The Awa Bank, Ltd

Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
Years Ended March 31, 2021 and 2022Consolidated Balance Sheets
The Awa Bank, Ltd. and its Consolidated Subsidiaries
As of March 31, 2021 and 2022

2021
AssetsCash and due from banks (Note 3 and 4)
Call loans and bills purchased (Notes 4)
Commercial paper and other debt purchased (Notes 4 and 5)
Trading account securities (Notes 4 and 5)
Securities (Notes 4, 5, 6 and 9)
Loans and bills discounted (Notes 4, 6, 7 and 8)
Foreign exchange (Note 6 and 7)
Lease receivables and investment assets (Notes 4 and 6)
Other assets (Notes 6, 9 and 12)
Tangible fixed assets (Notes 10 and 11)
Intangible fixed assets
Net defined benefit asset (Note 20)
Deferred tax assets (Note 17)
Customers' liabilities for acceptances and guarantees (Note 6 and 18)
Reserve for possible loan losses
Total assets
Liabilities
Deposits (Notes 4 and 9)
Negotiable certificates of deposit (Note 4)
Call money and bills sold (Note 4)
Payables under securities lending transactions (Note 4 and 9)
Borrowed money (Notes 4, 9 and 19)
Foreign exchange
Other liabilities (Note 19)
Accrued employees' bonuses
Accrued directors' bonuses
Net defined benefit liability (Note 20)
Accrued directors' retirement benefits
Accrued stock compensation program for directors
Reserve for reimbursement of deposits
Reserve for contingent liabilities
Deferred tax liabilities (Note 17)
Deferred tax liabilities for land revaluation account (Note 11)
Acceptances and guarantees (Note 18)
Total liabilities

\

\

\

Net Assets
Common stock
Authorized - 100,000,000 shares
Issued - 43,240,000 shares in 2022 and 2021
Capital surplus
Retained earnings
Treasury stock－ Issued 1,603,702 shares in 2022 and 1,305,640 shares in 2021
Total shareholders' equity
Net unrealized holding gains (losses) on securities (Note 5)
Net deferred gains (losses) on derivatives under hedge accounting
Land revaluation account (Note 11)
Remeasurements of defined benefit plans (Note 20)
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets\

Millions of yen
2022

632,773
19,5951,530
775
1,001,096
2,086,915
6,955
29,18747,86436,733
4,954
6,111
229
9,689
(18,337)
3,866,075\

3,089,980
128,841
11,07142,065236,99011
28,558
22
43
44
9
196
344
1,103
21,5032,704
9,689
3,573,180\\

690,236
18,3581,398
1,031,863
2,117,033
9,240
28,93548,70038,147
4,528
214
8,482
(19,414)
3,977,726$

3,167,043
133,504
12,85040,945
266,375
18
40,154
22
54
14
257
271
1,205
15,4272,691
8,482
3,689,322$$

5,639,643
149,995
11,4228,430,942
17,297,434
75,496
236,416
397,908
311,683
36,996
1,748
69,303(158,624)
32,500,416

25,876,648
1,090,808
104,992
334,545
2,176,444
147
328,082
179
441
114
2,099
2,214
9,845
126,047
21,98769,30330,143,982

23,452
20,106
176,045(3,529)23,452
20,106
185,469(4,100)191,616
164,278
1,515,393(33,499)

216,075
73,194(1,528)5,134
1876,819292,894
3,866,075

224,927
58,375(24)
5,126
63,476
288,404
3,977,726

1,837,789
476,958(196)
41,882518,637
2,356,434
32,500,416

See Notes to Consolidated Financial Statements.

1

Thousands of
U.S. dollars(Note 1)
2022

\

$

Consolidated Income Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

Thousands of
U.S. dollars(Note 1)
2022

Millions of yen
2021
2022
Income:Interest and dividend income:Interest on loans and discounts
Interest and dividends on securities
Other interest income
Trust fees
Fees and commissions
Other operating income
Other income (Note 14)
Total income\

Expenses:
Interest expense:
Interest on deposits and certificates of deposit
Interest on borrowings, rediscounts and bonds
Other interest expense
Fees and commissions
Other operating expenses
General and administrative expenses (Note 13)
Other expenses:
Provision for loan losses
Other expenses (Notes 15 and 20)
Total expenses
Income before income taxes
Income taxes (Note 17):
Current
Deferred
Net income
Net income attributable to owners of the parent company\

23,731
13,529247
2
8,169
15,797
4,117
65,596\23,782
14,205814
2
9,570
16,081
3,526
67,984

$

661
257
1,208
1,221
13,56928,060

450
133
1,042
1,265
14,81529,783

3,676
1,086
8,513
10,335
121,047
243,345

5,855
2,581
53,415

3,352
1,191
52,03327,387
9,731
425,140

12,181

15,950130,321

3,781
(98)
8,498
8,498

5,080
(242)
11,112
11,112

41,506(1,977)
90,79190,791\$

U.S. dollars(Note 1)2022

Per share of common stockYen
2021
Net income per share - basic
Dividends\

194,313116,063
6,650
16
78,192
131,391
28,809555,470202.64
40.00

2022
\

265.38
42.50

$

2.168
0.347

For the years ended March 31, 2021 and 2022, diluted net income per share of common stock was not disclosed because no dilutive
securities were outstanding.
See Notes to Consolidated Financial Statements.

2

Consolidated Statements of Comprehensive Income
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

Thousands of
U.S. dollars(Note 1)
2022

Millions of yen
2021
2022
Net income
Other comprehensive income:Net unrealized holding gains (losses) on securities
Net deferred gains (losses) on derivatives under hedge accounting
Remeasurements of defined benefit plans
Total other comprehensive income (Note 16)
Comprehensive income
Comprehensive income attributable to:
Owners of the parent company

\

8,498

\

11,112\

32,678950843
34,472
42,971\42,971

See Notes to Consolidated Financial Statements.

3$

90,791\(14,819)1,503(18)(13,334)(2,222)$(121,080)
12,280(147)(108,946)(18,155)\(2,222)$(18,155)

Consolidated Statements of Changes in Net Assets
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

Millions of yen
Stockholders' equity
Number of sharesof common stock
issuedBalance at March 31, 2020
Changes during the accounting period
Dividends
Net income attributable to owners of
the parent company
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation account
Changes other than changes instockholders' equity (net)Total changes during the accounting
periodBalance at March 31, 2021
Changes during the accounting period
Dividends
Net income attributable to owners of
the parent company
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation account
Changes other than changes instockholders' equity (net)Total changes during the accounting
periodBalance at March 31, 2022

43,240,000

Common stock

Capital surplus

Retained earnings

Treasury stock

\

\

\

\

23,452

20,106

169,299(2,892)

Total
shareholders'equity\209,966---(1,802)-(1,802)

-

-

-

8,498
49

(927)
290
-

8,498
(927)
290
49

-

-

-

-

-

-

43,240,000\

23,452

20,106\\

6,746
176,045\(636)(3,529)\6,109
216,075---(1,696)-(1,696)---

11,112
(0)
8

(960)
389
-

11,112
(960)
389
8

-

-

-

-

-

-

43,240,000\

23,452

20,106\\

9,424
185,469\(571)(4,100)\8,852
224,927

Millions of yen
Accumulated other comprehensive income
Net deferredgains (losses)
on derivatives
under hedge
accounting

Net unrealized
holding gains(losses) on
securities
Balance at March 31, 2020
Changes during the accounting period
Dividends
Net income attributable to owners of
the parent company
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation account
Changes other than changes instockholders' equity (net)Total changes during the accounting
periodBalance at March 31, 2021
Changes during the accounting period
Dividends
Net income attributable to owners of
the parent company
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation account
Changes other than changes instockholders' equity (net)Total changes during the accounting
periodBalance at March 31, 2022

\

\

\

40,516\(2,479)Landrevaluationaccount\

5,184

Remeasurementsof defined
benefit plans

Total
accumulated
othercomprehensive
income

\

\

(824)

42,396Total
net assets\

252,362

-

-

-

-

-

(1,802)

-

-

-

-

-

8,498
(927)
290
49

32,678

950

(49)

843

34,422

34,422

32,67873,194\950(1,528)

(49)
5,134

\

\

843
18

\

34,422
76,819\40,532292,894

-

-

-

-

-

(1,696)

-

-

-

-

-

11,112(960)
389
8(14,819)

1,503

(8)

(18)

(13,343)(13,343)(14,819)
58,375

\

1,503
(24)

(8)
5,126

\

\

See Notes to Consolidated Financial Statements.

4

(18)
-

\

(13,343)
63,476\(4,490)288,404

Consolidated Statements of Changes in Net Assets
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

Thousands of U.S. dollars (Note 1)
Stockholders' equity
Number of sharesof common stock
issuedBalance at April 1, 2021
Changes during the accounting period
Dividends
Net income attributable to owners of
the parent company
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation account
Changes other than changes instockholders' equity (net)Total changes during the accounting
periodBalance at March 31, 2022

43,240,000

Common stock

Capital surplus

Retained earnings

Treasury stock

$

$

$

$

191,616

164,278

1,438,393(28,834)

Total
shareholders'equity$1,765,462---(13,857)-(13,857)---

90,791(0)
65(7,843)
3,178-

90,791(7,843)
3,178
65

-

-

-

-

-

-

43,240,000$

191,616

164,278$$

76,9991,515,393$(4,665)(33,499)$

72,326
1,837,789

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income
Net deferredgains (losses)
on derivatives
under hedge
accounting

Net unrealized
holding gains(losses) on
securities
Balance at April 1, 2021
Changes during the accounting period
Dividends
Net income attributable to owners of
the parent company
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation account
Changes other than changes instockholders' equity (net)Total changes during the accounting
periodBalance at March 31, 2022$$

598,039$(12,484)Land
revaluationaccount$

41,947

Remeasurementsof defined
benefit plans

Total
accumulated
othercomprehensive
income$$147627,657

Total
net assets$

2,393,120

-

-

-

-

-

(13,857)

-

-

-

-

-

90,791(7,843)3,178
65(121,080)

12,280

(65)

(147)

(109,020)(109,020)(121,080)
476,958$

12,280(196)(65)
41,882$$

See Notes to Consolidated Financial Statements.

5

(147)
-

$

(109,020)
518,637$(36,686)
2,356,434

Consolidated Statements of Cash Flows
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

Thousands of
U.S. dollars(Note 1)
2022

Millions of yen
2021
Cash flows from operating activities:
Income before income taxes
Depreciation
Impairment loss
Increase (decrease) in reserve for possible loan losses
Net change in provision for contingent liabilities
Increase (decrease) in accrued employees' bonuses
Increase (decrease) in accrued directors' bonuses
Decrease (increase) in net defined benefit asset
Increase (decrease) in net defined benefit liability
Net change in reserve for retirement payments to directors
Net change in accrued stock compensation program for directors
Net change in reserve for claims on dormant accounts
Interest and dividend income
Interest expense
Securities losses (gains), net
Losses (gains) on investments in money held in trust, net
Foreign exchange losses (gains), net
Losses (gains) on disposal of tangible fixed assets, net
Net decrease (increase) in trading account securities
Net decrease (increase) in loans and bills discounted
Net increase (decrease) in deposits
Net increase (decrease) in certificates of deposit
Net increase (decrease) in borrowed money(except for subordinated borrowed money)
Net decrease (increase) in due from banks(except for deposits with the Bank of Japan)
Net decrease (increase) in call loans, bills purchased,
commercial paper and other debt purchased
Net increase (decrease) in call money
Net increase (decrease) in payables under securities lending transactions
Net decrease (increase) in foreign exchange (assets)
Net increase (decrease) in foreign exchange (liabilities)
Interest and dividends received
Interest paid
Other
Subtotal
Income taxes paid
Net cash provided by (used in) operating activities

\

2022

12,181
2,923
374
1,163
59
(0)
(10)
(105)
7
(0)
56
(83)
(37,509)
2,127(1,709)(7,375)32
141(124,053)
318,853(46,307)\

15,950
3,120
140
1,076
102
(0)
10
6,158
(119)
5
61
(72)
(38,801)
1,626
(699)
(0)
(20,233)
88775(30,118)
77,062
4,662$

130,321
25,492
1,143
8,791
833
(0)
81
50,314
(972)
40
498
(588)
(317,027)
13,285(5,711)(0)(165,315)
719
6,332(246,082)
629,642
38,091

183,379

29,385240,093

341

(84)

(686)

(17,827)(8,953)(16,405)
6,453(71)
38,247(2,351)
1,667
305,245(3,688)
301,556

1,367
1,779
(1,119)644
739,321(1,629)9,967
100,438(3,765)96,672

11,16914,535(9,142)
5,261
57
321,276(13,309)81,436820,638(30,762)
789,868

Cash flows from investing activities:
Payments for purchases of securities
Proceeds from sales of securities
Proceeds from maturities of securities
Payments for increases in money held in trust
Proceeds from decreases in money held in trust
Payments for purchases of tangible fixed assets
Payments for disposals of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchases of intangible fixed assets
Net cash provided by (used in) investing activities(170,572)
65,012
154,616(1,028)(26)
61(1,230)46,831(213,004)
75,087105,095(1,000)1,000(3,039)(87)
92(1,173)(37,030)(1,740,370)
613,506
858,689(8,170)8,170(24,830)(710)
751(9,584)(302,557)

Cash flows from financing activities:
Dividends paid
Payments for purchases of treasury stock
Proceeds from sales of treasury stock
Net cash provided by (used in) financing activities(1,802)(927)
290(2,438)(1,696)(960)
389(2,267)(13,857)(7,843)
3,178(18,522)

Foreign currency translation adjustments
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 3)

2345,951
285,275
631,227

4
57,378631,227
688,60532
468,8125,157,504
5,626,317\

See Notes to Consolidated Financial Statements.

6

\

$

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

1.

