The Awa Bank, Ltd

Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
Years Ended March 31, 2020 and 2021Consolidated Balance Sheets
The Awa Bank, Ltd. and its Consolidated Subsidiaries
As of March 31, 2020 and 2021

2020
AssetsCash and due from banks (Notes 3 and 4)
Call loans and bills purchased (Note 4)
Commercial paper and other debt purchased (Notes 4 and 5)
Trading account securities (Notes 4 and 5)
Securities (Notes 4, 5 and 9)
Loans and bills discounted (Notes 4, 6, 7 and 8)
Foreign exchange (Note 7)
Lease receivables and investment assets (Notes 4 and 6)
Other assets (Note 9)
Tangible fixed assets (Notes 10 and 11)
Intangible fixed assets
Net defined benefit asset (Note 19)
Deferred tax assets (Note 16)
Customers' liabilities for acceptances and guarantees (Note 17)
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 (Notes 4 and 9)
Borrowed money (Notes 4, 9 and 18)
Foreign exchange
Other liabilities (Note 18)
Accrued employees' bonuses
Accrued directors' bonuses
Net defined benefit liability (Note 19)
Accrued directors' retirement benefits
Accrued stock compensation program for directors
Reserve for reimbursement of deposits
Reserve for contingent liabilities
Deferred tax liabilities (Note 16)
Deferred tax liabilities for land revaluation account (Note 11)
Acceptances and guarantees (Note 17)
Total liabilities\

Net Assets
Common stock
Authorized - 100,000,000 shares
Issued - 43,240,000 shares in 2021 and 2020
Capital surplus
Retained earnings
Treasury stock－ Issued 1,305,640 shares in 2021 and 1,049,013 shares in 2020
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 19)
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets\

Millions of yen
2021

287,164
2,151
1,149
917
995,428
1,962,862
11,07028,80247,30837,396
5,164
5,261
269
8,437
(17,174)
3,376,210

2,771,127
175,149
20,02458,47053,61083
25,493
22
53
505
10
139
427
1,043
6,515
2,730
8,437
3,123,847\\\

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$$

5,715,590
176,993
13,8197,000
9,042,507
18,850,284
62,821
263,634
432,336
331,794
44,74755,1982,068
87,516(165,630)
34,920,738

27,910,577
1,163,770
100,000
379,956
2,140,637
99
257,953
198
388
397
81
1,770
3,107
9,962
194,228
24,42487,51632,275,133

23,452
20,106
169,299(2,892)

23,452
20,106
176,045(3,529)211,832
181,6091,590,145(31,876)

209,966
40,516(2,479)5,184(824)
42,396
252,362
3,376,210

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

1,951,720
661,132(13,801)
46,373
162
693,875
2,645,596
34,920,738

See Notes to Consolidated Financial Statements.

1

Thousands of
U.S. dollars(Note 1)
2021

\

$

Consolidated Income Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

Thousands of
U.S. dollars(Note 1)
2021

Millions of yen
2020
2021
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 13)
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 12)
Other expenses:
Provision for loan losses
Other expenses (Notes 14 and 19)
Total expenses
Income before income taxes
Income taxes (Note 16):
Current
Deferred
Net income
Net income attributable to noncontrolling interests
in income of consolidated subsidiaries
Net income attributable to owners of the parent company\

23,60315,091243
38,775
15,442
4,246
67,406\23,731
13,529247
2
8,169
15,797
4,117
65,596

$

1,005
906
2,267
1,220
12,77028,005

661
257
1,208
1,221
13,56928,0605,970
2,321
10,911
11,028
122,563
253,454

3,915
1,656
51,7485,855
2,581
53,41552,88523,313
482,476

15,65812,181110,026

4,593
(105)
11,170

3,781
(98)
8,498

34,152(885)
76,7599
11,160

\

8,498

$

Yen
2020
\

261.80
45.00

2021
\

202.6440.00

76,759U.S. dollars(Note 1)2021

Per share of common stock

Net income per share - basic
Dividends

214,352
122,2022,231
18
73,787
142,688
37,187592,502

$

1.830
0.361

For the years ended March 31, 2020 and 2021, 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, 2020 and 2021

Thousands of
U.S. dollars(Note 1)
2021

Millions of yen
2020
2021
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 15)
Comprehensive income
Comprehensive income attributable to:
Owners of the parent company
Noncontrolling interests\

11,170\(25,335)150(1,211)(26,397)(15,226)\(15,222)(4)

See Notes to Consolidated Financial Statements.

3

\

8,498

\

32,678950843
34,472
42,971\42,971-$76,759$295,1678,580
7,614
311,372
388,140$

388,140-

Consolidated Statements of Changes in Net Assets
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

Millions of yen
Stockholders' equity
Number of sharesof common stock
issuedBalance at March 31, 2019
Changes during the accounting period
Dividends
Net income attributable to owners of
the parent company
Purchase of treasury stock
Disposal of treasury stock
Change in ownership interests ofthe parent company due totransactions with noncontrollinginterests
Reversal of land revaluation account
Changes other than changes instockholders' equity (net)Total changes during the accounting
periodBalance 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 stock
Change in ownership interests ofthe parent company due totransactions with noncontrollinginterests
Reversal of land revaluation account
Changes other than changes instockholders' equity (net)Total changes during the accounting
periodBalance at March 31, 2021

43,240,000

Common stock

Capital surplus

Retained earnings

Treasury stock

\

\

\

\

23,452

20,069160,069(1,043)

Total
shareholders'equity\202,548---(1,934)-(1,934)---

11,160(0)(1,853)
5

11,160(1,853)
4

-

-

36
-

3

-

36
3

-

-

-

-

-

-

43,240,000\

23,452

36
20,106\\

9,229
169,299\(1,848)(2,892)\

7,417
209,966---(1,802)-(1,802)

-

-

-

8,498
-

(927)
290

8,498
(927)
290

-

-

-

49

-

49

-

-

-

-

-

-

43,240,000\

23,452

20,106\\

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

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, 2019
Changes during the accounting period
Dividends
Net income attributable to owners of
the parent company
Purchase of treasury stock
Disposal of treasury stock
Change in ownership interests ofthe parent company due totransactions with noncontrollinginterests
Reversal of land revaluation account
Changes other than changes instockholders' equity (net)Total changes during the accounting
periodBalance 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 stock
Change in ownership interests ofthe parent company due totransactions with noncontrollinginterests
Reversal of land revaluation account
Changes other than changes instockholders' equity (net)Total changes during the accounting
periodBalance at March 31, 2021

\

\

\

65,837\(2,629)Landrevaluationaccount\

5,187

Remeasurementsof defined
benefit plans

Total
accumulated
othercomprehensive
income\\387

68,783

Noncontrollinginterests

\

1,000

Total
net assets\

272,331

-

-

-

-

-

-

(1,934)

-

-

-

-

-

-

11,160(1,853)
4

-

-

-

-

-

-

36
3

(25,321)150(3)(1,212)(26,386)(1,000)(27,386)(25,321)40,516\150(2,479)

(3)
5,184

\

\

(1,212)(824)\(26,386)
42,396\(1,000)-\(19,969)
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

\

\

See Notes to Consolidated Financial Statements.

