Review of Operations (non-consolidated)

◆ Deposits --
　 Overall increase posted thanks to popularity of time deposits for individuals

The term-end balance of deposits rose by ￥16.7 billion over the previous term-end, to ￥1,413.9 billion. This performance is attributable to the popularity of our variable-maturity time deposits. The total of deposits and assets in custody at the term-end posted an increase of ￥17.9 billion over the previous term-end, to ￥1,620.9 billion.

The term-end loan balance increased by ￥43.5 billion to ￥1,163.0 billion, due to an increase in loans for the construction of rental apartments as well as mortgage loans for the purchase of condominiums, mainly in the Shintoshin district of Naha, in line with the completion of a number of popular new condominium buildings.

◆ Loans to Individuals -- Growth powered by mortgage loans

The term-end balance of loans to individuals rose by ￥9.8 billion over the previous term-end, to ￥347.6 billion, mainly due to growth in mortgage loans.

◆ Assets in custody -- Performance roughly level with previous year, owing to slack
　 prices on stock market

Despite the weakness of prices on the stock market from the year’s midpoint onward, the term-end balance of assets in custody (investment trusts, government bonds, and pension insurance) registered an increase of ￥1.4 billion over the previous term-end, at ￥207.0 billion. This was due to an increase in sales to individuals of government bonds and pension insurance instruments, which outweighed a decrease in the balance of investment trusts caused primarily by a weak stock market.

◆ Business profit on core banking operations --
　 profit declines due to rise in interest on deposits

Business profit on core banking operations is a key indicator of profitability. It represents net business profit (the total sum of profits on ordinary banking operations including deposits, loans, and foreign exchange), while eliminating the impact of one-time factors. It is roughly equivalent to the operating income of companies outside the banking sector.　For the reporting term, business profit on core banking operations fell by ￥2.3 billion from the previous term, to ￥8.7 billion. This is attributable to an increase of ￥2.5 billion in interest expenses on deposits as a result of a larger amount of deposits and a rise in interest rates.

◆ Operating income and net income --
　  income down due to higher credit costs

Credit costs rose against the backdrop of a deterioration in corporate customers’ business performance. As a result, operating income fell by ￥5.0 billion from the previous term, to ￥2.9 billion. Net income posted a decrease of ￥4.5 billion, to ￥1.3 billion.

◆ Unsecured loans to businesses --
　 Growth secured thanks to vigorous marketing initiatives

The term-end balance of unsecured loan products for businesses (i.e. those requiring neither collateral nor third-party guarantees) posted an increase of ￥3.4 billion over the previous term-end, to ￥13.8 billion. This is mainly attributable to the favorable performance of a new loan product called “Smooth Sailing,” offered in collaboration with the Okinawa Prefecture Credit Guarantee Association, as well as good sales of our Best Supporter loan package to help SMEs and sole proprietorships.

◆ Capital ratio -- ratio declines, due to increase in loans

A bank’s capital ratio is one of the chief indicators of the safe nature of its management and the soundness of its assets. It indicates the extent to which a bank’s profits and capital are adequate to cover possible losses on its loans and similar assets. The minimum domestic standard (for banks operating solely in Japan) is 4%, and the minimum standard for banks also operating overseas is 8%.

The Bank’s capital ratio as of March 31, 2008 registered a decline of 0.67 point from the previous term-end, at 8.60%, owing to an increase in risk-weighted assets caused by an increased amount of loans.

◆ Credit rating -- Bank once again receives A- rating (single A-minus) from JCRA

Credit ratings (issued by impartial credit rating agencies) with respect to companies that have issued bonds and other investment instruments represent judgments as to the probable ability of the company to repay the principal of, and pay the interest accruing to, such investment instruments. Japan Credit Rating Agency (JCRA), Japan’s leading credit rating agency, awarded the Bank an A- rating (single-A minus), for its long-term debentures. This is the seventh-highest rating out of a total of twenty.

◆ Bad debt disclosure -- NPL amount, bad debt ratio both improve

Bad debt (claims subject to disclosure under the Financial Reconstruction Act) at term-end posted a decline of ￥0.4 billion from the previous term-end, to ￥47.4 billion, thanks to efforts to help debtors improve their management. As a result, the bad debt ratio (ratio of bad debt to total claims) decreased by 0.19 percentage point from the previous term-end, to 4.02%.

◆ Business performance forecasts for FY2008 --
　 Net income of ￥4.2 billion projected

We project a significant decline in credit costs in fiscal 2008. As a result, net income is forecast to increase by ￥2.9 billion to ￥4.2 billion.

◆ Expenses --
　 Non-personnel expenses rise, centered on computer system expenses

Although personnel expenses decreased, non-personnel expenses rose, centered on expenses related to computer systems. Total expenses were up by ￥0.7 billion at ￥21.0 billion.