Basis of Presentation of Consolidated Financial Statements

The accompanying consolidated financial statements of The Awa Bank, Ltd. (the “Bank”) and its consolidated
subsidiaries have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments andExchange Law and the Japanese Banking Law, generally conform with the Japanese Uniform Rules for Bank Accounting
and the guidelines of Japanese regulatory authorities and are in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), which are different in certain respects from the application and disclosure
requirements of International Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English, with some
expanded descriptions, from the consolidated financial statements of the Bank prepared in accordance with Japanese
GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial
Instruments and Exchange Law. Some supplementary information included in the statutory Japanese language
consolidated financial statements, but not required for fair presentation, is not presented in the accompanying
consolidated financial statements.
As permitted by the Financial Instruments and Exchange Act of Japan, amounts of less than one million yen havebeen rounded down. As a result, the totals shown in the accompanying consolidated financial statements (both in yen
and U.S. dollars) do not necessarily agree with the sums of the individual amounts.
The translations of the Japanese yen amounts into U.S. dollar amounts are included solely for the convenience ofreaders outside Japan, using the prevailing exchange rate at March 31, 2022, which was \122.39 to U.S.$1.00. The
translations should not be construed as representations that the Japanese yen amounts have been, could have beenor could in the future be converted into U.S. dollars at this or any other rate of exchange.

7

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

2.

Significant Accounting Policies(1) Principles of consolidation
The consolidated financial statements for the years ended March 31, 2021 and 2022 include the accounts of the Bankand the following six subsidiaries:
The Awagin Guaranty Company Limited
The Awagin Card Company Limited
The Awagin Consulting Company Limited
The Awagin Connect Company Limited
The Awagin Lease Company Limited
The Awagin Growth Companies Investment Limited PartnershipAll significant intercompany balances, transactions and unrealized profits and losses included in assets and liabilities
have been eliminated. In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries,
including the portion attributable to noncontrolling shareholders, are evaluated using the fair value at the time the
Bank acquired control of the respective subsidiary.
The following subsidiary of the Bank was excluded from the scope of consolidation for the years ended March 31,
2021 and 2022 because the exclusion did not affect the reasonable interpretation of the financial condition andoperating results of the enterprise group in terms of assets and the Bank’s ownership percentage of net income,retained earnings or accumulated other comprehensive income.
The Awagin AFFrinnovation Investment Limited Partnership
The following subsidiary of the Bank was also not accounted for using the equity method for the years ended March
31, 2021 and 2022 because the exclusion did not have a material impact on the consolidated financial statements interms of the Bank’s ownership percentage of net income, retained earnings or accumulated other comprehensive
income.
The Awagin AFFrinnovation Investment Limited Partnership
The following three affiliates of the Bank were not accounted for using the equity method for the years ended March
31, 2021 and 2022 because the exclusion did not have a material impact on the consolidated financial statements interms of the Bank’s ownership percentage of net income, retained earnings or accumulated other comprehensive
income.
Shikoku Alliance Capital Company Limited
Shikoku Brand Company Limited
The Awagin Regional Revitalization Investment Limited Partnership

8Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

2.

Significant Accounting Policies (cont’d)(2) Securities
Held-to-maturity debt securities are stated at amortized cost. Equity securities of nonconsolidated subsidiaries andaffiliates which are not accounted for using the equity method are stated at moving average cost. Available-for-salesecurities are stated at fair market value. Unrealized gains and unrealized losses on these securities are reported, netof applicable income taxes, as a separate component of shareholders’ equity or net assets. Realized gains and losseson the sale of such securities are computed using moving average cost. Available-for-sale securities with no available
fair market values are stated at moving average cost.
(3) Depreciation method for fixed assets① Tangible fixed assets (except for leased assets)
Tangible fixed assets are generally stated at cost, less the accumulated depreciation. Depreciation of tangible fixed
assets owned by the Bank and its consolidated subsidiaries is recorded using the straight-line method. At March 31,
2021 and 2022, the estimated useful life for buildings and equipment was 19 to 50 years and 4 to 8 years, respectively.
② Intangible fixed assets
Depreciation for intangible fixed assets of the Bank and its consolidated subsidiaries is recorded using the straightline method. Internal use software costs of the Bank and its consolidated subsidiaries are depreciated using thestraight-line method over the estimated useful life of 5 years. Goodwill is expensed when incurred.
③ Leased assets
Leased assets are business equipment included in tangible fixed assets. Leased assets in tangible fixed assets
capitalized under finance leases that do not transfer ownership of the leased assets to the lessee are depreciated using
the straight-line method over the lease period. The residual value of a leased asset with a residual value guarantee
clause is the guaranteed amount. For a leased asset without such a clause, the residual value is zero.

9

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

2.

Significant Accounting Policies (cont’d)(4) Reserve for possible loan losses
The Bank writes off loans and makes provisions for possible loan losses based on the financial circumstances of theborrower and the status of the loan.
For loans to insolvent customers who are undergoing bankruptcy or other collection proceedings (“bankrupt
obligors”) or who are in a similar financial condition (“substantially bankrupt obligors”), the reserve for possible loan
losses for the portions of the loans that are neither secured nor guaranteed is provided in the full amount, excluding
write-off amounts and the portion that is estimated to be recoverable due to the existence of security interests orguarantees.
For loans to customers not presently in the above circumstances but who have a high probability of becoming
insolvent (“intensively controlled obligors”), the reserve for possible loan losses is provided at estimated future loss
amounts for the portions of the loans that are neither secured nor guaranteed in the amounts estimated to be
unrecoverable after an evaluation of the customer’s overall financial condition (“non-secured amount”). Estimatedfuture loss amounts are calculated using an estimated loss ratio obtained from an average of the actual default ratio
based on actual defaults for the past three years. The estimated loss ratio is set at a lower limit that the Bank deems
necessary.
For other loans, the reserve for possible loan losses is provided at estimated future loss amounts mainly for one
year or three years, which is calculated using an estimated loss ratio obtained from an average of the actual default
ratio based on actual defaults for the past one year or three years.
For “Capital subordinated loans (Special early business improvement type)” and “Loans with adequate capitalcharacteristics,” the reserve for possible loan losses is provided by the “method used to calculate the estimated loan
loss amount by deeming capital eligible loans with subordination characteristics to be unrecoverable,” in accordancewith “Auditing Treatment for Calculation of Estimated Loan Losses on Capital Eligible Loans and Accounting forConversion of Loans Held by Banks and Other Financial Institutions into Capital Eligible Loans” (The JapaneseInstitute of Certified Public Accountant (“JICPA”) Industry Committee Report No. 32, September 9, 2020).
In addition, of loans other than loans to bankrupt obligors, substantially bankrupt obligors and intensively controlled
obligors, for loans to customers in certain industries such as the “Hotel” and “Restaurant” industries on which
COVID-19 has had a significant effect and who meet certain conditions, estimated future loss amounts are calculated
as follows.
① For customers whose loan terms have not been amended, the estimated future loss is recorded at an amountcalculated by multiplying the loan amount by an expected loss ratio which takes into account the increase incredit risk expected to be incurred when the terms are amended.
② For customers whose loan terms have been amended, the estimated future loss is recorded at an amountcalculated by multiplying the non-secured amount by a certain loss ratio, in addition to the estimated future
loss amount based on the customer’s classification.
Assessments and classifications regarding possible loan losses are made by each business department and credit
supervision department and are audited by the independent Credit Administration Department. The reserve forpossible loan losses is provided based on the audit results. The consolidated subsidiaries write off loans and makeprovisions for possible loan losses based on their actual rate of loan losses in the past. However, unrecoverable
amounts of loans to customers who have a high probability of becoming bankrupt are estimated and a reserve forpossible loan losses is provided based on the estimation.
For the fiscal years ended March 31, 2021 and 2022, the Bank wrote off portions of loans that were estimated to
be unrecoverable from insolvent customers who were undergoing bankruptcy or other collection proceedings. The
estimated unrecoverable amounts were determined after excluding estimated recoverable amounts due to the existenceof security interests or guarantees. As of March 31, 2021 and 2022, the write-off of the estimated unrecoverable
amounts was \19,429 million and \18,610 million ($152,054 thousand), respectively.

10

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

2.

Significant Accounting Policies (cont’d)(5) Accrued employees’ bonuses
Accrued employees’ bonuses were recorded to pay bonuses to employees of the consolidated subsidiaries for the
fiscal years ended March 31, 2021 and 2022.
(6) Accrued directors’ bonuses
Accrued directors’ bonuses were recorded to provide for the payment of bonuses to directors in an estimated payment
amount attributable to the current period.
(7) Accrued directors’ retirement benefits
A provision is made for accrued retirement benefits of directors and corporate auditors of the consolidated subsidiaries
in the amount deemed accrued at the end of the reporting period.
(8) Accrued stock compensation program for directors
A provision is made for the accrued stock compensation program for directors, etc., based on the internal regulations
for the distribution of shares to directors in the amount deemed accrued at the end of the reporting period.
(9) Reserve for reimbursement of deposits
A provision is made in an amount deemed necessary for losses on future reimbursements of deposits, taking into
account the Bank’s estimated refund amount.
(10) Reserve for contingent liabilities
A provision is made in an estimated amount for future payments to credit guarantee associations on loan-loss burden
sharing.
(11) Accounting for retirement benefits
The Bank and its consolidated subsidiaries provide risk sharing pension plans and defined contribution pension plans.
The amount of required contribution was recorded as expense.
(12) Translation of foreign currencies
Foreign currency denominated assets and liabilities held by the Bank at the year end are translated into Japanese yenat the exchange rates prevailing at the end of the fiscal year.

11Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

2.

Significant Accounting Policies (cont’d)(13) Recognition of revenue and expense① Recognition of revenue and expense from finance lease transactions
Income and expenses related to finance lease transactions are recognized when lease payments are received.
② Recognition of revenue from transactions with customers
The Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (“ASBJ”) Statement No. 29,
March 31, 2020) and the Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ Guidance
No. 30, March 26, 2021) have been adopted, and revenues are recognized at the time of the transfer of promised
goods or services to customers in an amount to which the Bank expects to be entitled in exchange for those goods orservices.
The Bank and its consolidated subsidiaries recognize revenues by applying the following 5 steps:
Step 1: Identify the contract with the customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
Revenue from transactions with customers of the Bank and its consolidated subsidiaries relates mainly to transaction
services for which revenue is recognized at the time the services are provided to customers. This revenue include
fees and commissions for exchange services, funding transaction services, securities related services, agency services,and other banking services.
(14) Derivatives and hedge accounting
Derivative financial instruments are carried at market value.
① Hedging against interest rate risk
In order to hedge against the interest rate risk associated with various financial assets and liabilities, the Bank applies
the deferred hedge method stipulated in Accounting and Auditing Treatment of Accounting Standards for Financial
Instruments in Banking Industry (JICPA Industry Committee Report No. 24, March 17, 2022; hereinafter, the“Industry Committee Report No. 24”).
The effectiveness of hedging is assessed for each identified group of hedged deposits, loans and similar items andthe corresponding group of hedging instruments, such as interest rate swaps, in the same maturity bucket. In assessing
the effectiveness of cash flow hedges, the correlation between the interest rate sensitivities of the hedged items andthe hedging instruments is examined.
The Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR (Practical Issues Task Force(“PITF”) No. 40, March 17, 2022) is applied to these hedging relationships.
② Hedging against foreign currency risk
The Bank applies the deferred method of hedge accounting to hedge against foreign exchange risks associated withvarious foreign currency denominated monetary assets and liabilities as stipulated in Accounting and Auditing
Concerning Accounting for Foreign Currency Transactions in the Banking Industry (JICPA Industry Committee Report
No. 25, October 8, 2020; hereinafter, the “Industry Committee Report No. 25”). Assessment of the effectiveness ofthese hedge transactions is conducted by confirming whether the notional amounts of the hedging foreign exchange
swaps, etc., correspond to the hedged foreign currency denominated receivables or payables.
(15) Cash flow statements
In preparing consolidated statements of cash flows, cash on hand and deposits with the Bank of Japan are considered
to be cash and cash equivalents.

12Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

2.

Significant Accounting Policies (cont’d)(16) Income taxes
The tax effects of loss carryforwards and the temporary differences between the carrying amounts of assets andliabilities for tax and financial reporting are recognized. The asset-liability approach is used to recognize deferred tax
assets and liabilities for the expected future tax consequences of temporary differences between the carrying amountsof assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
(17) Per share data
Net income per share is based on the weighted average number of shares of common stock outstanding during theyear, excluding treasury stock.
Cash dividends per share shown in the accompanying consolidated statements of income represent dividends
declared as applicable to the respective year.
The Bank’s own shares held by the Directors Compensation BIP Trust and the Awagin Group Employee
Shareholding Association Dedicated Trust are recorded as treasury stock in the net assets section and are deductedfrom the weighted average number of shares outstanding during the year for the purpose of calculating net income pershare.
(18) Significant accounting estimates
Items for which the amount has been recorded in the consolidated financial statements for the year ended March 31,
2022 based on accounting estimates that may affect the consolidated financial statements for the year ending March
31, 2023 are as follows:
Reserve for possible loan losses① The amount of reserve for possible loan losses recorded in the consolidated financial statements for the years
ended March 31, 2021 and 2022 were \18,337 million and \19,414 million ($158,624 thousand), respectively.
② Information that contributes to understanding significant accounting estimates for certain identified items(i) Calculation method
The calculation method of reserve for possible loan losses is described in Note 2. (4), “Significant Accounting
Policies- Reserve for possible loan losses.”(ii) Major assumptions
Major assumptions include the “Customers’ future financial outlook,” determined by individually evaluating eachcustomer's ability to earn profits. On the whole, effects of COVID-19 on the economy are expected to be the sameor slightly less than the previous year for the fiscal year ending March 31, 2023. However, the effects are still
expected to be significant in certain industries such as the “Hotel” and “Restaurant” industries. Reserve for possible
loan losses for loans to customers in such industries is calculated on the assumption that these customers will havehigher credit risk. The amount of additional reserve for possible loan losses was \785 million ($6,413 thousand) as
of March 31, 2022.
(iii) Effects on consolidated financial statements for the year ending March 31, 2023
If changes in a customer's business performance or the effects of COVID-19 on the economy is significantly different
from the projections made with assumptions used in the estimates as of March 31, 2022, there may be significant
effects on the reserve for possible loan losses in the consolidated financial statements for the year ending March 31,
2023.