4

843
18

\

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

Consolidated Statements of Changes in Net Assets
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

Thousands of U.S. dollars (Note 1)
Stockholders' equity
Number of sharesof common stock
issuedBalance at April 1, 2020
Changes during the accounting period
Dividends
Net income attributable to owners of
the parent company
Purchase of treasury stock
Disposal of treasury stock
Change in ownership interests ofthe parent company due totransactions with noncontrollinginterests
Reversal of land revaluation account
Changes other than changes instockholders' equity (net)Total changes during the accounting
periodBalance at March 31, 2021

43,240,000

Common stock

Capital surplus

Retained earnings

Treasury stock

$

$

$

$

211,832

181,6091,529,211(26,122)

Total
shareholders'equity$1,896,540---(16,276)-(16,276)---

76,759-(8,373)2,619

76,759(8,373)
2,619

-

-

-

442

-

442

-

-

-

-

-

-

43,240,000$

211,832

181,609$$60,933
1,590,145$(5,744)(31,876)$

55,1801,951,720

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, 2020
Changes during the accounting period
Dividends
Net income attributable to owners of
the parent company
Purchase of treasury stock
Disposal of treasury stock
Change in ownership interests ofthe parent company due totransactions with noncontrollinginterests
Reversal of land revaluation account
Changes other than changes instockholders' equity (net)Total changes during the accounting
periodBalance at March 31, 2021$

365,965$(22,391)Landrevaluationaccount$

46,825Remeasurementsof defined
benefit plans

Total
accumulated
othercomprehensive
income$$(7,442)382,946

Noncontrollinginterests

$

-

Total
net assets$

2,279,486

-

-

-

-

-

-

(16,276)

-

-

-

-

-

-

76,759(8,373)
2,619

-

-

-

-

-

-

442

295,167

8,580

(442)

7,614

310,920-

310,920-$

295,167
661,132$

8,580(13,801)(442)
46,373$$

See Notes to Consolidated Financial Statements.

5

7,614
162

$

310,920
693,875$-$

366,1092,645,596

Consolidated Statements of Cash Flows
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

Thousands of
U.S. dollars(Note 1)
2021

Millions of yen
2020
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\

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
Cash flows from financing activities:
Dividends paid
Dividends paid to noncontrolling interests stockholders
Payments for purchases of treasury stock
Proceeds from sales of treasury stock
Payments from changes in ownership interests in subsidiaries
that do not result in a change in scope of consolidation
Net cash provided by (used in) financing activities
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)\

15,658
2,629
50
(91)
81
(5)
6
(599)
(2)
(2)
81
(38)
(38,939)4,179(2,740)
(0)
4,149
21
34
(63,413)
15,261(5,728)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)$110,026
26,402
3,378
10,504
532
(0)
(90)
(948)
63
(0)
505
(749)
(338,804)
19,212(15,436)(66,615)289
1,273(1,120,522)
2,880,074(418,272)

14,617

183,379

1,656,390

1,121

341

3,080

3,506
16,14031,033(3,561)80
39,086(4,160)1,730
30,185(5,132)
25,053(17,827)(8,953)(16,405)
6,453(71)
38,247(2,351)
1,667
305,245(3,688)
301,556(161,024)(80,868)(148,179)
58,287(641)
345,470(21,235)
15,0572,757,158(33,312)2,723,837(203,698)
71,178150,591(2,100)2,100(3,433)(52)
141(2,382)
12,343(170,572)
65,012
154,616(1,028)(26)
61(1,230)46,831(1,540,709)
587,227
1,396,585(9,285)(234)
550(11,110)423,006(1,934)(0)(1,853)
4(1,802)(927)
290(16,276)(8,373)
2,619

(958)
(4,742)(2,438)(22,021)0
32,654
252,620
285,2752345,951
285,275
631,227

18
3,124,839
2,576,777
5,701,625

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, 2020 and 2021

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 anddisclosure 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, 2021, which was \110.71 to U.S.$1.00. The
translations should not be construed as representations that the Japanese yen amounts have been, could have been or
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, 2020 and 2021

2.

Significant Accounting Policies(1) Principles of consolidation
The consolidated financial statements for the years ended March 31, 2020 and 2021 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 (for 2021)
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.
(Change in scope of consolidation)
The Awagin Connect Company Limited is included in the scope of consolidation for the year ended March 31, 2021
due to its establishment.
The following subsidiary of the Bank was excluded from the scope of consolidation for the years ended March 31,
2020 and 2021 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, 2020 and 2021 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, 2020 and 2021 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 (for 2021)
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, 2020 and 2021

2.

Significant Accounting Policies (cont’d)(2) Trading account securities
Listed trading account securities of the Bank are stated at fair market value. Gains and losses realized on disposal andunrealized gains and losses from market value fluctuations of the securities are recognized as gains and losses in the
period of the change. Costs are calculated by the moving average method.
(3) 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 with available fair market values are stated at fair market value, which is the average for the last month of
the fiscal year. Unrealized gains and unrealized losses on these securities are reported, net of applicable income taxes,
as a separate component of shareholders’ equity or net assets. Realized gains and losses on the sale of such securities
are computed using moving average cost. Available-for-sale securities whose fair values are extremely difficult todetermine are stated at moving average cost. Debt securities with no available fair market values are stated atamortized cost, net of the amount considered not collectible.
(4) Depreciation method for fixed assets① Tangible fixed assets (except for leased assets)
Tangible fixed assets are generally stated at cost, less accumulated depreciation and deferred gains on the sale of realestate. Depreciation of tangible fixed assets owned by the Bank and its consolidated subsidiaries is recorded using thestraight-line method. At March 31, 2020 and 2021, 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 straight-line
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, 2020 and 2021

2.

Significant Accounting Policies (cont’d)(5) 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 othercollection proceedings or who are in a similar financial condition, the reserve for possible loan losses for the portionsof the loans that are neither secured nor guaranteed is provided in the full amount, excluding write-off amounts andthe portion that is estimated to be recoverable due to the existence of security interests or guarantees. For loans tocustomers not presently in the above circumstances but who have a high probability of becoming insolvent, thereserve for possible loan losses for the portions of the loans that are neither secured nor guaranteed is provided for in
the amounts estimated to be unrecoverable after an evaluation of the customer’s overall financial condition. For otherloans, 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 for acertain period in the past based on actual defaults for the past one year or three years with certain necessary
adjustments such as future estimates.
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, 2020 and 2021, 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 theexistence of security interests or guarantees. As of March 31, 2020 and 2021, the write-off of the estimatedunrecoverable amounts was \19,623 million and \19,429 million ($175,494 thousand), respectively.
(6) Accrued employees’ bonuses
Accrued employees’ bonuses were recorded to pay bonuses to employees of the consolidated subsidiaries for the
fiscal years ended March 31, 2020 and 2021.
(7) Accounting for retirement benefits
The benefit formula basis is used as a method of attributing expected benefits to the period through the end of the
fiscal year in calculating projected benefit obligation. Prior service costs are recognized in the statements of income
using the straight-line method within the average of the estimated remaining service years of employees (10 years).
Actuarial differences are recognized in the statements of income using the straight-line method within the average ofthe estimated remaining service years (10 years) commencing with the following period.
Consolidated subsidiaries apply the simplified method for their unfunded lump-sum payment plans, which incalculating net defined benefit liability and retirement benefit expenses assumes the Bank’s projected benefit
obligation to be equal to the benefits payable and the voluntary retirement of all employees at the fiscal year-end.
(8) Accrued directors’ bonuses
Accrued directors’ bonuses were recorded to provide for the payment of bonuses to directors in an estimatedpayment amount attributable to the current period.
(9) Accrued directors’ retirement benefits
A provision is made for accrued retirement benefits of directors and corporate auditors in the amount deemed accruedat the end of the reporting period.

10Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

2.

Significant Accounting Policies (cont’d)(10) 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.
(11) 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.
(12) Reserve for contingent liabilities
A provision is made in an estimated amount for future payments to credit guarantee associations on loan-loss burden
sharing.
(13) 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.
(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 ” (The Japanese Institute of Certified Public Accountant (“JICPA”) Industry
Committee Report No. 24, October 8, 2020).
The effectiveness of hedging is assessed for each identified group of hedged deposits, loans and similar items and thecorresponding 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” (Accounting Standards
Board of Japan (“ASBJ”) Practical Issues Task Force (“PITF”) No. 40, September 29, 2020) 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). Assessment of the effectiveness of these hedge transactions is conducted byconfirming 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.

