THE HYAKUGO BANK, LTD./Financial Review


	Corporate Philosophy Corporate Statement Profile Ratings Hyakugo Bank Group Organization Board of Directors and Corporate Auditors History


	Six-Year Summary (Consolidated) Six-Year Summary (Non-Consolidated)


	Message from the President The Second Management Plan of the New Century Increasing Income Corporate Governance Current Status of Nonperforming Loans Financial Review Financial Section Corporate Data and Investor Information

Income (Non-Consolidated)
For the year ended March 31, 2006, consolidated total income increased ¥2,628 million (3.4 percent) year-on-year to ¥79,029 million, due to factors including increased income from fees and commissions and proceeds from sales of securities. Total expenses decreased ¥1,598 million (2.6 percent) year-on-year to ¥60,403 million, because of factors including a reduction in provision for possible loan losses. Net income increased ¥4,136 million (58.6 percent) year-on-year to ¥11,193 million.

Net Interest Margin (Non-Consolidated)

Millions of yen

2006

2005

Increase
(decrease)

Interest income

¥ 62,597

¥ 62,620

¥ (23

)

Average interest-earning assets

3,537,351

3,441,372

95,979

Average interest rate of interest-earning assets (%)

1.76

1.81

(0.05

)

Interest expense

4,298

4,915

(616

)

Average interest-bearing liabilities

3,425,986

3,341,720

84,266

Average interest rate of interest-bearing liabilities (%)

0.12

0.14

(0.02

)

Net interest income

58,299

57,705

593

Funding cost (%)

1.31

1.35

(0.04

)

Net interest margin (%)

0.45

0.46

(0.01

)


Note:	Figures for average interest-bearing liabilities are presented after deducting the average outstanding balance of money held in trust and interests.

Deposits
As of March 31, 2006, total deposits, including negotiable certificates of deposit, increased ¥73,416 million (2.2 percent) from a year earlier to ¥3,407,916 million, due to solid increases in individual and corporate deposits.

Deposits by Depositor (Non-Consolidated)
	Millions of yen
	2006	2005	Increase (decrease)
Individuals	¥2,582,897	¥2,526,320	¥56,576
Corporations	631,780	613,281	18,499
Local governments	165,822	163,036	2,786
Financial institutions	27,415	31,862	(4,446	)
Total	¥3,407,916	¥3,334,499	¥73,416

Loans
The balance of loans and bills discounted at the end of the fiscal year increased ¥63,582 million (3.2 percent) from a year earlier to ¥2,061,044 million. The increase was mainly due to increases in loans to corporate customers and loans to individuals, mainly housing loans.

Loans to Individuals (Non-Consolidated)

Millions of yen

2006

2005

2004

2003

2002

2006/2005
Increase
(decrease)

Balance of loans to individuals

¥542,556

¥534,879

¥528,168

¥495,858

¥486,570

¥ 7,676

Balance of loans to individuals in the region

542,512

534,746

527,992

495,659

486,447

7,766

Number of borrowers

118,070

120,601

124,121

126,946

126,740

(2,531

)

Number of borrowers in the region

118,015

120,530

124,036

126,853

126,645

(2,515

)

Loans to individuals as a percentage of total loans

26.3

26.8

26.5

24.5

24.3

(0.5

)

points

Loans to individuals in the region as a
percentage of total loans in the region

30.3

30.4

30.2

28.3

28.6

(0.1

)

Consumer Loans (Non-Consolidated)

Millions of yen

2006

2005

2004

2003

2002

2006/2005
Increase
(decrease)

Consumer loans

¥505,998

¥494,210

¥483,502

¥447,261

¥435,300

¥11,788

Housing loans

426,678

407,689

384,674

336,844

315,473

18,989

Securities and other

79,319

86,521

98,827

110,416

119,827

(7,201

)

Loans to Small and Medium-sized Companies (Non-Consolidated)

Millions of yen

2006

2005

2004

2003

2002

2006/2005
Increase
(decrease)

Balance of loans to small and medium-sized companies

¥890,616

¥893,898

¥901,335

¥955,746

¥969,191

¥ (3,282

)

Balance of loans to small and medium-sized companies in the region

844,446

858,514

867,142

926,486

948,368

(14,068

)

Number of borrowers

15,444

15,449

16,140

17,533

18,742

)

Number of borrowers in the region

15,378

15,397

16,091

17,482

18,686

(19

)

Loans to small and medium-sized companies as a percentage of total loans

43.2

44.8

45.3

47.1

48.3

(1.6

)

points

Loans to small and medium-sized companies in the
region as a percentage of total loans in the region

47.2

48.8

49.6

52.9

55.7

(1.6

)


Note:	1.	The above amounts do not include loans from Japan offshore market accounts.
	2.	Small and medium-sized companies are classified as those having capital of ¥300 million or less (¥100 million or less in the wholesale industry; ¥50 million or less in the retail and service industries) or those having 300 or fewer employees (100 or fewer in the wholesale industry; 50 or fewer in the retail industry and 100 or fewer in the service industry) and include businesses run by individuals.


