JOYO BANKPROFILE
The Joyo Bank, Ltd., was established in 1935 out of the merger of theTokiwa Bank and Goju Bank (both founded in 1878), and celebrating its
125th year in Business.
As a leading financial institution in Ibaraki Prefecture and surrounding
regions, the Bank, with the philosophy of “Practicing sound management,
creation of values, and partnership with the home region,” is contributing
to the growth of its home region by providing stable and comprehensive
financial services.

Management Philosophy“Sound management, creation of value, and partnership with the home region”(1) Focusing on retail banking as our core business, Joyo Bank will pursue sound management and steady banking activities.
(2) Joyo Bank will create high-value business together with our customers, regional communities, and shareholders.
(3) By providing financial services in our base territory of Ibaraki Prefecture and adjacent areas, Joyo Bank will contribute to socialand economic progress in the home region.

Action Guidelines
We will— Provide the most appropriate products and services based on a keen understanding of our customers.
— Undertake steady banking activities and grow together with our customers.
— Seek to further improve our financial skills.

CONTENTS
1 Financial Highlights
2 Message from the President
4 Business Highlights (Non-consolidated basis)
5 Management Policy
6 Tackling Management Tasks
10 Corporate Governance and Internal Control System
17 Corporate Social Responsibility (CSR)
20 Consolidated Balance Sheets
21 Consolidated Statements of Income/Consolidated Statement of Capital Surplus andRetained Earnings
22 Consolidated Statement of Changes in Net Assets
23 Consolidated Statements of Cash Flows

24 Notes to the Consolidated Financial Statements
36 Report of Independent Certified Public Accountants
37 Non-Consolidated Balance Sheets (Unaudited)
39 Non-Consolidated Statements of Income (Unaudited)/
Non-Consolidated Statement of Retained Earnings(Unaudited)
40 Non-Consolidated Statement of Changes
in Net Assets (Unaudited)
42 Organization
43 Board of Directors and Corporate Auditors/
Market Business Group and Overseas Office
44 Service Network/Affiliated Companies
45 Corporate Data

FINANCIAL HIGHLIGHTS
Consolidated
THE JOYO BANK, LTD. and Consolidated Subsidiaries
Thousands of
U.S. dollars

Millions of yen
Years Ended March 31

2007

2006

2007

For the Year Ended
Total Income
Total Expenses
Income before Income Taxes and Minority Interests
Net Income¥ 197,653
143,967
53,68526,319¥ 182,781
138,874
43,907
24,815$ 1,674,316
1,219,550
454,766
222,948At the Year End
Total Assets
Deposits
Loans and Bills Discounted
Securities
Net Assets
Shareholders’ Equity
Capital Ratio¥7,444,736
6,309,618
4,402,579
2,605,232
518,810—11.98%¥7,352,922
6,166,008
4,391,666
2,489,550—
488,80912.01%$63,064,265
53,448,696
37,294,196
22,068,894
4,394,834
—

¥

¥

$

For the Year Ended
Net Cash Provided by (Used in) Operating Activities
Net Cash (Used in) Provided by Investing Activities
Net Cash Used in Financing Activities
Net Decrease in Cash and Cash Equivalents
Cash and Cash Equivalents at End of Year

92,097(58,690)(34,724)(1,314)
116,379(73,506)
11,692(12,527)(74,322)
117,694

780,153(497,169)(294,150)(11,136)
985,851

Notes: 1. Japanese yen amounts are rounded down to the nearest million yen.
2. U.S. dollar amounts represent translation of Japanese yen at the exchange rate of ¥118.05 to US$1.00 on March 31, 2007.

Non-Consolidated
THE JOYO BANK, LTD.
Thousands of
U.S. dollars

Millions of yen
Years Ended March 31

2007

2006

2007

For the Year Ended
Total Income
Total Expenses
Income before Income Taxes
Net Income¥ 175,963
122,956
53,007
26,186¥ 160,079
118,093
41,986
24,721$ 1,490,587
1,041,562
449,024
221,826

At the Year End
Total Assets
Deposits
Loans and Bills Discounted
Securities
Net Assets
Shareholders’ Equity¥7,430,806
6,326,301
4,438,855
2,607,267
515,631—¥7,340,658
6,181,063
4,433,701
2,489,359—
488,207$62,946,267
53,590,019
37,601,487
22,086,128
4,367,909—

Notes: 1. Japanese yen amounts are rounded down to the nearest million yen.
2. U.S. dollar amounts represent translation of Japanese yen at the exchange rate of ¥118.05 to US$1.00 on March 31, 2007.

1

MESSAGE FROM THE PRESIDENT
Evolving into a comprehensive supplier of high-quality financial services

Providing comprehensive, high-quality
financial services
Deregulation has enabled the Bank to significantly
broaden its business domains, although there has also
been a strong increase in competition from service
providers in other sectors. The business environment forbanks is changing greatly with the establishment of the
Financial Instruments and Exchange Law and application of the new Basel Capital Accord (Basel II).
Here at Joyo Bank, in order to provide comprehensive high-quality financial services and strengthen ourcustomers’ trust, we are focusing on the three basic
targets set out in our ninth medium-term management
plan (FY2005 to FY2007): improving profitability(increased gross profits), improving operations management, and increased organizational vitality. In the ninth
medium-term management plan, we positioned thecustomer at the heart of all our activities, and viewcompliance with all laws and regulations as management’s most important task. We have worked hard tofollow these principles.
In line with our Regionally-Based Financing
Promotion Program (FY2005 to FY2006), intended tospur the development of the regional community andeconomy through consistently reliable financial services,
we are strengthening support for new business creation,
management consulting, and business revitalization in
our home region.

2

Responding to diverse customer needs
Keeping the focus on the customer, and understanding
the customer and their needs form the fundamentals of
the financial services business. At Joyo Bank we seek
to satisfy our customers by providing high-quality financial services that meet their needs.
In corporate banking business, we actively meetthe financing needs of local small-to medium corporate
customers through diverse fund-raising methods ranging from syndicated loans to private placements. As
part of our comprehensive financial services, we havestrengthened our capabilities in proposing businesssuccession and matchmaking solutions. On the PR
front, we have highlighted the bright future and development potential of Ibaraki Prefecture. We have organizedinspection tours for industrial sites in cooperation with
the Ibaraki Prefecture government to attract corporations from outside the prefecture, and held businesspartnering meetings for the agricultural production andfood-processing, restaurant and retail industries, aimed
at expanding sales channels.
For individual customers, we have enriched ourline-up of mortgage products, and started offering
products such as a housing loan for which repayments
are suspended if the customer suffers cancer, a stroke
or a heart attack. We also offer card, car and educationloans and other loans tailored to customer age-group.
In response to our customers’ diversifying needs,
we are expanding our range of asset management
products, for example with the launch of our new
investment trust product, through which funds areevenly spread among bonds, stocks and REITs, andbuilding out our securities brokerage network from two
locations to seven.

To respond quickly and appropriately to the broadening of our business domains and to changes in operational systems and technologies, we developed a joint
computer system with three other regional banks. The
system, in operation since January 2007, will enable us
to reduce system costs and develop products andservices to meet customer needs promptly.

Stability, Cooperation, Partnership withthe home region
Based on our management philosophy of stability,
cooperation, partnership with the home region, we
believe our mission is to contribute to the developmentof the regional community and economy, as a financiallystable, soundly managed provider of reliable financial
services and functions.
In addition to that mission, we are working toincrease customer satisfaction by improving customer
convenience and taking various measures against damage to customers’ interests, and by building enterprisevalue through improved profitability and sound business
management. This is our road to providing comprehensive, high-quality financial services.
Through strict adherence to compliance and rigorous risk management, we aim to provide financial services that build trust and peace of mind for customers in
the region.

Kunio Onizawa
President

From the top down, we as a bank are fully committed to meeting the expectations of our customers,
community and shareholders. I offer my sincere gratitude for your continued support for our endeavors.

Kunio Onizawa
President
July 2007

3

BUSINESS HIGHLIGHTS (NON-CONSOLIDATED BASIS)
Revenues and Earnings
Business profit declined ¥2.4 billion or 4.3% year-on-yearto ¥52.9 billion (US$448 million). Continuing robust salesof mortgage loans and investment trusts were more thanoutweighed by increased costs of procurement offoreign-currency denominated funds due to rising shortterm interest rates in overseas markets. Core businessprofit, the main indicator of the Bank’s profitability, alsoslipped ¥1.5 billion or 2.7% year-on-year to ¥52.2 billion(US$442 million).
Ordinary profit increased ¥6.5 billion or 16.0% yearon-year to ¥47.6 billion (US$403 million) on the back of asignificant decline in the amount of bad-debt disposal.
Net income increased by ¥1.4 billion or 5.9% year-onyear to ¥26.1 billion (US$221 million).
*Core business profit is the amount of business profit adjusted for gains
and losses on bond trading and general provisions for possible loan
losses.

Deposits, Loans and Securities
Deposits for the term increased by ¥138.7 billion to aterm-end balance of ¥6,285.2 billion (US$53,241 million).
Of this total, ordinary accounts increased by ¥123.0
billion to a term-end balance of ¥3,299.3 billion(US$27,948 million), and time deposits increased ¥24.8
billion to a term-end balance of ¥2,570.0 billion(US$21,770 million).
Loans in the term increased by ¥5.1 billion to a termend balance of ¥4,438.8 billion (US$37,601 million).
Loans to the public sector declined, but lending to individuals, especially mortgage loans, increased ¥37.7
billion, to end the term at ¥1,005.1 billion (US$8,514
million). In addition, lending to SMEs increased by ¥15.5
billion to ¥1,925.1 billion (US$16,307 million) at the end of
the term. Securities holdings increased ¥117.9 billion, to
end the term at ¥2,607.2 billion (US$22,085 million). Of
this total, government bonds increased by ¥30.0 billion to¥760.2 billion (US$6,439 million) at the end of the term.
The balance of corporate bonds increased ¥60.8 billion
to ¥402.0 billion (US$3,405 million) at the term-end.
Assets under custody increased by ¥215.5 billion
year-on-year to ¥1,067.4 billion (US$9,041 million), passing the trillion yen mark. In addition to a significant
increase in investment trusts, sales of government bonds
and pension insurance to individual customers also
4

increased significantly.
Mortgage and housing loans had another good year.
Mortgage loans increased by ¥54.6 billion year-on-year to¥870.6 billion (US$7,374 million), while loans to apartment building owners increased to ¥10.4 billion to ¥283.5
billion (US$2,401 million).

Capital Ratio
The capital ratio is an important indicator for assessing
the soundness of the Bank’s operations.
Our capital ratio, on a consolidated basis, stood at
11.98% (Tier I ratio: 10.20%), while our capital ratio on a
non-consolidated basis also remained at a high level of
11.88% (Tier I ratio: 10.21%).
In line with the new Basel II international standards forcapital adequacy introduced in Japan, the Bank now
calculates credit risk using the Standardized Approach(SA), and operational risk using the Standardized
Approach (SA) established by BIS from the term ended
March 2007.
It should be noted that the level required for banks
complained to domestic standards is 4% or greater.

Consolidated Accounts
The Bank currently has nine consolidated subsidiaries.
On a consolidated basis, ordinary income for the year
increased by ¥11.9 billion, to ¥192.0 billion (US$1,626
million). Ordinary expenses increased by ¥4.9 billion to¥142.2 billion (US$1,204 million). As a result of the above,
ordinary profit was ¥49.7 billion (US$421 million) and net
income was ¥26.3 billion (US$222 million), in both casesa year-on-year increase.
Turning to cash flow in the year (consolidated basis),
net cash provided by operating activities totaled ¥92.0
billion (US$779 million), due mainly to an increase indeposits, but net cash used in investing activities totaled¥58.6 billion (US$496 million), due mainly to a decline in
cash inflows from securities trading. Net cash used infinancing activities totaled ¥34.7 billion (US$293 million)
due chiefly to repayment of subordinated debt and acquisition of own shares.
As a result of the above, cash and cash equivalents at
the end of the term decreased by ¥1.3 billion to ¥116.3
billion (US$985 million).

MANAGEMENT POLICY
9th Medium-Term Management Plan “Leaping toward a New Growth Stage”
With the application of the new Basel Capital Accord (Basel II) and the government’s shift of focus from savings toinvestments, the financial environment in Japan is undergoing great change. Also, with competition from outside theregion increasing and other sectors offering financial services, the Bank’s competitive environment has become eventougher.
As Joyo Bank’s management environment has greatly changed, we are implementing the ninth medium-term
management plan to win further trust from our customers, community and shareholders, and to build an evenstronger management base.

9th Medium-Term Management Plan
(April 1, 2005 - March 31, 2008)

Our
Goal

To be a high-quality, comprehensive financial services provider

Through our 9th medium-term management plan, our goal is to be a comprehensive supplier of high-quality financial
services to support the reality of regional and business development and bountiful household finances.
• Understanding of our customers’ needs and acting on these sensitively (Increasing customer satisfaction)• Increasing profitability and stability and achieving increased shareholder value (Raising shareholder satisfaction)• Working toward individual growth and improving organizational vitality (Raising employee satisfaction)

Improved profitability(increased gross profits)

Basic
Goals
Increasedorganizational vitality

Improved
operations management

We are carrying out a wide range of policies to accomplish our basic goals of improving profitability (increasing grossprofits), operational management and organizational vitality, to realize our ambition of being a comprehensive supplierof high-quality financial services, the pathway to sustainable growth and higher enterprise value. As a company working in the services industry, where everything starts with trust, we are stepping up our commitment to more secure
financial transactions and greater compliance.

5

TACKLING MANAGEMENT TASKS
Asset Soundness
Results of Processing Non-Performing Loans in
FY2006
We have calculated write-offs and reserve amounts for
non-performing loans based on results from selfassessment and established rules on write-offs andprovision of reserves. Credit costs for nonperforming
loans processed in FY2006 totaled ¥6.8 billion (US$57
million). Below is a breakdown. Total disposals in fiscal
2006 declined by ¥9.3 billion year-on-year. This was
mainly due to reclassification of borrowers whose businesses are now picking up again as a result of corporate
rehabilitation support measures, and to a reversal of poor
business conditions at troubled companies.

March 31

Write-off of claims
Net provision for specific reserves
Provision for specific foreign borrowers
Losses on bulk sale of loans
Provision for other contingent losses
Other
Total

2007

Millions of Yen
2006 Change¥6,036 ¥ 8,182 ¥(2,146)— 7,454 (7,454)
—
—
—
372
226
146
400
290
110
—
—
—
¥6,810 ¥16,153 (9,343)

Reserve for Possible Loan Losses
For debtors deemed to be in a state of bankruptcy andquasi-bankruptcy based on self-assessment, we
deducted the value of collateral amounts from the loan
amounts. After that, we provided reserves in an amountof 100% of the amount of claims thought to be unrecoverable. Furthermore, for loans to debtors who are at risk,
we provided reserves based on the Bank’s historicalloan-loss ratio to the value of 64.17% for claims at risk ofbeing unrecoverable. As a result, compared to the ¥35.3
billion total of non-performing loans for which there is arisk of no recovery, we have provided specific reserves
for bad debts totaling ¥22.6 billion (US$191 million), a
reserve ratio of 64.18%.
Claims deemed to be unrecoverable or valueless(¥41.2 billion) based on self-assessment have been

6

executed on a “partial direct write-offs” basis and havebeen deducted within the balance sheet.
For the general reserve for bad debts, we have conducted an appropriate reserve provision following theguidelines of the Financial Inspection Manual prepared by
the Financial Services Agency. For debtors requiring
attention, we have divided these into three categories toinclude debtors requiring management, and have provided reserves after consideration of the historical default
ratio of each category.
Moving forward, we will continue to improve our credit
risk management system, and conduct appropriate writeoffs and provide reserves, and work toward improving thehealth and stability of our assets.
Reserve Based on Self-Assessment

March 31, 2007

Claims of balance (i)Claims secured
by collateral (ii)Claims with uncertain
collectibility (A)=(i)-(ii)Specific reserve (B)Reserve ratio (B)/(A)Billions of Yen
Potentially Substantially
Legallybankrupt
bankrupt
bankrupt
borrowers borrowers borrowers¥ 78.4 ¥

11.4

43.1

11.4

¥

35.3
0
22.6
0
64.17% 100.00%

Total

5.8 ¥ 95.8
5.8

60.4

0
35.3
0
22.6
100.00% 64.18%

Reserve for Possible Loan Losses
March 31

2007

General loan loss reserve¥16.8
Specific reserve
22.7
Reserve for specific foreign borrowers—
Reserve for possible loan losses
39.5
Reserve for assistance to specific borrowers—
Reserve for possible losses on sale of loans—
Reserve for other contingent losses
0.5

Billions of Yen
2006 Change

¥20.9
30.2
—
51.2
—
—
0.4

¥ (4.1)(7.5)—(11.6)——
1

Enhanced Managerial and Financial Support for
Businesses
To increase the quality of assets, not only must weaggressively proceed with the disposal of non-performing
loans, but also strengthen our efforts to resolve problemson the debtor side such as declining performance resulting from changes in the economic climate or industrial
structure and declining financial positions resulting fromfalling asset values. This is the vital role we are expected
to fulfill in the revitalization and development of the local
economy and it is something that the entire Bank is
working toward.
Specifically, the Company Management Support
Office has closely cooperated with our branch staff toprovide management analysis, advice on improvement
strategies, support for the drafting of operational reform
plans and, where necessary, support based on external
partnerships such as the Small to Medium-Enterprise
Rehabilitation Support Association. Through these activities, we are working toward supporting the corporate
rehabilitation and operational improvement of our corporate customers.
As a result of strengthening our support activities
since FY2005, based on the Regionally-Based Financing
Promotion Program, we have seen improvements in the
borrower classifications for 75 of our debtors (debtors’
credit ratings based upon the financial positions of thecompanies in question). We will continue our commitment to supporting the managements of troubled companies, with the aim of revitalizing the regional economy.
Disclosure of the Bank’s Assets
We continue to view the improvement of asset quality asa major management issue and in addition to working
toward the disposal of non-performing loans and increasing the health of our assets, we endeavor to provide
disclosure of all information.

