Review of Operations (non-consolidated)

◆ Deposits --
　  Time deposits for individuals show continued popularity

The term-end balance of deposits rose by ￥6.5 billion over the previous term-end, to ￥1,420.4 billion. This performance is attributable to the popularity of our special 60th anniversary commemorative time deposits for individuals.

The term-end loan balance increased by ￥20.3 billion to ￥1,183.3 billion, due to the success of the Bank’s aggressive marketing of both personal loans (centered on mortgage loans) and business loans to SMEs.

◆ Loans to Individuals -- Mortgage loan balance grows

The term-end balance of loans to individuals rose by ￥8.8 billion over the previous term-end, to ￥356.4 billion, due to growth in mortgage loans.

◆ Assets in custody -- Growth seen in balances of JGBs and personal pension
　  insurance plans; balance of investment trusts declines

The term-end balance of assets in custody (investment trusts, government bonds, and pension insurance) registered a decrease of ￥14.9 billion from the previous term-end. This was due to sluggish sales of investment trusts due to the deteriorating stock market, which more than offset an increase in the balances of JGBs and pension insurance plans.

◆ Business profit on core banking operations --
　  Almost unchanged from the previous year

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), after the elimination 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 remained essentially unchanged from the previous term, at ￥8.6 billion. Although income from fees and commissions decreased, interest income on loans rose.

◆ Operating income and net income --
　  Net income rises, due to lower credit costs

Operating income fell by ￥1.6 billion from the previous term, to ￥1.3 billion, due to the application of impairment accounting to equity securities holdings as a result of the slide in stock prices.

Net income, on the other hand, rose by ￥2.0 billion over the previous year, to ￥3.3 billion, as a result of the reversal of loan-loss reserves.

◆ 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, 2009 registered an increase of 1.06 points from the previous term-end, to 9.66%, due to an increase in regulatory capital caused by growth in retained earnings.

◆ 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 -- Major decrease recorded in NPL amount thanks to
　  improvement in borrower classifications

Bad debt (claims subject to disclosure under the Financial Reconstruction Act) at term-end posted a decline of ￥27.6 billion from the previous term-end, at ￥19.8 billion, thanks to successful efforts to improve borrower classifications. As a result, the bad debt ratio (ratio of bad debt to total claims) decreased by a substantial 2.37 percentage points from the previous term-end, to 1.65%.

◆ Business performance forecasts for FY2009 --
　  Net income of ￥3.5 billion projected

We forecast an increase of ￥3.8 billion in operating income as a result of a rebound from the previous term, thanks to the non-repetition of major impairment losses on securities holdings in the wake of the global financial crisis. In view of the lack of prospects for a reversal of loan-loss reserves, net income for the current term should remain roughly flat, at ￥3.5 billion.

◆ Expenses --
　 Slight overall increase due to rises in IT-related and branch-related expenses

An increased amount of depreciation expenses involved in IT-related investment to bolster the Bank’s online services, as well expenses involved in the opening of new branches, caused total expenses to exceed the previous-year level by ￥200 million, at ￥21.2 billion.