        850       19,459          11             12         1,765       192,122
Administrative and other expense              8,952     30,427       57,950      56,345          2,532        83,413     1,569,748
Income tax expense or benefit                    --     13,351       32,389      19,047            622         9,742       277,513
Other income or expense, net                 12,346        904        6,546      14,313            704         8,310         8,934
Segment profit before distribution of
   income (expense) for treasury funds      100,359     24,082       56,992      32,739           (382)       17,257       983,913
Distribution of income (expense) for
   treasury funds(1)                             --         --           --          --             --            --            --
                                        -----------  ---------  -----------   ---------      ---------     ---------  ------------
Segment profit                          Ps  100,359  Ps 24,082  Ps   56,992   Ps 32,739      Ps   (382)    Ps 17,257  Ps   983,913
                                        ===========  =========  ===========   =========      =========     =========  ============
Segments assets                         Ps4,166,424  Ps129,858  Ps3,452,069   Ps421,797      Ps 87,888     Ps538,059  Ps33,522,082
                                        ===========  =========  ===========   =========      =========     =========  ============


(1)  Those costs are calculated base on the funds that segments use or provide.
     Those do not have an impact in the final result.

(2)  This segment was incorporated from Conavi as a result of the Merger. It
     targets the building construction industry.

(3)  In the Annual Report of 2003 and 2004 Brokerage was not considered by the
     management as an individual operating segment, it was included in all other
     segments of the segments disclosure. For year 2005 and with the
     introduction of Suvalor as a result of the Merger, brokerage become in an
     operating segment susceptible to evaluation by the management. For
     comparability effects it was necessary to break out the segment brokerage
     for years 2003 and 2004.


                                      F-125


                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          The following is a reconciliation of reportable segments revenues,
     profit or loss and assets, to the Banks' consolidated totals:



                                                    2003           2004           2005
                                                ------------   ------------   ------------
                                                                     
REVENUES
Total revenues for reportable segments          Ps 1,808,366   Ps 2,334,389   Ps 4,136,202
Other revenues                                       307,342        140,253        111,278
                                                ------------   ------------   ------------
   Total                                           2,115,708      2,474,642      4,247,480
                                                ------------   ------------   ------------
Elimination of intersegment revenues                 (30,204)       (56,366)       (37,032)
                                                ------------   ------------   ------------
   TOTAL REVENUES FOR REPORTABLE SEGMENTS (1)   Ps 2,085,504   Ps 2,418,276   Ps 4,210,448
                                                ============   ============   ============

PROFIT OR LOSS
Total profit or loss for reportable segments    Ps   466,594   Ps   601,407   Ps   966,656
Other profit or loss                                  32,994         33,637         17,257
                                                ------------   ------------   ------------
   Total                                             499,588        635,044        983,913
                                                ------------   ------------   ------------
Elimination of intersegment profits                  (30,204)       (56,366)       (37,032)
                                                ------------   ------------   ------------
NET INCOME (LOSS)                               Ps   469,384   Ps   578,678   Ps   946,881
                                                ============   ============   ============

ASSETS
Total assets for reportable segments            Ps15,991,727   Ps19,186,151   Ps32,984,023
Other assets                                         513,204        560,357        538,059
                                                ------------   ------------   ------------
   Total                                          16,504,931     19,746,508     33,522,082
                                                ------------   ------------   ------------
Elimination of intersegment assets                (1,328,802)    (2,267,379)    (2,718,565)
                                                ------------   ------------   ------------
   CONSOLIDATED TOTAL                           Ps15,176,129   Ps17,479,129   Ps30,803,517
                                                ============   ============   ============


----------
(1)  Total revenues for reportable segments include interest, fees, other
     services and other operating income.