Risk-Monitored Claims Following the Banking Law
For loans subject to risk management under the Banking
Law, Joyo Bank has adopted four classifications fordisclosure purposes: loans to debtors in bankruptcy
based on self-assessment are “loans in bankruptcy anddishonored bills,” loans to debtors who are substantiallyor potentially in bankruptcy are “delinquent loans,” loans
to companies requiring caution that have been delinquent
for 3 months or more are “loans past due with respect tointerest payments for more than three months,” andloans to debtors who we support through interest reduction and waiver or repayment are “restructured loans.”
As a result of asset improvement due to the supportof company management, and by progressing to final
closure, the amount of bad loans subject to mandatory
disclosure declined by ¥52.2 billion to ¥146.5 billion (US$1,240 billion). Furthermore, we have kept a high coverage
ratio of 70.91%.
Risk-Monitored Assets under the Banking Law(Non-consolidated)
March 31

Loans in bankruptcy
and dishonored bills
Delinquent loans
Loans past due with respect
to interest payments for morethan three months
Restructured loans
Total (a)Loans and bills discounted (b)Ratio of risk-monitored assets toloans outstanding (a)/(b)Portion covered by collateraland guarantees (c)Coverage ratio (c)/(a)(Consolidated)
March 31

Loans in bankruptcy
and dishonored bills
Delinquent loans
Loans past due with respect
to interest payments for morethan three months
Restructured loans
Total

Billions of Yen
2006
Change

2007

¥

5.7
89.1

2.0
49.5
¥ 146.5¥4,438.8
3.30%

¥

4.8
133.4

¥ 0.9
(44.3)

2.2
58.1¥ 198.7¥4,433.7

(0.2)
(8.6)
¥(52.2)
¥ 5.1

4.48%

1.18%

¥ 103.9 ¥ 152.8(48.8)
70.91%
76.87% (59.5%)

2007

Billions of Yen
2006
Change

¥ 5.9
90.0

¥ 4.9
134.9

¥ 0.9
(44.8)

2.1
49.7¥147.92.4
58.5¥200.8(0.2)(8.7)¥(52.9)7

Claims Disclosed in Accordance with the Financial
Revitalization Law
Disclosure of the results of an asset assessment isrequired under the Financial Revitalization Law. Under theLaw, the Bank regards non-performing loans determinedthrough asset self-assessment to be loans to legally or
substantially bankrupt companies as “bankrupt andquasi-bankrupt assets,” loans to potentially bankrupt
companies as “doubtful assets,” loans past due withrespect to interest payments by more than three months
and restructured loans as “substandard loans.”
Claims subject to disclosure under the Financial
Revitalization Law during fiscal 2006 fell ¥51.6 billion
year-on-year to ¥147.4 billion, accounting for 3.27% of allloans, down 1.15 percentage points. Furthermore, the¥0.9 billion differential between the ¥147.4 billion inclaims for disclosure under the Financial Revitalization
Law, which excludes normal loans, and the ¥146.5 billion
in claims for mandatory disclosure in accordance with
Banking Law represents non-loan claims including customers’ liabilities for acceptances and guarantees,
accrued interest and suspense payments.

8

Problem Assets under the Financial Revitalization Law
March 312007

Bankrupt andquasi-bankrupt assets (a)Doubtful assets (b)Substandard loans (c)Problem assets (A)=(a)+(b)+(c)Normal assets (d)Total (B)=(A)+(d)Ratio of problem assets (A)/(B)Billions of Yen
2006
Change¥17.4 ¥ 16.9 ¥ 0.5
78.5
121.7
(43.3)
51.6
60.5
(8.9)
147.4
199.0
(51.6)
4,350.7
4,289.9
60.8¥4,498.2 ¥4,489.0 ¥ 9.2
3.27%
4.43% (1.15%)

Coverage Status at Fiscal 2006 Year-End

March 31, 2007

Problem assets (a)Assets secured bycollateral andguarantees (b)Reserve for possible
loan losses (c)Coverage ratio{(b)+(c)}/(a)Billions of Yen
Bankrupt andquasi-bankrupt Doubtful Substandard
assetsassets
loans
Total

¥17.4

¥78.5

¥51.6

¥147.4

17.4

43.1

14.9

75.4

0

22.7

6.5

29.2

100.00%83.87%

41.48% 70.93%

The disclosure-based assets for each borrower classification of self-assessment are summarized below.

Self-Assessment: Classification of Borrowers and Disclosure-Based Assets (Billions of Yen)
Self-Assessment
Classificationof Borrowers
Legally Bankrupt
Substantially Bankrupt
Potentially Bankrupt

Borrowers Requiring Caution

Normal Borrowers

Problem Assets
under Financial
Revitalization Law
Bankrupt andQuasi-Bankrupt
Assets 17.4

Legally
Bankrupt 5.9
Substantially
Bankrupt 11.5

Doubtful Assets
78.5

Risk-Monitored
Assets underthe Banking Law
Loans in Bankruptcy andDishonored Bills 5.7

Delinquent Loans
89.1

Substandard Loans
51.6

Loans Past Due with Respect
to Interest Payments forMore than Three Months 2.0
Restructured Loans 49.5

Subtotal 147.4

Subtotal 146.5

Normal Loans
4,350.7

Note: Assets covered by disclosure standards

Note: Categorization of Disclosure Standards

Financial Revitalization Law:
Loans, securities lending, foreign exchange, interest receivable,suspense payments, and customers’ liabilities for acceptanceand guarantees

Financial Revitalization Law:
Categorized by borrower basis, in accordance with selfassessment results. (As an exception, Substandard Loans are
categorized on individual loan basis.)

Banking Law:
Loans and bills discounted

Banking Law:
Loans to Legally Bankrupt Borrowers, Substantially Bankrupt
Borrowers, and Potentially Bankrupt Borrowers are categorized
on an individual borrower basis, in accordance with selfassessment results. Loans to Borrowers Requiring Caution aredisclosed on an individual loan basis.

9

CORPORATE GOVERNANCE AND INTERNAL CONTROL SYSTEM
To ensure a greater level of trust from customers, thelocal community and our shareholders, we believe it isessential that our management be efficient, sound andtransparent, and firmly rooted in compliance. Constantly
mindful of the importance of corporate ethics, we haveestablished eight basic principles under which we arestrengthening and expanding our corporate governance.
Corporate Governance at Joyo Bank
Joyo Bank employs the conventional Japanese statutory
auditor system for corporate governance pursuant to the
Corporation Law. The Bank appoints directors, statutory
auditors and accounting auditors. Our corporate governance bodies are as follows: General Meetings ofShareholders, Board of Directors, and Board of
Corporate Auditors (made up of statutory auditors). We
have a total of 12 directors, with nine executive directors,
excluding the chairman who is the Chairman of theBoard, the vice chairman and a senior managing director
in charge of the internal audit division. There are no outside directors. Of a total of five statutory auditors, three
are outside auditors.
The Bank’s Board of Directors meets twice a monthto deal with decision-making by the management andsupervision. We have set up an Executive Officer
Committee to discuss and pass resolutions regarding
major matters facing the Bank other than matters subject
to a special resolution by the Board of Directors. The
Executive Officer Committee meets twice a month todraft and implement on specific policies.
To determine the major themes for management
audits, special committees (Compliance Committee,

General Meetingof Shareholders

Decision-making/
Management
supervision
Board of Directors

General Budget Committee, ALM Committee, Risk
Management Committee and Sound Asset Committee)
have been established and decisions are made by thesecommittees.
In order to audit performance of duties by directors,
the auditors attend important meetings such as theBoard of Directors and Executive Officer Committee
meetings, peruse relevant documents, and carry out
business and asset status inspections, all of which are
based on the auditing policies and plans outlined at
Board of Corporate Auditors meetings (held once amonth in principle).
The Joyo Bank Corporate Philosophy
Corporate Social Responsibly (CSR) and Public Mission
Always keep in mind the Bank’s CSR and public mission, and establish
greater trust through sound and open business management.
Compliance
Comply with the legal and social code and execute honest and open
business activities.
Fight Against Crime
Ensure that the Bank has no relationship with organized crime.
Provide Valuable Financial Services
We will contribute to the development of the region in which we operateby responding to our customers’ needs and providing valuable financial
services, taking security issues into due consideration.
Relationship with the Local Community
We will communicate openly and freely with the community where we
do our business, raising our transparency through active disclosure ofcorporate information.
Respecting the Individual Rights of our Employees
We will provide a work environment that respects individuality andprotects the rights of all employees.

Internal Control Department
Operating execution
Executive Officer
Committee

Business Section

Retail Banking Business Group
Corporate Banking Business Group

Corporate Auditors

Credit Risk Management Group

Board of Corporate
Auditors

Operation Systems Group
Corporate Management Section

10

Public Business Group
Market Business GroupInitiatives on Environmental Issues
We will work to reduce the burden on the environment generated by ourbusiness activities, and will contribute to environmental preservation
efforts by the local community through our core banking operations.
Involvement in Activities that Contribute to the Region
Our efforts to be a good corporate citizen mean that we are making a
positive effort, involving ourselves in activities that contribute to theregion.

Internal Control
Compliance
Based upon our philosophy of stability, cooperation andpartnership with the home region, we are attaching great
importance to compliance in our management. We haveestablished a corporate ethics guideline and a code ofstandards. Moreover, we have established a new set of
guidelines to ensure that every director and employee
complies with the law and with the Bank’s Articles ofIncorporation. Every company within Joyo Bank Group
follows the same strict guidelines. We have put standards
into place to establish a compliance system across theGroup as a whole.
To ensure the best standards in compliance, we haveestablished a Compliance Office that oversees the compliance program as defined by the Board of Directors.
The Office makes regular reports to the Board. Moreover,
we have established a whistleblower hotline for the entire
Group, called the Compliance Hotline.
In addition to the Compliance Committee, we haveappointed outside experts to form Compliance
Monitoring Committees, which monitor complianceissues on a regular basis.
To ensure that our internal controls perform theirintended functions, our various auditing functions, which
are independent from business execution departments,
carry out internal audits across the Group.

Risk Management Standards and other Controls
In addition to establishing risk management standards
pertaining to all categories of risk, it is our aim to build aninternal risk management structure to ensure a soundfinancial position and stable earnings in the future.
Moreover, we also have business contingency plans inplace should any event disrupt our core systems, such as
natural disasters or a systems failure.
The management of risk is the responsibility of various
risk management departments, as set down in the inhouse regulations. Comprehensive risk management iscarried out by one department that oversees risk management for the entire Bank. The Board of Directors has
appointed one high-ranking officer to oversee the risk
management program.
We have established a Risk Management Committee
to measure the extent of various risks and make decisions on risk management policies. This committee willmeet regularly to ensure an accurate grasp of the situation regarding risk management issues across the Bank.
The officer in charge of risk management will make regular reports to the Board of Directors on the current stateof risk management and the countermeasures that the
Bank is taking against risks.
System to Ensure the Effective Execution of theirDuties by the Directors of Joyo Bank
We have put in place a business plan to clarify our operational targets, as well as an overall budget every year, todefine specific policies.
We have determined the scope of decision-making
responsibilities for each director, to achieve efficient
operations.
We have established an Executive Officer Committeethat consists of executive directors and executive officers
to discuss important matters affecting the daily conductof operations. We have also set up a range of committees, grouping executive directors, executive officers anddivision heads, who meet as and when needed.

11Supporting Corporate Auditors
One able and competent staff member is assigned toassist the corporate auditors.
To ensure the independence of this assistant from theinfluence of the business execution departments, theexecutive director in charge of all personnel transfers
should inform the corporate auditors of the decision. The
corporate auditors are entitled to express their opinions
and advice regarding the transfer of the staff member
who has been being selected for the duties.
The corporate auditors attend meetings of the
Executive Officer Committee and offer their opinions on
the audit process and all related matters.
The directors and employees of the Bank offer any
and all information the corporate auditors deem necessary to complete the audit.
In order to improve the efficiency of the audit system,
the corporate auditors maintain open communication
channels with all headquarters departments other than
the internal audit sections.
The Chairman of the Board, President, and accounting auditors each meet regularly with corporate auditorsand exchange opinions on the full range of issues related
to the audits.

Compliance System
The Bank places a high priority on strengthening its
compliance system to ensure sound banking operations,fulfill its social responsibility and public mission, andmaintain the trust of customers, shareholders and otherstakeholders.
The Bank is drafting a compliance program each year
and ensure that executives are fulfilling their roles incompliance.
Creating a compliance system whose ultimate supervisory organ is the Board of Directors and place dedicated compliance officers in each major division toundertake wide-ranging inspections to address how
division are addressing legal issues.
Supplementing internal compliance activities by outside audits to inject the required professional knowledge
and objectivity. Accordingly, the Bank will set up aCompliance Audit Committee, consisting of outside
professionals including a lawyer and a Certified Public
Accountant (CPA). The Committee evaluates and audits
the Bank’s compliance activities. The Bank is striving tofurther strengthen and improve its compliance activities.

Our Conduct Guidelines
We will● get to know our customers and offer optimal products and services● expand business scale and grow with our customers● increase our financial expertise

Policy Regarding Solicitations for Financial Products
In accordance with Article 8 of the Law Concerning the Sale of Financial Products, our solicitations for products are basedon the following policies.
1. Our appropriate solicitations for financial products are conducted by matching the products with the knowledge,
experience, and financial status of the customer.
2. To ensure that our customers make choices based on their own judgment and at their own liability, we will provide
easy-to-understand explanations so that the customer has sufficient understanding of financial products and therisks attached.
3. We assure that sales are never based on the provision of misleading or false statements or information, nor do we act
in a manner leading to any misunderstanding by our customers.
4. Our solicitations will not be conducted at times or in locations that cause inconvenience.
5. We are setting up a training system within the Bank to ensure proper solicitation to our customers.
12

Risk Management
While the financial industry has grown due to deregulationand the advancement of financial technology, the risks
carried by banks continue to diversify and become evermore complicated. In this environment, we are working tomeet the highly advanced and various needs of our customers, and we also have placed emphasis on the subject of “risk management” to ensure the maintenance andimprovement of healthy operations which is one of themost vital issues facing management.
The Risk Management System
In our fundamental rules regarding risk management wehave outlined our fundamental thinking and management
procedures including policies regarding risk management, organizational structure, and responsibilities.
In business management, the departments that carryrisks when conducting transactions (marketing departments) and the departments that internally manage theresults of transactions (business administration departments) are separated, thus creating an organizational

structure that allows for mutual checks and balances.
The various risks that are incurred during banking operations are managed by specific risk management departments depending on the type of risk.
We also have established a risk management supervision department, which supervises the management
systems for all risks, and is responsible for holding meetings of the Risk Management Committee, which is anorgan for the examination of Bank-wide solutions torisks. The department also provides regular reports on
the overall status of risks to the Board of Directors.
Additionally, internal auditing staff verify that risk
management is functioning appropriately and effectively
in Risk Management Supervision Department and eachrisk management related department, thereby increasing
the effectiveness of the system.

Risk Management System
Risk Management
Departments

Risk Management
Committee

Credit Risk
Board of Directors

Risk Management
Supervision Dept.

Market Risk
Liquidity Risk

Internal Auditing Dept.