13

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

2.

Significant Accounting Policies (cont’d)(19) Changes in accounting standards
Adoption of Accounting Standards for Revenue Recognition
The Bank adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020;
hereinafter, “Statement No. 29”) and related guidance from the beginning of the year ended March 31, 2022. With
the new standard, revenue is recognized at the time of the transfer of promised goods or services to the customer inan amount to which the Bank expects to be entitled in exchange for those goods or services. The application of thisstandard had no effect on the consolidated financial statements.
In accordance with the transitional treatment stipulated in Paragraph 89-3 of Statement No. 29, notes to “Revenue
Recognition” for the fiscal year ended March 31, 2021 were not provided.
Adoption of Accounting Standards for Fair Value Measurement
The Bank adopted the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019;
hereinafter, “Statement No. 30”) and the related guidance from the beginning of the year ended March 31, 2022. In
accordance with Paragraph 19 of Statement No. 30 and the transitional treatment stipulated in Paragraph 44-2 of the
Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019), the Bank has decided to apply
the new accounting policies stipulated by Statement No. 30 and the related guidance prospectively. As a result, thefair value of available-for-sale securities with available fair market values at the end of the fiscal year was changed
from a value based on the average for the last month of the fiscal year to a value based on the market value at theend of the fiscal year.
The fair value of financial instruments and their classification by the level of inputs used in the determination of fairvalue are disclosed in Note 4, “Financial Instruments.” However, notes for the fiscal year ended March 31, 2021 were
not provided in accordance with the transitional treatment stipulated in Paragraph 7-4 of the Implementation Guidanceon Disclosures about Fair Value of Financial Instruments (ASBJ Guidance No. 19, July 4, 2019).
(20) Unadopted accounting standards
The following standard and guidance were issued but not yet adopted.
- Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31, June 17,2021)① Overview
The treatment of the fair value measurement of investment trusts, the notes to the fair value of investment trusts andthe notes to the fair value of investments in partnerships in which the amount equivalent to equity is recorded in the
net amount on the balance sheet have been stipulated.
② Effective date
The guidance shall be effective from the beginning of the fiscal year ending March 31, 2023.
③ Effects of application
The Bank and its consolidated subsidiaries are in the process of determining the effects of the new guidance on the
consolidated financial statements.

14

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

2.

Significant Accounting Policies (cont’d)(21) Additional information
Executive Compensation BIP (Board Incentive Plan) Trust
The Bank introduced a performance linked stock compensation program using a scheme referred to as the “Executive
Compensation BIP (Board Incentive Plan) Trust” (the “BIP”) for directors of the Bank (excluding members of the
Audit and Supervisory Committee and outside directors) and executive officers (together the “Directors, etc.”) to
motivate them to contribute to the improvement of the Bank’s mid- to long-term business performance and its
corporate value.
① Overview of the transaction
Based on internal regulations for the distribution of shares, the Bank’s shares and the cash equivalent of the market
value of the Bank’s shares will be delivered and paid to the Directors, etc., according to points granted based on
business performance and the individual’s position among Directors, etc., at the time of retirement.
② The remaining balance of the Bank’s own stock in the trusts(i) The Bank records the remaining balance of the Bank’s own stock in the BIP as treasury stock in the section of
net assets(ii) The carrying amount and the number of shares of such treasury stock as of March 31, 2021 and 2022 were \732
million and \704 million ($5,752 thousand) and 210 thousand shares and 202 thousand shares, respectively.
Trust-Based Employee Shareholding Incentive Plan
The Bank introduced a trust-based employee shareholding incentive plan designed for the employees of the Groupand to provide incentives for improving the Bank’s medium- to long-term corporate value and to support asset
building by encouraging employees to acquire and hold shares through the expansion of the employee shareholding
association as a measure of enhancing employee welfare and benefits.

15

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

2.

Significant Accounting Policies (cont’d)① Overview of the transaction
The Bank established the Awagin Group Employee Shareholding Association Dedicated Trust (the “Trust”) in thetrust bank. The Trust acquires in advance a certain number of the Bank’s shares that are expected to be acquiredby the Awagin Group Employee Shareholding Association (the “Shareholding Association”) for three years after theestablishment. Until the termination of the Trust, the shares will be continually sold to the Shareholding Association.
If a significant amount of realized gains on sale of shares remain within the Trust upon its termination, these gains will
be distributed as residual assets to the Shareholding Association members who satisfy the eligibility requirements forbeneficiaries. Moreover, the Bank provides guarantees for the loans undertaken to acquire its shares. Therefore, if
there is a residual loan balance equivalent to a realized loss on the sale of these shares within the Trust upon its
termination due to a decline in the Bank’s stock price, the Bank shall repay this residual loan balance based on theguarantee agreement.
② The remaining balance of the Bank’s own stock in the trusts(i) The Bank records the remaining balance of the Bank’s own stock in the trusts as treasury stock in the sectionof net assets(ii) The carrying amount and the number of shares of such treasury stock as of March 31, 2021 and 2022 were \647
million and \286 million ($2,336 thousand) and 259 thousand shares and 114 thousand shares, respectively.
③ Carrying amounts of debt recorded through the application of the gross price method
The carrying amounts of debt recorded through the application of the gross price method as of March 31, 2021 and2022 were ¥651 million and ¥337 million ($2,753 thousand), respectively.
Retirement Benefit Plan
On April 1, 2021, the Group transferred its defined benefit pension plan to a risk sharing pension plan, which isclassified as a defined contribution plan pursuant to Paragraph 4 of the Accounting Standard for Retirement Benefits(ASBJ Statement No. 26, December 16, 2016). Regarding the accounting treatment associated with the transition, thePractical Solution on Accounting for Risk Sharing Pension Plan (PITF No. 33, December 16, 2016), Accounting forTransfer Between Retirement Benefit Plans (ASBJ Guidance No. 1, December 16, 2016) and Practical Solution on
Accounting for Transfer Between Retirement Benefit Plans (PITF No. 2, February 7, 2007) are applied. As a result,a gain on the termination of the retirement benefit plan of \44 million ($359 thousand) was recorded in other income
for the fiscal year ended March 31, 2022.
In addition, the retirement benefit trust established by the Bank has been cancelled.

3. Cash and Cash Equivalents
A reconciliation between “Cash and due from banks” in the consolidated balance sheets and “Cash and cash
equivalents at end of year” in the consolidated statements of cash flows at March 31, 2021 and 2022 is as follows:
Thousands ofMillions of yen
2021
Cash and due from banks ------------- \Due from banks, excluding deposits with
the Bank of Japan ------------------Cash and cash equivalents ------------ \U.S. dollars
2022

2022

632,773\690,236$

5,639,643(1,546)631,227\(1,631)
688,605$(13,326)
5,626,317

16

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

4.

Financial Instruments（１） Overview of financial instruments① Policy on financial instruments
The Bank and its consolidated subsidiaries (the “Group”) provide mainly banking services and other financial services,
including leasing. The Group holds financial assets such as loans and securities raised by deposits. In order toeffectively manage its assets and liabilities, the Bank works on asset and liability management (ALM) and conducts
derivative transactions as part of this ALM.
② Descriptions and risks of financial instruments
The financial assets of the Bank consist mainly of loans to domestic customers. They are subject to credit risk arisingfrom changes in the domestic economy and the financial status of the borrowers. The Group reduces its total credit
risk by holding a well-diversified portfolio of loans and not concentrating it lending with certain customers.
Also the Bank holds securities that consist mainly of stocks, bonds and mutual funds for investment and trading
purposes. They are subject to credit risk, interest rate risk and market price risk. The Group's portfolio consists
mainly of government bonds and municipal bonds, which are low risk.
The financial liabilities of the Bank consist mainly of the deposits of domestic customers, which create liquidity risk
in connection with the raising of necessary funds in case of unexpected withdrawal. To manage this risk, the Group
tries to maintain and improve the soundness and reliability of its assets and ensure stable cash management.
Derivative transactions include interest rate swaps, currency swaps, forward foreign exchange contracts, currency
options and bond futures contracts. The Bank engages in derivative transactions principally to stabilize its earnings
by hedging the risk of future fluctuations in interest rates，market prices and exchange rates related to assets andliabilities. These transactions are also executed in order to provide various services to customers.
For interest rate risk, the Bank applies hedge accounting based on “Industry Committee Report No. 24.” The Bank
assesses the effectiveness of hedges in offsetting movement in the fair value from changes in interest rates byclassifying hedged items such as deposits and loans and hedging instruments such as interest rate swaps by incidence
and remaining period. For cash flow hedges, the Bank assesses the effectiveness by verifying the correlation of theinterest rate fluctuation between the hedged items and the hedging instruments.
For exchange rate risk, the Bank applies hedge accounting based on “Industry Committee Report No. 25.” The
Bank uses currency swaps and other methods to hedge exchange rate risk and evaluates the effectiveness of thehedges by confirming that a foreign currency hedge position exists in an amount equivalent to the foreign currency
denominated monetary assets or liabilities being hedged.
Derivative transactions are subject to market risk and credit risk, but the Bank does not engage in complicated or
speculative transactions.
③ Risk management systems for financial products
The Bank and its consolidated subsidiaries manage risk as follows:17

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

4.

Financial Instruments (cont’d)(i) Credit risk management
The Bank prescribes “Credit Risk Management Standards” and carries out its credit risk management by division,
maintains an appropriate portfolio and seeks to improve on the soundness of its assets. In addition, the Bank reviews
the system for credit risk management periodically and works to improve it.
The Credit Division functions independently from the Business Promotion Division to maintain and improve thesoundness of assets. The Risk Management Division verifies credit ratings, conducts self assessments, administers thecredit portfolio and exerts influence on the system of internal checks to branches and the Credit Division while trying
to further enhance the credit rating and self-assessment.
(ii) Market risk management(Management for interest rate risks, market price risks and foreign exchange risks)
The Bank has set its market risk policy “to take adequate market risk within the Bank’s management vitality, assessmarket risk accurately and execute policy and controls that corresponds to that vitality and the scale andcharacteristics of the business to earn a profit.” In this way, the Bank enhances its system of management andoptimizes its market risk management.
The Trading Division of the Bank, in addition to maintaining the Trade Execution Section (front office), maintains
the Market Risk Management Section (middle office) and the Administrative Processing Section (back office) to confirm
and monitor the transactions of the Trade Execution Section, sets the tolerance levels for risk, measures profit andloss on market risks. The middle office reports these risks to the Board of Directors regularly.
The Risk Management Division, which is independent from the divisions above, monitors risk and profit and loss
and reports the information to the ALM Committee regularly. The Group strives to improve risk management, in part,by discussing future measures. The Bank uses the VaR (Value at Risk) method for calculations of interest rate risk,
foreign exchange risk and market price risk. For interest rate risk denominated in Japanese yen, the Bank analyzes
the gaps in risk, including the deposits and loans of the entire Bank, and uses the BPV (Basis Point Value) method
and present value method for detailed management.

18

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

4.

Financial Instruments (cont’d)(Quantitative information on market risk)
The Bank measures market risk based on the VaR method. The variance-covariance model is applied in themeasurement (holding period: 60 business days (cross-shareholdings: 120 business days), confidence interval: 99% andhistorical observation period: 250 business days). The amount of market risk (estimated amount of loss) of the Groupas of March 31, 2021 and 2022 was \72,216 million and \71,980 million ($588,119 thousand), respectively.
The Bank identifies the interest rate risk sorted by an internal model for liquid deposits which have had no incomingor outgoing movement to or from the Bank for a considerable period of time as core deposits and categorizing theseusing maturity periods of up to 10 years.
The Bank periodically performs back-testing to compare VaR measured by the model with the hypothetical profit
and loss which are assumed to have been incurred when the portfolio was fixed, as it was at the point the risk amount
was measured. The bank believes that the model estimates market risk with sufficient accuracy. As VaR represents
the market risk arising with a certain probability using a statistical methodology based on historical market volatilities,
however, risks arising from drastic market movements beyond normal estimation may not be captured by this method.
(iii) Liquidity risk management related to fund procurement
The Bank maintains the soundness and reliability of its assets and makes daily analysis of fund procurement and asset
management for the stable supply of funds and maintains a sound level of highly negotiable debt securities, such as
government bonds. In addition, the Bank sets risk management policies and organizes liquidity risk management tomaximize its assurance.
④ Supplementary explanation for the fair value of financial instruments
Since certain assumptions are used in the calculation of the fair value of financial instruments, the results of thecalculations may vary if different assumptions are used.

19

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

4.

Financial Instruments (cont’d)(2) Fair value of financial instruments
The following table summarizes book values, fair values and any differences between the book value and fair value asof March 31, 2021 and 2022. Stocks with no available fair market values and investments in partnerships were excluded
from the table (see Note 1). Notes to “Cash and due from banks,” “Call loans and bills purchased,” “Foreign exchange(assets and liabilities),” “Call money and bills sold” and “Payables under securities lending transactions” have been
omitted since their book values approximate the fair value because of their short maturities.

(1) Commercial paper and other debt
purchased(2) Trading account securities
Trading securities(3) Securities
Held-to-maturity debt securities
Available-for-sale securities(4) Loans and bills discounted
Reserve for possible loan losses (*1)(5) Lease receivables and investment assets
Reserve for lease losses (*1)(*2)
Total assets:(1) Deposits(2) Negotiable certificates of deposit(3) Borrowed money
Total liabilities:
Derivative transactions (*3)
Hedge accounting not applied
Hedge accounting applied (*4)
Total derivative transactions:

Millions of yen
2021
Book value
Fair value

Difference

\

\

1,530

\

1,530

-

775

775

-

988,305
2,086,915(17,446)
2,069,469
29,187(744)
28,442\ 3,088,524\ 3,089,980
128,841
236,990\ 3,455,812

988,305-

2,072,194

2,724

30,423\3,093,229\3,090,133
128,844236,981\3,455,960

\

\

\

(2,141)(5,140)(7,282)\(2,141)(5,140)(7,282)

\
\

\
\
\

1,980
4,705
152
2
(8)
147
-

(*1) “General and specific reserves for loan losses related to loans and bills discounted” and “General and specific reserves forloan losses related to lease receivables and investment assets” are excluded.
(*2) The book value after deduction for uncollectible receivables of lease receivables and investment assets for which the fair value
was calculated was \24,065 million.
(*3) Derivative transactions recorded in other assets and liabilities are presented as a lump sum.
Net claims and debts that arise from derivative transactions are presented on a net basis, and net liabilities are presented inparentheses.
(*4) Deferred hedging is applied mainly to interest rate swaps and other designated as hedging instruments in offsetting movementin the fair value from changes in interest rates. The “Treatment of Hedge Accounting for Financial Instruments that Reference
LIBOR” (PITF No. 40, September 29, 2020) is applied to these hedging relationships.

