Review of Operations (non-consolidated)

◆ Deposits -- Deposits declined due to a shift into assets in custody

The term-end balance of deposits and trust accounts declined ￥26.5 billion year-on-year to ￥1,361.9 billion, in line with the steady growth of assets in custody such as investment trusts. Deposits held by individuals declined ￥9.9 billion during the term, while deposits from corporations, deposits from local governments and other deposits totaled ￥10.2 billion and ￥6.3 billion during the term. The total of deposits and assets in custody rose ￥22.5 billion during the term to ￥1,514.7 billion.

The term-end loan balance declined ￥66.8 billion to ￥1,050.5 billion, reflecting sluggish growth in corporate demand for funds and securitization of mortgage loans. Stripping out a decline of ￥76.0 billion from loans in the form of securitization in fiscal years 2004 and 2005, the term-end balance of loans totaled ￥1,126.5 billion.

◆ Loans to Individuals -- Securitization of mortgage loans contributes to decline

The term-end balance of loans to individuals declined ￥39.3 billion year-on-year to ￥330.4 billion, due chiefly to securitization of mortgage loans. Stripping out the ￥76 billion impact of such securitization over fiscal years 2004 and 2005, the balance of mortgage loans at the end of the term rose ￥12.9 billion during the term to ￥344.5 billion, due mainly to strong sales of mortgage loans with cancer insurance riders. The term-end balance for loans to individuals increased ￥10.3 billion to ￥406.4 billion.

◆ Assets in Custody -- Steady growth through products tailored to needs

The balance of assets in custody (investment trusts, government bonds, and pension insurance) grew ￥49.0 billion to ￥152.8 billion at the term-end. This increase was primarily the result of our efforts to provide fund management products tailored to the increasingly diverse and sophisticated needs of our customers, and of steady growth in sales of investment trusts and government bonds.

◆ Business Profit on Core Banking Operations -- Increased sales of assets in
　 custody contribute to increase

For banks in Japan, business profit on core banking operations is an indicator of profitability (note). It represents net business profit (the total sum of profits on ordinary banking operations including deposits, loans and foreign exchange), while stripping out the impact of one-time factors. It is roughly equivalent to operating income at companies outside the banking sector. Despite a decline in interest income due to lower yields on loans, the Bank's business profit on core banking operations on a non-consolidated basis rose ￥400 million from the previous fiscal year to ￥17.2 billion, due chiefly to increases in gains from securitization of mortgage loans and increased fee income from sales of assets in custody.

◆ Operating Income and Net Income -- The Bank stayed in the black during the term
　 even after major final disposals of bad debt

Operating income fell ￥6.3 billion from the previous fiscal year to ￥1.6 billion, with an increase in bad debt disposal more than offsetting reduced declines in interest and dividends on securities. Net income declined ￥4.5 billion to ￥1.3 billion.

◆ Unsecured Loans for Businesses --
　 Balance of unsecured financial products tops ￥10 billion mark

The balance of unsecured (not requiring third-party guarantees) loans to businesses grew to a term-end total of ￥10.8 billion, an increase of ￥3.2 billion, marking the first time it has risen over the ￥10 billion mark. Lending was driven by broadened product range, including the “Best Supporter” package for venture capital companies and other small and individual-operated businesses, and Junpuu Manpan (“full sail with following wind”) products designed jointly with the prefectural credit guarantee association.

◆ Capital Ratio -- The capital ratio remained at the high level of 10%+

The capital ratio is one of the chief indicators of the safeness and soundness of a bank's asset portfolio. It expresses to what extent a company’s profit and capital are adequate to cover its borrowings and similar assets. The minimum (domestic standard) is 4% for banks operating solely in Japan and 8% for banks also operating overseas. As of March 31, 2006, the Bank had a capital ratio on a non-consolidated basis of 10.92% by the domestic standard, which is more than twice the minimum requirement.

◆ Credit Rating -- Bank gets A-rating (single A-minus)

Issued by credit rating agencies when companies issue bonds and other investment instruments, credit ratings (usually graded alphabetically) represent impartial third-party judgments as to the likelihood of repayment of principal and interest. Japan Credit Rating Agency, Japan's leading credit rating agency, awarded the Bank an A-rating (single A-minus) for long-term debentures. This is the agency’s seventh highest rating out of a total of 20.

◆ NPL Amounts and Bad Debt Ratio

In the reporting term under review, the Bank greatly exceeded its initial estimates for bad debt disposal amounts and strengthened its NPL provision, to prepare itself for anticipated change in the operating environment and business rehabilitation at certain customer companies. Bad debt (claims subject to mandatory disclosure under the Financial Reconstruction Law) declined ￥3.1 billion year-on-year to ￥82.5 billion, reflecting accelerated NPL final disposal measures. The bad debt ratio (ratio of bad debt to total claims) rose 0.21 points to 7.70%, reflecting a decline in overall credit in line with the decline in loans.

◆ Forecasts for Fiscal 2006 --
　 The Bank forecasts net income of ￥5.5 billion for fiscal 2006

The Bank forecasts net income of ￥5.5 billion for fiscal 2006, assuming successful implementation of various policies under the management plan.

◆ Expenses -- Expenses rise on investment in backbone computer systems

Personnel expenses declined ￥100 million year-on-year, due chiefly to a decline in the number of bank employees, while non-personnel expenses rose ￥500 million year-on-year, due chiefly to an increase in non-personnel expenses accompanying the Bank’s switch to a jointly operated backbone computer system in January 2006. Overall, expenses rose ￥400 million year-on-year to ￥20.3 billion.