Business Promotion
Departments,
Administrative
Control Departments,
Group Companies

Operational Risk

Verification of suitability
and validity of the risk
management system

13Comprehensive Risk Management
The Bank has adopted comprehensive risk managementfor quantitative understanding of risk using statisticalmethods for each category of risk, in order to manage
not only individual risk categories but also to enablesystematic risk management as the business of banking
grows more diversified and complex.
This comprehensive approach enables the Bank tomanage what extent of risk amount can be permitted
relative to risk-adjusted capital, the indicator of financial
soundness, and whether or not management resources
are being deployed efficiently.
Allocation of Risk-Adjusted Capital
In comprehensive risk management, levels of riskadjusted capital that may be allocated to cover the scaleof permissible risk within Tier I (core capital) are determined. This is then allocated by risk type and category tocontrol risk within the permitted parameters. In the caseof major change which cannot be analyzed in terms of
past data, we use special simulations (stress testing) toverify capital adequacy levels.
• Credit Risk Management
Credit risk is the risk of not receiving principal or loan
payments as promised on loans due to a decline in
the credit situation of the debtor. This is seen as oneof the most serious risks undertaken within banking
operations.
In order to prevent the occurrence of nonperforming loans and improve the health of our assets,
we undertake every effort to ensure good credit risk
management.
• Overview of Basic Policy and Procedures with
Regard to Credit Risk Management
The Bank has compiled management guidelines for
credit risk, which serve as a basic policy for appropriate management of credit risk on individual loans andmanagement of the credit portfolio, focusing on
spreading risk as its basic tool.

14• Credit Risk Management for Individual Loans
We have separated credit-screening departmentsfrom lending departments, and constantly work
toward making screening stricter while also focusing
on credit management before due date to prevent thestatus of a claim from deteriorating.
The Bank has created a set of basic parameters
for lending, designed to speed up decision-making in
lending decisions and to ensure more rigorous risk
management. We also have a system for accuratelyreflecting in the asset self-assessments the businessperformance achieved by the borrower and changes
in the value of collateral.
The Bank has also adopted an automated scoring
system for small-lot loans to unify credit screening
standards and improve efficiency.
• Borrower Ratings
We have a 12-stage rating process including quantitative appraisal of data such as financial condition of theborrower and cash flows. In addition to serving as thebasis for asset self-assessments, ratings for borrower
creditworthiness are used across the full range ofcredit risk management, including assessment ofamount of credit risk, setting of interest rates for loans
and setting of decision-making powers.
• Asset Self-Assessment
In asset self-assessments to evaluate the soundnessof assets, a primary evaluation is carried out first,
followed by a decision on credit category based on acredit rating by the individual branch concerned. Thenthe head office department in charge of credit screening checks this (secondary assessment) and the
Corporate Audit Division audits the results of the asset
self-assessment and verifies the appropriateness ofprocedures. Based on these results, the Bank provides appropriate reserves and writes down problem
loans based on the assessments.

• Quantification of Credit Risk Management
The quantification of credit risk management refers to
the statistical forecasting of future losses (amount ofcredit risk) that can be expected from the bankruptcy
or deterioration of business at borrowers. Based on
our customer credit ratings, the Bank calculates credit
risk for each borrower in light of its health and otherfactors.
• Loan Portfolio Management
We treat loan assets in their entirety as a single portfolio and conduct credit risk management from amacro-perspective. Based on the quantification of
credit risk, we carry out periodic monitoring to determine whether or not credit risk is concentrated in
specific rating groups, sectors or corporate groups,
and analyze and evaluate credit situations by rating,region and sector.
Market Risk Management
Market risk refers to fluctuation primarily in earnings
caused by interest rate changes, foreign exchange rate
fluctuations, and changes in the demand for funds within
the financial industry. Assets such as loans and securities
and liabilities such as deposits are constantly influenced
by such changes.
We manage all assets and liabilities (deposits, loans,securities, and others) comprehensively based on ALM(asset and liability management) to manage market risks.
• Market Risk Management System
The front and back office departments are separate.
The bank has also established middle-office risk
management sections to create a system of mutual
checks and balances.
• Market Risk Control
The scale of risks involved in assets and liabilities(deposits, loans, securities) go through a multifaceted
analysis — gap analysis, basis point value (BPV),
simulation of interest fluctuation, and Value at Risk
(VaR) — in order to clarify the state of risks and conduct asset allocation effectively and implement risk
control measures.

The Bank engages in financial derivative transactions to meet the diverse needs of its customers andhedge its own risks arising from interest fluctuations.
For the risks associated with financial derivatives, inaddition to conducting daily mark-to-market valuation
and BPV analyses to accurately grasp the size andnature of the risk, we also manage risk appropriately
by establishing limits according to objectives.
Operational Risk Management
Administrative risk refers to the risk of losses arising from
irregular procedures or employee conduct in banking
operations, or inappropriate system operation or detrimental external events. The Bank divides such risk up
into five categories, administrative risk, system risk, risk totangible assets, personnel management risk, and compliance (legal) risk. The Bank has also established a management office for each risk category, as well as
supervision of overall operational risk measures.
• Administrative Risk
Operational risk is the risk of damages due toimproper administration resulting in accidents or
improprieties. The Bank has taken steps to uphold
and improve the quality of its administrative operations, to ensure that customers are notinconvenienced by inappropriate administrative management and that administrative management is as
error-free and prompt as possible.
In addition to analyzing and evaluating the circumstances, causes and processes surrounding administrative mistakes, the Bank verifies the effectiveness ofcountermeasures after their introduction and repeats
them as often as necessary to ensure that the problem is resolved. We are drawing up regulations foradministrative processes, and ensuring their strict
application by all staff from executives down throughguidance and training. We are also verifying the effectiveness of internal audits and taking steps to preempt
accidents.

15• System Risk
System risk is the risk of losses due to the breakdownof computer systems, erroneous computer operation,and inappropriate computer use. Measures to ensure
appropriate management of such risk is based onprotection of information assets and ensuring stable
operation of computer systems.
Tangible Assets Risk, Personnel Management Risk
and Compliance (Legal) Risk
Risk to tangible assets (inadequate precautions to prevent damage from earthquakes and management neglectof buildings), personnel management risk relating tosafety and hygiene at the workplace, and compliance risk
(legality of business, illegal behavior by executives andemployees of the Bank) are addressed through appropriate measures after identification and evaluation using
methods to gauge risk scale and features, and the effectof risk reduction measures is later assessed.
• Emergency Measures
To ensure that we can continue to do business withour customers even during emergency situations, it isimportant to have in place precautionary measures foreach kind of risk. To prepare for emergencies, wehave set up, in remote locations, backup centers forcore computer systems, and have compiled a set of
guidelines for emergencies that clearly lay down contacts and procedures.

16• Management of Customer Information
In view of the importance of information retained bybanks, we drafted our “rules regarding the management of important information,” which clarify ourfundamental policies regarding our information management system, conduct standards, functions andresponsibilities.
Furthermore, in conjunction with the full implementation of the Law Concerning the Protection of Private
Information, we have enhanced our information management system and improved security for building
access and building management in order to control
access by external parties. In addition, we have varied
the access privileges to customer information depending on the type of information and limited access to
the locations where information is stored.
Fundamentally we have banned the removal of
information from the premises and have enforced
transmission of faxes by internal lines and dataencryption in order to create a system that prevents
information from being leaked externally due to inappropriate actions or administrative errors. We plan toevaluate these measures as necessary.

CORPORATE SOCIAL RESPONSIBILITY (CSR)
Contributions to the Regional Community

Lending to Local Customers

In line with our philosophy of “Stability, Corporation,
Partnership with the Home Region,” we will continue tocontribute to the development of the local communityand economy through a robust business performance
under a sound management, enabling us to provide local
customers with comprehensive, high-quality financial
services.
We believe that remaining true to our core business ofproviding financial services is the best way for us to
support the local region. We proactively disclose a wide
range of information on our varied community support
initiatives.
We continued to account for more than 40% of ourdeposit and loan transactions in Ibaraki Prefecture.

Regional and SME Lending
Loans to customers in the region* totaled ¥3,522.6 billion, representing over 80% of all loans.
Loans to SMEs reached ¥1,925.1 billion, accounting
for 43.3% of all loans. Approximately half of the loans wemake to companies in the region support SMEs.
The total number of SME borrowers is 33,444, 98.4%
of which are local.

Deposits

Balance of Loans, Balance of Loans and Percentage of Loans toRegional Customers*(1) “Region” refers to Ibaraki Prefecture and neighboring areas forming
the main catchment area (by location of main branches) of the
Bank: Ibaraki, Fukushima, Tochigi, Saitama, Chiba and Miyagi
prefectures.
(2) Lending to customers outside the local region is mainly limited tolending to corporate customers in Tokyo or Osaka who havefactories or offices in the area and who have a deep relationshipwith local business.

(Billions of yen)

18.18%

Joyo BankCity banks/Trust banks

40.28%
18.64%

Joyo Bank

5,000

Other

16.40%
6.50%¥4,433.7¥4,438.8

80.2%

79.2%

79.3%

4,000

Other regional banks
Shinkin banks (credit unions)¥4,375.9100
80¥3,510.9

3,000¥3,515.3¥3,522.6

60

Loan balance

2,000

40

Balance of loans toregional customers

1,000

20

Percentage of loans
to regional customers

00
As of March 31, As of March 31, As of March 31,
2005
2006
2007

Loans

Balance of Loans and Percentage of Loans to SMEs, andBalance of Loans and Percentage of Loans to Regional SMEs

11.11%(Billions of yen)

Joyo Bank

19.63%

41.43%
Joyo Bank

2,000

City banks/Trust banks
Other regional banks
Other¥1,909.7¥1,765.5¥1,736.7¥1,925.1¥1,748.8

1,500

Shinkin banks (credit unions)22.12%¥1,927.5

50.2%

49.4%

49.6%

44.0%

43.0%

43.3%

80

Balance of loans to
SMEs

60

Balance of loans toregional SMEs

40

Percentage of loans to
SMEs

20

Loans to regional SMEs
as percentage of loans
to regional customers

1,000

500

5.71%
Note: Figures for share exclude postal savings, which are held in the
public sector.

100

0

0
As of March 31, As of March 31, As of March 31,
2005
2006
2007

17

Loans to Individuals
Loans to individual customers have grown to ¥1,005.1
billion, with mortgages performing well. Of these,¥1,002.8 billion or 99.7% are loans to local individuals.
Loans to individuals are 22.6% of all loans, and loans tolocal individuals are 28.4% of all regional loans.
Further, of the 209,710 individual loan customers,
99.6% (209,054 customers) are local individuals. Of allloans to individuals there were 82,888 loans made forhousing-related purposes, our major type of loan, whichis growing well.

Number of Individual Loan Customers, Number of
Housing-Related Loans

Optimal Financial Services for Local Customers
97.9% of deposits, in an amount of ¥6,153.8 billion, arefrom local customers, and 99.5% of assets in custody arefrom local customers. Investment trusts in particular havegrown significantly, and government bonds and pension
insurance premiums held on behalf of individuals havealso shown strong increases. Many customers are alsousing our payment services, with 686,803 payroll
accounts, 651,649 direct debit account arrangements forutilities, and 241,618 pension accounts.

Deposit Balance, Local Deposit(Unit: Customers)(Unit: Loans)

220,000

100,000
218,355

214,272

79,928165,000

209,710

81,43580,00082,88860,000110,000
40,00055,00020,0000

Number ofindividualloan customers
Number of
housing-related
loans

0
FY ended
FY ended
FY ended
March 31, 2005 March 31, 2006 March 31, 2007

(Billions of yen)

7,000
6,000
5,000

100
97.7%

97.9%

97.9%

¥6,139.7¥6,146.4¥6,285.2¥6,000.2¥6,022.7¥6,153.8

80

4,000

60

3,000

40

Deposit balance
Local deposit balance

2,000

Local deposit balance
percentage

20

1,000
0

0
March 31,2005

March 31,2006

March 31,
2007

Number of SME Customers & Number of Regional SME
Customers(Unit: Customers)

Initiatives for Stimulating the Local Economy

40,00033,48033,00030,00033,27232,78833,44432,928

Number of SMEs

20,000

Number of regional
SMEs
10,0000
As of March 31, As of March 31, As of March 31,
2005
2006
2007

Balance of Loans and Percentage of Loans to Individuals,
Percentage of Regional Loans used for Loans to Local
Individuals(Billions of yen)

1,200

900

26.4%

27.4%

28.4%

21.2%

21.8%

22.6%

¥931.3¥967.3¥1,005.1

30

20Percentage of loans
to individuals

600
10
300

0

0
As of March 31, As of March 31, As of March 31,
2005
2006
2007

18

Balance of loans to
individuals

Percentage of regionalloans used for loans
to local individuals

Measures to Develop New Ventures
Funding by Joyo Bank
We provide financial support to companies developing
new businesses and new ventures via the “Ibaraki
Venture Business Development Partnership” and the“Nikko Region-Based Industry, Education, andGovernment-Partnered Investment Partnership.”As part of our efforts to support troubled companies
in the Ibaraki Prefecture area, we have invested in an
investment fund operated by the Organization for Small &Medium Enterprises and Regional Innovation and Ibaraki
Prefecture. By providing rehabilitation support to local
SMEs, we are helping to revitalize the local economy.
Working with Agri-Business
Ibaraki Prefecture is an agricultural region, and agribusiness is involved in much of its economic development. We support regional industry and the regional
economy by training and supporting individuals andcorporations involved in agriculture. In business lending,we offer the “Daichi” loan for farmers, an unsecured
product that in principle does not require a guarantor (forcorporations, a representative alone will serve as guarantor). We also organize business-partner meetings for the
agricultural production and food processing, restaurant
and retail industries, to develop marketing channels fromproduction to processing.

After the establishment of the fund, we received many
contributions from sympathetic companies and individuals. As of March 31, 2007, fund assets totaled ¥178
million. During fiscal 2006, the fund donated ¥5.0 million
to 42 recipients. Through this fund, we have supported a
total of 305 schools, groups and other entities to date,
disbursing a total of ¥40.91 million.

Tieups with External Institutions
We foster and support new ventures and establishedcompanies beginning new businesses with entities suchas the Foundation for the Promotion of Small andMedium Enterprises, the Development Bank of Japan,
the Shoko Chukin Bank, the Norinchukin Bank, theJapan Finance Corporation for Small Businesses, andother partners in industry, academia and local
government.

Environment-Friendly Financial Products, andSupport for Environmental Initiatives of Our
Customers
In order to contribute to environmental conservation in
the region and to actively support efforts to preserve theenvironment we have introduced environmental products(including the Joyo Eco Select Loan and a mortgage loan
with a preferred interest rate for eco-friendly housing).
The Bank’s subsidiary, Joyo Industrial ResearchCenter, holds explanatory meetings on the acquisition of
the international environmental standards ISO14001 andoffers individual consulting services, working to support
our customers’ acquisition of ISO certification.

Attracting Companies to the Area
For corporate customers investigating whether to locate
in Joyo Bank’s operating area, we introduce suitablesites, give briefings on each, and take other measures toattract companies to our area.
In November 2006, we organized an industrial site
inspection tour to introduce Ibaraki Prefecture sites tocorporate customers from Fukushima and Chiba prefectures, and brief them on areas along the Tsukuba
Express railway line and around Hitachi Naka Port. We
focused on the growth potential of Ibaraki Prefecture’s
economy and industry.
These are other means through which we are contributing to the revitalization of the regional economy.

Environmental Preservation Activities“Eco Ibaraki” Charitable Trust Environmental
Conservation FundIn October 1992, we jointly invested ¥100 million alongwith Nippon Fire and Marine (currently NIPPONKOA
Insurance) and other partners to establish the Charitable
Trust “Eco Ibaraki,” an environmental conservation fund.
This fund is used to support environmental conservation
projects in Ibaraki Prefecture. Its purpose is to contributeto lifestyles that are in harmony with nature, and to contribute to the development and prosperity of local society.

Resource and Energy Conservation
We work to reduce waste through sorting and recyclingof trash, the recycling of used documents and green
procurement (preferential purchasing of Green Markproducts) as much as possible. We use recycled paperfor 100% of our copy paper.
The entire bank strives to conserve resources andenergy, planning to reduce the amount of energy, waterand fuel that it uses.
Local Contributions to Environmental Conservation
As part of the Joyo Volunteer Club’s activities and individual branch contributions, we participate in clean-up operations and recycling activities in local areas, actively working
with everyone in the region to preserve the environment.