          The following summarizes the Bank's revenues and long-lived assets
     attributable to Colombia and other foreign countries:


                                     F-126



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)



                                                    2004                           2005
                                        ----------------------------   ----------------------------
                                                           LONG                           LONG
                                          REVENUES    LIVED - ASSETS     REVENUES    LIVED - ASSETS
                                        -----------   --------------   -----------   --------------
                                                                         
GEOGRAPHIC INFORMATION
Republic of Colombia                    Ps2,284,240     Ps340,304      Ps3,990,600      Ps734,419
Republic of Panama and Cayman Islands       183,400         1,692          202,018         29,810
Puerto Rico                                      --            --           42,897            131
USA (1)                                       7,002           577           11,965            326
                                        -----------     ---------      -----------      ---------
   Total                                  2,474,642       342,573        4,247,480        764,686
   Eliminations                             (56,366)       (1,119)         (37,032)         7,144
                                        -----------     ---------      -----------      ---------
   TOTAL, NET                           Ps2,418,276     Ps341,454      Ps4,210,448      Ps771,830
                                        ===========     =========      ===========      =========


----------
(1)  Information relating to Bancolombia Miamy Agency is included since 2004,
     because it started operations at the end of 2003. Additionally, the amounts
     for the year 2005 include Suleasing Internacional Inc. as a result of the
     Merger among Bancolombia, Conavi and Corfinsura.

          The segments reported embrace the following activities:

          RETAIL BANKING: The Bank's Retail Banking segment provides a wide
     range of financial products and services to individuals and SMEs. This
     segment is important for the Bank's funding and generation of revenues.

          COMMERCIAL BANKING: The Commercial Banking Segment provides commercial
     banking products and services to all sectors of the economy. Corporate
     customers are segmented by their economic activity as well as by their
     size. This segmentation assures adequate support and adequate pricing
     according to their risk level.

          SMALL BUSINESS BANKING: This segment includes legal entities with
     annual sales of from Ps 250 to Ps 10 billion, as well as individuals who
     work independently in the retail, cattle-raising and agricultural sectors,
     among others. On 2005, the structure of this segment changed aiming to
     enhance competitiveness in the SMEs banking market as well as the corporate
     banking market.

          BUILDER BANKING: The Builder Banking segment provides services to the
     professional Building construction industry. Builder customers are
     segmented by the number of construction projects belonging to them.

          GOVERNMENTAL AND INSTITUTIONAL BANKING: This segment provides services
     to institutional customers subject to the supervision of the
     Superintendency of Finance the Superintendency of Health or the
     Superintendency of Family Subsidy, and also electric and financial
     corporations. The governmental customers include public sector entities.


                                     F-127



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          TREASURY: The Bank's Treasury Division is responsible for the
     management of the Bank's treasury products and its proprietary liquidity as
     well as its foreign exchange and securities positions. Additionally the
     Bank realized operations of treasury with its customers.

          OFFSHORE COMMERCIAL BANKING: Bancolombia Panama S.A. and Bancolombia
     Cayman, located in Panama and the Cayman Islands, respectively, Suvalor
     Panama S.A. and Banco Corfinsura Internacional Inc, located in Panama and
     Puerto Rico, respectively, provide a complete line of banking services
     mainly to Colombian customers, which includes loans to private sector
     companies, brokerage services (Suvalor Panama S.A.), trade financing, lease
     financing, financing for industrial projects as well as a complete
     portfolio of cash management products, such as checking accounts,
     international collections and payments and PC Banking. Through these
     Subsidiaries, the Bank also offers to its high net worth customers and
     private banking customers investment opportunities in U.S. dollars, in
     savings accounts and in checking accounts, CD-time deposits, and investment
     funds.

          TRUST: The Bank offers, through its Subsidiary Fiducolombia S.A., a
     family of five mutual funds and one voluntary retirement fund, all of which
     are designed to provide customers with the opportunity to diversify their
     investments. As of December 31, 2005, it had Ps 2,878,543 in total assets
     under management, increasing 42.5% from Ps 2,020,227 in 2004. Additionally,
     Fiducolombia offers a broad range of products and services by type of
     trust, among which the following stand out: Public trust, management and
     payment trust, individual investment trust, real estate trust and guarantee
     trust.