20

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

4.

Financial Instruments (cont’d)(1) Commercial paper and other debt
purchased(2) Trading account securities
Trading securities(3) Securities
Held-to-maturity debt securities
Available-for-sale securities(4) Loans and bills discounted
Reserve for possible loan losses (*1)(5) Lease receivables and investment assets
Reserve for lease losses (*1)
Total assets:(1) Deposits(2) Negotiable certificates of deposit(3) Borrowed money
Total liabilities:
Derivative transactions (*2)
Hedge accounting not applied

Hedge accounting applied (*3)

Millions of yen
2022
Book value
Fair value

Difference

Thousands of U.S. dollars
2022
Book value
Fair value
Difference

\

\

$

1,398

\

1,398

-

11,422$

11,422

$

-

-

-

-

-

-

-

1,015,286
2,117,033(18,518)
2,098,514
28,935(802)
28,132\ 3,143,332\ 3,167,043
133,504
266,375\ 3,566,923

1,015,286-

8,295,497-

2,106,060

7,545

17,207,778

61,64730,087\3,152,833\3,167,174
133,506
266,353\3,567,034

8,295,497
17,297,434(151,303)
17,146,123
236,416(6,552)229,855$25,682,915$25,876,648
1,090,808
2,176,444$29,143,908

245,828$25,760,544$25,877,718
1,090,824
2,176,264$29,144,815

$

\

\

$

$

$

(5,071)(8,234)(5,071)(8,234)

\
\

\
\

1,955
9,500
131
1
(22)
111
-

(41,433)(67,276)(41,433)(67,276)$$

15,97377,620
1,070
8
(179)
906
-

Total derivative transactions:\ (13,306) \ (13,306) \$ (108,718) $ (108,718) $(*1) “General and specific reserves for loan losses related to loans and bills discounted” and “General and specific reserves forloan losses related to lease receivables and investment assets” are excluded.
(*2) Derivative transactions recorded in other assets and liabilities are presented as a lump sum.
Net claims and debts that arise from derivative transactions are presented on a net basis, and net liabilities are presented inparentheses.
(*3) Deferred hedging is applied mainly to interest rate swaps and other designated as hedging instruments in offsetting movementin the fair value from changes in interest rates. The “Treatment of Hedge Accounting for Financial Instruments that Reference
LIBOR” (PITF No. 40, March 17, 2022) is applied to these hedging relationships.

(Note 1) Stocks with no available fair market value and investments in partnerships were not included in Availablefor-sale securities in “(2) Fair value of financial instruments” above. These financial instruments were as follows:Book value
Millions of yen
Millions of yen
Thousands of U.S. dollars
2021
2022
2022
Unlisted stocks (*1)(*2) \7,135 \
7,601 $
62,104
Investments inpartnerships (*3)\
5,655 \
8,975 $
73,331(*1) Unlisted stocks are not included in the disclosure of fair value in accordance with Paragraph 5 of the Implementation Guidanceon Disclosures about Fair Value of Financial Instruments (ASBJ Guidance No. 19, March 31, 2020).
(*2) The amount of unlisted stocks impaired during the years ended March 31, 2021 and 2022 was \4 million and \72 million ($588
thousand), respectively.
(*3) Investments in partnerships are not included in the disclosure of fair value in accordance with Paragraph 27 of the
Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31, July 4, 2019).

21

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

4.

Financial Instruments (cont’d)(Note 2) Expected collection of monetary claims and securities with maturities:

Within 1
year¥592,714
19,595

1-3
years
\
-

Millions of yen
2021
3-5
5-7
years
years
\
\
-

7-10
years
\
-

Over 10years\-

Due from banks
Call loans and bills purchased
Commercial paper and other debt
purchased
1,528
Securities
Held-to-maturity debt securities
Japanese government bonds
Municipal bonds
Short-term corporate bonds
Corporate bonds
OthersAvailable-for-sale securities with
91,207183,270
146,841
81,51882,291
124,698
maturities
Japanese government bonds
38,50059,30023,7008,700
8,000
43,800
Municipal bonds
18,62635,87736,17230,212
21,603
19,714
Short-term corporate bonds
Corporate bonds
11,70731,73318,06815,451
16,63456,987
Others
22,37356,36068,90027,15536,053
4,196
Loans and bills discounted (*1)
416,293
392,163
318,885
238,897
264,855
397,146
Lease receivables and investment
assets (*2)
8,162
12,145
6,348
1,345
527
142
Total
\1,129,501¥587,579¥472,075¥321,761¥347,675¥521,987(*1) Loans and bills discounted on which full repayment is not expected from debtors such as bankrupt obligors,
substantially bankrupt obligors and intensively controlled obligors in the amount of \39,024 million and those
without terms in the amount of \19,648 million are not included.
(*2) Lease receivables and investment assets on which full repayment is not expected from debtors such as bankrupt
obligors, substantially bankrupt obligors and intensively controlled obligors in the amount of \515 million are notincluded. There are no monetary claims or securities without maturities.

22

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

4.

Financial Instruments (cont’d)Due from banks
Call loans and bills purchased
Commercial paper and other debt
purchased
Securities
Held-to-maturity debt securities
Japanese government bonds
Municipal bonds
Short-term corporate bonds
Corporate bonds
OthersAvailable-for-sale securities withmaturities
Japanese government bonds
Municipal bonds
Short-term corporate bonds
Corporate bonds
OthersLoans and bills discounted (*1)
Lease receivables and investment
assets (*2)
TotalMillions of yen
2022
3-5
5-7
years
years
\
\
-

Within 1
year¥649,826
18,358

1-3
years
\
-

1,397

-

-

-

-

-

-

-

7-10
years
\
-

Over 10
years
\
-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

101,450

182,374

112,778

82,89489,426

170,101

33,10019,047
19,45429,848422,640

41,60037,931
25,69877,144
398,914

4,000
37,14820,80750,821331,998

12,00024,23813,21033,445242,5128,000
19,93322,32339,169264,249

71,30026,69067,733
4,376
394,169

8,318¥1,201,993

11,914¥593,203

6,313¥451,090

1,238¥326,645

457¥354,132107¥564,378

23

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

4.

Financial Instruments (cont’d)Within 1
year$5,309,469
149,995

Thousands of U.S. dollars
2022
1-3
3-5
5-7
years
years
years
$
$
$
-

7-10
years

Over 10years$-

Due from banks$
Call loans and bills purchased
Commercial paper and other debt
purchased
11,414
Securities
Held-to-maturity debt securities
Japanese government bonds
Municipal bonds
Short-term corporate bonds
Corporate bonds
OthersAvailable-for-sale securities with
828,907
1,490,105
921,464
677,293730,664
1,389,827
maturities
Japanese government bonds
270,446
339,897
32,682
98,04765,364
582,563
Municipal bonds
155,625
309,919
303,521
198,039
162,864
218,073
Short-term corporate bonds
Corporate bonds
158,950
209,968
170,005
107,933
182,392
553,419
Others
243,876
630,312415,238
273,265
320,034
35,754Loans and bills discounted (*1)
3,453,223
3,259,367
2,712,623
1,981,469
2,159,073
3,220,598
Lease receivables and investment
assets (*2)
67,963
97,344
51,581
10,115
3,733
874
Total
$9,821,006 $4,846,825 $3,685,676 $2,668,886 $2,893,471 $4,611,308(*1) Loans and bills discounted on which full repayment is not expected from debtors such as bankrupt obligors,
substantially bankrupt obligors and intensively controlled obligors in the amount of \42,985 million ($351,213
thousand) and those without terms in the amount of \19,562 million ($159,833 thousand) are not included.
(*2) Lease receivables and investment assets on which full repayment is not expected from debtors such as bankrupt
obligors, substantially bankrupt obligors and intensively controlled obligors in the amount of \585 million ($4,779
thousand) are not included. There are no monetary claims or securities without maturities.

24

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

4.

Financial Instruments (cont’d)(Note 3) Amount payable for borrowed money and other interest-bearing liabilities:

Deposits (*)
Negotiable certificates ofdepositCall money and bills soldPayables under securities
lending transactions
Borrowed money
Total

Deposits (*)
Negotiable certificates ofdepositCall money and bills soldPayables under securities
lending transactions
Borrowed money
Total

Millions of yen
2021
3-5
5-7
years
years
\ 11,286\
531

Within 1
year\ 2,938,949

1-3
years
\ 137,827

7-10
years
\ 1,385

Over 10years\-

128,341
11,071

500
-

-

-

-

-

42,065
187,042\ 3,307,469

47,835\ 186,163

2,112\ 13,399

531\ 1,385\-

Millions of yen
2022
3-5
5-7
years
years
\ 19,116\
623

Within 1
year\ 3,000,610

1-3
years
\ 145,207

7-10
years
\ 1,485

Over 10years\-

133,504
12,850

-

-

-

-

-

40,945
243,871\ 3,431,782

20,518\ 165,725

1,864\ 20,980

72
695

50
\ 1,535\-

Thousands of U.S. dollars
2022
1-3
3-5
5-7
years
years
years
$1,186,428$ 156,189$ 5,090

Within 1
year$24,516,790

7-10
years
$ 12,133

Over 10years$-

Deposits (*)
Negotiable certificates ofdeposit
1,090,808
Call money and bills sold
104,992
Payables under securities
lending transactions
334,545
Borrowed money
1,992,572
167,644
Total$28,039,725$1,354,073(*) Demand deposits are included in “Within 1 year.”

25

\

\

-

-

-

-

15,230$ 171,419

588$ 5,678408$ 12,541-$

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

4.

Financial Instruments (cont’d)(3) Fair value of financial instruments and classification by level of inputs
Based on the observability and the significance of the inputs used to determine fair values, the fair value of financial
instruments is presented by categorizing measurements into the following three levels:
Level 1 : fair value measured by quoted prices of identical assets or liabilities in active markets.
Level 2 : fair value measured using observable inputs other than Level 1.
Level 3 : fair value measured using unobservable inputs.
When multiple inputs from different levels were used in measuring fair value, the Bank and its subsidiaries classified
the fair values into the level from which the lowest level of inputs were used.

① Financial instruments measured at fair value in the consolidated balance sheet
Millions of yen
2022
Level 2
Level 3

Level 1
Commercial paper and otherdebt purchased\

Securities
Available-for-sale securities
Japanese government bonds
and municipal bonds
Corporate bonds
Equity securities

-

\

-

\

Total

201

\

201

173,782
127,504

167,769
154,196-

18,912-

341,552
173,109
127,504

55,097

175,077-

230,174

Interest rate related

-

1,727

-

1,727

Currency related

-

6,082

-

6,082

Others (*1)
Derivative transactions (*2):

Total assets\

356,384\

504,853\

19,114\880,351

\

-

\

1,859

\

-

\

1,859

Derivative transactions (*2):
Interest rate related
Currency related
Total liabilities\-

19,256\26

21,116\-

19,256\21,116

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

4.

Financial Instruments (cont’d)Thousands of U.S. dollars
2022
Level 2
Level 3

Level 1
Commercial paper and otherdebt purchased$

Securities
Available-for-sale securities
Japanese government bonds
and municipal bonds
Corporate bonds
Equity securities

-

$

-

$

Total

1,642

$

1,642

1,419,903
1,041,784

1,370,773
1,259,874-

154,522-2,790,685
1,414,404
1,041,784

450,175

1,430,484-

1,880,660

Interest rate related-

14,110-

14,110Currency related-

49,693-49,693$ 2,911,871$ 4,124,953$

156,172$ 7,192,997

$

$

$

-

Others (*1)
Derivative transactions (*2):

Total assets
Derivative transactions (*2):
Interest rate related
Currency related-

15,189157,333

Total liabilities-$

15,189157,333$$
172,530$$
172,530(*1) Investment trusts to which the transitional treatment stipulated in Paragraph 26 of the Implementation Guidanceon Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31, July 4, 2019) was applied were
excluded from the above table. The amount of such investment trusts, etc., in the consolidated balance sheet
was \142,945 million ($1,167,946 thousand).
(*2) Derivative transactions are interest rate swaps designated as hedging instruments in offsetting market fluctuationsof loans and bills discounted, etc., and deferred hedging is mainly applied. The Treatment of Hedge Accounting
for Financial Instruments that Reference LIBOR (PITF No. 40, March 17, 2022) is applied to these hedging
relationships.

27

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

4.

Financial Instruments (cont’d)② Financial instruments other than those measured at fair value in the consolidated balance sheet
Millions of yen
2022
Level 2
Level 3

Level 1
Commercial paper and otherdebt purchased
Loans and bills discounted
Lease receivables andinvestment assets
Total assets

\

-

\

Deposits

\

\

-

\

-

-

\

Total

1,197
2,106,060\

1,197
2,106,060-

30,08730,087-\ 2,137,345\ 2,137,345\-\ 3,167,174-\ 3,167,174

Negotiable certificates of deposit-

133,506-

133,506

Borrowed money-

255,425

10,928266,353-\ 3,556,106

10,928\ 3,567,034

Total liabilities\

Thousands of U.S. dollars
2022
Level 2
Level 3

Level 1
Commercial paper and otherdebt purchased

$

-

$

-

Loans and bills discounted
Lease receivables andinvestment assets
Total assets

$

-

$

Deposits$-$ 25,877,718

Negotiable certificates of deposit-

Borrowed money
Total liabilities

$

\

$

Total

9,780

$

9,780

-

-

17,207,778

17,207,778--

245,828

245,828-$ 17,463,395$ 17,463,395$-$ 25,877,718

1,090,824-

1,090,824-

2,086,976

89,2882,176,264-$ 29,055,527

89,288$ 29,144,815

28$

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

4.