11

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

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 the year,
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,
2021 based on accounting estimates that may affect the consolidated financial statements for the year ending March
31, 2022 are as follows:
Reserve for possible loan losses① Reserve for possible loan losses was recorded in the amount of \18,337 million ($165,630 thousand) in the
consolidated financial statements for the year ended March 31, 2021.
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. (5), “Significant Accounting
Policies- Reserve for possible loan losses.”(ii) Major assumptions
Major assumptions are “Customers’ future financial outlook in determining customer classification” and “Effects of
COVID-19 on the economy.” The “Customers’ future financial outlook” is determined by individually evaluatingeach customer's ability to earn profits. Also the “Effects of COVID-19 on the economy” is based on assumption that
although the economy's recovery will continue in the year ending March 31, 2022 due to the progress with ofvaccinations and the support of various policies, there are still concerns about the resurgence of COVID-19.
(iii) Effects on consolidated financial statements for the year ending March 31, 2022
If the initial assumptions are changed due to a customer's business performance or delays in ending the COVID-19
pandemic, there may be significant effects on the reserve for possible loan losses in the consolidated financial
statements for the year ending March 31, 2022.

12

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

2.

Significant Accounting Policies (cont’d)(19) Unadopted accounting standards
The following standard and guidance were issued but not yet adopted.
- “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020)- “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, March 26,
2021)① Overview
The above standard and guidance provide comprehensive principles for revenue recognition. Under the standard andguidance, revenue is recognized 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.
② Effective date
The standard shall be effective from the beginning of the fiscal year ending March 31, 2022.
③ Effects of application
The effects of the new standard on the consolidated financial statements are expected to be immaterial.
- “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019)- “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, July 4,
2019)- “Revised Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9, July 4, 2019)- “Revised Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019)- “Revised Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No.
19, March 31, 2020)① Overview
The “Accounting Standard for Fair Value Measurement” and “Implementation Guidance on Accounting Standard for
Fair Value Measurement” (hereinafter “Accounting Standard for Fair Value Measurement”) have been developed toenhance comparability between Japanese accounting standards and international accounting standards. The
Accounting Standard for Fair Value Measurement is applied to the following items:- Financial instruments as prescribed in the “Accounting Standard for Financial Instruments”- Inventories held for trading purposes as prescribed in the “Accounting Standard for Measurement of
Inventories”
Further, “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” has been revised, andrelated notes have been established, including a breakdown by the level of fair value of financial instruments.
② Effective date
The standard shall be effective from the beginning of the fiscal year ending March 31, 2022.

13

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

2.

Significant Accounting Policies (cont’d)③ Effects of application
The effects of the new standard on the consolidated financial statements are expected to be immaterial.
(20) Change in presentation method
The Bank and its consolidated subsidiaries applied “Accounting Standard for Disclosure of Accounting Estimates”(ASBJ Statement No. 31, March 31, 2020) to the consolidated financial statements for the consolidated fiscal year
ended March 31, 2021. Significant accounting estimates are disclosed in the notes to the consolidated financial
statements.
The notes do not include related information for the prior consolidated fiscal year in accordance with thetransitional provisions set out in Paragraph 11 of the Accounting Standard.
(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, 2020 and 2021 were \744
million and \732 million ($6,611 thousand) and 214 thousand shares and 210 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 Group andto provide incentives for improving the Bank’s medium to long-term corporate value and support asset building byencouraging employees to acquire and hold shares through the expansion of the employee shareholding association asa measure of enhancing employee welfare and benefits from the fiscal year ended March 31, 2021.

14

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

2.

Significant Accounting Policies (cont’d)① Overview of the transaction
The Bank will establish the Awagin Group Employee Shareholding Association Dedicated Trust (the “Trust”) in thetrust bank. The Trust will acquire 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 will provide 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 section of
net assets(ii) The carrying amount and the number of shares of such treasury stock as of March 31, 2021 were \647 million($5,844 thousand) and 259 thousand shares.
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 was ¥651 million ($5,880
thousand) as of March 31, 2021.
(Retirement Benefit Plan)
On April 1, 2021, the Group has transferred its defined benefit pension plan to a risk sharing pension plan, which isclassified as a defined contribution plan stipulated in Paragraph 4 of “Accounting Standard for Retirement Benefits”(ASBJ Statement No. 26, December 16, 2016). Regarding the accounting treatment associated with the transition,“Practical 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, aloss on termination of retirement benefit plan of \75 million ($677 thousand) was recorded in other expenses for the
fiscal year ended March 31, 2021. 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, 2020 and 2021 is as follows:
Thousands ofMillions of yen
2020
Cash and due from banks ------------- \Due from banks (excluding deposits with
the Bank of Japan) ------------------Cash and cash equivalents ------------ \U.S. dollars
2021

2021

287,164\

632,773$

5,715,590(1,888)285,275\(1,546)631,227$(13,964)5,701,625

15

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

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 very safe.
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 capital outflows. To manage this risk, theGroup 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 byhedging 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 “Accounting Standards and Auditing Treatment
for Financial Instruments in the Banking Industry” (JICPA Industry Committee Report No. 24, October 8, 2020). 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 “Treatment of Accounting and Auditing
Concerning Accounting for Foreign Currency Transactions in the Banking Industry” (JICPA Industry Committee
Report No. 25, October 8, 2020). The Bank uses currency swaps and other methods to hedge exchange rate risk andevaluates the effectiveness of the hedges by confirming that a foreign currency hedge position exists in an amountequivalent 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:16

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

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 and loss 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 andreports 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 thegaps in risk, including the deposits and loans of the entire Bank, and uses the BPV (Basis Point Value) method andpresent value method for detailed management.

17Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

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, 2020 and 2021 was \69,769 million and \72,216 million ($652,298 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 themarket 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
In addition to values based on market price, the fair value of financial instruments includes values reasonably
calculated if no market price is available. Since certain assumptions are used in the calculation of such values, theresults of such calculations may vary if different assumptions are used.

18

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

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 as ofMarch 31, 2020 and 2021. Unlisted stocks and others for which the fair value was deemed to be extremely difficult todetermine were excluded from the table (see Note 2).

(1) Cash and due from banks(2) Call loans and bills purchased(3) Commercial paper and other debt
purchased(4) Trading account securities
Trading securities(5) Securities
Held-to-maturity debt securities
Available-for-sale securities(6) Loans and bills discounted
Reserve for possible loan losses (*1)(7) Lease receivables and investment assets
Reserve for lease losses (*1)(*2)
Total assets:(1) Deposits(2) Negotiable certificates of deposit(3) Call money and bills sold(4) Payables under securities lendingtransactions(5) Borrowed money
Total liabilities:
Derivative transactions (*3)
Hedge accounting not applied
Hedge accounting applied
Total derivative transactions:

Millions of yen
2020
Book value Fair value\ 287,164 \ 287,164
2,151
2,151

Difference
\
-

1,149

1,149

-

917

917

-

983,503
1,962,862(16,362)
1,946,499
28,802(658)
28,143\ 3,249,529\ 2,771,127
175,149
20,024

983,503-1,950,404

3,904

30,223\3,255,514\2,771,249
175,150
20,02458,47053,610\ 3,078,383

58,47053,603\3,078,499

\

\

\

\

\

196
(3,290)(3,093)\196(3,290)(3,093)

\
\

\

2,080
5,985
122
0
(6)
116
-

(*1) “General and specific reserves for loan losses related to loans and bills discounted” and “General and specific reserves for loan
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 \23,989 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.

19Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

4.

Financial Instruments (cont’d)(1) Cash and due from banks(2) Call loans and bills purchased(3) Commercial paper and other debt
purchased(4) Trading account securities
Trading securities(5) Securities
Held-to-maturity debt securities
Available-for-sale securities(6) Loans and bills discounted
Reserve for possible loan losses (*1)(7) Lease receivables and investment assets
Reserve for lease losses (*1)(*2)
Total assets:(1) Deposits(2) Negotiable certificates of deposit(3) Call money and bills sold(4) Payables under securities lendingtransactions(5) Borrowed money
Total liabilities:
Derivative transactions (*3)
Hedge accounting not applied

Millions of yen
2021
Book value Fair value\ 632,773 \ 632,773
19,595
19,595Difference\-

Thousands of U.S. dollars
2021
Book value
Fair value
Difference$ 5,715,590 $ 5,715,590 $
176,993
176,993
-

1,530

1,530

-

13,81913,819

-

775

775

-

7,000

7,000

-

988,305
2,086,915(17,446)
2,069,469
29,187(744)
28,442\ 3,740,893\ 3,089,980
128,841
11,071

988,305-

8,926,971-

2,072,194

2,724

18,717,315

24,60430,423\3,745,599\3,090,133
128,844
11,071

1,980
4,705
152
2
-

8,926,971
18,850,284(157,582)
18,692,701
263,634(6,720)256,905$33,790,018$27,910,577
1,163,770
100,000

274,799$33,832,526$27,911,959
1,163,797
100,000

42,065236,990\ 3,508,948

42,065236,981\3,509,096

(8)
147

379,956
2,140,637$ 31,694,950

379,956
2,140,556$31,696,287

\
\

\

$
$

$

17,88442,498
1,372
18
(72)
1,327

\

(2,141) \ (2,141) \$ (19,338) $ (19,338) $(5,140)(5,140)(46,427)(46,427)
Total derivative transactions:\(7,282) \ (7,282) \$ (65,775) $ (65,775) $(*1) “General and specific reserves for loan losses related to loans and bills discounted” and “General and specific reserves for loan
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 ($217,369 thousand).
(*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.