19

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Consolidated Balance Sheets
THE JOYO BANK, LTD. and Consolidated Subsidiaries

Thousands of
U.S. dollars (Note 2)

Millions of yen
March 31,

AssetsCash and due from banks (Note 3)
Call loans and bills purchased
Commercial paper and other debt purchased
Trading assets (Note 6)
Money held in trust
Securities (Notes 7, 9 and 25)
Loans and bills discounted (Notes 8, 10 and 12)
Foreign exchanges
Other assets
Tangible fixed assets
Intangible fixed assets
Premises and equipment (Notes 3 and 22)
Deferred tax assets (Note 14)
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Reserve for devaluation of investment securities
Total assets
Liabilities, minority interests and shareholders’ equity
Liabilities:
Deposits (Notes 7 and 15)
Call money and bills sold (Notes 9 and 19)
Payables under securities lending transactions
Trading liabilities (Note 16)
Borrowed money (Note 11)
Foreign exchanges
Bonds
Due to trust account
Other liabilities
Reserve for bonuses to directors and corporate auditors
Reserve for employees’ retirement benefits (Note 13)
Reserve for losses on interest refunded
Reserve for other contingent losses
Deferred tax liabilities (Note 14)
Deferred tax liabilities for land revaluation (Notes 3 and 14)
Goodwill
Acceptances and guarantees
Total liabilities
Minority interests
Shareholders’ equity (Note 17):
Common stock:
Authorized — 2,167,515 thousand shares
Issued —852,231 thousand shares
Capital surplus
Retained earnings
Land revaluation reserve, net of taxes (Notes 3 and 14)
Unrealized gain on available-for-sale securities
Less, treasury stock at cost
Total shareholders’ equity
Total liabilities, minority interests and shareholders’ equity
Net assets:
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Unrealized gains on available-for-sale securities
Deferred losses on hedging instruments, net of taxes
Land revaluation reserve, net of taxes (Notes 3 and 14)
Total valuation and translation adjustments
Minority interests
Total net assets
Total liabilities and net assets
See accompanying notes to the consolidated financial statements.

20

2007

2006

2007

¥ 140,313
3,541
85,237
29,1702,591
2,605,232
4,402,579
984
51,557
119,927
11,826—
2,733
32,862(43,748)(74)¥7,444,736¥ 154,597
11,99895,197
29,342
2,725
2,489,550
4,391,666
1,084
55,413——
124,628—
51,602(54,811)(73)¥7,352,922$ 1,187,597
30,000722,041
247,106
21,95422,068,894
37,294,196
8,336
436,738
1,015,900
100,184—
23,151
278,381(370,589)(629)$63,064,265¥6,309,618
108,447
203,254
89
74,550350
15,00016
120,259
50
5,286
5
551
38,307
14,196
3,081
32,862
6,925,926—¥6,166,008
157,118
280,759
117
87,3402,536
15,00017
57,983
—
6,640
—
412
18,647
14,227—51,602
6,858,412
5,700$53,448,696
918,658
1,721,762
754
631,5122,968
127,064136
1,018,719
423
44,778
44
4,668
324,504
120,256
26,101
278,381
58,669,431
—

—
—
—
—
—
—
—
—

85,11358,581
242,080
11,000107,086(15,052)
488,809¥7,352,922

—
—
—
—
—
—
—
—

85,11358,574
256,069(21,174)
378,581
128,938(791)
10,953
139,100
1,128
518,810¥7,444,736

—
—
—
—
—
—
—
—
—
—
—
—

¥

¥

$

720,991
496,179
2,169,158(179,371)
3,206,957
1,092,237(6,704)
92,787
1,178,319
9,556
4,394,834$63,064,265

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Consolidated Statements of Income
THE JOYO BANK, LTD. and Consolidated Subsidiaries

Millions of yen
Years ended March 31,

Income:Interest and dividend income:Interest on loans and discounts
Interest and dividends on securities
Other interest income
Fees and commissions
Trading income (Note 18)
Other operating income
Other income (Note 20)
Total income
Expenses:
Interest expenses:
Interest on deposits
Interest on borrowings and rediscounts (Note 19)
Other interest expenses
Fees and commissions
Other operating expenses
General and administrative expenses
Other expenses (Note 21)
Total expenses
Income before income taxes and minority interests
Income taxes:
Current
Deferred (Note 14)
Minority interests in net income of consolidated subsidiaries
Net income
Net income per share (in yen and dollars)

Thousands of
U.S. dollars (Note 2)

2007

2006

2007

¥ 85,237
47,351
1,527
26,378473
8,957
27,727
197,653¥ 80,963
43,6191,144
25,013429
4,474
27,137
182,781$ 722,042
401,113
12,939223,452
4,011
75,881
234,875
1,674,316

7,959
8,216
12,594
6,555
7,504
70,16730,969143,967
53,685

3,608
5,765
9,767
6,452
2,467
71,12539,686
138,874
43,90767,42569,603
106,690
55,53063,566594,387
262,346
1,219,550
454,766

16,7909,840
735¥ 26,319¥ 32.31702
17,462926¥ 24,815¥ 29.92

142,230
83,355
6,232$ 222,948$
0.27

See accompanying notes to the consolidated financial statements.

Consolidated Statement of Capital Surplus and Retained Earnings
Millions of yen
Year ended March 31,

Capital surplus:
Balance at beginning of year
Gains on disposal of treasury stock
Balance at end of year
Retained earnings:
Balance at beginning of year
Net income
Reversal of land revaluation reserve
Appropriation:
Cash dividends
Cancellation of shares in treasury
Reversal of land revaluation reserve
Bonuses to directors
Balance at end of year2006

¥ 58,577
4¥ 58,581¥227,756
24,815—(5,370)(4,549)(521)(50)¥242,080

See accompanying notes to the consolidated financial statements.

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Consolidated Statement of Changes in Net Assets
THE JOYO BANK, LTD. and Consolidated Subsidiaries

Millions of yen
Shareholders’ equity

Year ended March 31, 2007

Commonstock

Balance at March 31, 2006

¥85,113

Capital surplus

Retainedearnings¥58,581 ¥242,080

Valuation and translation adjustments
Unrealized
gains onavailablefor-salesecurities

Deferred
losses on
hedging
instruments,
net of taxes¥(15,052) ¥370,722 ¥107,086

¥ —

Total
shareholders’
Treasury stock
equityLandrevaluation
reserve,
net of taxes

Totalvaluation andtranslation
adjustments¥11,000 ¥118,086

Minority
interests

Total net
assets¥5,700 ¥494,509

Changes during the year:
Cash dividends
Bonuses to directors andcorporate auditors
Net income(5,306)(5,306)(5,306)

(50)

(50)

(50)

26,319Purchase of treasury stock
Disposal of treasury stock(11)

Retirement of treasury stock

4

Increase in retained earnings due totransfer from land revaluation reserve

26,31926,319(34)(13,207)(13,241)(13,241)(6,985)

6,997

—

—

87

92

92

46

46

46

Net changes of items other thanshareholders’ equity
Total changes during the year—

Balance at March 31, 2007

¥85,113(7)

21,851

(791)

(46)

21,013(4,572)

16,441

21,851

(791)

(46)

21,013(4,572)

24,300¥(21,174) ¥378,581 ¥128,938¥(791)

13,988¥58,574 ¥256,069(6,121)

7,859¥10,953 ¥139,100¥1,128 ¥518,810

Thousands of U.S. dollars (Note 2)
Shareholders’ equity

Year ended March 31, 2007

Commonstock

Balance at March 31, 2006

$720,991

Capital surplus

Retainedearnings$496,242 $2,050,661

Valuation and translation adjustments

Totalshareholders’
Treasury stock
equityUnrealized
gains onavailablefor-salesecurities$(127,513) $3,140,383 $ 907,130

Deferred
losses on
hedging
instruments,
net of taxes

$

—

Land
revaluation
reserve,
net of taxes

Totalvaluation andtranslation
adjustments$93,181 $1,000,311

Minority
interests

Total net
assets$48,290 $4,188,985

Changes during the year:
Cash dividends(44,952)

Bonuses to directors andcorporate auditors
Net income
Purchase of treasury stock
Disposal of treasury stock(100)

Retirement of treasury stock

37

Increase in retained earnings due totransfer from land revaluation reserve(44,952)

(423)

(423)

(423)

222,948

222,948

222,948(112,172)(112,172)(294)(111,877)(59,174)

59,274

—

—

743

781

781

393

393

393

Net changes of items other thanshareholders’ equity
Total changes during the year—

Balance at March 31, 2007

$720,991(63)

118,496$496,179 $2,169,158

See accompanying notes to the consolidated financial statements.

22(44,952)

185,106(6,704)(393)

178,007(38,734)

139,273

185,106(6,704)(393)

178,007(38,734)

205,848$(179,371) $3,206,957 $1,092,237$(6,704)(51,858)

66,574$92,787 $1,178,319$ 9,556 $4,394,834

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Consolidated Statements of Cash Flows
THE JOYO BANK, LTD. and Consolidated Subsidiaries

Millions of yen
Years ended March 31,

Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation
Impairment losses
Amortization of goodwill
Net decrease in reserve for possible loan losses
Net increase (decrease) in reserve for devaluation of investment securities
Net increase in reserve for other contingent losses
Net increase in reserve for losses on interest refunded
Net increase in reserve for bonuses to directors and corporate auditors
Net decrease in reserve for employees’ retirement benefits
Interest and dividend income
Interest expenses
Net losses related to securities transactions
Net gains on money held in trust
Foreign exchange (gains), net
Losses on disposal of tangible fixed assets
Losses on disposal of premises and equipment
Net decrease (increase) in trading assets
Net (decrease) increase in trading liabilities
Net increase in loans and bills discounted
Net increase in deposits
Net increase (decrease) in negotiable certificates of deposit
Net increase (decrease) in borrowed money excluding subordinated debt
Net decrease in due from banks excluding cash equivalents
Net decrease (increase) in call loans and others
Net decrease in receivables under securities borrowing transactions
Net decrease in call money and bills soldNet (decrease) increase in payables under securities lending transactions
Net decrease in foreign exchange (assets)
Net (decrease) increase in foreign exchange (liabilities)
Net decrease in due to trust accountInterest and dividends received
Interest paid
Others, net
Subtotal
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Purchases of securities
Proceeds from sales of securities
Proceeds from redemption of securities
Increase in money held in trust
Purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchases of intangible fixed assets
Purchases of premises and equipment
Proceeds from sales of premises and equipment
Net cash (used in) provided by investing activities
Cash flows from financing activities:
Proceeds from issuance of subordinated debt
Repayment of subordinated debt
Cash dividends paid
Cash dividends paid to minority shareholders
Purchases of treasury stock
Proceeds from sales of treasury stock
Net cash used in financing activities
Translation adjustment for cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 3)

Thousands of
U.S. dollars (Note 2)

2007

2006

2007

¥ 53,685
16,30572(79)(11,063)0138
5
50(1,354)(138,374)
28,7713,863(1)(27,982)
1,295
—
171
(28)
(10,913)137,168
6,441
2,210
12,96818,417—(48,671)(77,505)100(2,185)(1)
137,452(26,792)
19,23293,395(1,298)92,097¥ 43,907
16,281
1,194—(5,211)
(66)
70
—
—
(403)
(132,578)
19,142
5,736(153)(31,783)—383(13,579)
19(58,467)
5,847(22,387)(6,222)
18,162(49,185)
25,959(135,849)
118,45628
2,401—
131,211(19,416)
13,664(72,840)(666)(73,506)$ 454,766
138,119613(671)(93,717)
6
1,170
44
423
(11,476)(1,172,171)
243,719
32,730(12)(237,038)
10,973
—
1,452
(241)
(92,449)
1,161,952
54,564
18,720109,859
156,013—(412,294)(656,549)
849(18,515)(9)
1,164,356(226,956)
162,916
791,150
10,997780,153(880,914)
523,727
316,141—(16,513)1,194(2,325)——(58,690)(865,873)
551,278
341,870(1,000)———(14,653)72
11,692(7,462,214)
4,436,486
2,678,033—(139,887)
10,115(19,703)——(497,169)

10,000(25,000)(5,306)
0(14,509)92(34,724)
3(1,314)
117,694¥116,379

15,000(15,000)(5,370)(0)(7,223)
66(12,527)
19(74,322)
192,016¥117,694

84,709(211,774)(44,952)(1)(122,912)
781(294,150)
30(11,136)996,987$ 985,851

See accompanying notes to the consolidated financial statements.

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Notes to the Consolidated Financial Statements
THE JOYO BANK, LTD. and Consolidated Subsidiaries

1. Basis of Preparation
The accompanying consolidated financial statements of The Joyo
Bank, Ltd. (the “Bank”) and consolidated subsidiaries areprepared on the basis of accounting principles generally acceptedin Japan, which are different in certain respects as to theapplication and disclosure requirements of International Financial
Reporting Standards, and are compiled from the consolidated
financial statements prepared by the Company as required by the
Securities and Exchange Law of Japan.
For the convenience of readers outside Japan, certain items
presented in the original consolidated financial statements havebeen reclassified and rearranged.
In addition, the notes to the consolidated financial statements
include information which is not required under accounting
principles generally accepted in Japan but is presented herein as
additional information.

2. Japanese Yen and U.S. Dollar Amounts
As permitted by the Securities and Exchange Law of Japan,
amounts of less than one million yen have been rounded off. As aresult, the totals shown in the accompanying consolidated financial
statements (both in yen and U.S. dollars) do not necessarily agreewith the sums of the individual amounts. Solely for the convenienceof the reader, the U.S. dollar amounts represent a translation of theJapanese yen amounts at ¥118.05 = US$1.00, the exchange rate
prevailing on March 31, 2007.

3. Significant Accounting Policies(a) Consolidation
The accompanying consolidated financial statements include theaccounts of the Bank and 9 significant subsidiaries.
Joyo No.1 Investment Limited Partnership was excluded fromthe scope of consolidation because its assets, ordinary income,net income and retained earnings have no material impact on the
Bank’s financial position and results of operations.
All significant intercompany transactions have been eliminatedin consolidation. The difference between the cost of investments
and the equity in their net assets has been fully charged toincome in the year of acquisition.
(b) Translation of foreign currencies
Foreign currency-denominated assets and liabilities are translated
into Japanese yen at the rates prevailing at the balance sheet date.
No foreign currency-denominated assets and liabilities were heldby the consolidated subsidiaries.
(c) Transactions for trading purposes
Transactions for “trading purposes” (seeking to capture gains
arising from short-term changes in interest rates, currency
exchange rates or market prices of securities and other marketrelated indices or from arbitrage between markets) are valued atmarket or fair value, and have been included in trading assets andtrading liabilities on a trade date basis. Gain or loss on such tradingtransactions are reflected as trading income or trading expenses in
the consolidated statements of income.
Among the trading assets and liabilities, securities and monetaryclaims are carried at market value as of the balance sheet date.
Derivatives including swaps, futures, and options are valued
assuming settlement on the balance sheet date.
Trading income or trading expenses include interest received or
paid during the fiscal year. The year-on-year valuation differences of24