Financial Instruments (cont’d)(Note 1) Valuation techniques and inputs used in measuring fair value
AssetsCommercial paper and other debt purchased
The fair value of trust beneficial rights in other debt purchased is based on the price quoted for corresponding
securities. For factoring, these transactions have short contractual terms (within 1 year). Therefore, the fair value isconsidered to be the book value because the fair value of these items approximates the book value. The fair value iscategorized as Level 3.
Securities
When quoted unadjusted prices in active markets are available, fair values are categorized as Level 1. This includes
mainly listed equity securities and Japanese government bonds.
When quoted prices are available but not considered to be in active markets, fair values are categorized as Level
2. This includes mainly municipal bonds, corporate bonds and other securities.
When quoted market prices are not available, fair values are determined by using valuation techniques such as thediscounted present value method of future cash flows. The valuation is based on the maximum use of observable inputs,
which are TIBOR, swap rates, etc. Of corporate bonds, the inputs for bank-guaranteed private placed bonds include
credit spreads, with interest rates assumed for similar new underwritings of the total amount of principal and interestfor each category based on the issuer’s internal rating and term. The fair value of claims against bankrupt obligors,
substantially bankrupt obligors and intensive control obligors, because the bad debt is calculated based on the present
value of the expected future cash flow or the estimated collectable amount from guarantees, approximates theconsolidated balance sheet amount as of the consolidated balance sheet date less the allowance for bad debts. Whensignificant unobservable inputs are used for valuation, the fair value is categorized as Level 3.
Loans and bills discounted
The fair value of loans and bills discounted with floating interest rates is considered to be equal to the book value
since the rate reflects the market rate in a short period and the fair value of these items approximates the book value,
unless the creditworthiness of the borrower changes significantly from the inception date. The fair value of loans andbills discounted with a fixed rate is calculated as the present value, discounting future cash flow at credit spread witha rate that reflects the proper market rate corresponding to the remaining period and credit risk based on the internalrating. The fair value of loans and bills discounted with short contractual terms (within 1 year) is considered to be thebook value because the fair value of these items approximates the book value. In addition, the fair value of claims
against bankrupt obligors, substantially bankrupt obligors and intensive control obligors, because the bad debt iscalculated based on the present value of the expected future cash flow or the estimated collectable amount fromcollateral and/or guarantees, approximates the consolidated balance sheet amount as of the consolidated balance
sheet date less the allowance for bad debts. The fair value of loans and bills discounted with no maturity due toconditions such as limiting the loans to the value of pledged assets is deemed to be the book value since the fair value
is expected to approximate the book value considering the estimated loan period, interest rate and other conditions.
The fair value is categorized as Level 3.
Lease receivables and investment assets
The fair value of lease receivables and investment assets takes into consideration the loan loss ratio of each categoryof borrower and the discounted market interest rate on the consolidated balance sheet date. In addition, the fair valueof claims against bankrupt obligors, substantially bankrupt obligors and intensive control obligors, because the bad
debt is calculated based on the present value of the expected future cash flow or the estimated collectable amountfrom collateral and/or guarantees, approximates the consolidated balance sheet amount as of the consolidated balance
sheet date less the allowance for bad debts. The fair value is categorized as Level 3.

29Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

4.

Financial Instruments (cont’d)Liabilities
Deposits and negotiable certificates of deposit
The fair value of demand deposits is considered to be the payable amount as of the consolidated balance sheet date(the book value). The fair value of floating interest rate deposits, time deposits (matured), nonresident Japanese yen
deposits and foreign currency time deposits is considered less important and is expected to approximate the bookvalue. The fair value of fixed-term deposits and negotiable certificates of deposit is calculated as the present value,
discounting the future cash flow at a rate that reflects when the Bank received the new deposit. The fair value ofdeposits with short terms (within 1 year) is considered to be the book value because the fair value of these items
approximates the book value. The fair value is categorized as Level 2.
Borrowed money
The fair value of borrowed money with floating interest rates is considered to be the book value since the rate
reflects the market rate in a short period and the fair value of these items approximate the book value, unless thecreditworthiness of the Bank and its consolidated subsidiaries changes significantly from the inception date. The fairvalue of borrowed money with short contractual terms (within 1 year) is considered to be the book value because thefair value of these items approximates the book value. The fair value is categorized as Level 2.
The fair value of borrowed money with a fixed rate is calculated as the present value by discounting the total amountof principal and interest at an interest rate for similar new loans. The fair value is categorized as Level 3.
Derivative Transactions
Derivative transactions for which unadjusted quoted market prices in active markets are available are categorized as
Level 1. This mainly includes bond futures contracts and interest rate futures contracts.
However, since most derivative transactions are over-the-counter transactions and there are no published quoted
market prices, fair values are calculated using valuation techniques such as the discounted present value method or
the Black-Scholes model, depending on the type of transaction and the period to maturity. The main inputs used inthese valuation techniques are interest rates, exchange rates, volatility, etc. When unobservable inputs are not usedor when they are used but their effect is not material, the fair values are categorized as Level 2. This includes Plain
Vanilla interest rate swaps, currency swaps, currency options, and foreign exchange forward contracts.

30Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

4.

Financial Instruments (cont’d)(Note 2) Description of the fair value of Level 3 financial instruments carried on the consolidated balance sheet at fairvalue
① Quantitative information on significant unobservable inputs
2022
Valuation
methodology

Significant
unobservable inputs

Input range

Weighted
average of
inputsDiscounted present
value technique

Credit spread

0.4447179% 3.0155407%

1.1135471%

Category
Securities
Available-for-sale securities
Corporate bonds② Reconciliation from the beginning balance to the ending balance, valuation gains (losses) recognized for the period
Millions of yen
2022
Income (expenses) or othercomprehensive income

Commercial paperand other debt
purchased
Securities
Available-forsale securities
Corporate
bonds

Beginningbalance

Recordedin income(expenses)
(*1)

\

\

319

18,886-

Recorded inothercomprehensive
income (*2)

\

(2)

(1)

Net ofpurchases,
sales,
issuanceandsettlement

\

(116)

19

Reclassification
to Level 3 fair
value

\

8

-

Reclassificationfrom Level 3
fair value

\

-

-

Endingbalance

Valuation
gains(losses)onfinancialassetsandliabilities
(*1)

\

\

-

201

-

18,912-Endingbalance

Valuation
gains(losses)onfinancialassetsandliabilities
(*1)

-

$

$

-

154,522

Thousands of U.S. dollars
2022
Income (expenses) or othercomprehensive income

Commercial paperand other debt
purchased
Securities
Available-forsale securities
Corporate
bonds

Beginningbalance

Recordedin income(expenses)
(*1)

$

$

2,606

154,309-(16)

Recorded inothercomprehensive
income (*2)$(8)

Net ofpurchases,
sales,
issuanceandsettlement

$

155

(947)

65

31

Reclassification
to Level 3 fair
value

$

-

-

Reclassificationfrom Level 3
fair value

$

1,642

-

-

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

4.

Financial Instruments (cont’d)(*1) The valuation losses are included in “other operating expenses” in the consolidated income statements.
(*2) The valuation gains (losses) are included in “net unrealized holding gains (losses) on securities” in the
consolidated statements of comprehensive income.
③ Description of the fair value valuation process
The Group has established policies and procedures for the calculation of fair value in the risk management division,and each trading division calculates fair value in accordance with these policies and procedures. The Group verifies
the validity of the valuation techniques and inputs used to calculate fair value and the appropriateness of the levelclassification of the fair value in the valuation division.
In calculating fair value, the Group uses valuation models that most appropriately reflect the nature, characteristics,
and risks of individual assets. When the Group uses quoted prices obtained from third parties, the Group also verifies
the appropriateness of the prices by confirming the valuation techniques and inputs used, comparing them with themarket prices of similar financial instruments, and by other appropriate methods.
④ Description of the effect on fair value when significant unobservable inputs are changed
The most significant unobservable input used in the calculation of the fair value of bank-guaranteed private
placements of bonds is the credit spread. A significant increase (decrease) in this input, by itself, will result in asignificant decrease (increase) in the fair value.

32

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

5.

Securities

Unsecured securities that have been loaned and that allow the borrowers to sell the borrowed securities amounted to\56,329 million and \56,166 million ($458,910 thousand) as of March 31, 2021 and 2022, respectively, and are includedin Japanese government bonds in Securities.
(1) Acquisition costs, book values and fair values of securities with market values
The following tables summarize acquisition costs, book values and fair values of securities with market values as ofMarch 31, 2021 and 2022. The amounts in the following tables include trading account securities and trust beneficiaryinterests in commercial paper and other debt purchased as well as securities① Trading securities:
Thousands of
U.S. dollars
2022

Millions of yen
2021
2022
Amount of net unrealized gains (losses) included instatements of income ---------------------------

\

3

\

② Held-to-maturity debt securities for the years ended March 31, 2021 and 2022:
Not applicable.

33

-

$

-

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

5.

Securities (cont’d)③ Available-for-sale securities:※ Book value exceeded acquisition cost.

Equity securities -----------Bonds:
Japanese government bonds Municipal bonds ----------Corporate bonds ---------Other --------------------Total ----------------------

Book (fair)value\
124,711

Millions of yen
2021
Acquisitioncost\
44,839Difference\
79,871

121,112130,394
81,846
277,831735,896\

116,985
128,427
79,846254,124624,224

\

4,126
1,966
2,000
23,707
111,671

\

4,726

\

(398)

\

(735)
(167)
(859)
(2,703)(4,865)\

106,806\※ Book value did not exceed acquisition cost.
Equity securities -----------Bonds:
Japanese government bonds Municipal bonds ----------Corporate bonds ---------Other --------------------Total ----------------------

\

4,327

\

66,20936,37874,86370,949252,728\

66,94536,54675,72273,653
257,593

Grand total -----------------\

988,624\

881,81834

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

5.

Securities (cont’d)※ Book value exceeded acquisition cost.

Equity securities -----------Bonds:
Japanese government bonds Municipal bonds ----------Corporate bonds ---------Other --------------------Total ----------------------

Book (fair)value\
122,632

Millions of yen
2022
Acquisition
cost\
47,111

Difference\
75,520116,184
75,92155,065203,163
572,967\

112,330
74,65153,759187,004
474,857

\

3,853
1,269
1,305
16,15998,109

\

5,529

\

(657)

\

(2,073)(779)(1,693)(7,482)(12,686)\

85,422\※ Book value did not exceed acquisition cost.
Equity securities -----------Bonds:
Japanese government bonds Municipal bonds ----------Corporate bonds ---------Other --------------------Total ----------------------

\

4,872

\

57,59891,847118,043
170,158
442,520\

59,672
92,627
119,737
177,640
455,207

Grand total -----------------\ 1,015,487\

930,06535

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

5.

Securities (cont’d)※ Book value exceeded acquisition cost.
Thousands of U.S. dollars
2022
Book (fair)
Acquisition
value
cost
Difference
Equity securities ------------Bonds:
Japanese government bonds -Municipal bonds ----------Corporate bonds ----------Other ---------------------Total ----------------------$ 1,001,977
949,293620,320449,914
1,659,964$ 4,681,485$

384,925$

617,043$

917,803609,943439,243
1,527,935
3,879,867$

31,481
10,368
10,662132,028
801,609$45,175$(5,368)$(16,937)(6,364)(13,832)(61,132)(103,652)$

697,949※ Book value did not exceed acquisition cost.
Equity securities ------------Bonds:
Japanese government bonds -Municipal bonds ----------Corporate bonds----------Other ---------------------Total ----------------------$

39,807

470,610
750,445964,482
1,390,293$ 3,615,654$

487,556
756,818
978,323
1,451,425
3,719,315

Grand total -----------------$ 8,297,140$

7,599,191④ Held-to-maturity debt securities sold for the years ended March 31, 2021 and 2022:
Not applicable.

36

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

5.

Securities (cont’d)⑤ Available-for-sale securities sold in the years ended March 31, 2021 and 2022:

Equity securities ------------Bonds:
Japanese government bonds -Municipal bonds ----------Corporate bonds----------Other ---------------------Total ----------------------

Equity securities -----------Bonds:
Japanese government bonds Municipal bonds ----------Corporate bonds----------Other --------------------Total ----------------------

Equity securities -----------Bonds:
Japanese government bonds Municipal bonds ----------Corporate bonds----------Other --------------------Total ----------------------

Amount sold\
6,945

Millions of yen
2021
Gains
\
2,547

Losses\936

20,792
17,1972,431
17,64565,012

30
7
1
1,155
3,743

242
37
1
401
1,620

\

\

\

Amount sold\
4,152

Millions of yen
2022
Gains
\
1,451

Losses
\
348

9,830
9,717
7,767
43,61975,087

79
7
34
1,469
3,043

11
48
44
1,722
2,175

\

\

\

Thousands of U.S. dollars
2022
Amount sold
Gains
Losses$33,924$
11,855$2,843$

80,317
79,39363,461
356,393
613,506

645
57
277
12,002
24,863

$

37

$

89
392
359
14,06917,771

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

5.