Hedge accounting applied (*4)(Note 1) Methods used to determine the fair value of financial instruments
Assets(1) Cash and due from banks
The fair value of due from banks with no maturity is considered to be the book value because the fair value of these
items approximates the book value.

20

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

4.

Financial Instruments (cont’d)(2) Call loans and bills purchased
The fair value of call loans and bills purchased is deemed to be the book value because these items have shortcontractual terms (within 1 year) and the fair value approximates the book value.
(3) Commercial 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 have short contractual terms (within 1 year). Therefore, the fair value is considered tobe the book value because the fair value of these items approximates the book value.
(4) Trading account securities
The fair value of securities such as bonds held for trading is based on the published market price or the price quoted
by correspondent financial institutions.
(5) Securities
The fair value of stocks is based on the market price. The fair value of bonds is determined by the over-the-countermarket value or amounts quoted by correspondent financial institutions. The fair value of investment trusts is based on
the publicly disclosed net asset value. The fair value of private placement bonds is calculated based on loans and bills
discounted. Investments in partnerships are evaluated if the partnership assets can be quoted at fair value and theposted equivalent value of net assets is the fair value of the investment in the partnership.
Information on securities classified by the purpose for which they are held is disclosed in Note 5, “Securities.”(6) Loans and bills discounted
The fair value of loans and bills discounted with floating 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 thecreditworthiness of the borrower changes significantly from the inception date. The fair value of loans and bills
discounted with a fixed rate is calculated as the present value, discounting future cash flow at a rate that reflects theproper market rate corresponding to the remaining period and credit risk based on the internal rating. The fair value ofloans and bills discounted with short contractual terms (within 1 year) is considered to be the book value because thefair 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 is calculated based on the present value of the expected future cash flow or theestimated collectable amount from collateral and/or guarantees, approximates the consolidated balance sheet amountas of the consolidated balance sheet date less the allowance for bad debts.
The fair value of loans and bills discounted with no maturity due to conditions such as limiting the loans to the valueof 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.
(7) Lease receivables and investment assets
The fair value of lease receivables and investment assets takes into consideration the loan loss ratio of eachborrower’s category and the discounted market interest rate on the consolidated balance sheet date. In addition, thefair 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 collectableamount from collateral and/or guarantees, approximates the consolidated balance sheet amount as of the consolidatedbalance sheet date less the allowance for bad debts.

21

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

4.

Financial Instruments (cont’d)Liabilities(1) Deposits and (2) 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). In addition, 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 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 book value.
(3) Call money and bills sold and (4) Payables under securities lending transactions
The fair value of call money and bills sold is deemed to be the book value because the contractual terms are within 1
year and the fair value of these items approximates the book value.
(5) Borrowed money
The fair value of borrowed money with floating rates is considered to be the book value since the rate reflects themarket rate in a short period and the fair value of these items approximate the book value, unless the creditworthinessof the Bank and its consolidated subsidiaries changes significantly from the inception date. The fair value of borrowed
money with a fixed rate is calculated as the present value by discounting the total amount of principal and interest at
an assumed interest rate for similar new loans. The fair value of borrowed money with short contractual terms (within
1 year) is considered to be the book value because the fair value of these items approximates the book value.
Derivative Transactions
Information on derivative transactions is disclosed in Note 20, “Derivative Transactions.”(Note 2) Financial instruments whose fair value was deemed to be extremely difficult to determine were not includedin Available-for-sale securities under (5) Securities in “(2) Fair value of financial instruments” above. These
instruments were as follows:Book value
Millions of yen
2021

Millions of yen
2020
Unlisted stocks (*1)(*2) \Investments inpartnerships (*3)\
Total ---------------- \6,679 \

Thousands of U.S. dollars
2021
7,135 $
64,447

5,245 \
11,924 \5,655 $
12,790 $51,079115,527(*1) Unlisted stocks are not included in the disclosure of fair value because the fair value is deemed extremely difficult to determine.
(*2) The amount of unlisted stocks impaired during the years ended March 31, 2020 and 2021 was\3 million and \4 million ($36
thousand), respectively.
(*3) Investments in partnerships in which the partnership assets comprise unlisted stocks are not included in the disclosure of fairvalue because the fair value is deemed extremely difficult to determine.

22

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

4.

Financial Instruments (cont’d)(Note 3) Expected collection of monetary claims and securities with maturities:

Within 1
year\249,648
2,151

1-3
years
\
-

Millions of yen
2020
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
719
425
Securities
Held-to-maturity debt securities
Japanese government bonds
Municipal bonds
Short-term corporate bonds
Corporate bonds
OthersAvailable-for-sale securities with
134,597
192,196
175,630
67,36087,46277,500maturities
Japanese government bonds
74,50076,60050,1005,000
8,500
18,800
Municipal bonds
17,52037,22636,871
33,65837,666
18,971
Short-term corporate bonds
Corporate bonds
18,88528,081
20,206
10,374
17,441
33,479Others23,69150,28868,452
18,32723,854
6,249
Loans and bills discounted (*1)
435,245
393,552
273,593
200,951
208,624
389,223
Lease receivables and investment
assets (*2)
8,176
12,021
6,213
1,298
433
218
Total
\830,537\598,196\455,437\269,610\296,520\466,941(*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 \38,299 million and those
without terms in the amount of \23,371 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 \440 million are notincluded. There are no monetary claims or securities without maturities.

23

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

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
2021
3-5
5-7
years
years
\
\
-

Within 1
year¥592,714
19,595

1-3
years
\
-

1,528

-

-

-

-

-

-

-

7-10
years
\
-

Over 10
years
\
-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

91,207183,270

146,841

81,51882,291

124,698

38,50018,626
11,707
22,373416,293

59,30035,87731,73356,360392,163

23,70036,172
18,06868,900318,885

8,700
30,212
15,451
27,155
238,897

8,000
21,603
16,63436,053
264,855

43,80019,71456,9874,196
397,146

8,162¥1,129,501

12,145¥587,579

6,348¥472,075

1,345¥321,761

527¥347,675

142¥521,987

24

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

4.

Financial Instruments (cont’d)Within 1
year$5,353,753
176,993

Thousands of U.S. dollars
2021
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
13,801
Securities
Held-to-maturity debt securities
Japanese government bonds
Municipal bonds
Short-term corporate bonds
Corporate bonds
OthersAvailable-for-sale securities with
823,837
1,655,406
1,326,357
736,320
743,302
1,126,348
maturities
Japanese government bonds
347,755
535,633
214,072
78,58372,260395,628
Municipal bonds
168,241
324,062
326,727
272,893
195,131
178,068
Short-term corporate bonds
Corporate bonds
105,744286,631
163,201
139,562
150,248514,741
Others202,086
509,077
622,346245,280
325,652
37,900Loans and bills discounted (*1)
3,760,211
3,542,254
2,880,363
2,157,862
2,392,331
3,587,264
Lease receivables and investment
assets (*2)
73,724
109,701
57,33812,148
4,760
1,282
Total
$10,202,339 $5,307,370 $4,264,068 $2,906,340 $3,140,411 $4,714,903(*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 ($352,488
thousand) and those without terms in the amount of \19,648 million ($177,472 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 \515 million ($4,651
thousand) are not included. There are no monetary claims or securities without maturities.