securities and monetary claims are also recorded in the abovementioned accounts. As for the derivatives, assuming that thesettlement will be made in cash, the year-on-year valuationdifferences are also recorded in the above-mentioned accounts.
No consolidated subsidiaries have engaged in trading activities
or other transactions in order to generate profit from short-term
price fluctuations.
(d) Securities
Securities other than trading securities have been accounted
for by the following methods:
Marketable debt securities held to maturity are stated atamortized cost by the moving-average cost method. Availablefor-sale securities of which market prices are available arestated at fair value based on the market prices, etc. at the fiscal
year end, whereas those of which fair value is not available arestated at cost or amortized cost by the moving-average cost
method.
Unrealized gain or loss on available-for-sale securities (net ofthe related tax effect) has been reported as a component of net
assets.
Investments in securities held in money trusts whose
investment is operated solely by the Bank on behalf of thetrustors, are stated at fair value.
(e) Derivatives
Derivatives positions held by the Bank (not includingtransactions for trading purposes) are stated at fair value.
(f) Depreciation of tangible fixed assets
Depreciation of tangible fixed assets held by the Bank iscalculated by the declining-balance method, except for buildings
acquired on or after April 1, 1998 of which depreciation is
calculated by the straight-line method. The estimated useful lives
are as follows:
Buildings: 6~50 years
Equipment: 3~20 years
Depreciation of tangible fixed assets held by the consolidated
subsidiaries is calculated principally by the declining-balancemethod, based on the respective estimated useful lives of theassets.
Depreciation of the leased assets of a consolidated subsidiaryis calculated by the straight-line method over the lease terms.
Depreciation of intangible fixed assets is calculated using thestraight-line method. Software for internal use is depreciatedusing the straight-line method over its estimated useful life (mainly
5 years).
(g) Reserve for possible loan losses
The reserve for possible loan losses of the Bank is provided as
detailed below, in accordance with the internal rules for providing
reserves for possible loan losses:
For claims to debtors who are legally bankrupt (as a result ofbankruptcy, special liquidation, etc.) or who are substantiallybankrupt, a reserve is provided based on the amount of theclaims, net of the amounts expected to be collected by thedisposal of collateral or as a result of the execution of guarantees.
For claims to debtors who are not currently bankrupt, but arelikely to become bankrupt, a reserve is provided based on theamount considered necessary based on an overall solvency
assessment of the amount of claims net of the amounts expected
to be collected by the disposal of collateral or as a result of theexecution of guarantees.
For other claims, a reserve is provided based on the Bank’s
historical loan-loss experience.
All claims are assessed by the Business Section (at thebranches and the related head office divisions) based on the
Bank’s internal rules for the self-assessment of asset quality. The
Corporate Audit Department, which is independent of theBusiness Section, subsequently conducts audits of suchassessments, and a reserve is provided based on the audit
results.
The reserves of the consolidated subsidiaries are provided forgeneral claims at an amount based on the actual historical rate ofloan losses and for specific claims (from potentially bankrupt
customers, etc.) at an estimate of the amounts deemed
uncollectible based on the respective assessments.
For collateralized or guaranteed claims from debtors who arelegally or substantially bankrupt, the amounts of the claims
deemed uncollectible in excess of the estimated value of thecollateral or guarantees have been written off in aggregate
amounts of ¥42,761 million and ¥48,367 million as of March 31,
2007 and 2006, respectively.
(h) Reserve for devaluation of investment securities
A reserve for the devaluation of investment securities is provided
at the amount deemed necessary to cover estimated possible
losses on investments which the Bank and its consolidated
subsidiaries may incur in the future.
(i) Reserve for bonuses to directors and corporate auditors
Bonuses to directors and corporate auditors previously had beentreated as an appropriation of retained earnings. However, in linewith changes in relevant accounting standards (AccountingStandards for Bonuses to Directors and Corporate Auditors;
Business Accounting Standards No. 4), the said bonuses aretreated as expenses, effective the current fiscal year.
As a result, general and administrative expenses for the year
ended March 31, 2007 increase by ¥50 million and income before
income taxes for the year ended March 31, 2007 decrease by¥50 million.
(j) Reserve for employees’ retirement benefits
Reserve for employees’ retirement benefits of the Bank and its
subsidiaries is provided for the amount deemed necessary, basedon estimated pension benefits obligations and pension plan
assets at the fiscal year end, to cover required retirement benefits
for eligible employees.
Prior service cost is deferred and amortized using the straightline method over certain years (10 years) within the averageremaining service period of the eligible employees.
Unrealized actuarial losses are deferred and amortized using
the straight-line method over a ten-year period commencing withthe following year, which is shorter than the average remaining
service period of the eligible employees.
Effective from April 1, 2006, the Bank has credited to expenses
the amount posted under “unrecognized plan assets” resulting
from changes in actuarial assumptions on retirement benefit
obligations pursuant to stipulations in the “Guidelines on
Implementation of Amendments to Accounting Standards for
Retirement Benefits” (Guidelines on Implementation of BusinessAccounting Standard No.7, issued on March 16, 2005). The term
“unrecognized plan assets” refers to the excess portion ofpension plan assets over retirement benefit obligations held by
the company in question, which resulted from changes in
actuarial assumptions on plan assets or recognition of priorservice obligations. Previously the Bank did not credit the amountposted under unrecognized plan assets to expenses. This change
has no effect on the Bank’s results of operations on aconsolidated basis.
(k) Reserve for losses on interest refunded
One consolidated subsidiary provides a reserve for losses oninterest refunded in an amount deemed necessary based on
estimated amounts to be refunded, taking into account historical
records of interest refunded on the portion of loans whose interest
rates exceeded the maximum interest rate stipulated by theInterest Limitation Law.
Effective the current fiscal year, newly adopted accounting
standards stipulate the provision of reserves for losses on interest
refunded at consumer finance companies, in accordance with the“Auditing Treatment of Accounting Standards for Reserve for
Possible Losses on Refund Claims for Interest at Consumer
Finance Companies” (JICPA Industry Audit Committee Report
No. 37). The changes in the accounting standards have nomaterial effect on the Bank’s income statement.
(l) Reserve for other contingent losses
The Bank provides reserve for contingent liabilities not covered byother reserves in an amount deemed necessary based on
estimated losses in the future.
(m) Goodwill
Goodwill is amortized using straight-line method over 20 years.
(n) Land revaluation reserve
In accordance with the Law concerning the Revaluation of Land,
the Bank revalued the land held for its operations on March 31,
1998. The net unrealized gain is presented in net assets net of theapplicable income taxes as land revaluation reserve, net of taxes.
(o) Leases
Finance leases other than those which transfer the ownership ofthe leased property to the Bank and its consolidated subsidiaries
are accounted for as operating leases.
(p) Hedging
Hedging against interest rate changes
The deferred method of hedge accounting is applied totransactions to hedge against the interest rate risks associatedwith monetary claims and debt in accordance with the regulations
set out in the “Accounting and Auditing Treatment of AccountingStandards for Financial Instruments in the Banking Industry”(JICPA Industry Audit Committee Report No. 24).
The Bank assesses the effectiveness of such hedges in
offsetting movement of the fair value with the changes in interest
rates, by classifying the hedged items (loans) and the hedging
instruments (interest swaps) by their maturity. As to cash flow
hedges, the Bank assesses the effectiveness of such hedges infixing cash flows by verifying the correlation between the hedged
items and the hedging instruments.
In addition, a portion of deferred hedge losses and gains, which
was previously under the “macro hedge,” i.e., the management ofinterest rate risk arising from large-volume transactions in loans,
deposits and other interest-earning assets, and interest-bearing
liabilities as a whole using derivatives, in accordance with the25regulations set out in the “Accounting and Auditing Treatment ofPreliminary Accounting Standards for Financial Instruments in the
Banking Industry” (JICPA Industry Audit Committee Report No.
15) is no longer subject to hedge accounting effective the year
ended March 31, 2005. The deferred hedge losses and gains
related to hedge instruments to which the Bank discontinued theapplication of hedge accounting, or applied fair value hedge
accounting as a result of the change mentioned above, areperiodically charged to interest expenses or interest income
effective fiscal 2003 by maturity and notional principal of eachhedge instrument.
Deferred hedge losses under macro hedge stood at ¥2,292
million and ¥3,632 million at March 31, 2007 and 2006, respectively.
Hedging against foreign exchange fluctuation risk
The deferred method of hedge accounting is applied totransactions to hedge against the foreign exchange fluctuation
risks associated with monetary claims and liabilities denominatedin foreign currencies, in accordance with the regulations set out inthe “Accounting and Auditing Treatment of Accounting Standards
for Foreign Currency Transactions in the Banking Industry” (JICPA
Industry Audit Committee Report No. 25).
To minimize foreign exchange fluctuation risk on monetaryclaims and liabilities, the Bank engages in currency swaps, foreignexchange swaps, and similar transactions. The effectiveness ofthese transactions in the hedging of the foreign exchange risks ofmonetary claims and liabilities denominated in foreign currencies
is assessed through comparison of the foreign currency positionof the hedged monetary claims and liabilities, with that of thehedging instruments.
(q) Consumption tax
Consumption tax is excluded from transactions reported by the
Bank and its consolidated subsidiaries. However, non-deductible
consumption tax on tangible fixed assets is charged to income as
incurred.
(r) Earnings per share
The computation of earnings per share of common stock isbased on the weighted average number of shares outstanding
during each year.
(s) Statements of cash flows
Cash and cash equivalents in the statements of cash flows
represent cash and due from banks in the consolidated balance
sheets, excluding deposits with banks other than the Bank ofJapan as well as the time deposits of certain consolidated
subsidiaries.
Millions of yen
March 31,

Cash and due from banks
Deposits with banks other thanthe Bank of Japan
Time deposits of the consolidated subsidiaries
Cash and cash equivalents

26

2007

2006

¥140,313¥154,597(23,934)(36,853)—(50)¥116,379 ¥117,694

4. Application of New Accounting Standards
Effective the current fiscal year, the Bank has presented net asset
items pursuant to the Enforcement Ordinance of the Banking Law
in line with stipulations in “Accounting Standards for Presenting
Net Assets” (Business Accounting Standards No. 5) and related
practical guidelines (Practical Guidelines for Business AccountingStandards No. 8). The changes are as follows.
Former shareholders’ equity items are reclassified under net
assets, which are divided into shareholders’ equity, valuation andtranslation adjustments, and minority interests. Under theprevious accounting standard, shareholders’ equity would
amount to ¥518,473 million as of the balance-sheet date.

5. Changes in Presentation
The Enforcement Ordinance of the Banking Law was revised on
April 28, 2006 and applicable from the fiscal year beginning on
and after April 1, 2006. Effective April 1, 2006, the Bank changed
its consolidated balance sheet and consolidated statements ofcash flows presentation as follows:
Consolidated balance sheets(1) Previously, net realized and unrealized gain (loss) on hedge
instruments was posted under the net deferred loss (gain),which was included in other assets (liabilities). Effective thecurrent fiscal year, net realized and unrealized gains (losses) onhedge instruments, net of applicable income taxes, have beenreported as deferred gains (losses) on hedging instruments,
net of taxes in the category of valuation and translation
adjustments.
(2) Previously, minority interests were presented separately, next
to the liabilities section. Effective the current fiscal year,
minority interests are shown in the net asset section.
(3) Premises and equipment have been reclassified as tangible
fixed assets, intangible fixed assets, and other fixed assets.
Consolidated statements of cash flows
In accordance with the change in presentation of premises andequipment in the consolidated balance sheet, purchases ofpremises and equipment is presented as purchases of tangible
fixed assets. In addition, proceeds from sales of premises andequipment is also renamed as proceeds from sales of tangible
assets.

6. Trading Assets
Millions of yen
March 31,

Trading securities
Trading securities-related financial derivatives
Trading-related financial derivatives
Other trading assets
Total

2007

2006

¥ 3,9140265
24,989¥29,170¥ 2,033
5
304
26,998¥29,342

7. Securities

10. Commitments and Contingent Liabilities
Millions of yen

March 31,

Japanese government bonds
Japanese local government bonds
Corporate bonds
Corporate stocks
Other securities
Total

2007

2006

¥ 761,036 ¥ 730,151
320,063317,583
402,016
341,167
318,757
308,979
803,359
791,668¥2,605,232 ¥2,489,550

Note: Securities include ¥65 million and ¥66 million of investments in nonconsolidated
subsidiaries as of March 31, 2007 and 2006, respectively.

8. Bills Discounted
Bills discounted are accounted for as financial transactions inaccordance with JICPA Industry Audit Committee Report No. 24.
The Bank has the rights to sell or pledge bank acceptancesbought, commercial bills discounted, documentary bills andforeign exchanges bought without restrictions. The face value atMarch 31, 2007 and 2006 totaled ¥51,217 million and ¥48,468
million, respectively.

9. Pledged Assets
Assets pledged as collateral at March 31, 2007 and 2006 were as
follows:
Millions of yen
March 31,

Pledged assets:
Securities
Loans
Liabilities covered by pledged assets:
Deposits
Call money
Payables under securities
lending transactions

2007

2006

340,120—¥422,069
52,044

24,413—30,29350,000203,254

280,759

Overdraft facilities and line-of-credit contracts are agreements
under which, subject to compliance with the contractual
conditions, the Bank or consolidated subsidiaries pledge toprovide clients with funds up to a fixed limit upon submission of aloan application to the Bank. The unused amount related to such
facilities/contracts stood at ¥1,403,626 million and ¥1,381,900
million at March 31, 2007 and 2006, respectively. Of this amount,facilities/contracts which expires within one year or which areunconditionally cancelable at any time, totaled ¥1,302,674 millionand ¥1,289,385 million at March 31, 2007 and 2006, respectively.
Most of these agreements will expire without the clients’ having
utilized the financial resources available to them, and the amountof the nonexecuted financing will not necessarily impact on the
Bank or its consolidated subsidiaries’ future cash flows. Most ofthese facilities/contracts contain a clause which allows the Bankor its consolidated subsidiaries to reject a loan application or to
reduce the upper limit requested in view of changing financial
conditions, credit maintenance and other reasonable concerns.
When necessary, the Bank will demand collateral such as realestate or marketable securities at the date on which an
agreement is entered into. In addition, after facilities/contracts areset forth the Bank will regularly assess the business status of theclients, based on predetermined internal procedures and, when
prudent, will revise the agreements or reformulate their policies tomaintain creditworthiness.

11. Borrowed Money

In addition to the above, securities amounting to ¥67,575 millionand ¥56,550 million at book value were pledged as collateral inconnection with exchange settlements and futures transactions
as of March 31, 2007 and 2006, respectively.
One consolidated subsidiary had pledged its lease receivables
amounting to ¥6,274 million and ¥4,652 million as collateral forborrowed money of ¥4,700 million and ¥3,390 million as of March
31, 2007 and 2006, respectively.
Lease deposits as of March 31, 2007 and 2006 of ¥1,462
million and ¥4,079 million, respectively, have been included inother assets. Initial margins on futures transactions as of March
31, 2007 and 2006 of ¥160 million and ¥160 million, respectively,
have been included in other assets.

Borrowed money at March 31, 2007 and 2006 included
subordinated debt of ¥42,000 million and ¥57,000 million,
respectively.

12. Non-Performing Loans
In accordance with the disclosure requirements under the Rules
for Bank Accounting in Japan, the balance of loans and bills
discounted at March 31, 2007 and 2006 included the following
non-performing loans:
Millions of yen
March 31,

Loans in bankruptcy and dishonored bills
Delinquent loans
Loans past due with respect to interest
payments for more than 3 months
Restructured loans
Total

2007

2006

5,946
90,059¥ 4,993
134,9212,196
49,714¥147,915

2,436
58,512¥200,863¥

Notes: 1. Loans in bankruptcy and dishonored bills refers to loans (excluding
charged-off amounts) stipulated in Article 96, Paragraph 1, Item 3 (a) to (e)or Item 4 of the Enforcement Regulation to Corporation Tax Law (1965
Enforcement Regulation No. 97) to which accrued interest receivables are
not recognized as accruals for accounting purposes as no repayment ofprincipal or payment of interest have been made for a considerable period.
Delinquent loans refers to loans with respect to which accrued interest
receivables are not recognized as accruals for accounting purposes,
excluding loans falling into the category of restructured loans.
Loans past due with respect to interest payments for more than 3 months
refers to loans with respect to which repayment of principal or payment ofinterest are past due three months or more, excluding loans falling into thecategories of loans in bankruptcy and dishonored bills or delinquent loans.
Restructured loans refers to loans to borrowers to whom financial support isgiven in the form of reduction in interest, waiver of repayment of the principal or payment of interest, or debt forgiveness with the aim of corporate
rehabilitation, excluding loans falling into loan categories mentioned above.
2. The above amounts are stated before the deduction of the reserve forpossible loan losses.

2713. Employees’ Retirement Benefits

14. Deferred Tax Assets(a) Outline of current retirement benefit system
The Bank and its consolidated subsidiaries have adopted defined
employees’ retirement benefit plans, i.e., the employees’ welfare
pension fund supplemented by the employees’ public pension
system and lump-sum retirement benefits. In addition, extra
benefits may be paid on a case-by-case basis. The Bank has
established an employees’ retirement benefit trust. As of the endof March 31, 2007, the Bank and 9 consolidated subsidiaries
have lump-sum severance payment systems for employees. The
Bank and its consolidated subsidiaries have jointly established afund under a defined benefit pension plan.
(b) The following tables set forth the changes in the net retirement
benefit obligation, the plan assets and the funded status of the
Bank and its consolidated subsidiaries at March 31, 2007 and2006:
Millions of yen
March 31,Retirement benefit obligation
Fair value of plan assets
Funded status
Unrecognized net retirement benefit
obligation at transition
Unrecognized actuarial gain
Unrecognized prior service cost
Net retirement benefit obligation
Prepaid pension costReserve for employees’ retirement benefits

2007

2006

¥(60,673)
65,031
4,358¥(59,333)
64,5195,185—(5,325)
762
(204)
5,081
¥ (5,286)—(8,957)860(2,911)
3,728¥ (6,640)

Millions of yen
March 31,

Deferred tax assets:
Reserve for possible loan losses
Reserve for employees’ retirement benefits
Devaluation of securities
Net operating loss carry forwards
OthersValuation allowance
Total
Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Retirement benefit trust
Reversal of reserve for possible loan losses
after elimination of intercompany balances
OthersTotal
Net deferred tax liabilities2006¥29,122
9,502
4,746
829
16,728(6,400)¥54,528¥33,621
10,592
4,898
323
15,883(1,990)¥63,328¥(80,015)(9,495)¥(72,424)(9,495)(18)(573)(90,103)¥(35,574)

(21)
(33)
(81,975)¥(18,647)

The effective tax rate reflected in the consolidated statements ofincome for the year ended March 31, 2007 differs from the statutory
tax rate for the following reason:
Statutory tax rate
40.32%
Valuation allowances
8.21%
Other
1.07%
Effective tax rate
49.60%
Note: Description is omitted as the difference between the statutory tax rate and theeffective tax rate under tax-effect accounting for the year ended March 31,
2006, is smaller than one-twentieth of the statutory tax rate.

15. Deposits

Notes: 1. The above amounts do not include any extra benefits.
2. The consolidated subsidiaries have adopted a simplified method for the
calculation of their retirement benefit obligation.

