Deposits
During the year under review, the Bank continued striving to secure stable funds, which led to an ¥8.4 billion increase in deposits of individual customers. Overall deposits, however, declined ¥13.1 billion, to ¥2,610.9 billion, due to a fall in corporate deposits, especially of large companies. To address customers’ diversifying needs for financial products, we actively promoted sales of investment trusts, personal pension insurance, and other products. As a result, the balance of investment trusts grew ¥24.8 billion, to ¥41.8 billion at fiscal year-end.

Loans and Bills Discounted
The balance of loans and bills discounted at fiscal year-end was ¥1,813.7 billion, up ¥19.4 billion from a year earlier. Due to steady performance mortgage loans rose ¥35.1 billion. In addition, our Corporate Business Promotion Office cultivated new loan customers in Osaka Prefecture, and all branches worked to uncover demand for financial requirement for business purposes.

Securities
The balance of securities holdings rose ¥104.0 billion, to ¥728.0 billion, as the Bank increased investments in domestic and foreign bonds in order to secure solid asset management income.

Cash Flows
Net cash provided by operating activities amounted to ¥45.8 billion, owing largely to a decline in pledged money for securities lending transactions and other short-term market activities. Net cash used in investing activities totaled ¥71.2 billion, due to purchases of marketable securities. Net cash provided by financing activities was ¥0.9 billion, due mainly to the issue of subordinated bonds. As a result, cash and cash equivalents at year-end stood at ¥41.7 billion, down ¥24.4 billion from a year earlier.

Equity Ratio
Based on domestic standards, the Bank’s consolidated equity ratio improved 0.85 point, to 7.72%, owing to the solid ¥9.9 billion net income figure. The non-consolidated equity ratio grew 0.46 point, to 7.67%.
    For the end of March 2005, the Bank forecasts a consolidated equity ratio of around 7.7% and a non-consolidated equity ratio of about 7.6%.

Earnings
During the year, the Bank assertively pursued a number of initiatives under its revised medium-term management plan, Reform Project 2002, which placed strong priority on strengthening profitability. Specific actions included promoting a customer-oriented mindset and contributing to society, upgrading financial services for small and medium-sized companies, swiftly resolution of the non-performing loans, and further reducing expenses. As a result of these efforts and increased asset management income related to investment trusts, we achieved a business profit from core businesses* of ¥23.0 billion, well above our ¥19.0 billion target.
    However, we posted a number of losses, including a ¥16.2 billion loss on write-downs of non-performing loans (including transfer to the reserve for possible loan losses) and a ¥3.1 billion loss by reversal due to an overly conservative evaluation of our deferred tax assets. Nevertheless, we posted net income of ¥9.9 billion, thanks largely to a gain on the sale of securities.
    Although we predict our operating environment to remain difficult, we will aggressively and swiftly implement various measures aimed at further strengthening earnings.

*Definition of business profit from core businesses: Business profit from core businesses is the basic indicator of the profitability of banks, and is calculated by subtracting income/loss on bond trading, and provisions to the general reserve for possible loan losses from net business profit.