25

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

4.

Financial Instruments (cont’d)(Note 4) 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
2020
3-5
5-7
years
years
\ 23,432\
740

Within 1
year\ 2,611,612

1-3
years
\ 134,206

7-10
years
\ 1,135

Over 10years\-

174,949
20,024

200
-

-

-

-

-

58,4704,978\ 2,870,035

32,178\ 166,584

16,454\ 39,886

740\ 1,135\-

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\-

Thousands of U.S. dollars
2021
1-3
3-5
5-7
years
years
years
$1,244,937$ 101,942$ 4,796

Within 1
year$26,546,373

7-10
years
$ 12,510

Over 10years$-

Deposits (*)
Negotiable certificates ofdeposit
1,159,253
4,516
Call money and bills sold
100,000
Payables under securities
lending transactions
379,956
Borrowed money
1,689,477
432,074
Total$29,875,070$1,681,537(*) Demand deposits are included in “Within 1 year.”

26

\

\

-

-

-

-

19,076$ 121,027$ 4,796$ 12,510-$

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

5.

Securities

Unsecured securities that have been loaned and that allow the borrowers to sell the borrowed securities amounted to\89,781 million and \56,329 million ($508,797 thousand) as of March 31, 2020 and 2021, respectively, and areincluded in Japanese government bonds in Securities.
(1) Acquisition costs, book values and fair values of securities with available fair values
The following tables summarize acquisition costs, book values and fair values of securities with available fair values asof March 31, 2020 and 2021. The amounts in the following tables include trading account securities and trust
beneficiary interests in commercial paper and other debt purchased as well as securities① Trading securities:
Thousands of
U.S. dollars
2021

Millions of yen
2020
2021
Amount of net unrealized gains (losses) included instatements of income ---------------------------

\

4

\

② Held-to-maturity debt securities for the years ended March 31, 2020 and 2021:
Not applicable.

27

3

$

27

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

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\
91,223

Millions of yen
2020
Acquisition
cost\
37,667

Difference\
53,555

197,978
112,576
86,098
202,593
690,469\

192,283
110,374
83,654
190,640
614,619

\

5,694
2,202
2,443
11,95375,849\13,796\(2,812)

\

(896)
(360)
(615)
(11,350)(16,035)\

59,814\※ Book value did not exceed acquisition cost.
Equity securities -----------Bonds:
Japanese government bonds Municipal bonds ----------Corporate bonds ---------Other --------------------Total ----------------------\

10,983\

43,23074,32247,704
117,222
293,463\

44,127
74,682
48,320128,572
309,499

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

983,933\

924,11828

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

5.

Securities (cont’d)※ 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\
44,839121,112130,394
81,846
277,831735,896\\

Difference
79,871\

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\

881,818

29

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

5.

Securities (cont’d)※ Book value exceeded acquisition cost.
Thousands of U.S. dollars
2021
Book (fair)
Acquisition
value
cost
Difference
Equity securities ------------Bonds:
Japanese government bonds -Municipal bonds ----------Corporate bonds ----------Other ---------------------Total ----------------------$ 1,126,465
1,093,957
1,177,797
739,2822,509,538$ 6,647,059$

405,013$

721,443$

1,056,679
1,160,030
721,217
2,295,402
5,638,370$

37,26817,75818,065
214,136
1,008,680$

42,688$(3,594)$(6,638)(1,508)(7,759)(24,415)(43,943)$964,736※ Book value did not exceed acquisition cost.
Equity securities ------------Bonds:
Japanese government bonds -Municipal bonds ----------Corporate bonds----------Other ---------------------Total ----------------------$

39,084

598,039
328,588676,208
640,854$ 2,282,792$

604,687
330,105
683,967
665,278
2,326,736

Grand total -----------------$ 8,929,852$

7,965,116④ Held-to-maturity debt securities sold for the years ended March 31, 2020 and 2021:
Not applicable.

30

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

5.

Securities (cont’d)⑤ Available-for-sale securities sold in the years ended March 31, 2020 and 2021:

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\
7,655

Millions of yen
2020
Gains
\
2,790

Losses\821

9,027
26,341
2,219
25,893
71,138

15
57
6
916
3,786

11
37
1
49
920

\

\

\

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

\

\

\

Thousands of U.S. dollars
2021
Amount sold
Gains
Losses$62,731$
23,006$8,454$

187,805
155,333
21,958159,380
587,227270
63
9
10,43233,809

$

31

$

2,185
334
9
3,622
14,632

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

5.

Securities (cont’d)⑥ Securities reclassified for the years ended March 31, 2020 and 2021:
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, 2020 was \182 million, including \182 million of equity securities and nil of other.
Impairment loss for the fiscal years ended March 31, 2021 was \ 408 million ($3,685 thousand), including \ 408 million($3,685 thousand) of equity securities and nil 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% or more
but less than 50%, historical price trends over a specific period and the recent business performance of the issuing
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, 2020 and 2021 were as follows:
Thousands of
U.S. dollars
2021

Millions of yen
2020
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 ---

\

2021

59,814(17,968)\

41,846(1,329)40,516

106,806(32,281)$

74,524(1,329)\73,194

964,736(291,581)

673,146(12,004)$

661,132(3) Guarantee obligations for privately placed bonds
At March 31, 2020 and 2021, the amount of guarantee obligations for privately placed bonds (Securities and Exchange
Law, Article 2, Item 3) included in corporate bonds amounted to \19,238 million and \19,189 million ($173,326
thousand), respectively.

32

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

6．

Loans and Bills Discounted

At March 31, 2020 and 2021, loans and bills discounted included the following:

Loans to bankrupt customers-------------Nonaccrual loans----------------------Loans past due three months or more------Restructured loans ----------------------

\

2,715
36,024
381
6,473

\

1,265
38,274741
6,744

Thousands of
U.S. dollars
2021$
11,426
345,714
6,693
60,915

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

45,594\47,026$

Millions of yen
2020

2021

424,767

The amounts above represent gross receivable amounts before deducting reserves for possible loan losses.
Loans to bankrupt customers are loans to customers undergoing bankruptcy or similar proceedings or who are insimilar financial condition. Interest is not being accrued on these loans as there is a strong likelihood that the principal
and interest are uncollectible.
Nonaccrual loans are loans on which accrued interest income is not recognized, excluding “Bankrupt loans” and loans
on which interest payments are deferred in order to support the borrowers’ recovery from financial difficulties.
Loans past due three months or more are loans not included in the above categories or in restructured loans for which
payments are past due three months or more but less than six months.
Restructured loans are loans not included in the above categories for which the Bank has granted concessions such as
reduced interest rates or the deferral or waiver of interest and/or principal payments to support customers in financial
difficulties.

7.

Commercial Bills

Discounts of commercial bills are accounted for as financing transactions as stipulated in “Accounting and Auditing
Treatment of Accounting Standards for Financial Instruments in Banking Industry” (JICPA Industry Committee
Report No. 24, October 8, 2020). The Bank has rights to use commercial bills discounted or foreign exchange
purchased in the form of sale or use as (re)collateral. The total face value of commercial bills obtained as a result of
discounting was \10,438 million and \6,944 million ($62,722 thousand) at March 31, 2020 and 2021, respectively.

33

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

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, 2020 and 2021 amounted to \369,371 million and \382,712 million ($3,456,887
thousand), respectively. Of these amounts, \359,231 million and \372,245 million ($3,362,343 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 to limit when there is cause to do so, such as when there is a change in financial condition of theborrower or when it is necessary to protect the Bank or its consolidated subsidiaries’ credit.
The Bank and its consolidated subsidiaries take various measures to protect their credit. 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.

9.