Millions of yen
March 31,(c) Cost for retirement benefits of the Bank and its consolidated
subsidiaries included the following components for the years
ended March 31, 2007 and 2006:
Millions of yen
Years ended March 31,

2007

2007

Service cost
¥1,899Interest cost
1,012
Expected return on plan assets(782)
Amortization:
Amortization of prior service cost98
Amortization of unrecognized actuarial (gain) loss
(322)
Total retirement benefit cost
¥1,904Current deposits
Time deposits
Negotiable certificates of deposit
Others
Total

2007

2006

¥3,583,922 ¥3,420,281
2,561,042 2,539,831
36,39029,949128,263
175,946¥6,309,618 ¥6,166,008

2006¥1,917
1,000(561)

16. Trading Liabilities
Millions of yen
March 31,

2007

2006

98
1,388
¥3,843

Trading-related financial derivatives
Total

¥89
¥89

¥117
¥117

Note: Retirement benefit cost of consolidated subsidiaries which is calculated by asimplified method has been included in “service cost” referred to above.

17. Shareholders’ Equity(d) The assumptions used in accounting for the defined benefit
plans for the years ended March 31, 2007 and 2006 were as
follows:
Years ended March 31,

2007

Discount rate
Expected rate of return on plan assets
Periodical allocation of estimatedretirement benefits
Amortization period of prior service cost
Amortization period of actuarial gain/loss

2.0%
3.5%

28

2006

2.0%
3.5%

Straight-line method
10 years
10 years
10 years
10 years

In accordance with the Banking Law of Japan, the Bank has provided
a legal reserve by appropriation of retained earnings, which is included
in retained earnings. The Banking Law of Japan provides that an
amount equivalent to at least 20% of the amount to be disbursed as
distributions of earnings be appropriated to the legal reserve until the
total of such reserve and the capital surplus equals 100% of thecommon stock.
The new Corporation Law of Japan (the “Law”), which superseded
most of the provisions of the Commercial Code of Japan, went into
effect on May 1, 2006. The Law provides that an amount equal to 10%of the amount to be disbursed as distributions of capital surplus (otherthan the capital reserve) and retained earnings (other than the legal
reserve) be transferred to the capital reserve and the legal reserve,
respectively, until the sum of the capital reserve and the legal reserve
equals 25% of the capital stock account. Such distributions can bemade at any time by resolution of the shareholders or by the Board of
Directors if certain conditions are met.
Under the Law, upon the issuance and sale of new shares ofcommon stock, the entire amount of the proceeds is required to beaccounted for as common stock, although a company may, byresolution of the Board of Directors, account for an amount notexceeding one-half of the proceeds of the sale of new shares asadditional paid-in capital.

Impairment losses for the previous fiscal year ended March 31,
2006 also on a consolidated basis, amounted to ¥1,056 million in
impairment losses on land holdings, ¥135 million in losses onbuildings, and ¥2 million in losses on equipment. Concerningfacilities for business, every branch is, in principle, designated by
the Bank as the smallest unit for recognition and measurement of
impairment loss, taking into consideration cash flows in the region
in question. In the case of idle assets, individual assets areassessed as measurement units. Regarding head office buildings,
operation centers, dormitories, and housing and welfare facilities,
these facilities are classified as the Bank’s common property, as
they generate no cash flows.

18. Trading Income

22. Accumulated Depreciation of Tangible Fixed Assets
Millions of yen

Years ended March 31,

2007

2006

Revenue from trading securities
Revenue from trading-related financial derivatives
Other trading revenue
Total

¥305
55
112
¥473

¥302
104
21
¥429

19. Interest on Borrowings and Rediscounts
Millions of yen
Years ended March 31,

Call money and bills sold
Securities lending transactions
Borrowings
Total

2007

2006

¥4,6832,390
1,142¥8,216¥2,838
1,668
1,257¥5,765

20. Other Income
Millions of yen
Years ended March 31,

Other ordinary income
Gain on disposal of tangible fixed assets
Gains on collection of loan assets
Reversal of reserve for possible loan losses
Total

2007

2006

¥22,099
248
3,695
1,684
¥27,727¥24,414—
2,722—¥27,137

Accumulated depreciation on tangible fixed assets, recognized forthe fiscal year ended March 31, 2007, amounted to ¥144,378
million. The corresponding figure for the previous fiscal year
ended March 31, 2006, stated under “Premises and equipment,”was ¥141,531 million.

23. Segment Information(a) Business segment information
Segment information by type of business for the years ended
March 31, 2007 and 2006 are summarized as follows:
Millions of yen
Year ended
March 31, 2007

Banking
operations

Leasing

Eliminations Consolidated

Millions of yen
Millions of yen

Losses on disposal of tangible fixed assets
Losses on disposal of premises and equipment
Losses on impairment
Write-offs of claims
Write down of equity shares
Losses on sale of claims
Others
Total

Total

Ordinary income, net ¥ 47,652 ¥ 578 ¥ 1,798 ¥ 50,029 ¥ (280) ¥ 49,748
Assets¥7,433,633 ¥45,676 ¥32,135 ¥7,511,444 ¥(66,708) ¥7,444,736
Depreciation
2,872 13,289
143
16,305(0)
16,305Losses on impairment
72
—
—
72
—
72
Capital expenditures
5,746 11,295
203
17,245—
17,245

21. Other Expenses
Years ended March 31,

Other

Ordinary income:Ordinary income
from externalcustomers¥ 169,547 ¥17,671 ¥ 4,805 ¥ 192,025 ¥— ¥ 192,025
Ordinary income
from internaltransactions
622
2,167 6,871
9,662(9,662)—
Total
170,170 19,839 11,677
201,687(9,662)
192,025
Ordinary expenses
122,518 19,260 9,878
151,657(9,381)
142,2762007¥ 1,543
—
72
7,460
199
499
21,196¥30,969

2006

¥

—
383
1,194
9,881
135
226
27,867¥39,686

Impairment losses were recorded in an aggregate amountdeemed irrecoverable on idle assets, primarily located in Ibaraki
Prefecture.
Impairment losses recognized on a consolidated basis for the
fiscal year ended March 31, 2007 can be broken down into thetwo categories of losses on land holdings in the amount of ¥70
million, and losses on buildings in the amount of ¥2 million.

Year ended
March 31, 2006

Banking
operations

Leasing

Other

Total

Eliminations Consolidated

Ordinary income:Ordinary income
from externalcustomers¥ 157,044 ¥17,317 ¥ 5,696 ¥ 180,058 ¥— ¥ 180,058
Ordinary income
from internaltransactions
623
2,234 5,608
8,466(8,466)—
Total
157,668 19,551 11,305
188,525(8,466)
180,058
Ordinary expenses
116,593 18,535 10,894
146,022(8,725)
137,296
Ordinary income, net ¥ 41,074 ¥ 1,016 ¥ 411 ¥ 42,502 ¥ (259) ¥ 42,761
Assets¥7,343,485 ¥48,823 ¥31,360 ¥7,423,669 ¥(70,746) ¥7,352,922
Depreciation
2,760 13,380
141
16,281(0)
16,281
Losses on impairment
1,194
—
—
1,194
—
1,194
Capital expenditures
2,581 12,256
657
15,496—
15,496
Notes: 1. Classification is made according to nature of businesses of consolidated subsidiaries. In addition, “other” includes guarantee business.

29

2. Instead of the net sales and the operating income of a non-financial company,
ordinary income in gross and net amount is indicated,
3. Effective the year ended March 31, 2007, the Bank has adopted new
accounting standards for acceptance and guarantees on guarantee
obligations on securities issued by private placement (pursuant to Article 2,
Clause 3 of the Securities and Exchange Law) and customers’ liabilities for
acceptances and guarantees in accordance with changes in Enforcement
Regulations to the Banking Law (1982 Finance Ministry Order No. 10).
Under the new standards, acceptances and guarantees, and customers’
liabilities for acceptances and guarantees offset each other. As a result,assets held for banking operations decreased ¥21,702 million from therelevant figures calculated using the previous method.

(b) Geographic segment information
Segment information by geographic area has not been disclosed
since over 90% of the total consolidated ordinary income andassets of the Bank and consolidated subsidiaries reside in Japan.
(c) Ordinary income from foreign operations
Segment information related to the Bank’s foreign operations forthe years ended March 31, 2007 and 2006 are as follows:
Millions of yen
Years ended March 31,

Ordinary income from foreign operations (A)Ordinary income (B)(A)/(B)

2007

2006

¥ 29,295
192,025
15.25%¥ 26,188
180,058
14.54%

Note: Ordinary income arising from foreign operations refers to ordinary income fromforeign currency-denominated transactions and yen-denominated transactions
with non-residents in Japan, as well as offshore transactions (excluding intersegment transactions).

24. Leases(a) Finance leases
Finance leases, as lessee, at March 31, 2007 and 2006 aresummarized as follows:

Millions of yen
March 31,

2007

2006

Equipment
Others
Accumulated depreciation
Total¥63,592
4,012(34,780)¥32,823¥63,501
4,212(32,941)¥34,773

Lease payments receivable for finance leases:
Within one year
Over one year
Total

¥12,290
25,884¥38,175¥12,476
27,929¥40,406

Note: Minimum lease payment receivable presented above includes interest amounts,
as the total balance at minimum lease payment receivable and residual value ofleased assets is small as a percentage of the book value of receivables.

Total lease payments received under finance leases for the year
ended March 31, 2007 and 2006 were ¥13,505 million and¥13,586 million, respectively. Depreciation under finance leases
for the year ended March 31, 2007 and 2006 were ¥11,632
million and ¥11,697 million, respectively.
(b) Operating leases
Future minimum lease payments for operating leases at March 31,
2007 and 2006 were ¥541 million and ¥573 million, of which ¥41
million and ¥37 million were due within one year.
No impairment losses have been recognized on leased assets.

25. Securities Information
The information includes trading account securities andcommercial paper in trading assets and trust beneficiary rights incommercial paper and other debt purchased in addition tosecurities.
(a) Securities held for trading purposes

Millions of yen
March 31,

2007

2006

Equipment
Accumulated depreciation
Total

¥49
(25)
¥24

¥50
(19)
¥30

Lease payments for finance leases:
Within one year
Over one year
Total

¥11
13
¥24

¥14
16
¥30

Note: Acquisition cost and minimum lease payment presented above include interest
amounts calculated under the interest method, as the balances of acquisition
cost and minimum lease payment are small as a percentage of the book valueof total tangible fixed assets.

Total lease payments under finance leases for the year ended
March 31, 2007 and 2006 were ¥14 million and ¥11 million,
respectively. Depreciation which would have been recorded underfinance leases for the year ended March 31, 2007 and 2006 were
¥14 million and ¥11 million, respectively.
Finance leases, as lessor, at March 31, 2007 and 2006 aresummarized as follows:

30

Millions of yen
March 31,

Carrying value
Holding gains charged to income

2007

2006

¥28,90437¥29,0312(b) Marketable debt securities held to maturity
Millions of yen
March 31, 2007

Book
value

Japanese government
bonds
¥
—
Japanese local
government bonds
3,404
Corporate bonds
26,452Others
19,486
Total¥49,342

Marketvalue

Unrealized
gain (net)Unrealized
gain (gross)

Unrealized
loss (gross)

—

¥ —

¥ —

¥ —

3,548
26,221
19,464¥49,234

144
(230)
(21)
¥(107)

144
67
15
¥227

—
297
36
¥334

¥

Millions of yen
March 31, 2006

Book
value

Japanese government
bonds
¥
—
Japanese local
government bonds
5,325
Corporate bonds
22,819Others23,091
Total¥51,237

Marketvalue

Unrealized
gain (net)Millions of yen
Unrealized
gain (gross)

Unrealized
loss (gross)Book value
March 31,

¥

—

¥ —

¥ —

¥ —

5,652
22,27523,148¥51,076

326
(544)
57
¥(160)

326
31
82
¥440

—
576
25
¥601

Non-marketable debt securities held to maturity:
Trust beneficiary rights
Non-marketable available-for-sale securities:
Unlisted equity securities
Investments in investment partnerships(c) Marketable available-for-sale securities
Book
value

Unrealized
gain (net)¥6,017¥13,713

3,734
2,147

4,131
1,245

Millions of yen

Millions of yen
Cost

2006

(f) Schedule of redemption of available-for-sale securities
with maturity dates and debt securities being held tomaturity

Note: Market value is based on the market prices at the fiscal year end.

March 31, 2007

2007

Unrealized
gain (gross)

Unrealized
loss (gross)

Equity securities¥ 124,044 ¥ 315,147 ¥191,103 ¥191,624
Debt securities:
Japanesegovernment bonds
769,108
761,036(8,071)
671
Japanese local
government bonds
316,594
316,659
65
1,973
Corporate bonds
375,900
375,564(335)
1,145
Others819,200
844,959
25,75829,991
Total¥2,404,848 ¥2,613,367 ¥208,518 ¥225,406

¥

521

8,743
1,908
1,481
4,232
¥16,887

March 31, 2007

Debt securities:
Japanesegovernment bonds
Japanese local
government bonds
Corporate bonds
OthersTotal

One yearor less

One tofive years

Five toten yearsOverten years¥ 27,563 ¥ 362,214 ¥312,869 ¥ 58,388
38,543
152,179 129,340—
52,887
228,832 71,319
48,976
41,461
289,955 187,193 263,462¥160,456 ¥1,033,181 ¥700,722 ¥370,827

Millions of yen
March 31, 2006

Millions of yen
March 31, 2006

Cost

Book
value

Unrealized
gain (net)Unrealized
gain (gross)

Unrealized
loss (gross)

Equity securities¥ 117,940 ¥ 304,847 ¥186,907 ¥186,945
Debt securities:
Japanesegovernment bonds
748,031
730,151 (17,879)
292
Japanese local
government bonds
313,699
312,257(1,441)2,926
Corporate bonds
320,966
318,347(2,618)780
Others823,945
838,024
14,079 20,196
Total¥2,324,582 ¥2,503,629 ¥179,047 ¥211,141¥

38

18,171
4,368
3,399
6,117
¥32,094

Debt securities:
Japanesegovernment bonds
Japanese local
government bonds
Corporate bonds
OthersTotal

One yearor less

One tofive years

Five toten yearsOverten years¥ 92,883¥201,432 ¥320,333 ¥115,501

27,07153,32890,373¥263,656

153,633 136,878—
175,705 85,042
27,092309,792 199,963 217,387¥840,564 ¥742,217 ¥359,981(g) Money held in trust classified as available-for-sale securities
Millions of yen

Notes: 1. Book value is based on the market prices at the fiscal year end.
2. Pursuant to “Practical Guidelines for Accounting for Financial Instruments”(JICPA Accounting Committee Report No. 14, amended on July 3, 2001),
the Bank recognized the impairment losses on listed equity shares whosemarket price at the balance sheet date declined 30% or more comparedwith acquisition cost, taking into consideration the recoverability. As of
March 31, 2007 and 2006, the Bank devaluated the marketable availablefor-sale securities and recognized as a loss of ¥9 million and ¥22 million,
respectively.

March 31,

2007

2006

Cost
Book value
Unrealized gain (net)Unrealized gain (gross)
Unrealized loss (gross)¥2,151
2,591
440
440
—

¥2,152
2,725
573
573
—

Note: Book value is based on the market prices at the fiscal year end.