Securities (cont’d)⑥ Securities reclassified for the years ended March 31, 2021 and 2022:
Not applicable.
⑦ Available-for-sale securities with market values are considered impaired if the market value decreases materiallybelow the acquisition cost and the decline is not considered recoverable. The market value is used for the balance
sheet amount, and the amount of write-down is accounted for as an impairment loss for the fiscal year. Impairment
loss for the fiscal years ended March 31, 2021 was \408 million, including \408 million of equity securities and nil ofother. Impairment loss for the fiscal years ended March 31, 2022 was \95 million ($776 thousand), including \93
million ($759 thousand) of equity securities and \2 million ($16 thousand) of other.
The market value is deemed to have decreased materially when it has fallen by 50% or more from the acquisition cost.
In such cases, impairment accounting is applied uniformly. In cases in which the market value has fallen by 30% ormore but less than 50%, historical price trends over a specific period and the recent business performance of theissuing company are taken into account to determine whether or not the acquisition cost can be recovered. Securities
whose acquisition costs are deemed not to be recoverable are written down to the current market value.
(2) Net unrealized holding gains on securities stated at market value
Net unrealized holding gains on securities stated at market value at March 31, 2021 and 2022 were as follows:

Millions of yen
2021
Available-for-sale securities -------------Deferred tax liabilities ------------------Net unrealized holding gains on securities(before adjustment for noncontrollinginterests)---------------------------Noncontrolling interests------------------\Net unrealized holding gains on securities ---\106,806(32,281)2022\

74,524(1,329)73,19485,504(25,800)

Thousands of
U.S. dollars
2022$

59,704(1,329)\58,375

698,619(210,801)

487,817(10,858)$

476,958（*） Net unrealized holding gains for the year ended March 31, 2022 included net unrealized gains of \82 million ($669
thousand) on available-for sales securities which are components of partnerships, etc.
(3) Guarantee obligations for privately placed bonds
At March 31, 2021 and 2022, the amount of guarantee obligations for privately placed bonds (Securities and Exchange
Law, Article 2, Item 3) included in corporate bonds amounted to \19,189 million and \19,198 million ($156,859
thousand), respectively.

38

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

6．

Loans and Bills Discounted

Claims under the Banking Act and the Act on Emergency Measures for the Revitalization of the Financial Functions
are those recorded in the following accounts in the consolidated balance sheets: the corporate bonds in “securities”(limited to those for which redemption of the principal and payment of interest is guaranteed in whole or in part andfor which the bonds were issued through private placement of securities (Article 2, Paragraph 3 of the Financial
Instruments and Exchange Act), “loans and bills discounted,” “foreign exchange,” accrued interest and suspense
payments in “other assets,” “customers’ liabilities for acceptances and guarantees,” and “lease receivables andinvestment assets,” and those securities as noted as securities on loan (limited to those under a loan-for-use or alease agreement).

\

16,38427,497254
7,328

Thousands of
U.S. dollars
2022$
133,867
224,667
2,075
59,874\51,464$

Millions of yen
Legal bankruptcy and de facto bankruptcy --Bankruptcy risk------------------------Loans past due three months or more------Restructured loans ----------------------\

Total ---------------------------------\

2021
16,383
23,612741
6,744
47,4822022

420,491“Legal bankruptcy and de facto bankruptcy” are claims against borrowers who have fallen into bankruptcy for reasons
such as the commencement of bankruptcy proceedings, the commencement or petition for commencement of
rehabilitation proceedings and claims equivalent thereto.
“Bankruptcy risk” are loans to borrowers who are not currently in bankruptcy but are in difficult financial situations
and with a high possibility that the principal and interest cannot be collected according to the contract, excluding“legal bankruptcy and de facto bankruptcy.”“Loans past due three months or more” are loans for which the payment of the principal and/or interest is past due
three months or more from the day following the contractual payment date, excluding “legal bankruptcy and de facto
bankruptcy” and “bankruptcy risk.”“Restructured loans” are loans for which the Bank has relaxed its lending conditions for borrowers in financial
difficulties, such as by a reduction of the original interest rate, the forbearance of interest payments, the granting ofa maturity date extension and/or the renunciation of claims in order to support the borrower’s financial recovery or
restructuring. These loans exclude those in “legal bankruptcy and de facto bankruptcy,” “bankruptcy risk” and “loans
past due three months or more.”
The above claim amounts are before deducting any reserve for possible loan losses.
Changes in presentation method
In accordance with the Cabinet Office Ordinance Partially Amending Enforcement Regulations of the Banking Act(Cabinet Office Ordinance No. 3, January 24, 2020), which came into effect on March 31, 2022, the classifications of“risk monitored loans” under the Banking Act is presented in accordance with the classifications of disclosed claims
under the Act on Emergency Measures for Revitalization of Financial Functions.

39Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

7.

Commercial Bills

Discounts of commercial bills are accounted for as financing transactions as stipulated in Industry Committee Report
No. 24. The Bank has rights to use commercial bills discounted or foreign exchange purchased in the form of sale oruse as (re)collateral. The total face value of commercial bills obtained as a result of discounting was \6,944 million
and \6,812 million ($55,658 thousand) at March 31, 2021 and 2022, respectively.

8.

Commitment Lines

Loan agreements and commitment line agreements related to loans are agreements which oblige the Bank and its
consolidated subsidiaries to lend funds up to a certain limit agreed to in advance. The Bank and its consolidated
subsidiaries lend the funds upon the request of the borrower to draw down funds under the agreement as long as there
is no breach of the various terms and conditions stipulated in the agreement. The unused commitment balances related
to these agreements at March 31, 2021 and 2022 amounted to \382,712 million and \384,093 million ($3,138,271
thousand), respectively. Of these amounts, \372,245 million and \370,558 million ($3,027,682 thousand), respectively,
related to loans in which the term of the agreement was one year or less or in which unconditional cancellation of theagreement was allowed at any time.
In many cases, the term of the agreement expires without the loan ever being drawn down. In these cases, theunused loan commitment does not necessarily affect future cash flows. Conditions are also included in certain loan
agreements which allow the Bank and its consolidated subsidiaries either to decline the request for a loan drawdown
or to reduce the agreed limit when there is a reason such as a change in financial circumstances or necessity of credit
risk management.
The Bank and its consolidated subsidiaries take various measures to manage credit risk. Such measures include
having the obligor pledge collateral such as real estate or securities on signing the loan agreement or confirming theobligor’s financial condition at regular intervals in accordance with the Bank and its consolidated subsidiaries’
established internal procedures.

40

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

9.

Assets Pledged

At March 31, 2021 and 2022, assets and future receipts pledged as collateral were as follows:

Securities ------------------\

Millions of yen
2021
288,809\2022
313,062

Thousands of
U.S. dollars
2022$
2,557,905

2022
12,695

Thousands of
U.S. dollars
2022$
103,725

40,945254,000

334,545
2,075,332

The above pledged amounts secure the following liabilities:

Deposits ------------------Payables under securities lendingtransactions ---------------Borrowed money ------------\

Millions of yen
2021
13,401\42,065224,000

At March 31, 2021 and 2022, certain investment securities amounting to \1,421 million and \1,578 million ($12,893
thousand), respectively, and other assets of \30,049 million including deposits with the central counterparty of\30,000 million and other of \49 million and other assets of \20,049 million ($163,812 thousand) including deposits
with the central counterparty of \20,000 million ($163,412 thousand) and other of \49 million ($400 thousand),
respectively, were pledged as collateral for exchange settlement and handling and others of government funds or in
substitution for clearing margins on futures and others.
At March 31, 2021 and 2022, other assets included cash collateral paid for financial instruments of \5,037 million
and \11,507 million ($94,019 thousand), respectively, and guarantee deposits of \292 million and \274 million($2,238 thousand), respectively.

10.

Tangible Fixed Assets

Accumulated depreciation of tangible fixed assets at March 31, 2021 and 2022 amounted to \32,180 million and\32,817 million ($268,134 thousand), respectively. Accumulated capital gains that directly offset acquisition costs oftangible fixed assets to obtain tax benefits at March 31, 2021 and 2022 amounted to \734 million and \734 million($5,997 thousand), respectively. No such offset was newly recorded for the years ended March 31, 2021 and 2022.

11.

Land Revaluation AccountIn accordance with the Land Revaluation Law, the Bank revalued land used in the ordinary course of business as ofMarch 31, 1999. The revaluation excess, net of deferred taxes, is shown as land revaluation account, a separate
component of shareholders' equity. At March 31, 2021 and 2022, the market values of the revalued land decreased
from the revalued amount by \7,117 million and \7,584 million ($61,965 thousand), respectively.

12.

Other Assets

As of March 31, 2022, other assets included receivables from contracts with customers of \386 million ($3,153
thousand).

41

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

13.

General and Administrative Expenses

For the years ended March 31, 2021 and 2022, general and administrative expenses included salaries and allowancesof \9,482 million and \8,904 million ($72,751 thousand), respectively, depreciation expenses of \2,923 million and\3,120 million ($25,492 thousand), respectively, and outsourcing expenses of \3,649 million and \3,690 million($30,149 thousand), respectively.

14.

Other Income

For the years ended March 31, 2021 and 2022, other income included gain on sale of securities of \3,574 million and\2,661 million ($21,741 thousand), respectively.

15.

Other Expenses(1) Loss on loans and securities
For the years ended March 31, 2021 and 2022, other expenses included loans written off of \26 million and \27 million($220 thousand), respectively, losses on the sale of securities of \1,264 million and \505 million ($4,126 thousand),
respectively, and securities written off of \413 million and \165 million ($1,348 thousand), respectively.
(2) Impairment loss
For the year ended March 31, 2021, the Bank reduced the book value of business use assets whose operating cash
flows had decreased and real estate values had declined and assets that were to be disposed of due to relocation andrebuilding to the recoverable amounts and recognized impairment loss of \374 million.

Area
OperatingassetsIdle assets

Purpose of use

Tokushimaarea

Branchesand others

Other area
Tokushimaarea

BranchIdle
assetsImpairment
loss
Millions of
yen
2021

Type

1 location

Land andbuildings(Land)(Buildings)
Buildings

1 locationLand

14 locations

Land andbuildings(Land)(Buildings)

Total

\

365
147
218
7
0

\
\

374
148
226

The Bank allocates its assets to each branch (or group of branches if the management is in a group), which is thesmallest unit of an asset group, and the consolidated subsidiaries regard each entity as a unit in a group. The
recoverable amount is the net realizable value, which is determined by the appraisal value based on Real EstateAppraisal Standards less the expected disposal cost or zero for assets to be disposed of due to relocation or rebuilding.

42

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

15.

Other Expenses (cont’d)(2) Impairment loss (cont’d)
For the year ended March 31, 2022, the Bank reduced the book value of business use assets whose operating cash
flows had decreased and real estate values had declined and assets that were to be disposed of due to relocation andrebuilding to the recoverable amounts and recognized impairment loss of \140 million ($1,143 thousand).

Area

Purpose of use

Type

OperatingassetsTokushimaarea

Branches
5 locations
and others

Land andbuildings(Land)(Buildings)

Idle assets

Tokushima
area

Idle assets

2
locations

Impairment loss
Millions ofThousands ofyen
U.S. dollars
2022
\

Land
Land andbuildings(Land)(Buildings)

Total

135
67
68

$

4
\
\

140
72
68

1,103
547
555
32

$
$

1,143
588
555

The Bank allocates its assets to each branch (or group of branches if the management is in a group), which is thesmallest unit of an asset group, and the consolidated subsidiaries regard each entity as a unit in a group. The
recoverable amount is the net realizable value, which is determined by the appraisal value based on Real EstateAppraisal Standards less the expected disposal cost or zero for assets to be disposed of due to relocation or rebuilding.

43Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

16.

Other Comprehensive Income

Amounts reclassified to net income (loss) in the current period that were recognized in other comprehensive incomein the current or previous periods and the tax effects for each component of other comprehensive income for the years
ended March 31, 2021 and 2022 were as follows:

Millions of yen
2021
2022

Thousands of
U.S. dollars
2022

Net unrealized holding gains (losses) on securities
Increase (decrease) during the year ------------------ \Reclassification adjustments -----------------------Subtotal, before tax ------------------------------Tax (expense) benefit -----------------------------Subtotal, net of tax -------------------------------

48,703(1,711)
46,992(14,313)32,678Net deferred gains (losses) on derivatives under hedge
accounting
Increase (decrease) during the year -----------------Reclassification adjustments -----------------------Subtotal, before tax ------------------------------Tax (expense) benefit -----------------------------Subtotal, net of tax -------------------------------

157
1,209
1,367
(416)
950

1,119
1,043
2,162
(658)
1,503

9,142
8,521
17,664(5,376)
12,280Remeasurements of defined benefit plans
Increase (decrease) during the year -----------------Reclassification adjustments -----------------------Subtotal, before tax ------------------------------Tax (expense) benefit -----------------------------Subtotal, net of tax ------------------------------Total other comprehensive income ----------------- \3,090(1,878)
1,212
(369)
843
34,472

(26)
(26)
8
(18)
(13,334)

(212)
(212)
65
(147)
(108,946)

44

\

\

(20,536)(765)(21,301)
6,481(14,819)$$(167,791)(6,250)(174,041)
52,953(121,080)

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

17.

Income Taxes

The Bank and its consolidated subsidiaries are subject to a number of taxes based on income, including corporation
tax, inhabitants tax and enterprise tax.
A reconciliation of the statutory tax rate and effective tax rate for the years ended March 31, 2021 and 2022 was
not disclosed because the difference between the statutory tax rate and effective tax rate was less than 5% of thestatutory tax rate.
Significant components of deferred tax assets and liabilities as of March 31, 2021 and 2022 were as follows:

Millions of yen
2021
2022
Deferred tax assets:
Excess reserve for possible loan losses --------------\
Excess depreciation ------------------------------Net defined benefit liability------------------------Tax loss carryforwards ----------------------------Net deferred gains (losses) on derivatives under hedge
accounting -------------------------------------Others-----------------------------------------Valuation allowance ------------------------------Total deferred tax assets -----------------------------

10,374702
21
2\

10,566702
3Thousands of
U.S. dollars
2022$

86,330
5,735
24

669
2,042
(2,557)
11,255102,211(2,657)
10,83781
18,065(21,709)88,544

Deferred tax liabilities:
Deferred gains on real property --------------------Unrealized gains on securities ----------------------Others-----------------------------------------Total deferred tax liabilities ---------------------------(245)(32,281)(2)(32,529)(245)(25,800)(5)(26,050)(2,001)(210,801)(40)(212,844)

Net deferred tax liabilities----------------------------- \(21,273)(15,213)$ (124,299)

45\

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

18.

Acceptances and Guarantees

All commitments and contingent liabilities arising in connection with customers' needs in foreign trade and othertransactions are included in “Acceptances and guarantees” in Liabilities in the Consolidated Balance Sheets. A contra
account, “Customers' liabilities for acceptances and guarantees,” representing the Bank's right of indemnity from
customers is shown in Assets.

19.