          LEASING: Leasing Colombia S.A. Surenting S.A. and Sufinanciamiento
     S.A., as the Bank's Subsidiaries specialized in lease activities, offer
     financial and operational leases. The main activities that require lease
     financing are infrastructure, import of goods, international leases, real
     estate, vehicles for executives, leasing for suppliers, and cattle raising.
     Leasing Colombia provides leased assets, usually involving equipment, for a
     fixed term that is shorter than the assets useful life. Once the
     corresponding term ends, the customer has the option of acquiring the
     assets for their commercial value. Surenting S.A., a non-financial
     subsidiary of Leasing Colombia, offers broad solutions for large companies'
     transport and vehicle needs. Surenting provides vehicle renting and fleet
     management services for individuals and entities.

          BROKERAGE: On October 3, 2005, Comisionista de Colombia S.A Comicol
     Merged with and into Compania Suramericana de Valores S.A. Suvalor
     Comisionista de Bolsa as surviving entity. According to data as of
     September 30, 2005, Suramericana de Valores S.A. - Suvalor - and
     Comisionista de Colombia S.A - Comicol -

          The following are investment alternatives offer by Suvalor: Fixed and
     variable yield instruments; Stock Investments; SURENTA Investment Funds;
     International Investments; Specialized Products such as Portfolio
     Management and capital markets advisory services and Structured Products.


                                     F-128



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          MANUFACTURING: The manufacturing segment of the Bank provides a wide
     range of products to individuals and companies such us: metal parts in gray
     and ductile iron, both wrought and finished, such as brake systems for
     passenger automobiles and trucks, accessories for aqueducts and agriculture
     machinery.

          ALL OTHER SEGMENTS: Provide the following products and services:

          -    Warehouse and logistics services through Almacenar S.A., a
               Subsidiary of the Bank;

          -    Colcorp S.A. is a Subsidiary of the Bank that specializes in
               providing investment banking services to a variety of the Bank's
               customers;

     Y) RECENT U.S. GAAP PRONOUNCEMENTS

          In May 2005, the FASB issued Statement No. 154 ("SFAS 154"),
Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20,
Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in
Interim Financial Statements, and amends the requirements for the accounting for
and reporting of a change in accounting principle. This Statement applies to all
voluntary changes in accounting principle. It also applies to changes required
by an accounting pronouncement in the unusual instance that the pronouncement
does not include specific transition provisions. When a pronouncement includes
specific transition provisions, those provisions should be followed. This
statement is effective for accounting changes and corrections of errors made in
fiscal years beginning after December 15, 2005. The impact of SFAS 154 will
depend on the accounting change, if any, in a future period.

          In February 2006, the FASB issued Statement No. 155 ("SFAS 155"),
Accounting for Certain Hybrid Financial Instruments. This Statement amends FASB
Statements No. 133, Accounting for Derivative Instruments and Hedging
Activities, and No. 140, Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities. This Statement resolves issues
addressed in Statement 133 Implementation Issue No. D1, "Application of
Statement 133 to Beneficial Interests in Securitized Financial Assets". This
Statement:

          a.   Permits fair value remeasurement for any hybrid financial
               instrument that contains an embedded derivative that otherwise
               would require bifurcation

          b.   Clarifies which interest-only strips and principal-only strips
               are not subject to the requirements of Statement 133


                                     F-129



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          c.   Establishes a requirement to evaluate interests in securitized
               financial assets to identify interests that are freestanding
               derivatives or that are hybrid financial instruments that contain
               an embedded derivative requiring bifurcation

          d.   Clarifies that concentrations of credit risk in the form of
               subordination are not embedded derivatives

          e.   Amends Statement 140 to eliminate the prohibition on a qualifying
               special purpose entity from holding a derivative financial
               instrument that pertains to a beneficial interest other than
               another derivative financial instrument.

          This Statement is effective for all financial instruments acquired or
issued after the beginning of an entity's first fiscal year that begins after
September 15, 2006. The Bank is currently evaluating the potential impact, if
any, that the adoption of SFAS 155 will have on our consolidated financial
statements.