Assets Pledged

At March 31, 2020 and 2021, assets and future receipts pledged as collateral were as follows:

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

Millions of yen
2020
120,421\2021
288,809

Thousands of
U.S. dollars
2021$
2,608,698

2021
13,401Thousands of
U.S. dollars
2021$
121,045

42,065224,000

379,956
2,023,304

The above pledged amounts secure the following liabilities:

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

Millions of yen
2020
15,220\58,47042,000At March 31, 2020 and 2021, certain investment securities amounting to \1,287 million and \1,421 million ($12,835
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 \30,049 million ($271,420 thousand) including deposits
with the central counterparty of \30,000 million ($270,978 thousand) and other of \49 million ($442 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, 2020 and 2021, other assets included cash collateral paid for financial instruments of \4,756 million
and \5,037 million ($45,497 thousand), respectively, and guarantee deposits of \294 million and \292 million ($2,637
thousand), respectively.

34

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

10.

Tangible Fixed Assets

Accumulated depreciation of tangible fixed assets at March 31, 2020 and 2021 amounted to \32,151 million and\32,180 million ($290,669 thousand), respectively. Accumulated capital gains that directly offset acquisition costs oftangible fixed assets to obtain tax benefits at March 31, 2020 and 2021 amounted to \734 million and \734 million($6,629 thousand), respectively. No such offset was newly recorded for the years ended March 31, 2020 and 2021.

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, 2020 and 2021, the market values of the revalued land decreased
from the revalued amount by \7,535 million and \7,117 million ($64,285 thousand), respectively.

12.

General and Administrative Expenses

For the years ended March 31, 2020 and 2021, general and administrative expenses included salaries and allowancesof \9,637 million and \9,482 million ($85,647 thousand), respectively, and outsourcing expenses of \3,607 million and\3,649 million ($32,959 thousand), respectively.

13.

Other Income

For the years ended March 31, 2020 and 2021, other income included gain on sale of securities of \3,341million and\3,574 million ($32,282 thousand), respectively.

14.

Other Expenses(1) Loss on loans and securities
For the years ended March 31, 2020 and 2021, other expenses included loans written off of \24 million and \26 million($234 thousand), respectively, losses on the sale of securities of \823 million and \1,264 million ($11,417 thousand),
respectively, and securities written off of \185 million and \413 million ($3,730 thousand), respectively.

35

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

14. Other Expenses (cont’d)(2) Impairment loss
For the year ended March 31, 2020, 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 \50 million.

Area
Operatingassets
Total

Tokushimaarea

Purpose of use
Branchesand others

Impairment
loss
Millions of
yen
2020

Type
Buildings

5 locations

\
\

50
50

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 orrebuilding.

36

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

14. Other Expenses (cont’d)(2) Impairment loss (cont’d)
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 ($3,378 thousand).

Area
OperatingassetsIdle assets

Purpose of use

Impairment loss
Millions ofThousands ofyen
U.S. dollars
2021

Type

Tokushimaarea

Branchesand others

14
locations

Other area
Tokushimaarea

Branch

1 location

Land andbuildings(Land)(Buildings)
Buildings

Idle assets

1 location

Land

Total
(Land)(Buildings)

\

\
\

365
147
218
7
0
374
148
226

$

$
$

3,296
1,327
1,969
63
0
3,378
1,336
2,041

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 orrebuilding.

37

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

15.

Other Comprehensive Income

Amounts reclassified to net income (loss) in the current period that were recognized in other comprehensive income inthe current or previous periods and the tax effects for each component of other comprehensive income for the years
ended March 31, 2020 and 2021 were as follows:

Millions of yen
2020
2021

Thousands of
U.S. dollars
2021

Net unrealized holding gains (losses) on securities
Increase (decrease) during the year ------------------ \Reclassification adjustments -----------------------Subtotal, before tax ------------------------------Tax (expense) benefit -----------------------------Subtotal, net of tax -------------------------------(33,620)(2,729)(36,349)
11,014(25,335)

Net 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 -------------------------------(2,051)
2,268
216
(65)
150

157
1,209
1,367
(416)
950

1,418
10,92012,347(3,757)
8,580

Remeasurements 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 ----------------- \(1,383)(366)(1,750)538(1,211)(26,397)

3,090(1,878)
1,212
(369)
843
34,472

27,910(16,963)
10,947(3,333)
7,614
311,372

38\\

48,703(1,711)
46,992(14,313)32,678$$439,915(15,454)424,460(129,283)
295,167

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

16.

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, which in the aggregate indicate a statutory rate of approximately 30.4% for theyear ended March 31, 2020.
The reconciliation of the statutory tax rate and effective tax rate for the year ended March 31, 2020 was as follows:
2020
30.4%

Statutory tax rate
(Adjustments)
Items permanently excluded from expenses such as entertainment expenses
Items permanently excluded from income such as dividend income
Inhabitants tax on per capita basis
Increase (decrease) in valuation allowance
Others
Effective tax rate after application of deferred income tax accounting

0.4
(1.5)
0.2
(1.1)
0.2
28.6%

A reconciliation of the statutory tax rate and effective tax rate for the year ended March 31, 2021 was not disclosed
because the difference between the statutory tax rate and effective tax rate was less than 5% of the statutory tax rate.
Significant components of deferred tax assets and liabilities as of March 31, 2020 and 2021 were as follows:

Millions of yen
2020
2021

Thousands of
U.S. dollars
2021

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 -----------------------------

1,085
2,058
(2,423)
11,968669
2,042(2,557)
11,255

6,042
18,444(23,096)
101,661

Deferred tax liabilities:
Deferred gains on real property ---------------------Unrealized gains on securities ----------------------Others-----------------------------------------Total deferred tax liabilities ---------------------------(244)(17,968)(1)(18,214)(245)(32,281)(2)(32,529)(2,212)(291,581)(18)(293,821)

Net deferred tax liabilities----------------------------- \(6,246)(21,273)$ (192,150)

39

10,209
515
521
-

\

\

10,374702
21
2$93,704
6,340
189
18

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

17.

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.

18.

Borrowed Money

Borrowed money at March 31, 2020 and 2021 consisted of the following:

Millions of yen
2020
2021
Borrowings from banks and others---------------------- \53,610\236,990
Lease obligations (payable within 1 year)---------------- \
108
\
104
Lease obligations (excluding those payable within 1 year)--- \
122
\
63

Thousands of
U.S. dollars
2021$ 2,140,637
$
939
$
569

(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, 2021.

・Borrowings from banks and others:
Year ending March 31:
2022-----------------------2023-----------------------2024-----------------------2025-----------------------2026------------------------

Millions of yen\
187,042
30,086
17,7491,512
600

Thousands of
U.S. dollars$
1,689,477
271,755
160,319
13,657
5,419

・Lease obligations:Year ending March 31:
2022-----------------------2023-----------------------2024-----------------------2025-----------------------2026------------------------

Millions of yen
\
104
36
16
8
2

40

Thousands of
U.S. dollars
$

939
325
144
72
18

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

19.

Employees' Severance and Retirement Benefits(1) Overview of retirement benefit plan
The Bank and its consolidated subsidiaries provide funded contributory pension plans under the Defined Benefit
Corporate Pension Law and lump-sum payment plans as defined benefit plans. The funded contributory pension plans,
which were transferred from the welfare pension fund with approval from the Minister of Health, Labour and Welfare
have been provided effective from September 1, 2004. Retirement benefit plans were revised on September 1, 2004,
and a “Point system” was introduced in the calculation of retirement benefits. In addition, a portion of the lump-sum
payment plans were transferred to defined contribution plans on December 1, 2004.
The Bank also has established a retirement benefit trust. Consolidated subsidiaries apply the simplified method fortheir lump-sum payment plans in the calculation of net defined benefit liability and retirement benefit expenses.
The Bank and its consolidated subsidiaries have transferred their defined benefit pension plans 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 risk sharing pension plans, in addition to the standard contribution equivalent, a risk-taking contribution
equivalent is stipulated in advance in the policies. The amount of benefits increases or decreases according to thefinancial status of the risk sharing pension plan in each consolidated fiscal year and the financial balance of thepensions will be maintained. Contributions to the defined contribution plans will be implemented from the fiscal year
ending March 31, 2022 and after.
Regarding the accounting treatment associated with the transition, “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 for Transfer between Retirement
Benefit Plans” (PITF No. 2, February 7, 2007) are applied. As a result, loss on termination of retirement benefit planof \75 million ($677 thousand) was recorded in other expenses for the fiscal year ended March 31, 2021.
In addition, the retirement benefit trust established by the Bank has was cancelled on April 1, 2021.
(2) Defined benefit plans① Movement in projected benefit obligation (excluding plans to which the simplified method is applied):Thousands of
U.S. dollars
2021