Borrowed Money

Borrowed money at March 31, 2021 and 2022 consisted of the following:

Borrowings from banks and others--------------------\
Lease obligations (payable within 1 year)---------------- \Lease obligations (excluding those payable within 1 year)--- \Millions of yen
2021
2022

Thousands of
U.S. dollars
2022

236,990
104
63

$
$
$

\
\
\

266,37564
57

2,176,444
522
465(Lease obligations are included in other liabilities.)

The following is a summary of aggregate annual maturities of borrowings from banks and others and lease obligations
within 5 years at March 31, 2022.

・Borrowings from banks and others:
Year ending March 31:
2023-----------------------2024-----------------------2025-----------------------2026-----------------------2027------------------------

Millions of yen\
243,871
18,220
2,297
1,385
479

Thousands of
U.S. dollars$
1,992,572
148,868
18,767
11,316
3,913

・Lease obligations:Year ending March 31:
2023-----------------------2024-----------------------2025-----------------------2026-----------------------2027------------------------

Millions of yen
\
64
31
16
6
2

46

Thousands of
U.S. dollars
$

522
253
130
49
16

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

20.

Employees' Severance and Retirement Benefits(1) Overview of retirement benefit plan
The Bank and its consolidated subsidiaries apply risk sharing pension plans and defined contribution pension plans as
their defined contribution plans.
Previously, the Bank and its consolidated subsidiaries applied funded contributory pension plans and lump-sum
payment plans as their defined benefit plans as well as defined contribution pension plans. Of these defined benefit
plans, the defined benefit pension plans have been transferred to risk sharing pension plans which are classified as
defined contribution plans stipulated in Paragraph 4 of “Accounting Standard for Retirement Benefits” (ASBJ
Statement No. 26, December 16, 2016) on April 1, 2021. In addition, the retirement benefit trust established by the
Bank has was cancelled on the same day.
Risk sharing pension plans are designed to maintain the financial balance of the pensions, because in addition to
the standard contribution equivalent, a risk-taking contribution equivalent is stipulated in advance in the policies sothat the amount of benefits increases or decreases according to the financial status of the risk sharing pension plan ineach consolidated fiscal year.
Regarding the accounting treatment associated with the transition of retirement benefit plan, “Practical Solution
on Accounting for Risk Sharing Pension Plan” (PITF No. 33, December 16, 2016), “Accounting for Transfer between
Retirement Benefit Plans (ASBJ Guidance No. 1, December 16, 2016) and “Practical Solution on Accounting forTransfer between Retirement Benefit Plans” (PITF No. 2, February 7, 2007) are applied. As a result, loss ontermination of retirement benefit plan of \75 million was recorded in other expenses for the fiscal year ended March
31, 2021 and gain on termination of retirement benefit plan of \44 million ($359 thousand) was recorded in otherincome for the fiscal year ended March 31, 2022.
(2) Defined benefit plans① Movement in projected benefit obligation (excluding plans to which the simplified method is applied):Thousands of
U.S. dollars
2022

Millions of yen
2021
2022
Projected benefit obligation at beginning of year -- \Service cost ------------------------------Interest cost ------------------------------Actuarial differences -----------------------Retirement benefits paid --------------------Effects of transition to risk sharing pension plan-Projected benefit obligation at end of year ------- \30,073
769
176

47

\

24,853-421(1,511)(5,076)24,853 \(24,853)-$$

203,063(203,063)-

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

20.

Employees' Severance and Retirement Benefits (cont’d)② Movement in plan assets:
Thousands of
U.S. dollars
2022

Millions of yen
2021
2022
Plan assets at beginning of year --------------- \Expected return on plan assets ---------------Actuarial differences -----------------------Employer contribution ----------------------Employee contribution ----------------------Retirement benefits paid --------------------Effects of transition to risk sharing pension plan-Plan assets at end of year -------------------\

34,940 \
671
3,512
45
30
(1,077)(7,083)31,03831,038(31,038)$

253,599(253,599)

-

$

-

\

(*)
Plan assets include the assets of the retirement benefits trust.

③ Reconciliation of net defined benefit liability applying the simplified method:
Thousands of
U.S. dollars
2022

Millions of yen
2021
2022
Net defined benefit liability at beginning of year -Net retirement benefit expenses --------------Retirement benefits paid --------------------Effects of transition to risk sharing pension plan-Net defined benefit liability at end of year -------

\

111 \
8
(0)
-

\

119

48

\

119
(119)

$

972
(972)

-

$

-

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

20.

Employees' Severance and Retirement Benefits (cont’d)④ Reconciliation from the ending balances of projected benefit obligation and plan assets to net defined benefit
liability and net defined benefit asset recorded on the consolidated balance sheet:
Thousands of
U.S. dollars
2022

Millions of yen
2021
2022
Funded projected benefit obligation -----------Plan assets -------------------------------Unfunded projected benefit obligation ---------Net liability and asset
recorded on the consolidated balance sheet --Net defined benefit liability ------------------Net defined benefit asset --------------------Net liability and asset
recorded on the consolidated balance sheet----\24,853 \(31,038)(6,185)
119

-

$

-

\

(6,066) \

-

$

-

\

44 \
(6,111)

-

$

-

\

(6,066) \

-

$

-

-

Thousands of
U.S. dollars
2022
$

-

-

(*1) Plan assets include the assets of the retirement benefits trust.
(*2) The above table includes plans applying the simplified method.

⑤ Net retirement benefit expenses and their breakdown:

Millions of yen
2021
2022
Service cost ------------------------------- \Interest cost ------------------------------Expected return on plan assets ---------------Amortization of actuarial differences ----------Net retirement benefit expenses --------------- \

747 \
176
(671)
52
306

\

-

$

-

(*1) Retirement benefit expenses of the consolidated subsidiaries applying the simplified method were included in “service cost”.
(*2) Employee contributions to the funded contributory pension plan were not included in service cost.
(*3) In addition to the net retirement benefit expenses described above, loss on termination of retirement benefit plan of \75 million
was recorded in other expenses for the fiscal year ended March 31, 2021.
(*4) In addition to the net retirement benefit expenses described above, gain on termination of retirement benefit plan of \44 million($359 thousand) was recorded in other income for the fiscal year ended March 31, 2022.

49

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

20.

Employees' Severance and Retirement Benefits (cont’d)⑥ The components of remeasurements of defined benefit plans in other comprehensive income (before income tax
effect):Thousands of
U.S. dollars
2022

Millions of yen
2021
2022
Prior service costs -------------------------Actuarial differences -----------------------Total -------------------------------------

\

1,212

\

1,212

\

\

(26)
(26)

$

-

$

(212)
(212)

(*) Theremeasurements of defined benefit plans include consolidation adjustments of negative \43 million for the fiscal year ended
March 31, 2021.

⑦ The components of remeasurements of defined benefit plans in accumulated other comprehensive income (before
income tax effect):Thousands of
U.S. dollars
2022

Millions of yen
2021
2022
Unrecognized prior service costs -------------Unrecognized actuarial differences ------------Total -------------------------------------

\

- \
(26)
(26) \

\

-

$
$

-

⑧ Plan assets(i) Plan assets comprise:2021
Debt securities ----------------------------Equity securities --------------------------Life insurance general accounts---------------Cash and due from banks and others -----------Other ------------------------------------Total -------------------------------------

2022

24.9%

-%

26.6
9.7

-

33.4
5.4
100.0%-%(*)As of March 31, 2021 and
2022, plan assets consisted of
2.4% and -%, respectively, ofassets of the retirement benefit trust established for the funded contributory pension plan and 13.5% and -%, respectively, ofassets of the retirement benefit trust established for the lump-sum payment plans.

(ii) Determination of expected long-term rate of plan assets
The expected long-term rate of return on plan assets is determined considering the current and future portfolio ofplan assets and current and expected long-term rate of return generated from various components of the plan assets.

50

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

20.

Employees' Severance and Retirement Benefits (cont’d)⑨

Actuarial assumptions at end of year:
2021

Discount rate -----------------------------Expected long-term rate of return on plan assets
Funded contributory pension plan ----------Employee retirement benefit trust ----------Funded contributory pension plan
Lump-sum payment plan
Expected rate of salary increase
Funded contributory pension plan ----------Lump-sum payment plan-------------------

2022
0.6%

-%

2.0%

-%

0.0%
2.0%

-%
-%

2.5%
2.4%

-%
-%

(*1) The discount rate for the year ended March 31, 2021 was presented using a weighted average rate.
(*2) The expected rate of salary increase is based on the expected rate of increase in points calculated for each plan as a point
system is used to determine retirement benefits.

(3) Defined contribution plans(i) The amount of retirement benefit expenses related to the defined contribution plans
The amount of required contribution to the defined contribution plans was \125 million and \847 million ($6,920
thousand) as of March 31, 2021 and 2022, respectively.
(ii) Matters related to the amount of risk-taking contribution equivalent
The amount of risk-taking contribution equivalent required from the fiscal year ending March 31, 2023 and after is
nil.

21.

Derivative Transactions

The Bank enters into various derivative contracts, including swaps, options, forwards and futures, that cover interest
rates, foreign currencies and stocks and bonds in order to meet customers' needs and manage the risks of market
fluctuations related to the assets, liabilities and interest rates of the Bank and its consolidated subsidiaries. In
connection with these transactions, the Bank has established procedures and controls to minimize market and credit
risk, including limits on transaction levels, hedging exposed positions, daily reporting to management and the outside
review of trading department activities. At March 31, 2021 and 2022, outstanding derivatives were as follows:51

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

21.

Derivative Transactions (cont’d)Currency and foreign exchange transactions:Contract
amountOver-the-counter transactions:
Currency swaps\
Forward exchange contracts
Sell ----------------------------Buy ----------------------------Currency options
Sell ----------------------------Buy -----------------------------

Millions of yen
2021
Portionmaturing
Marketover one year
value

Recognized
gain(loss)

3,132 \

3,132 \

88,83328,05425,32323,884(5,005)2,863(5,005)2,863

51,75451,754-(1,120)
1,120

(786)
1,005

Contract
amount- \Millions of yen
2022
Portionmaturing
Marketover one year
value

-

Recognized
gain(loss)

Thousands of
U.S. dollars
2022
Recognized
gain(loss)

Over-the-counter transactions:
Currency swaps\
6,159 \
6,159 \
- \4 $32
Forward exchange contracts
Sell ----------------------------117,022
27,124(9,739)(9,739)(79,573)
Buy ----------------------------30,690
27,358
4,667
4,667
38,132Currency options
Sell ----------------------------54,960(1,376)(1,008)(8,235)
Buy ----------------------------54,960
1,376
1,266
10,343
The above transactions were recorded at fair values, and recognized gains and losses were included in the consolidated
statements of income.

52

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

22.

Revenue Recognition(1) Breakdown of revenue from contracts with customers
Millions of yen
2022
Reportable segment

Service revenues
Deposit services
Exchange services
Securities related services
Agency services
OthersOrdinary income arising fromcontracts with customers
Other ordinary income
Ordinary income from externalcustomers

Commercial
banking
\
8,193
1,028
1,458
2,293
1,022
2,390

Leasing
\

-

\

Total
8,193
1,028
1,458
2,293
1,022
2,390

Adjustments\-

Consolidated
total
\
8,193
1,028
1,458
2,293
1,022
2,390

\
\

8,193
44,974\\

14,770\\8,193
59,745

\
\

(0)

\
\

8,193
59,745\53,168\

14,770\67,939\(0)\

67,938

Thousands of U.S. dollars
2022
Reportable segment

Service revenues
Deposit services
Exchange services
Securities related services
Agency services
OthersOrdinary income arising fromcontracts with customers
Other ordinary income
Ordinary income from externalcustomers

Commercial
banking$
66,941
8,399
11,912
18,7358,350
19,527

Leasing
$

-

$

Total
66,941
8,399
11,912
18,7358,350
19,527

Adjustments$-

Consolidated
total$
66,941
8,399
11,912
18,7358,350
19,527$$

66,941
367,464$$

120,679$$

66,941
488,152

$
$

(0)

$
$

66,941
488,152$

434,414$120,679$

555,102$(0)$555,094(2) Understanding revenue from contracts with customers
Information that provides a basis for understanding revenue from contracts with customers is as described in Note2(13), “Significant Accounting Policies -Recognition of revenue and expense.”

53

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

23.

Segment Information(1) General information about reportable segments
The Group’s reportable segments are components of the Group for which separate financial information is provided
to and used by the ALM Committee and Management Meeting periodically to determine the allocation of resources
and assess performance.
The Group is engaged mainly in commercial banking and leasing services. Therefore, the Bank and its consolidated
subsidiaries recognize reportable segments by the financial services provided: ‘Commercial banking’ and ‘Leasing.’‘Commercial banking’ includes deposit services, lending services, securities investment services and exchange
services. ‘Commercial banking’ represents the Bank’s banking services and the consolidated subsidiaries’ credit
guarantee services, credit card services, management consulting services, online mall operation services andinvestment services to growing companies.
‘Leasing’ includes the leasing services of Awagin Leasing Company Limited, one of the consolidated subsidiaries.
(2) Reporting segment ordinary income, profit or loss, segment assets, segment liabilities and other material items
The accounting policies for the reportable segments are the same as the Group’s accounting policies described in
Note 2, “Significant Accounting Policies.” Reportable segment profit is based on operating profit, and intersegment
ordinary income is based on arm’s length pricing.
As described in Note. 2(19) “Changes in accounting standards,” the Accounting Standard for Revenue Recognition(ASBJ Statement No. 29, March 31, 2020) and related guidance were adopted from the beginning of the fiscal year
ended March 31, 2022, and the accounting method for revenue recognition was changed. The method used to calculateof segment profit or loss was changed accordingly. This change had no effect on the consolidated financial statements.

54

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

23.

