Review of Operations (non-consolidated)

◆ Deposits --  Growth in time deposits for individuals

The term-end balance of deposits increased by ￥103.7 billion from the previous term-end to ￥1,524.1 billion, the first time that deposits have passed the ￥1,500 billion mark. This was due to a strong performance by newly launched time deposits for individuals, and buoyancy in deposits held by private corporations and local government and other public entities.

The term-end balance of loans increased by ￥26.2 billion year-on-year to ￥1,209.5 billion on strong growth in lending to individuals (chiefly mortgage loans) and to local government and other public entities.

◆ Loans to Individuals -- Increased mortgage lending

The balance of loans to individuals increased ￥13.0 billion from the previous term-end to ￥369.4 billion, due to an increase in mortgage lending.

◆ Assets in custody -- Growth in investment trusts and personal pension products

Assets in custody (investment trusts, Japanese government bonds (JGBs) and pension insurance products) increased by ￥3.0 billion from the previous term-end to ￥195.1 billion, due to a rise in constant value for investment trusts and increased sales of personal pension insurance plans.

◆ Business profit on core banking operations --
　  Higher net interest income and interest and dividend income on securities

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 increased by ￥0.5 billion year-on-year to ￥9.1 billion. This was due chiefly to increased interest on loans and lower interest payments on deposits, and an increase in interest and dividend income on securities, which more than offset a decline in fees and commissions.

◆ Operating income and net income --
　  Net income rises on higher securities-related profits

Operating income increased by ￥4.6 billion from the previous year to ￥5.9 billion on a reduction in charge-offs on JGB and other bondholdings and shareholdings as the economy corrected from the chaos in financial markets that broke out in the previous fiscal year. During the reporting term, net income increased ￥1.1 billion to ￥4.4 billion.

◆ Capital ratio -- Steady rise in earnings drives increase

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, 2010 increased 0.83 percentage point from the previous term-end to 10.49%.

◆ Credit rating -- Rating climbs one level to A from A-

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 a healthy “A” rating for its long-term debentures, the sixth-highest rating out of a total of 20.

◆ Bad debt disclosure -- Bad debt level and ratio remain low

Bad debt (claims subject to disclosure under the Financial Reconstruction Law) increased ￥0.5 billion from the previous term-end to ￥20.3 billion. The bad debt ratio (ratio of bad debt to total claims) rose by 0.01 percentage point to 1.66%, remaining at a low level.

◆ Business performance forecasts for fiscal 2009 --
　  Earnings target set at ￥4.1 billion

For the year ending March 2011, we forecast net income of ￥4.1 billion, a year-on-year decrease of ￥0.3 billion. Key factors are likely to be higher revenues from an increase in total deposits and loans, and a decrease in recoveries of write-offs.

◆ Expenses -- Decline in non-personnel expenses

Overall expenses were down year-on-year by ￥0.1 billion to ￥21.1 billion, as a result of retrenchment measures notably targeting non-personnel expenses.