Millions of yen
2020
2021
Projected benefit obligation at beginning of year -- \Service cost ------------------------------Interest cost ------------------------------Actuarial differences ------------------------Retirement benefits paid --------------------Effects of transition from the simplified method toprincipal method due to merger---------------Effects of transition to risk sharing pension plan-Projected benefit obligation at end of year ------- \41

30,720 \
765
156
(180)
(1,501)

30,073769
176
421(1,511)

113
30,073(5,076)24,853\$$

271,637
6,946
1,589
3,802
(13,648)(45,849)
224,487

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

19. Employees' Severance and Retirement Benefits (cont’d)② Movement in plan assets:
Thousands of
U.S. dollars
2021

Millions of yen
2020
2021
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 --------------------- \36,851 \689(1,564)33
31(1,101)
34,940 \34,940
671
3,512
45
30
(1,077)(7,083)31,038$$315,599
6,060
31,722406
270(9,728)(63,977)
280,354(*1) 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
2021

Millions of yen
2020
2021
Net defined benefit liability at beginning of year --- \Net retirement benefit expenses --------------Retirement benefits paid --------------------Effects of transition from the simplified method toprincipal method due to merger---------------Net defined benefit liability at end of year -------- \

42

227 \
20
(23)

111
8
(0)

(113)
111 \

119

$

$

1,002
72
(0)
1,074

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

19. 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
2021

Millions of yen
2020
2021
Funded projected benefit obligation -----------Plan assets --------------------------------\

30,073 \(34,940)(4,867)111

24,853(31,038)(6,185)
119$

224,487(280,354)(55,866)
1,074(4,756) \(6,066)$(54,791)\505 \(5,261)

44(6,111)$

397(55,198)\(4,756) \(6,066)$(54,791)

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----(*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:
Thousands of
U.S. dollars
2021

Millions of yen
2020
2021
Service cost ------------------------------- \Interest cost ------------------------------Expected return on plan assets ---------------Amortization of actuarial differences -----------Amortization of prior service costs ------------Net retirement benefit expenses --------------- \

753 \
156
(689)
(269)
(97)
(145) \

747
176
(671)
52
306

$

$

6,747
1,589
(6,060)4692,763(*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($677 thousand) was recorded in other expenses for the fiscal year ended March 31, 2021.

43

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

19. 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
2021

Millions of yen
2020
2021
Prior service costs -------------------------- \Actuarial differences ------------------------Total ------------------------------------- \(97)(1,652)(1,750)

\
\

1,212
1,212

$
$

10,947
10,947(*) The remeasurements of defined benefit plans include consolidation adjustments of negative \43 million ($388 thousand) 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
2021

Millions of yen
2020
2021
Unrecognized prior service costs -------------Unrecognized actuarial differences ------------Total -------------------------------------

\

1,229
1,229

\

\

(26)
(26)

\

$
$

(234)
(234)

⑧ Plan assets(i) Plan assets comprise:
2020
Debt securities ----------------------------42.3%
Equity securities ---------------------------28.8
Life insurance general accounts---------------10.2
Cash and due from banks and others --------------------- 13.4
Other ------------------------------------5.3
Total ------------------------------------100.0%

2021
24.9%
26.6
9.7
33.4
5.4
100.0%(*) As of March 31, 2020 and 2021, plan assets consisted of 3.9% and 2.4%, respectively, of assets of the retirement benefit trust
established for the funded contributory pension plan and 13.8% and 13.5%, respectively, of assets 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 of plan
assets and current and expected long-term rate of return generated from various components of the plan assets.

44

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

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

Actuarial assumptions at end of year:
2020

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-------------------

2021
0.5%

0.6%

2.0%

2.0%

0.0%
2.0%

0.0%
2.0%

2.5%
2.4%

2.5%
2.4%

(*1) The discount rate for the years ended March 31, 2020 and 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 \144 million and \125 million ($1,129
thousand) as of March 31, 2020 and 2021, 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, 2022 and after is nil.

20.

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, 2020 and 2021, outstanding derivatives were as follows:45

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

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

Recognized
gain(loss)

54,231 \25,67826,085 \23,478(3,128) \3,325(3,128)3,325

38,04638,046

-

(434)
434

(144)
326

Contract
amountOver-the-counter transactions:
Currency swaps\
Forward exchange contracts
Sell ----------------------------Buy ----------------------------Currency options
Sell ----------------------------Buy -----------------------------

Millions of yen
2020
Portionmaturing
Marketover one year
value

Millions of yen
2021
Portionmaturing
Marketover one year
value

Recognized
gain(loss)- \Thousands of
U.S. dollars
2021
Recognized
gain(loss)

3,132 \

3,132 \

- $-88,83328,05425,32323,884(5,005)2,863(5,005)2,863(45,208)
25,86051,75451,754-(1,120)
1,120

(786)
1,005

(7,099)9,077

The above transactions were recorded at market values, and recognized gains and losses were included in the
consolidated statements of income. Market values for over-the-counter transactions were calculated at discounted
present values or values based on option price calculation models and other methods for the balances at March 31,
2020 and 2021. Derivative transactions for which hedge accounting was applied were excluded from the above table.

46

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

21.

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 toand used by the ALM Committee and Management Meeting periodically to determine the allocation of resources andassess 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) Basis of measurement for reporting segment ordinary income, profit or loss, segment assets, segment liabilities
and other material items
The accounting policies of 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.

47

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

21. 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, 2020 and 2021 was as follows:
Millions of yen
2020
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

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

\
\
\
\
\
\

Leasing

53,353666
54,01915,816
3,346,840
3,109,555\

2,446
39,425
4,149
32

\

\
\
\
\

Total

14,305
177
14,483725
41,52025,573

\

133
71
62
-

\

\
\
\
\

Consolidated
total

Adjustments

67,658844
68,503
16,541
3,388,360
3,135,129\

2,580
39,497
4,212
32

\

\
\
\
\

(284)
(844)
(1,128)(811)(12,150)(11,281)

\

49
(558)
(32)
-

\

\
\
\
\

67,37467,374
15,7293,376,210
3,123,847
2,629
38,939
4,179
32

32

-

32

-

32

103

0

103

0

103

52
50

0
-

53
50

0
-

53
50

-

-

-

-

-

Tax expenses
4,364
209
4,573
(86)
4,487
Increase in tangible fixed assets
and intangible fixed assets
5,682
64
5,746
69
5,815
(*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 \284 million is for the adjustment of gain on sale of shares.
2. Adjustment of segment profit of negative \811 million is for the adjustment of gain on sale of shares and the elimination ofintersegment transactions.
3. Adjustment of segment assets of negative \12,150 million is for the elimination of intersegment transactions and others.
4. Adjustment of segment liabilities of negative \11,281 million is for the elimination of intersegment transactions and others.
5. Adjustment of depreciation of \49 million is due to intersegment transactions.
6. Adjustment of interest income received of negative \558 million is for the elimination of intersegment transactions.
7. Adjustment of interest expense paid of negative \32 million is for the elimination of intersegment transactions.
8. Adjustment of losses on disposal of fixed assets of \0 million is due to intersegment transactions.
9. Adjustment of tax expenses of negative \86 million is associated mainly with the adjustment of gain on sale of shares.
10. Adjustment of increase in tangible fixed assets and intangible fixed assets of \69 million is due to intersegment transactions.
(*3) Segment profit is reconciled to net income in the consolidated statements of income.