          In March 2006, the FASB issued Statement 156 ("SFAS 156"), Accounting
for Servicing of Financial Assets. This Statement amends FASB Statement No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities, with respect to the accounting for separately recognized
servicing assets and servicing liabilities. This Statement permits, but does not
require, the subsequent measurement of servicing assets and servicing
liabilities at fair value. An entity that uses derivative instruments to
mitigate the risks inherent in servicing assets and servicing liabilities is
required to account for those derivative instruments at fair value. Under this
Statement, an entity can elect subsequent fair value measurement to account for
its separately recognized servicing assets and servicing liabilities. By
electing that option, an entity may simplify its accounting because this
Statement permits income statement recognition of the potential offsetting
changes in fair value of the servicing assets, servicing liabilities, and
related derivative instruments in the same accounting period. An entity that
elects to subsequently measure servicing assets and servicing liabilities at
fair value is expected to recognize declines in fair value of the servicing
assets and servicing liabilities more consistently than by reporting
other-than-temporary impairments.

          An entity should adopt this Statement as of the beginning of its first
fiscal year that begins after September 15, 2006. Bancolombia is evaluating the
impacts of SFAS 156.

          In July 2005, the FASB posted FSP APB 18-1, "Accounting by an Investor
for Its Proportionate Share of Accumulated Other Comprehensive Income of an
Investee Accounted for Under the Equity Method in Accordance With APB Opinion
No. 18 Upon a Loss of Significant Influence".

          The FSP requires that when equity method accounting ceases upon the
loss of significant influence of an investee, the investor's proportionate share
of the investee's OCI should be offset against the carrying value of the
investment. To the extent that this results in a negative carrying value, the
investor should adjust the carrying value to zero and record the residual
balance through earnings.

          An entity should adopt this Staff Position as of the first reporting
period beginning after July 12, 2005. The impact of FSP APB 18-1 will depend on
the loss of significant influence of an investee accounted under equity method,
if any, in a future period.


                                     F-130



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

               EITF Issue No. 03-1, "The Meaning of Other-Than-Temporary
     Impairment and Its Application to Certain Investments". On November 3,
     2005, the FASB issued FSP FAS 115-1 and FAS 124-1, "The Meaning of
     Other-Than-Temporary Impairment and Its Application to Certain
     Investments". This FSP nullifies certain requirements of Issue 03-1 and
     supersedes EITF Abstracts, Topic No. D-44, "Recognition of
     Other-Than-Temporary Impairment upon the Planned Sale of a Security Whose
     Cost Exceeds Fair Value". This FSP specifically:

               a.   Nullifies the requirements of paragraphs 10-18 of Issue 03-1
                    in EITF Abstracts

               b.   Carries forward the requirements of paragraphs 8 and 9 of
                    Issue 03-1 in EITF Abstracts with respect to cost-method
                    investments

               c.   Carries forward the disclosure requirements included in
                    paragraphs 21 and 22 of Issue 03-1 and related examples in
                    EITF Abstracts

               d.   References existing other-than-temporary impairment
                    guidance.

               The guidance in this FSP shall be applied to reporting periods
     beginning after December 15, 2005. Earlier application is permitted. The
     adoption of FSP FAS 115-1 and FAS 124-1 is not expected to have a material
     impact on BC consolidated financial statements.

(32) RESTATEMENT OF SUPPLEMENTAL CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
     UNDER U.S.GAAP

               The Bank Supplemental Consolidated Statements of Operations for
     the year ended December 31, 2005 and the Supplemental Consolidated
     Condensed Stataments of Cash Flows for the three years ended December 31,
     2005, prepared in accordance with U.S. GAAP, were restated to correct
     inadvertent errors. There is no impact on the Consolidated Net Income and
     Stockholders' Equity for any of the years presented under U.S. GAAP as
     reported in the original filing.