(d) Marketable available-for-sale securities sold(h) Unrealized gain on available-for-sale securities

Millions of yen
Years ended March 31,

2007

Millions of yen

2006
March 31,

Proceeds from sales of marketableavailable-for-sale securities
Gains
Losses¥496,387
9,217
7,527

¥504,941
4,294
2,596

(e) Major components and balance sheet amounts of nonmarketable securities

Unrealized gain:
Available-for-sale securities
Other money held in trust
Deferred tax liabilities
Net unrealized gains onavailable-for-sale securities
Minority interests
Unrealized gains on available-for-sale securities

2007

2006

¥208,518 ¥179,047
440
573(80,015)(72,424)
128,943
107,196(5)(109)¥128,938 ¥107,086

31

26. Derivatives(a) Transactions(1) The Bank conducts derivative transactions related to fluctuationsin interest rates, currency exchanges and bond prices, which areclassified into hedging and non-hedging purposes.
One of the Bank’s consolidated subsidiaries engages ininterest-related derivative transactions for hedging purposes.
(2) Policies: The Bank enters into derivative transactions to: (1) meetcustomer needs for hedging of risks involved in fluctuations inforeign exchanges and interest rates; (2) mitigate risks involved in
the Bank’s operations in the context of efficiently managing its
overall assets and liabilities, and; (3) hedge individual transactionsof the Bank. For trading in derivatives for the purpose ofincreasing earnings over a short-term period, the Bank has set
certain position limits and loss-cut rules.
The above-mentioned consolidated subsidiary follows trading
policies similar to those of the Bank.
(3) Purposes: The Bank conducts derivatives transactions inaccordance with the above-mentioned policies. The Bank
employs hedge accounting in some of its derivatives transactions.
a. Methods of hedge accounting
The Bank has adopted ordinary treatment for deferred hedges
and special treatment for interest-rate swaps.
b. Policies and implementation of hedging transactions
The Bank uses hedging transactions to mitigate its exposure tointerest rate risk, risk involving fluctuations in foreign exchange
rates and stock prices, and credit risk, in accordance with its
internal rules (Rules on Transactions under Hedge Accounting)based on the Practical Guidelines on Accounting for Financial
Instruments.
During the prior and current years, hedge accounting has
been applied to the following financial instruments and assets
and liabilities hedged:
Hedging instruments: Interest-rate swaps, currency swaps andforeign exchange swaps
Assets and liabilities hedged:(Yen-denominated) Loans and bills discounted, deposits, andborrowed money(Foreign-currency denominated) Bonds and deposits
c. Assessment of hedging effectivenessThe effectiveness of hedging was assessed in accordance with
Rules on Transactions under Hedge Accounting. As forhedging against interest rate changes by means of offsetting
fluctuations in fair value arising from changes in interest rates,
the Bank assesses the hedge effectiveness by correlating agroup of hedged items (i.e. loans) with hedging instruments(such as interest rate swaps) classified by remaining maturity
bucket. As for cash flow hedges, the Bank assesses theeffectiveness of such hedges in fixing cash flows by verifying
the correlation between the hedged items and hedging
instruments. As for hedging foreign exchange fluctuations, theBank assesses the effectiveness of utilizing currency andexchange swap transactions as hedging instruments throughconfirmation of the fact that there exists a sufficient balance ofhedging instruments in the form of foreign exchanges,
corresponding to the hedged items in the form of monetaryclaims and obligations denominated in foreign currencies.
In addition, the Bank confirmed that its hedging methods for
its special treatment of interest-rate swaps met the required
criteria.
32(4) Nature of Risks: Derivative transactions involve market risk andcredit risk. Market risk refers to the risk of losses from fluctuationsin interest rates and currency exchanges, etc. Credit risk is the riskthat a position cannot be settled according to the original contract
terms due to the bankruptcy or insolvency of the counterparty.
(5) Risk Management System: The Board of Directors (the “Board”) is
responsible for determining policies on the basis of in-house
regulations on risk management, taking due account of the
maximum transaction volumes, the maximum allowable loss
amounts, and loss-cutting rules on derivative transactions, which
are reported to the Board on a regular basis. For credit risk
management, the current exposure method is applied for risk
control, by setting credit lines by counterparty.
Regarding the organizational structure, the Bank clearly
segregates back-office work from front-office work. Furthermore,
the Bank has established middle-office sections to ensure that thesystem of checks and balances works effectively.
(6) Supplementary Explanation of Quantitative Information: The
contract amounts presented are the notional contract amounts or
the principal for calculation purpose. Accordingly, they do not
represent the actual market risk exposure relating to all derivative
positions.
(b) Interest-rate derivatives
March 31, 2007

Millions of yen
Contract amounts
MarketUnrealized

Total

Transactions listed on exchanges:
Interest-rate futures:
Sold¥—
Bought—Interest-rate options:
Sold—
Bought—Over-the-counter transactions:
Forward rate agreements:
Sold—
Bought—Interest-rate swaps:
Receivable fixed/
payable floating
70,434
Receivable floating/payable fixed
70,434
Receivable floating/payable floating—
Interest-rate options:
Sold—
Bought
—
Caps:
Sold
3,258
Bought3,258
Swaption:
Sold32,876
Bought32,876
Others:Sold—
Bought
—
Total

¥

—

Over 1 year

value

gain (loss)

¥

—
—

¥ —
—

¥ —
—

—
—

—
—

—
—

—
—

—
—

—
—

26,65054

54

26,650

122

122

—

—

—

—
—

—
—

—
—

2,781
2,781

(20)
20

65
(29)

4,010
4,010

(224)
224

51
224

—
—

—
—

—
—

—

¥176

¥489

¥

March 31, 2006

Unrealized

Totalgain (loss)

Transactions listed on exchanges:
Interest-rate futures:Sold¥ —Bought—Interest-rate options:
Sold—
Bought—Over-the-counter transactions:
Forward rate agreements:
Sold—
Bought—Interest-rate swaps:
Receivable fixed/
payable floating
30,350Receivable floating/payable fixed
30,350Receivable floating/payable floating—
Interest-rate options:
Sold—
Bought
—
Caps:
Sold
3,174
Bought3,174
Swaption:Sold17,130Bought17,130
Others:Sold—
Bought—Total¥(c) Currency Derivatives

Millions of yen
Contract amounts
Market—Over 1 year

value

March 31, 2007

¥

—
—

¥ —
—

¥ —
—

—
—

—
—

—
—

—
—

—
—

—
—

17,43711

11

17,437

175

175

—

—

—

—
—

—
—

—
—

3,058
3,058

(52)
52

23
5

¥

5,320
5,320

(378)
378

(172)
378

—
—

—
—

—
—

—

¥186

¥421

Notes: 1. The above derivatives are valued at market and unrealized gain (loss) is
accounted for in the consolidated statements of income. Derivatives to which
hedge accounting is applied have not been included in the above table.
2. Calculation of market value
The market value of transactions listed on exchanges has been calculatedon the basis of the closing prices on the Tokyo International Financial
Futures Exchange, etc. The market value of over-the-counter transactions
has been calculated at their discounted current value or by utilizing calculation models for options prices.

Millions of yen
Contract amounts
MarketUnrealized

Totalgain (loss)

Over 1 year

value

Listed:Currency futures:
Sold
¥
— ¥
— ¥
—
Bought———Currency options:
Sold
—
—
—
Bought———Over-the-counter transactions:
Currency swaps
552,195 520,582 1,309
Forward foreignexchange contracts:
Sold
10,374
4,424(292)
Bought
8,841
4,410
292
Currency options:Sold17,405—(205)
Bought17,405—
206
Others:Sold———
Bought
—
—
—
Total

¥

March 31, 2006

— ¥

¥

—
—
—
—

1,309

(292)
292
(53)
30
—
—

— ¥1,310¥1,285

Millions of yen
Contract amounts
MarketUnrealized

Total

value

gain (loss)

¥ —
—

¥ —
—

—
—

—
—

909

909

(108)
82

(108)
82

(318)
320

(24)
4

—
—

—
—

¥ 885

¥ 863

Over 1 year

Listed:Currency futures:
Sold
¥
— ¥
—
Bought——Currency options:
Sold——
Bought——Over-the-counter transactions:
Currency swaps
334,268 324,375
Forward foreignexchange contracts:
Sold
4,093
332
Bought3,223
228
Currency options:Sold26,560—Bought26,560—
Others:Sold——
Bought
—
—
Total

¥

— ¥

—

Notes: 1. The transactions in this table have been revalued at the market rate prevailing on the balance sheet date, and unrealized gain (loss) is accounted
for in the consolidated statements of income. Derivatives which qualify as
hedges have been excluded from this table.
2. Calculation of market valueMarket value is calculated at discounted present value, etc.

(d) Stock Derivatives
Not applicable as of March 31, 2007 and 2006.

33

(e) Bond Derivatives
Millions of yen
Contract amounts
MarketTotal Over 1 year
value

March 31, 2007

Listed:Bond futures:
Sold
BoughtBond future options:
Sold
BoughtOver-the-counter transactions:
Bond options:
Sold
BoughtOthers:Sold
Bought
Total

¥537
—

¥—
—

¥ 0
—

¥ 0
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

¥ —

¥—

¥ 0

¥ 0

Listed:Bond futures:
Sold
BoughtBond future options:
Sold
BoughtOver-the-counter transactions:
Bond options:
Sold
BoughtOthers:Sold
BoughtTotal

2. Calculation of fair market value
Financial derivatives listed on securities exchanges are stated using theclosing prices on the Tokyo Stock Exchange as of the balance-sheet date,
and those traded over the counter are stated using discounted present
value or option price calculation models.

(f) Commodity Derivatives
Not applicable as of March 31, 2007 and 2006.

(g) Credit Derivatives

Millions of yen
Contract amounts
MarketTotal Over 1 year
value

March 31, 2006

Unrealized
gain (loss)

Notes: 1. The transactions described above are marked to market, and the unrealized gains and losses are charged to income. Derivatives under hedge
accounting are excluded from the above tables.

Unrealized
gain (loss)

¥539
—

¥—
—

¥ 5
—

¥ 5
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

¥ —

¥—

¥ 5

¥ 5

Not applicable as of March 31, 2007 and 2006.

27. Stock Options
No expenses related to the exercise of stock options were recorded forthe fiscal year ended March 31, 2007.
Changes to the nature and scale of stock options are listed below.
Persons to whom stock
options are granted

Type and number of shares
Date of rights granted
Terms and conditions
Eligible service period
Period for exercise ofstock options
Exercise price
Balance of stock options
outstanding at beginning of year
Exercise of options
Expired options
Balance of outstanding
options at end of year

2000

2001

Directors of
the Bank: 10
Employees of
the Bank: 10
Common shares:
175,000
August 1, 2000
Not applicableNot applicable
From July 1, 2002
to June 30, 2007
¥411

Directors of
the Bank: 10
Employees of
the Bank: 8
Common shares:
268,000
August 1, 2001
Not applicableNot applicable
From July 1, 2003
to June 30, 2008
¥375

67,00060,0007,000

175,000
140,000
0035,00028. Related-Party Transactions
For the year ended March 31, 2007, material transactions with major individual shareholders are as follows:
Nature of relationship
Relationshipwith the
Bank

Name

Location

A company
Usui Setsubi Hitachi-Omiya,in which
Kogyo Co. Ltd. Ibaraki Pref.
majority voting
rights areheld byrelatives of adirector of
the Bank

Paid-in capital(Millions of yen)

Businessline

Voting rights
ownership (%)

10

Hygiene facility
installation forwater supply
and wastewater treatment—

Directors
and statutory
auditors

Businesstie-ups

Details oftransaction

Transaction
amount(Millions of yen)NotapplicableNot
applicable

Lending of
money

10

Guarantees

2

Accounting
title
Loans
receivable

Acceptancesand guarantees

Year-endbalance(Millions of yen)
13

2

Policies on and terms and conditions of the transaction
Interest is reasonably determined in a manner similar to ordinary transactions, taking into account the prevailing market interest rates. The loan period
shall not exceed 5 years. Repayment of principal shall be made on a straight-line basis every month or in lump-sum on the due date. However, repayment before the due date shall be allowed.

34

Nature of relationship
Relationshipwith theBank
A companyin whichmajority voting
rights areheld byrelatives of adirector of
the Bank

Name

Location

Rarara Ltd.

Mito,
Ibaraki Pref.

Paid-in capital(Millions of yen)

Businessline

Voting rights
ownership (%)

3

Beauty salon—

Directors
and statutory
auditors

Businesstie-ups

Details oftransaction

NotapplicableNot
applicable

Lending ofmoneyTransaction
amount(Millions of yen)—Accounting
title
Loans
receivable

Year-endbalance(Millions of yen)
6

Policies regarding, and terms and conditions of, the transaction
Interest is reasonably determined in a manner similar to ordinary transactions, taking into account the prevailing market interest rates. The loan period is
5 years. Repayment of principal shall be made on a straight-line basis every month.
For the year ended March 31, 2006, material transactions with major individual shareholders are as follows:
Nature of relationship
Relationshipwith the
Bank

Name

Location

A company
Usui Setsubi Hitachi-Omiya,in which
Kogyo Co. Ltd. Ibaraki Pref.
majority voting
rights areheld byrelatives of adirector of
the Bank

Paid-in capital(Millions of yen)

Businessline

Voting rights
ownership (%)

10

Hygiene facility
installation forwater supply
and wastewater treatment—

Directors
and statutory
auditors

Businesstie-ups

Details oftransaction

NotapplicableNot
applicable

Lending ofmoneyTransaction
amount(Millions of yen)2

Accounting
title
Loans
receivable

Year-endbalance(Millions of yen)
9

Policies on and terms and conditions of the transaction
Interest is reasonably determined in a manner similar to ordinary transactions, taking into account the prevailing market interest rates. The loan period
shall not exceed 5 years. Repayment of principal shall be made on a straight-line basis every month or in lump-sum on the due date. However, repayment before the due date shall be allowed.
Nature of relationship
Relationshipwith theBank
A companyin whichmajority voting
rights areheld byrelatives of adirector of
the Bank

Name

Location

Rarara Ltd.

Mito,
Ibaraki Pref.

Paid-in capital(Millions of yen)

Businessline

Voting rights
ownership (%)

3

Beauty salon—

Directors
and statutory
auditors

Businesstie-ups

Details oftransaction

NotapplicableNot
applicable

Lending ofmoneyTransaction
amount(Millions of yen)
10

Accounting
title
Loans
receivable

Year-endbalance(Millions of yen)
8

Policies regarding, and terms and conditions of, the transaction
Interest is reasonably determined in a manner similar to ordinary transactions, taking into account the prevailing market interest rates. The loan period is
5 years. Repayment of principal shall be made on a straight-line basis every month.
Note: For the year ended March 31, 2007 and 2006 the Bank has made no related-party transactions with parties falling into categories of parent, subsidiary and sister companies, and major corporate shareholders.

29. Per-share Data

Millions of yen
March 31,
Yen

March 31,

Net assets per share
Earnings per share-basic
Earnings per share-diluted

2007

2006

¥647.60
32.31
32.31

¥596.22
29.92
29.91

Note: Bases for calculation of earnings per share (basic and diluted) are as follows:

Earnings per share
Net income
Earnings not available tocommon shareholders
Of which, bonuses for directors and auditors
Net income after deduction of the
portion described above
Weighted average number of commonshares for the fiscal year (in thousands)
Diluted earnings per share
Adjustment to net income
Increase in common shares (in thousands)
Of which, acquisition of own shares understock option pursuant to provisions in
Article 210-2, Paragraph 2 of theCommercial Code (in thousands)
Share warrants that have no dilutive
effects on earnings per share

2007

2006

¥ 26,319¥ 24,815

—
—

50
50

26,31924,765814,389

827,618

—
169

—
353

169

353

—

—

35

Report of Independent Certified Public Accountants

36

F

I

N

A

N

C

I

A

L

S

T

A

T

E

M

E

N

T

S

Non-Consolidated Balance Sheets (Unaudited)
THE JOYO BANK, LTD.

Millions of yen
March 31,

AssetsCash and due from banks
Call loans and bills purchased
Commercial paper and other debt purchased
Trading assets
Money held in trust
Securities
Loans and bills discounted
Foreign exchanges
Other assets
Tangible fixed assets
Intangible fixed assets
Premises and equipment
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Reserve for devaluation of investment securities
Total assets

2007

2006

¥ 140,106 ¥ 154,302
3,541
11,99885,237
95,197
29,17029,3422,591
2,725
2,607,267
2,489,359
4,438,855
4,433,701
984
1,084
40,33239,92979,821—
9,657——
82,70232,86251,602(39,569)(51,236)(53)(52)¥7,430,806 ¥7,340,658

Thousands of
U.S. dollars
2007$ 1,186,843
30,000722,041
247,106
21,95422,086,128
37,601,487
8,336
341,652
676,171
81,806—278,381(335,191)(451)$62,946,267

37

Thousands of
U.S. dollars

Millions of yen
March 31,

Liabilities and shareholders’ equity
Liabilities:
Deposits
Call money and bills soldPayables under securities lending transactions
Trading liabilities
Borrowed money
Foreign exchanges
Bonds
Due to trust account
Other liabilities
Reserve for bonuses to directors and corporate auditors
Reserve for employees’ retirement benefits
Reserve for other contingent losses
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Acceptances and guarantees
Total liabilities
Shareholders’ equity:
Common stock:
Authorized — 2,167,515 thousand shares
Issued —852,231 thousand shares
Capital surplus
Legal reserve
Voluntary reserve
Retained earnings
Land revaluation reserve, net of taxes
Unrealized gain on available-for-sale securities
Less, treasury stock at cost
Total shareholders’ equity
Total liabilities and shareholders’ equity
Net assets:
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Unrealized gains on other securities
Deferred losses on hedging instruments, net of taxes
Land revaluation excess
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

2007

2006

2007

¥6,326,301
108,447
203,25489
67,000350
15,00016
103,449
50
4,968
551
39,777
13,05632,862
6,915,175¥6,181,063
157,118
280,759
117
80,0002,536
15,00017
42,219—6,331
412
22,182
13,08851,602
6,852,451$53,590,019
918,658
1,721,762
754
567,556
2,968
127,064136
876,317423
42,091
4,668
336,953
110,602
303,794
58,578,358

—
—
—
—
—
—
—
—
—
—

85,11358,581
55,317
163,432
24,3499,313
107,079(14,978)
488,207¥7,340,658

—
—
—
—
—
—
—
—
—
—

85,11358,574
256,967(22,403)378,251
128,905(791)
9,266
137,380
515,631¥7,430,806

—
—
—
—
—
—
—
—
—
—
—

¥

¥

Notes: 1. Japanese yen amounts are rounded down to the nearest million yen.
2. U.S. dollar amounts represent translation of Japanese yen at the exchange rate of ¥118.05 to US$1.00 on March 31, 2007.