48

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

21. Segment Information (cont’d)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

\
\
\
\
\
\

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

\

\
\
\
\

Consolidated
total

Adjustments

65,587745
66,33313,063
3,877,603
3,584,692\

2,872
37,939
2,156
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

0

8

8

-

8

477

22

499

(8)

491

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

41
352

0
22

41
374

0
-

41
374

84

-

84

(8)

75

Tax expenses
Increase in tangible fixed assets
and intangible fixed assets

3,436

245

3,682

0

3,682

2,196

14

2,211

48

2,259

Extraordinary losses

49

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

21. Segment Information (cont’d)Thousands of U.S. dollars
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

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

$
$
$
$
$
$

Leasing458,269
5,121
463,390
110,739
34,639,255
32,141,468$

24,686342,119
18,959
0

$

$
$
$
$

Total

134,152
1,607
135,760
7,244
385,611
237,638

$

1,246
560
514
72

$

$
$
$
$

Consolidated
total

Adjustments

592,4216,729
599,159
117,992
35,024,866
32,379,116$

25,941
342,688
19,474
72

$

$
$
$
$

(6,729)(6,729)(3,604)(104,127)(103,983)$

460(3,874)
(261)
-

$

$
$
$
$

592,421592,421
114,379
34,920,738
32,275,133
26,402
338,804
19,212
72

0

72

72

-

72

4,308

198

4,507

(72)

4,435

370
3,179

0
198

370
3,378

0
-

370
3,378

758

-

758

(72)

677

Tax expenses
31,036
2,212
33,258033,258
Increase in tangible fixed assets
and intangible fixed assets
19,835
126
19,971433
20,404(*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 ($3,604 thousand) is for the elimination of intersegment transactions.
2. Adjustment of segment assets of negative \11,528 million ($104,127 thousand) is for the elimination of intersegment transactions andothers.
3. Adjustment of segment liabilities of negative \11,512 million ($103,983 thousand) is for the elimination of intersegment transactions
and others.
4. Adjustment of depreciation of \51 million ($460 thousand) is due to intersegment transactions.
5. Adjustment of interest income received of negative \429 million ($3,874 thousand) is for the elimination of intersegment transactions.
6. Adjustment of interest expense paid of negative \29 million ($261 thousand) is for the elimination of intersegment transactions.
7. Adjustment of losses on disposal of fixed assets of \0 million ($0 thousand) is due to intersegment transactions.
8. Adjustment of loss on termination of retirement benefit plan of negative \8 million ($72 thousand) is for the adjustment associated withthe termination of the retirement benefit plan.
9. Adjustment of tax expenses of \0 million ($0 thousand) is due to intersegment transactions.
10. Adjustment of increase in tangible fixed assets and intangible fixed assets of \48 million ($433 thousand) is due to intersegment
transactions.
(*3) Segment profit is reconciled to net income in the consolidated statements of income.

50

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

21. Segment Information (cont’d)(4) Related information
For the years ended March 31, 2020 and 2021:
Information by service:
Millions of yen
2020
Security
investments

Loans
Ordinary income
Customers\

24,384 \Leasing

18,950 \Other businesses

14,305 \9,734 \

Total
67,374

Millions of yen
2021
Security
investments

Loans
Ordinary income
Customers\

24,199\

Leasing

17,299 \Other businesses

14,852\

9,236 \

Total
65,587

Thousands of U.S. dollars
2021
Security
investments

Loans
Ordinary income
Customers$

218,580 $Leasing

156,255$

Other businesses

134,152(5) Impairment loss on tangible fixed assets by reportable segment
For the years ended March 31, 2020 and 2021:
Millions of yen
2020
Reportable segments
Commercial
banking
Leasing- \Impairment loss
\
50 \

$

83,425 $Total
50Millions of yen
2021
Reportable segments
Commercial
banking
Impairment loss\

Leasing
352 \

Total
22 \

374

Thousands of U.S. dollars
2021
Reportable segments

Impairment loss$

Commercial
banking
3,179 $

Leasing

Total
198 $

51

3,378

Total
592,421

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

22.

Transactions with Related Parties

There were no transactions with related parties for the years ended March 31, 2020 and 2021.
There were no related party transactions involving consolidated subsidiaries of the Bank for the year ended March 31,
2020 and 2021.

23.

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, 2020 and 2021 were as
follows:
For the year ended March 31, 2020:
Number of shares
as of the previous
fiscal year end(thousands)
Shares issued
Common stock
43,240Total
43,240Treasury stock
Common stock
299
Total
299

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

751
751

1
1

(*1 and *2) 1,049
1,049(*1) The number of treasury stock as of March 31, 2019 and 2020 included the Bank’s own shares of 215 thousand shares and 214
thousand shares, respectively, held by the BIP.
(*2) The 751 thousand increase in the number of shares of treasury stock was due to the purchase of fractional shares (1 thousand
shares) and acquisition through the market (750 thousand shares). The 1 thousand decrease in the number of shares oftreasury stock was due to the sale of fractional shares (0 thousand shares) and the delivery of the Bank’s own shares by the
BIP (1 thousand shares).

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 and 210
thousand shares, respectively, held by the BIP and the number of treasury stock as of March 31, 2021 included the Bank’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).

52

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

23. Changes in Net Assets (cont’d)(2) Dividends
The following dividends were paid in the years ended March 31, 2020 and 2021:
Year ended March 31, 2020:
Date ofresolution

Type ofsharesDirectors'
meeting held on
May 10, 2019
Directors'
meeting held on
November 8,
2019Amount ofdividends

Cash dividends

per share

Recorddate

Effective
dateMillions of
yen

Yen

Common
stock

\ 971

\ 22.50

March 31,2019

June 10,2019

Common
stock

\ 963

\ 22.50

September
30, 2019

December
5, 2019

Year ended March 31, 2021:
Cash dividends per
share

Amount of dividends
Date ofresolution

Type ofsharesDirectors'
meeting held on
May 15, 2020

Common
stock

\ 954

$

8,617

\ 22.50$

Directors'
meeting held on
November 13,
2020

Common
stock

\ 848

$

7,659

\ 20.00$

Millions ofyen

Thousandsof U.S.
dollars

Recorddate

Effective
date

0.20

March 31,2020

June 10,
2020

0.18

September
30, 2020

December
7, 2020

U.S.
dollars

Yen（*1) The amount of dividends resolved at the Directors’ meeting held on May 15, 2020 includes \4 million ($36 thousand) ofdividends for the Bank’s own shares held by the BIP.
（*2) The amount of dividends resolved at the Directors’ meeting held on November 13, 2020 includes \4 million ($36 thousand) ofdividends for the Bank’s own shares held by the BIP and \6 million ($54 thousand) of dividends for the Bank’s own shares heldby the Trust.

53

Notes to Consolidated Financial Statements
The Awa Bank, Ltd. and its Consolidated Subsidiaries
For the Years Ended March 31, 2020 and 2021

23. Changes in Net Assets (cont’d)
The following dividends were recorded during the fiscal years ended March 31, 2020 and 2021 and became effective
after March 31, 2020 and 2021:
For the fiscal year ended March 2020, the dividends became effective after March 31, 2020:

Date ofresolution

Directors'
meeting held on
May 15, 2020

Type ofsharesCommonstock

Amount ofdividends

Millions of
yen
\

954

Cash
dividends
per share

Source ofdividends

Recorddate

Effective
date

March 31,2020

June 10,2020

Yen
Retainedearnings\

22.50

For the fiscal year ended March 2021, the dividends became effective after March 31, 2021:
Cash dividends per
share

Amount of dividends
Date ofresolution

Type ofsharesDirectors'
meeting held on
May 14, 2021

CommonstockMillions ofyen

Thousandsof U.S.
dollars\$ 7,659

848

Source ofdividends

Retainedearnings

\

Yen

U.S.
dollars

20.00$ 0.18

Recorddate

Effective
date

March 31,2021

June 10,2021(*) The amount of dividends includes \4 million ($36 thousand) of dividends for the Bank’s own shares held by the BIP and \5million ($45 thousand) of dividends for the Bank’s own shares held by the Trust.

24.

Subsequent Events

Acquisition of treasury stock
Implementing its flexible financial management policy and furthering the return of profits to its shareholders in
response to changes in the business environment, the Bank, at the Directors’ meeting held on November 12, 2021
and pursuant to Article 156 of the Companies Act, which is applied by replacing Paragraph 3 of Article 165, resolvedto 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 period:

Common stock of the Bank
450,000 shares\1,000 million ($9,032 thousand)November 22, 2021 to December 15, 2021

54

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