               As described in Note 31(m) the acquisition of Conavi and
     Corfinsura was accounted for using the pooling of interests method under
     Colombian GAAP and purchase accounting under US GAAP. In order to provide
     comparative financial information under US GAAP, the Bank presented
     Supplemental Consolidated Financial Statements in note 31 (c). The
     restatement of the Supplemental Consolidated Condensed Statements of
     Operations and the Supplemental Consolidated Condensed Statements of Cash
     Flow for the year ended December 31, 2005, is a consequence of the
     inadvertent failure to eliminate on a line by line basis of the results and
     cash flows of Conavi and Corfinsura for the period from January 1, 2005 to
     July 30, 2005. The Supplemental Consolidated Condensed Statement of Cash
     Flows for the years ended December 31, 2005, 2004 and 2003 are being
     restated for the reclassification of cash flows related to trading
     securities from investing activities to operating activities.


                                      F-131



                       BANCOLOMBIA S. A. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
           (Stated in millions of pesos and thousands of U.S. dollars)

          SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS



                                                                2005
                                                    ---------------------------
                                                     PREVIOUSLY
                                                      REPORTED       RESTATED
                                                    ------------   ------------
                                                             
Total interest income                               Ps 2,972,967   Ps 2,627,277
Total interest expense                                (1,198,334)    (1,032,923)
                                                    ------------   ------------
NET INTEREST INCOME                                    1,774,633      1,594,354
Total net provisions                                     (14,965)       (11,822)
                                                    ------------   ------------
NET INTEREST INCOME AFTER PROVISION AND FINANCIAL
   LEASING
                                                       1,759,668      1,582,532
Other income                                           1,141,720        935,738
Other expenses                                        (1,847,496)    (1,464,378)
                                                    ------------   ------------
INCOME BEFORE INCOME TAXES                             1,053,892      1,053,892
Income tax expense                                      (149,541)      (149,541)
                                                    ------------   ------------
NET INCOME BEFORE DISCONTINUED OPERATIONS                904,351        904,351
                                                    ------------   ------------
Discontinued operations                                  (13,230)       (13,230)
NET INCOME                                          Ps   891,121   Ps   891,121
                                                    ============   ============


          SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS



                                               2003                           2004                          2005
                                   ----------------------------   ---------------------------   ---------------------------
                                     PREVIOUSLY                    PREVIOUSLY                    PREVIOUSLY
                                      REPORTED       RESTATED       REPORTED       RESTATED       REPORTED       RESTATED
                                   ------------   -------------   ------------   ------------   ------------   ------------
                                                                                             
Net income (loss)                  Ps   474,419   Ps    474,419   Ps   642,126   Ps   642,126   Ps   891,121   Ps   891,121
Adjustments to reconcile net
income to
   net cash provided (used) by
   operating activities:             (1,803,773)     (1,964,394)    (1,663,670)      (608,738)    (8,164,268)    (5,215,860)
                                   ------------   -------------   ------------   ------------   ------------   ------------
Net cash provided by operating
   activities                        (1,329,354)     (1,489,975)    (1,021,544)        33,388     (7,273,147)    (4,324,739)
Net cash used in investing
    activities                          (54,586)        106,035       (520,488)    (1,575,420)    (3,184,771)    (6,133,179)
Net cash provided by financing
   activities                         1,979,312       1,979,312      1,344,931      1,344,931     10,938,580     10,938,580
                                   ------------   -------------   ------------   ------------   ------------   ------------
(Decrease) increase in cash and
   cash equivalents                Ps   595,372   Ps    595,372   Ps  (197,101)  Ps  (197,101)  Ps   480,662   Ps   480,662
                                   ============   =============   ============   ============   ============   ============
Cash and cash equivalents at
   beginning of year                    851,089         851,089      1,446,461      1,446,461      1,249,360      1,249,360
                                   ------------   -------------   ------------   ------------   ------------   ------------
Cash and cash equivalents at end
   of year                         Ps 1,446,461   Ps  1,446,461   Ps 1,249,360   Ps 1,249,360   Ps 1,730,022   Ps 1,730,022
                                   ============   =============   ============   ============   ============   ============



                                      F-132