38$

720,991
496,179
2,176,765(189,775)
3,204,160
1,091,955(6,704)78,497
1,163,748
4,367,909$62,946,267

F

I

N

A

N

C

I

A

L

S

T

A

T

E

M

E

N

T

S

Non-Consolidated Statements of Income (Unaudited)
THE JOYO BANK, LTD.

Thousands of
U.S. dollars

Millions of yen
Years ended March 31,

Income:Interest income:Interest on loans and discounts
Interest and dividends on securities
Other interest income
Fees and commissions
Trading income
Other operating income
Other income
Total income
Expenses:
Interest expenses:
Interest on deposits
Interest on borrowings and rediscounts
Other interest expenses
Fees and commissions
Other operating expenses
General and administrative expenses
Other expenses
Total expenses
Income before income taxes
Income taxes:
Current
Deferred
Net income
Per share (in yen and dollars):
Net income
Cash dividends applicable to the year

2007

2006

2007

¥ 85,407
47,3391,567
23,296
473
8,957
8,921
175,963¥ 81,040
43,592
1,183
21,932
429
4,474
7,425
160,079$ 723,486
401,012
13,276
197,346
4,011
83,50567,2901,490,587

7,974
8,216
12,4697,293
7,504
70,5598,938
122,956
53,007

3,612
5,765
9,659
7,200
2,467
71,32718,061
118,093
41,98667,55569,603
105,625
61,78650,145
597,706
75,717
1,041,562
449,024

16,36810,451¥ 26,186

149
17,115¥ 24,721

138,661
88,537$ 221,826¥32.12
7.00¥29.806.00$0.272
0.059

Notes: 1. Japanese yen amounts are rounded down to the nearest million yen.
2. U.S. dollar amounts represent translation of Japanese yen at the exchange rate of ¥118.05 to US$1.00 on March 31, 2007.

Non-Consolidated Statement of Retained Earnings (Unaudited)
Millions of yen
Years ended March 31,

Retained earnings:
Balance at beginning of year
Net income
Reversal of land revaluation reserve
Appropriations:
Cancellation of shares in treasury
Cash dividends
Bonuses to directors
Transfer to voluntary reserve
Balance at end of year2006

¥30,142
24,721(521)(4,549)(5,393)(50)(20,000)¥24,349

Notes: 1. Japanese yen amounts are rounded down to the nearest million yen.
2. U.S. dollar amounts represent translation of Japanese yen at the exchange rate of ¥118.05 to US$1.00 on March 31, 2007.

39

F

I

N

A

N

C

I

A

L

S

T

A

T

E

M

E

N

T

S

Non-Consolidated Statement of Changes in Net Assets (Unaudited)
THE JOYO BANK, LTD.

Year ended March 31, 2007

Commonstock

Capitalreserve

Other
capitalsurplusTotal
capitalsurplusMillions of yen
Shareholders’ equity
Other retained earnings
Reserve
EarnedforsurplusLegaldispositions Voluntarybrought
reserve of fixed assets reserve
forwardBalance at March 31, 2006

¥85,113¥58,574¥ 7¥58,581¥55,317

Capital surplus¥ —¥163,432 ¥24,349

Total
retainedearnings

Total
Treasury shareholders’stockequity¥243,099 ¥(14,978) ¥371,815

Changes during the year:
Cash dividends
Bonuses to directors andcorporate auditors
Net income
Reserve for dispositions of fixed assets

115

Voluntary reserves

10,000(5,329)(5,329)(5,329)

(50)

(50)

(50)

26,18626,18626,186

(115)

—

—

(10,000)—

Purchase of treasury stock—

Retirement of treasury stock

4

4

Disposal of treasury stock

(11)

(11)

Increase in retained earnings due totransfer from land revaluation reserve—(14,509)(14,509)

—

87

92

(6,985)(6,985)

6,997

—

46

46

3,752

13,86846

Net changes of items other thanshareholders’ equity
Total changes during the year
Balance at March 31, 2007

Year ended March 31, 2007
Balance at March 31, 2006

—

—

(7)

(7)

—

115

¥85,113¥58,574¥—¥58,574¥55,317¥115

Unrealized
gains onavailable-for-salesecurities¥107,079

10,000¥173,432 ¥28,102

Millions of yen
Valuation and translation adjustment
Deferred
losses onLand
hedging
revaluation
instrument,
reserve,
net of taxes
net of taxes¥ —¥9,313(7,424)

6,435¥256,967 ¥(22,403) ¥378,251

Total
valuation andtranslation
adjustments

Total net
assets¥116,392¥488,207

Changes during the year:
Cash dividends(5,329)Bonuses to directors andcorporate auditors(50)

Net income

26,186

Reserve for dispositions of fixed assets—

Voluntary reserves—

Purchase of treasury stock(14,509)

Retirement of treasury stock

92

Disposal of treasury stock—

Increase in retained earnings due totransfer from land revaluation reserve46

Net changes of items other thanshareholders’ equity

21,826

(791)

(46)

20,98820,988

Total changes during the year

21,826

(791)

(46)

20,98827,424

Balance at March 31, 2007

¥128,905¥(791)¥9,266¥137,380¥515,631

Note: Japanese yen amounts are rounded down to the nearest million yen.

40

F

I

N

A

N

C

I

A

L

S

T

A

T

E

M

E

N

T

S

Non-Consolidated Statement of Changes in Net Assets (Unaudited)
THE JOYO BANK, LTD.

Capital surplus

Thousands of U.S. dollars (Note)
Shareholders’ equity
Other retained earnings
Reserve
EarnedforsurplusLegaldispositions Voluntarybrought
reserve of fixed assets reserve
forwardYear ended March 31, 2007

Commonstock

Capitalreserve

Other
capitalsurplusTotal
capitalsurplus

Balance at March 31, 2006

$720,991 $496,179$ 63$496,242 $468,590

Total
retainedearnings

Total
Treasury shareholders’stockequity$ — $1,384,430 $206,268 $2,059,289 $ 126,882 $3,149,641

Changes during the year:
Cash dividends
Bonuses to directors andcorporate auditors
Net income
Reserve for dispositions of fixed assets
Voluntary reserves

84,709(45,146)(45,146)(45,146)

(423)

(423)

(423)

221,826

221,826

221,826

(981)

—

—

(84,709)—

Purchase of treasury stock—— (122,912)

Retirement of treasury stock

37

37

Disposal of treasury stock

(100)

(100)

Increase in retained earnings due totransfer from land revaluation reserve(122,912)

—

743

781

(59,174)(59,174)

59,274

—

393

393

31,784

117,475

393

Net changes of items other thanshareholders’ equity
Total changes during the year
Balance at March 31, 2007

Year ended March 31, 2007
Balance at March 31, 2006

—

—

(63)

$720,991 $496,179$ —Unrealized
gains onavailable-for-salesecurities$ 907,064(63)—$496,179 $468,590

981

84,709—54,518$981 $1,469,100 $238,053 $2,176,765 $(189,775)$3,204,160

Thousands of U.S. dollars (Note)
Valuation and translation adjustment
Deferred
losses on
Land
Total
hedging
revaluation
valuation andinstrument,
reserve,translation
net of taxes
net of taxes
adjustments$(62,893)$78,891$ 985,956

Total net
assets$4,135,598

Changes during the year:
Cash dividends(45,146)

Bonuses to directors andcorporate auditors(423)

Net income

221,826

Reserve for dispositions of fixed assets—

Voluntary reserves—

Purchase of treasury stock(122,912)

Retirement of treasury stock

781

Disposal of treasury stock—

Increase in retained earnings due totransfer from land revaluation reserve393

Net changes of items other thanshareholders’ equity

184,890(6,704)(393)

177,792

177,792

Total changes during the year

184,890(6,704)(393)

177,792

232,310

Balance at March 31, 2007

$1,091,955$(6,704)$78,497$1,163,748$4,367,909

Note: U.S. dollar amounts represent translation of Japanese yen at the exchange rate of ¥118.05 to US$1.00 on March 31, 2007.

41

Organization

THE JOYO BANK, LTD.

Internal Administration Group
Corporate Audit DivisionCorporate Management Section
Corporate Risk Management Division
Credit Risk Management Office

General Meeting of
Shareholders

Legal and Compliance Office
Corporate Planning Division

Board of Corporate Auditors

Group Management Office

Corporate Auditors

Publicity Office
Tokyo Sub-Headquarters

Board of Directors

Personnel Division
Staff Counseling Office
Executive Secretariat

Executive Officer Committee

General Affairs Division
Credit Risk Management Group
Credit Examination Division
Loan Supervision Office
Company Management Support Office
Operation Systems GroupOperation Planning Division
Data Processing Center
Area Data Processing Center
Joint Systems Promotion OfficeComputer System Division
Business Section
Business Planning Division
Customer Counceling OfficeInternational Operations Office
Overseas Representative Office (Shanghai)
Foreign Exchanges Centering Office
Hokuto District Business Division
Retail Banking Business Group
Retail Banking Division
Custody Business Promotion OfficeCall Center
Loan Operation Center
Consumer Finance Center
Living and Business Consulting Center
Pension Business Promotion Center
Corporate Banking Business Group
Corporate Banking Business Division
Business Information Support Office

Head Office
Tokyo Business Division (Tokyo Main Office)146 Branches, 25 Sub-branches

Quick Business Center
Area Corporate Business Division
Public Business Group
Government and Municipal Business DivisionMarket Business Group
Treasury and Securities DivisionMarkets and Business Administration Division

42

Securities Business Office

As of June 28, 2007

Board of Directors and Corporate Auditors

ChairmanIsao Shibuya
Deputy Chairman
Yuto Kawahara
President
Kunio Onizawa
Senior Managing Director
Tsutomu Tohyama

Managing Directors
Takenori Hotate
Yoshiyuki Miyanaga
Kazuyoshi Terakado
Takao Tateno
Kazuo Komuro
Mikio Kawamata
Toru Hakata
Etsuo Hiraoka

Corporate Auditors
Takashi Iwakami (standing)
Kyohei Tomita (standing)
Akira Yasu
Toshihiko Kawamura
Sanenori Hitomi

As of June 28, 2007

Market Business Group and Overseas Office■ Head Office5-5, Minami-machi 2-chome, Mito,
Ibaraki 310-0021, Japan
Phone: 029-231-2151■ Market Business GroupManaging Director
Kazuo Komuro■ Markets and Business Administration
Division
7-2, Yaesu 2-chome, Chuo-ku,
Tokyo 104-0028, Japan
Phone: 03-3273-1741
General Manager
Jun Kawauchi
Deputy General Manager
Hirohiko Sato
• Operations Group (Tokyo)
Senior Manager
Osato Aizawa● International Operations Office3-3, Shinhara 1-chome, Mito,
Ibaraki 310-0045, Japan
Phone: 029-255-6671
Telex: J23278 JOYOBANK3632105 JOYOBKSwift: JOYOJPJTGeneral Manager
Akihiko Hashimoto■ Treasury and Securities Division■ Shanghai Representative Office(Business Planning Division)
Room 1901, Shanghai International Trade
Centre, 2201 Yan An Road (West),
Shanghai 200335 P.R. of China
Phone: 86-21-6209-0258
Chief Representative
Katsunori Suzuki
Deputy Chief Representative
Kenji Kikuchi

7-2, Yaesu 2-chome, Chuo-ku,
Tokyo 104-0028, Japan
Phone: 03-3273-5245
General Manager
Shigeki Morita
Deputy General Manager
Osamu Midorikawa• Investment Group
Senior Manager
Masahide Takauchi• Business Promotion GroupManager
Hiroshi Iijima

43Service Network

Miyagi Pref. (1 Branch)
Mito (Head Office, International Business Office,International Operations Office)Ibaraki Pref. (Head Office, 119 Branches,
24 Sub-Branches)
Fukushima Pref. (10 Branches)
Tochigi Pref. (5 Branches, 1 Sub-Branch)

Overseas:
Shanghai Representative Office
As of March 31, 2007

Chiba Pref. (5 Branches)
Tokyo (Tokyo Business Div. (Tokyo Main Office), 3 Branches)
Treasury and Securities Div.
Markets and Business Administration Div.
Saitama Pref. (2 Branches)
Osaka Pref. (1 Branch)

Affiliated Companies■ The Joyo Computer Service Co., Ltd.

■ The Joyo Business Service Co., Ltd.

16-25, Nishihara 2-chome, Mito, Ibaraki
Established 1973, Capital Stock: ¥47.5 million
Share of Voting Rights: 5%

8-1, Sasano-machi 1-chome, Hitachinaka, Ibaraki
Established 1984, Capital Stock: ¥100 million
Share of Voting Rights: 100%

Sale of software and contract of calculation
businesses

Agent in charge of administrative work for the
Bank■ The Joyo Lease Co., Ltd.

■ The Joyo Staff Service Co., Ltd.

4-12, Minami-machi 3-chome, Mito, Ibaraki
Established 1974, Capital Stock: ¥100 million
Share of Voting Rights: 5%

4-12, Minami-machi 3-chome, Mito, Ibaraki
Established 1991, Capital Stock: ¥30 million
Share of Voting Rights: 100%

Leasing of machinery and equipment, claim
acquisition

Temporary staffing business for the Bank

■ The Joyo Credit Guarantee Co., Ltd.
4-12, Minami-machi 3-chome, Mito, Ibaraki
Established 1978, Capital Stock: ¥30 million
Share of Voting Rights: 5%

Credit guarantee of housing loans from theBank■ The Joyo Credit Co., Ltd.
4-12, Minami-machi 3-chome, Mito, Ibaraki
Established 1982, Capital Stock: ¥100 million
Share of Voting Rights: 5%

Credit card services
44■ The Joyo Industrial Research Institute,Ltd.
5-18, Sannomaru 1-chome, Mito, Ibaraki
Established 1995, Capital Stock: ¥100 million
Share of Voting Rights: 5%

Consulting, investigation and research■ The Joyo Equipment Management
Co., Ltd.
5-5, Minami-machi 2-chome, Mito, Ibaraki
Established 1999, Capital Stock: ¥100 million
Share of Voting Rights: 100%

Maintenance and management of operational properties and equipment of the Bank

■ The Joyo Cash Service Co., Ltd.
3-3, Jonan 1-chome, Mito, Ibaraki
Established 1999, Capital Stock: 50 million
Share of Voting Rights: 100%

Management and maintenance of ATMs andCDs

As of March 31, 2007

Corporate Data

Date of Establishment

July 30, 1935

Head Office5-5, Minami-machi 2-chome, Mito, Ibaraki 310-0021, Japan
Phone: 029-231-2151
URL: http://www.joyobank.co.jp/
http://www.joyobank.co.jp/joyobank/eng/ (English Page)

Domestic Network

Head Office, Tokyo Business Division (Tokyo Main Office), and
146 Branches, 25 Sub-branches

Overseas Network

1 Representative Office: Shanghai

Number of Employees

3,494

Stock Exchange Listing

Tokyo Stock Exchange

Paid-in Capital¥85,113 million

Number of Shares(as of March 31, 2007)

Authorized
2,167,515 thousand
Issued and Outstanding 837,231 thousand

Number of Shareholders(1 trading unit = 1,000 shares)

22,989Principal Shareholders

The 10 largest shareholders of the Bank and their respective
shareholdings at March 31, 2007 were as follows:
Number of Shares
Held(Thousands)

Percentage of Total
SharesOutstanding(%)

NIPPONKOA Insurance Company, Ltd. ..............................................
The Bank of Tokyo-Mitsubishi UFJ, Ltd. .............................................
Nippon Life Insurance Company .........................................................
Northern Trust Company (AVFC) Sub Account American Client ...........
Japan Trustee Services Bank, Ltd. (Trust Account) ..............................
The Dai-ichi Mutual Life Insurance Company .......................................
Sumitomo Life Insurance Company.....................................................
The Master Trust Bank of Japan, Ltd. (Trust Account) .........................
UBS Securities, LLC. Customer Segregated Account .........................
The Gunma Bank, Ltd. .......................................................................

40,97339,99228,00324,944
17,547
17,04916,44815,687
10,82910,465

4.89%
4.65
3.34
2.97
2.09
2.03
1.96
1.87
1.29
1.25

Total ............................................................................................

220,939

26.38%
As of March 31, 2007

For further information,please write to:Markets and Business
Administration Division,
The Joyo Bank, Ltd.
7-2, Yaesu 2-chome,
Chuo-ku, Tokyo
104-0028, Japan

45