Outstanding Loans by Industry (Non-Consolidated)
	2006				2005
	Outstanding balance (Millions of yen)		Number of borrowers		Outstanding balance (Millions of yen)		Number of borrowers
	Total	Total in the region	Total	Total in the region	Total	Total in the region	Total	Total in the region
	2,061,044	1,790,100	134,003	133,680	1,997,461	1,760,393	136,517	136,196
Manufacturing	325,093	253,158	3,142	3,041	326,081	242,324	3,188	3,084
Agriculture	3,020	2,362	151	151	2,864	2,362	155	155
Forestry	5,961	5,953	64	64	6,142	5,953	71	71
Fishery	4,033	4,032	181	181	3,891	3,891	191	191
Mining	2,877	1,697	23	21	3,060	1,880	26	24
Construction	108,221	107,520	2,821	2,818	106,673	106,272	2,787	2,785
Utilities	18,902	17,792	46	44	19,911	16,652	50	47
Telecommunication	16,147	7,777	146	139	15,055	8,751	139	135
Communication	7,915	915	12	9	6,870	1,870	10	9
Transportation	93,511	72,780	538	525	80,665	66,119	524	514
Wholesale & Retail	280,571	253,355	3,587	3,554	275,134	252,311	3,676	3,642
Finance & Insurance	86,731	20,420	115	63	83,233	16,625	115	66
Real estate	170,873	127,725	1,178	1,153	133,168	122,719	1,071	1,061
Service industries	251,000	220,794	3,909	3,879	243,635	216,019	3,875	3,843
Restaurant	16,143	16,044	706	703	15,438	15,306	731	728
Local government	151,541	145,180	32	32	163,063	145,180	48	48
Other	542,556	542,511	118,070	118,015	534,879	534,744	120,601	120,530

Investment Securities
The balance of investment securities increased ¥95,273 million (7.0 percent) from a year earlier to ¥1,461,020 million.

Capital Adequacy Ratio
Hyakugo Bank applies domestic standards for determining capital adequacy. As of March 31, 2006, the Bank’s capital adequacy ratio based on domestic standards was 10.03 percent, and the Tier I capital ratio was 8.38 percent. Calculated using BIS standards, the capital adequacy ratio was 12.05 percent. On a non-consolidated basis, the capital adequacy ratio based on domestic standards was 9.83 percent, and the Tier I ratio was 8.17 percent. Using BIS standards, the non-consolidated capital adequacy ratio was 11.89 percent.

	Millions of yen
	Consolidated		Non-Consolidated
March 31	2006	2005	2006	2005
Tier I:
Common stockholders’ equity	¥ 167,290	¥ 156,796	¥ 161,060	¥ 151,445
Total Tier I capital	167,290	156,796	161,060	151,445
Tier II:
Premises revaluation account, after 55% discount	3,685	3,782	3,685	3,782
Reserve for possible loan losses	12,475	11,932	12,320	11,778
Total Tier II capital	33,160	32,715	33,006	32,561
Deduction from capital	101	101	101	101
Total capital	200,350	189,410	193,966	183,905
Total risk-adjusted assets	1,996,000	1,909,184	1,971,348	1,884,513
Capital adequacy ratio (%)	10.03	9.92	9.83	9.75

Total Stockholders’ Equity
Total stockholders’ equity at March 31, 2006 increased ¥32,083 million (15.2 percent) from a year earlier to ¥242,949 million.

Cash Flows (Consolidated)
Net cash provided by operating activities was ¥5,990 million, reflecting an increase in deposits and other factors. Net cash used in investing activities was ¥45,553 million, mainly due to purchases of investment securities. Net cash used in financing activities was ¥1,523 million due to payment of cash dividends and other factors. As a result, cash and cash equivalents at the end of the year decreased ¥41,072 million from a year earlier to ¥125,748 million.

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