Segment Information (cont’d)(3) Information about reported segment ordinary income, profit or loss and amounts of assets, liabilities and othermaterial items
Segment information as of and for the years ended March 31, 2021 and 2022 was as follows:
Millions of yen
2021
Reportable segment
Commercial
banking
Ordinary income
Customers
Intersegment
Total
Segment profit
Segment assets
Segment liabilities
Other items
Depreciation
Interest income received
Interest expense paid
Extraordinary income
Gains on disposal of fixed assets
Gain on termination of retirement
benefit plan

Extraordinary losses
Losses on disposal of fixed assets
Impairment loss
Loss on termination of retirement
benefit plan

\
\
\
\
\
\

Leasing

50,735567
51,302
12,2603,834,912
3,558,382
2,733
37,876
2,099
0

\

Total

14,852
178
15,030802
42,691
26,309

\
\
\
\
\

138
62
57
8

0

8

\
\
\
\
\
\

Consolidated
total

Adjustments

65,587745
66,33313,063
3,877,603
3,584,692
2,872
37,939
2,156
8
8

\
\
\
\
\
\

(745)
(745)
(399)
(11,528)(11,512)
51
(429)
(29)
-

\
\
\
\
\
\

65,58765,587
12,6633,866,075
3,573,180
2,923
37,509
2,127
8
8

-

-

-

-

-

477

22

499

(8)

491

41
352

0
22

41
374

0
-

41
374

84

-

84

(8)

75

Tax expenses
3,436
245
3,682
0
3,682
Increase in tangible fixed assets
and intangible fixed assets
2,196
14
2,211
48
2,259
(*1) Ordinary income is presented as the counterpart of sales of companies in other industries.
(*2) Adjustments are as below.
1. Adjustment of segment profit of negative \399 million is for the elimination of intersegment transactions.
2. Adjustment of segment assets of negative \11,528 million is for the elimination of intersegment transactions and others.
3. Adjustment of segment liabilities of negative \11,512 million is for the elimination of intersegment transactions and others.
4. Adjustment of depreciation of \51 million is due to intersegment transactions.
5. Adjustment of interest income received of negative \429 million is for the elimination of intersegment transactions.
6. Adjustment of interest expense paid of negative \29 million is for the elimination of intersegment transactions.
7. Adjustment of losses on disposal of fixed assets of \0 million is due to intersegment transactions.
8. Adjustment of loss on termination of retirement benefit plan of negative \8 million is for the adjustment associated with the terminationof the retirement benefit plan.
9. Adjustment of tax expenses of \0 million is due to intersegment transactions.
10. Adjustment of increase in tangible fixed assets and intangible fixed assets of \48 million is due to intersegment transactions.
(*3) Segment profit is reconciled to net income in the consolidated statements of income.

55

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

23.

Segment Information (cont’d)Millions of yen
2022
Reportable segment
Commercial
banking

Ordinary income
Customers
Intersegment
Total
Segment profit
Segment assets
Segment liabilities
Other items
Depreciation
Interest income received
Interest expense paid
Extraordinary income
Gains on disposal of fixed assets
Gain on termination of retirement
benefit plan

\
\
\
\
\
\

Leasing

53,168684
53,852
15,873
3,947,255
3,675,097
2,931
39,281
1,597
0

\

Total

14,770177
14,948781
42,87026,611

\
\
\
\
\

135
68
56
9

0

-

\
\
\
\
\
\

Consolidated
total

Adjustments

67,939861
68,80016,6553,990,125
3,701,709
3,066
39,349
1,653
10

\
\
\
\
\
\

(0)
(861)
(861)
(520)
(12,399)(12,387)
54
(547)
(27)
35

0

-

\
\
\
\
\
\

67,93867,938
16,134
3,977,726
3,689,322
3,120
38,801
1,626
45
0

-

9

9

35

44

230

0

230

0

230

Losses on disposal of fixed assets
Impairment loss
Loss on termination of retirement
benefit plan

89
140

0
-

89
140

0
-

89
140

-

-

-

-

-

Tax expenses
Increase in tangible fixed assets
and intangible fixed assets

4,583

241

4,825

12

4,838

4,124

26

4,150

62

4,213

Extraordinary losses

56

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

23.

Segment Information (cont’d)Thousands of U.S. dollars
2022
Reportable segment
Commercial
banking

Ordinary income
Customers
Intersegment
Total
Segment profit
Segment assets
Segment liabilities
Other items
Depreciation
Interest income received
Interest expense paid
Extraordinary income
Gains on disposal of fixed assets
Gain on termination of retirement
benefit plan

Extraordinary losses
Losses on disposal of fixed assets
Impairment loss
Loss on termination of retirement
benefit plan

$
$
$
$
$
$

Leasing434,4145,588
440,003
129,691
32,251,450
30,027,755$

23,948
320,949
13,048
0

$

$
$
$
$

Total

120,679
1,446
122,134
6,381
350,273
217,427

$

1,103
555
457
73

$

0

-

$
$
$
$

Consolidated
total

Adjustments

555,1027,034
562,137
136,081
32,601,723
30,245,191$

25,051
321,505
13,506
81

$

$
$
$
$

(0)
(7,034)(7,034)(4,248)(101,307)(101,209)
441(4,469)
(220)
285

0

-

$
$
$
$
$
$

555,094
555,094
131,824
32,500,416
30,143,982
25,492
317,027
13,285
367
0

-

73

73

285

359

1,879

0

1,879

0

1,879

727
1,143

0
-

727
1,143

0
-

727
1,143

-

-

-

-

-

Tax expenses
37,445
1,969
39,42398
39,529
Increase in tangible fixed assets
and intangible fixed assets
33,695212
33,907506
34,422(*1) Ordinary income is presented as the counterpart of sales of companies in other industries.
(*2) Adjustments are as below.
1. Adjustment of ordinary income from customers of negative \0 million ($0 thousand) is for the adjustment of gain on sale of shares.
2. Adjustment of segment profit of negative \520 million ($4,248 thousand) is for the adjustment of gain on sale of shares and theelimination of intersegment transactions.
3. Adjustment of segment assets of negative \12,399 million ($101,307 thousand) is for the elimination of intersegment transactions andothers.
4. Adjustment of segment liabilities of negative \12,387 million ($101,209 thousand) is for the elimination of intersegment transactions
and others.
5. Adjustment of depreciation of \54 million ($441 thousand) is due to intersegment transactions.
6. Adjustment of interest income received of negative \547 million ($4,469 thousand) is for the elimination of intersegment transactions.
7. Adjustment of interest expense paid of negative \27 million ($220 thousand) is for the elimination of intersegment transactions.
8. Adjustment of gain on termination of retirement benefit plan of \35 million ($285 thousand) is for the adjustment associated with thetermination of the retirement benefit plan.
9. Adjustment of losses on disposal of fixed assets of \0 million ($0 thousand) is due to intersegment transactions.
10. Adjustment of tax expenses of \12 million ($98 thousand) is due to intersegment transactions and termination of the retirement benefit
plan.
11. Adjustment of increase in tangible fixed assets and intangible fixed assets of \62 million ($506 thousand) is due to intersegment
transactions.
(*3) Segment profit is reconciled to net income in the consolidated statements of income.

57

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

23.

Segment Information (cont’d)(4) Related information
For the years ended March 31, 2021 and 2022:
Information by service:
Millions of yen
2021
Security
investments

Loans
Ordinary income
Customers\

24,199 \Leasing

17,299 \Other businesses

14,852 \9,236 \

Total
65,587

Millions of yen
2022
Security
investments

Loans
Ordinary income
Customers\

24,398\Other
businesses

Leasing

17,326 \14,770\Total

11,442 \67,938

Thousands of U.S. dollars
2022
Security
investments

Loans
Ordinary income
Customers$

199,346 $Leasing

141,563 $Other businesses

120,679(5) Impairment loss on tangible fixed assets by reportable segment
For the years ended March 31, 2021 and 2022:
Millions of yen
2021
Reportable segments
Commercial
banking
Leasing
Impairment loss
\
352 \
22 \

$

93,488 $

Total
374

Millions of yen
2022
Reportable segments
Commercial
banking
Impairment loss\

Leasing
140 \

Total
- \

140

Thousands of U.S. dollars
2022
Reportable segments

Impairment loss

Commercial
banking$
1,143 $

Leasing

Total
- $

58

1,143

Total
555,094

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

24.

Transactions with Related Parties

There were no transactions with related parties for the years ended March 31, 2021 and 2022.
There were no related party transactions involving consolidated subsidiaries of the Bank for the years ended March
31, 2021 and 2022.

25.

Changes in Net Assets(1) Type and number of shares
The type and number of shares issued and treasury stock for the years ended March 31, 2021 and 2022 were as
follows:
For the year ended March 31, 2021:
Number of shares
as of the previous
fiscal year end(thousands)
Shares issued
Common stock
43,240Total
43,240Treasury stock
Common stock
1,049
Total
1,049

Increase in number ofshares during theaccounting period(thousands)

Decrease in numberof shares during theaccounting period(thousands)

Number of shares asof the fiscal year end(thousands)--

43,24043,240

371
371

114
114

(*1 and *2) 1,305
1,305(*1) The number of treasury stock as of March 31, 2020 and 2021 included the Bank’s own shares of 214 thousand shares and210 thousand shares, respectively, held by the BIP and the number of treasury stock as of March 31, 2021 included theBank’s own shares of 259 thousand shares held by the Trust.
(*2) The 371 thousand increase in the number of shares of treasury stock was due to the purchase of fractional shares (0 thousand
shares) and acquisition by the Trust (370 thousand shares). The 114 thousand decrease in the number of shares of treasury
stock was due to the delivery of the Bank’s own shares by the BIP (3 thousand shares) and the sales of the Bank’s own sharesby the Trust (111 thousand shares).

For the year ended March 31, 2022:
Number of shares
as of the previous
fiscal year end(thousands)
Shares issued
Common stock
43,240Total
43,240Treasury stock
Common stock
1,305
Total
1,305

Increase in number ofshares during theaccounting period(thousands)

Decrease in numberof shares during theaccounting period(thousands)

Number of shares asof the fiscal year end(thousands)--

43,24043,240

450
450

152
152

(*1 and *2)

1,603
1,603

(*1) The number of treasury stock as of March 31, 2021 and 2022 included the Bank’s own shares of 210 thousand shares and202 thousand shares, respectively, held by the BIP and the Bank’s own shares of 259 thousand shares and 114 thousand
shares, respectively, held by the Trust.
(*2) The 450 thousand increase in the number of shares of treasury stock was due to the purchase of fractional shares (0 thousand
shares) and acquisition through the market (450 thousand shares). The 152 thousand decrease in the number of shares oftreasury stock was due to the sales of fractional shares (0 thousand shares), the delivery of the Bank’s own shares by the BIP(8 thousand shares) and the sales of the Bank’s own shares by the Trust (144 thousand shares).

59

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

25.

Changes in Net Assets (cont’d)(2) Dividends
The following dividends were paid in the years ended March 31, 2021 and 2022:
Year ended March 31, 2021:
Date ofresolution

Type ofsharesDirectors'
meeting held on
May 15, 2020
Directors'
meeting held on
November 13,
2020

Amount ofdividends

Cash dividends

per share

Recorddate

Effective
dateMillions of
yen

Yen

Common
stock

\ 954

\ 22.50

March 31,2020

June 10,
2020

Common
stock

\ 848

\ 20.00

September
30, 2020

December
7, 2020

Year ended March 31, 2022:
Cash dividends per
share

Amount of dividends
Date ofresolution

Type ofsharesDirectors'
meeting held on
May 14, 2021

Common
stock

\ 848

$

6,928

\ 20.00$

Directors'
meeting held on
November 12,
2021

Common
stock

\ 848

$

6,928

\ 20.00$

Millions ofyen

Thousandsof U.S.
dollars

Recorddate

Effective
date

0.16

March 31,2021

June 10,
2021

0.16

September
30, 2021

December
6, 2021U.S.
dollars

Yen（*1) The amount of dividends resolved at the Directors’ meeting held on May 14, 2021 includes \4 million ($32 thousand) ofdividends for the Bank’s own shares held by the BIP and \5 million ($40 thousand) of dividends for the Bank’s own shares
held by the Trust.
（*2) The amount of dividends resolved at the Directors’ meeting held on November 12, 2021 includes \4 million ($32 thousand)of dividends for the Bank’s own shares held by the BIP and \3 million ($24 thousand) of dividends for the Bank’s own shares
held by the Trust.

60Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2021 and 2022

25.

Changes in Net Assets (cont’d)

The following dividends were recorded during the fiscal years ended March 31, 2021 and 2022 and became effective
after March 31, 2021 and 2022:
For the fiscal year ended March 2021, the dividends became effective after March 31, 2021:

Date ofresolution

Directors'
meeting held on
May 14, 2021

Type ofsharesCommonstock

Amount ofdividends

Millions of
yen
\

848

Cash
dividends
per share

Source ofdividends

Recorddate

Effective
date

March 31,2021

June 10,2021

Yen
Retainedearnings\

20.00

For the fiscal year ended March 2022, the dividends became effective after March 31, 2022:
Cash dividends per
share

Amount of dividends
Date ofresolution

Type ofsharesDirectors'
meeting held on
May 13, 2022

CommonstockMillions ofyen

Thousandsof U.S.
dollars\$ 7,704

943

Source ofdividends

Retainedearnings

\

Yen

U.S.
dollars22.50$ 0.18

Recorddate

Effective
date

March
31, 2022

June 10,2022(*) The amount of dividends includes \4 million ($32 thousand) of dividends for the Bank’s own shares held by the BIP and \2
million ($16 thousand) of dividends for the Bank’s own shares held by the Trust.

26.

Subsequent Events

Acquisition of treasury stock
Implementing its flexible financial management policy and furthering the return of profits to its shareholders in responseto changes in the business environment, the Bank, at the Directors’ meeting held on May 13, 2022 and pursuant to
Article 156 of the Companies Act, which is applied by replacing Paragraph 3 of Article 165, resolved to acquire its
own shares and then completed the acquisition during the acquisition period as follows:
Class of shares acquired:
Total numbers of shares acquired:
Aggregate acquisition cost:
Acquisition date:
Acquisition method:

Common stock of the Bank
500,000 shares\1,067 million ($8,718 thousand)May 16, 2022
Purchase through ToSTNeT-3

61

The Awa Bank, Ltd.
24-1,Nishisemba-cho 2 chome,Tokushima 770-8601,Japan
Phone: 088(623)3131